Auto Dealer Group AutoNation Reports Record Third Quarter EPS
* Third Quarter Revenue $5.3 Billion, Up 1.2% Driven By Higher New Vehicle, Parts, Service, Finance And Insurance Sales * 110 Bp Reduction In SG&A As A Percent Of Gross Profit * Seventh Consecutive Record Quarter Of EPS From Continuing Operations
FORT LAUDERDALE, Fla., Oct. 30 -- AutoNation, Inc. , America's largest retailer of both new and used vehicles, today reported record third quarter earnings per share of $0.38, 15% above a year- earlier $0.33 per share, driven by the continued repurchase of outstanding shares and initiatives aimed at maximizing operating efficiencies that allowed the Company to further leverage its cost structure. The Company reported net income of $109 million, an increase of 2% over a year ago.
Total revenue for the third quarter ended September 30, 2003 increased to $5.3 billion compared to $5.2 billion a year ago, driven by revenue growth of 3% for new vehicles, 2% for parts and service, and 7% for finance and insurance. Third quarter vehicle sales were positively impacted due to the accelerated demand in California in anticipation of a substantial increase in the California vehicle license fee on October 1. Selling, general and administrative expense (SG&A) was $566 million or 71.6% of total gross profit, a 110 basis point improvement compared to a year ago. Operating income was $206 million, an increase of 3.5% over a year ago, and as a percent of gross profit improved 60 basis points to 26.1%.
Commenting on the third quarter results AutoNation Chairman and Chief Executive Officer Mike Jackson said, "Once again, AutoNation delivered solid performance in the quarter as we continued our operational improvements and cost containment. We were pleased to achieve a record for F&I profit per vehicle retailed, gains in our parts and service business and a positive trend in our used vehicle business. Our strategy remains the same. We will continue to focus on the fundamentals, leveraging our cost structure and allocating our capital appropriately among stock repurchase, acquisitions and capital investments."
For the nine-month period ended September 30, 2003, the Company reported net income from continuing operations of $427 million or $1.48 per share. Excluding the $0.44 per share benefit of the first quarter 2003 IRS tax settlement, earnings per share from continuing operations was $1.04, a 12% increase versus the prior year. The Company's revenue for the nine-month period totaled $14.8 billion, down 1% versus the prior year.
Looking ahead, Mr. Jackson said, "Auto manufacturers have effectively kept consumers in the marketplace with innovative product and strong incentives. AutoNation's fourth quarter earnings per share guidance is $0.27 to $0.29 from our core business. We are maintaining full year earnings per share guidance at $1.31 to $1.33, the upper end of our previous range. This excludes the benefits of the Company's first quarter tax settlement and fourth quarter items related to favorable state income tax settlements and the gain on the sale of a non-core equity investment."
The Company's earnings outlook on a GAAP basis for the fourth quarter is $0.32 to $0.34 per share and for the full year 2003 is $1.80 to $1.82 per share from continuing operations. The reconciliation of the Company's earnings estimate is set forth in the table below:
Q4 2003 Full Year 2003 2003 Q4 and full-year guidance $0.27 - $0.29 $1.31 - $1.33 Q1 2003 income tax benefit from IRS settlement -- 0.44 Q4 2003 benefits from state income tax settlements and gain on sale of non-core equity investment 0.05 0.05 Expected 2003 Q4 and full-year GAAP EPS from continuing operations $0.32 - $0.34 $1.80 - $1.82
Commenting on the Company's outlook for 2004, Mr. Jackson said, "We anticipate that the 2004 new vehicle market will remain intensely competitive in a stable volume environment. Our full year 2004 EPS outlook is $1.40 - $1.45."
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 (888) 428-4480 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 November 7, 2003 by calling (800) 475-6701 (access code #701295) 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.
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. This release contains certain non-GAAP financial measures as defined under SEC rules, including net income from continuing operations excluding the first-quarter tax benefit and certain fourth quarter items. The Company believes such 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. As required by SEC rules, the Company has provided reconciliations of those measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Revenue:
New vehicle $3,266.2 $3,174.6 $8,967.1 $8,967.9
Used vehicle 964.9 980.2 2,859.7 2,925.9
Parts and service 637.0 626.5 1,857.7 1,861.0
Finance and insurance 148.2 138.9 411.5 393.4
Other 241.1 273.5 689.3 811.8
Total revenue 5,257.4 5,193.7 14,785.3 14,960.0
Cost of sales:
New vehicle 3,035.6 2,937.4 8,316.0 8,273.1
Used vehicle 860.0 878.3 2,542.3 2,610.3
Parts and service 358.8 353.3 1,047.2 1,050.3
Other 213.5 242.0 610.1 734.6
Total cost of sales 4,467.9 4,411.0 12,515.6 12,668.3
Gross profit 789.5 782.7 2,269.7 2,291.7
Selling, general and
administrative expenses 565.5 568.7 1,637.4 1,672.4
Depreciation 17.6 18.0 51.4 50.6
Amortization 0.3 0.5 1.3 1.9
Loan and lease underwriting
income, net (0.1) (6.0) (6.1) (8.9)
Other (gains) losses (0.1) 2.2 2.3 4.5
Operating income 206.3 199.3 583.4 571.2
Floorplan interest expense (15.5) (18.6) (54.5) (55.3)
Interest expense - IRS
settlement (3.1) -- (10.9) --
Other interest expense (15.4) (13.0) (43.8) (36.7)
Interest income 0.8 2.6 2.8 8.6
Other income (expense) (1.4) 2.5 4.9 1.6
Income from continuing
operations before income
taxes 171.7 172.8 481.9 489.4
Provision for income taxes 62.9 66.1 182.4 187.2
Income tax benefit from IRS
settlement -- -- (127.5) --
Net tax provision - continuing
operations 62.9 66.1 54.9 187.2
Net income from continuing
operations 108.8 106.7 427.0 302.2
Loss from discontinued
operations, net of income
taxes -- -- (12.3) --
Net income before cumulative
effect of accounting change 108.8 106.7 414.7 302.2
Cumulative effect of
accounting change, net of
income taxes -- -- (14.6) --
Net income $108.8 $106.7 $400.1 $302.2
Diluted earnings per share:
Continuing operations $0.38 $0.33 $1.48 $0.93
Discontinued operations -- -- $(0.04) --
Cumulative effect of
accounting change -- -- $(0.05) --
Net income $0.38 $0.33 $1.39 $0.93
Weighted average common and
common
equivalent shares
outstanding 286.6 321.9 288.6 325.5
Common shares outstanding 274.6 314.6 274.6 314.6
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended September 30,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $3,266.2 $3,174.6 $91.6 2.9
Used vehicle 964.9 980.2 (15.3) (1.6)
Parts and service 637.0 626.5 10.5 1.7
Finance and
insurance 148.2 138.9 9.3 6.7
Other 241.1 273.5 (32.4) (11.8)
$5,257.4 $5,193.7 $63.7 1.2
Gross profit:
New vehicle $230.6 $237.2 $(6.6) (2.8)
Used vehicle 104.9 101.9 3.0 2.9
Parts and service 278.2 273.2 5.0 1.8
Finance and
insurance 148.2 138.9 9.3 6.7
Other 27.6 31.5 (3.9) (12.4)
789.5 782.7 6.8 0.9
Selling, general and
administrative
expenses 565.5 568.7 3.2 0.6
Depreciation 17.6 18.0 0.4
Amortization 0.3 0.5 0.2
Loan and lease
underwriting income,
net (0.1) (6.0) (5.9)
Other (gains) losses (0.1) 2.2 2.3
Operating income 206.3 199.3 7.0 3.5
Floorplan interest
expense (15.5) (18.6) 3.1 16.7
Interest expense -
IRS settlement (3.1) -- (3.1)
Other interest expense (15.4) (13.0) (2.4) (18.5)
Interest income 0.8 2.6 (1.8) (69.2)
Other income (expense) (1.4) 2.5 (3.9)
Income from continuing
operations before
income taxes $171.7 $172.8 $(1.1) (0.6)
Retail vehicle sales:
New 116,413 117,533 (1,120) (1.0)
Used 64,735 64,420 315 0.5
181,148 181,953 (805) (0.4)
Revenue per vehicle
retailed:
New $28,057 $27,010 $1,047 3.9
Used $14,905 $15,216 $(311) (2.0)
Gross profit per
vehicle retailed:
New $1,981 $2,018 $(37) (1.8)
Used $1,620 $1,582 $38 2.4
Finance and
insurance $818 $763 $55 7.2
Operating Highlights Nine Months Ended September 30,
2003 2002 $Variance %Variance
Revenue:
New vehicle $8,967.1 $8,967.9 $(0.8) (0.0)
Used vehicle 2,859.7 2,925.9 (66.2) (2.3)
Parts and service 1,857.7 1,861.0 (3.3) (0.2)
Finance and
insurance 411.5 393.4 18.1 4.6
Other 689.3 811.8 (122.5) (15.1)
$14,785.3 $14,960.0 $(174.7) (1.2)
Gross profit:
New vehicle $651.1 $694.8 $(43.7) (6.3)
Used vehicle 317.4 315.6 1.8 0.6
Parts and service 810.5 810.7 (0.2) (0.0)
Finance and
insurance 411.5 393.4 18.1 4.6
Other 79.2 77.2 2.0 2.6
2,269.7 2,291.7 (22.0) (1.0)
Selling, general and
administrative
expenses 1,637.4 1,672.4 35.0 2.1
Depreciation 51.4 50.6 (0.8)
Amortization 1.3 1.9 0.6
Loan and lease
underwriting income,
net (6.1) (8.9) (2.8)
Other (gains) losses 2.3 4.5 2.2
Operating income 583.4 571.2 12.2 2.1
Floorplan interest
expense (54.5) (55.3) 0.8 1.4
Interest expense -
IRS settlement (10.9) -- (10.9)
Other interest expense (43.8) (36.7) (7.1) (19.3)
Interest income 2.8 8.6 (5.8) (67.4)
Other income (expense) 4.9 1.6 3.3
Income from continuing
operations before
income taxes $481.9 $489.4 $(7.5) (1.5)
Retail vehicle sales:
New 319,879 331,478 (11,599) (3.5)
Used 190,308 191,990 (1,682) (0.9)
510,187 523,468 (13,281) (2.5)
Revenue per vehicle
retailed:
New $28,033 $27,054 $979 3.6
Used $15,027 $15,240 $(213) (1.4)
Gross profit per
vehicle retailed:
New $2,035 $2,096 $(61) (2.9)
Used $1,668 $1,644 $24 1.5
Finance and
insurance $807 $752 $55 7.3
Operating Percentages Three Months Ended Nine Months Ended
September 30, September 30,
%2003 %2002 %2003 %2002
Revenue mix percentages:
New vehicle 62.1 61.1 60.6 59.9
Used vehicle 18.4 18.9 19.3 19.6
Parts and service 12.1 12.1 12.6 12.4
Finance and insurance 2.8 2.7 2.8 2.6
Other 4.6 5.2 4.7 5.5
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross profit:
New vehicle 7.1 7.5 7.3 7.7
Used vehicle 10.9 10.4 11.1 10.8
Parts and service 43.7 43.6 43.6 43.6
Finance and insurance 100.0 100.0 100.0 100.0
Other 11.4 11.5 11.5 9.5
Total 15.0 15.1 15.4 15.3
Selling, general
and administrative
expenses 10.8 10.9 11.1 11.2
Operating income 3.9 3.8 3.9 3.8
Operating items as a
percentage of total
gross profit:
Selling, general and
administrative
expenses 71.6 72.7 72.1 73.0
Operating income 26.1 25.5 25.7 24.9
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Three Months Ended Nine Months Ended
Information September 30, September 30,
2003 2002 2003 2002
Capital expenditures,
excluding property
operating lease
buy-outs $30.1 $39.9 $79.4 $99.9
Property operating
lease buy-outs $-- $5.6 $9.8 $11.0
Stock repurchases $111.8 $47.9 $465.2 $ 199.0
Acquisitions $3.0 $32.6 $48.1 $ 164.2
Proceeds from
exercises of stock
options $63.2 $0.9 $101.9 $75.6
Floorplan Assistance Three Months Ended Nine Months Ended
and Expense September 30, September 30,
2003 2002 Variance 2003 2002 Variance
Floorplan
assistance
(included in cost
of operations) $29.7 $33.1 $(3.4) $88.7 $96.1 $(7.4)
Floorplan
interest
expense (15.5) (18.6) 3.1 (54.5) (55.3) 0.8
Net inventory
carrying
benefit $14.2 $14.5 $(0.3) $34.2 $40.8 $(6.6)
Balance Sheet and September 30, December 31,September 30,
Other Highlights 2003 2002 2002
Cash and cash equivalents $33.7 $176.2 $ 169.7
Inventory $2,373.9 $2,598.4 $2,251.7
Floorplan notes payable $2,234.6 $2,302.5 $1,818.0
Non-vehicle debt $738.5 $651.3 $ 647.0
Equity $3,958.7 $3,910.2 $4,020.1
New days supply (industry
standard of selling,
days, including fleet) 53 days 63 days 48 days
Used days supply (trailing
30 days) 38 days 40 days 37 days
Comparable Basis Net Income Diluted Earnings Per Share
Reconciliation Nine Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Net income, as
reported $400.1 $302.2 $1.39 $0.93
Discontinued
operations 12.3 -- 0.04 --
Cumulative effect
of accounting change 14.6 -- 0.05 --
Net income from
continuing operations,
as reported 427.0 302.2 1.48 0.93
Income tax benefit
from IRS settlement (127.5) -- (0.44) --
Net income, excluding
income tax benefit
from IRS Settlement $299.5 $302.2 $1.04 $0.93
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended September 30,
$ %
2003 2002 Variance Variance
Revenue:
New vehicle $3,220.1 $3,139.6 $80.5 2.6
Used vehicle 953.2 966.9 (13.7) (1.4)
Parts and service 629.4 617.5 11.9 1.9
Finance and insurance 145.9 136.9 9.0 6.6
Other 223.8 255.1 (31.3) (12.3)
$5,172.4 $5,116.0 $56.4 1.1
Gross profit:
New vehicle $227.9 $234.9 $(7.0) (3.0)
Used vehicle 103.8 100.7 3.1 3.1
Parts and service 274.8 269.4 5.4 2.0
Finance and insurance 145.9 136.9 9.0 6.6
Other 22.6 20.6 2.0 9.7
$775.0 $762.5 $12.5 1.6
Store selling, general and
administrative expenses,
excluding depreciation and
amortization $526.3 $524.8 $(1.5) (0.3)
Retail vehicle sales:
New 114,606 116,090 (1,484) (1.3)
Used 63,853 63,278 575 0.9
178,459 179,368 (909) (0.5)
Revenue per vehicle retailed:
New $28,097 $27,045 $1,052 3.9
Used $14,928 $15,280 $(352) (2.3)
Gross profit per vehicle
retailed:
New $1,989 $2,023 $(34) (1.7)
Used $1,626 $1,591 $35 2.2
Finance and insurance $818 $763 $55 7.2
Operating Percentages Three Months Ended Nine Months Ended
September 30, September 30,
% 2003 % 2002 % 2003 % 2002
Revenue mix percentages:
New vehicle 62.3 61.4 60.8 60.2
Used vehicle 18.4 18.9 19.4 19.5
Parts and service 12.2 12.1 12.6 12.4
Finance and insurance 2.8 2.7 2.8 2.6
Other 4.3 4.9 4.4 5.3
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross Profit:
New vehicle 7.1 7.5 7.3 7.8
Used vehicle 10.9 10.4 11.1 10.8
Parts and service 43.7 43.6 43.6 43.6
Finance and insurance 100.0 100.0 100.0 100.0
Other 10.1 8.1 10.2 7.9
Total 15.0 14.9 15.3 15.2
Store selling, general and
administrative expenses,
excluding depreciation
and amortization 10.2 10.3 10.4 10.4
Operating items as a percentage
of total gross profit:
Store selling, general and
administrative expenses,
excluding depreciation and
amortization 67.9 68.8 67.8 68.3
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Nine Month Ended September 30,
$ %
2003 2002 Variance Variance
Revenue:
New vehicle $8,789.7 $8,867.8 $(78.1) (0.9)
Used vehicle 2,802.2 2,881.3 (79.1) (2.7)
Parts and service 1,821.6 1,829.9 (8.3) (0.5)
Finance and insurance 403.0 387.2 15.8 4.1
Other 632.8 775.7 (142.9) (18.4)
$14,449.3 $14,741.9 $(292.6) (2.0)
Gross profit:
New vehicle $639.9 $687.7 $(47.8) (7.0)
Used vehicle 311.9 311.4 0.5 0.2
Parts and service 794.0 797.4 (3.4) (0.4)
Finance and insurance 403.0 387.2 15.8 4.1
Other 64.5 61.1 3.4 5.6
$2,213.3 $2,244.8 $(31.5) (1.4)
Store selling, general and
administrative expenses,
excluding depreciation and
amortization $1,500.0 $1,534.3 $34.3 2.2
Retail vehicle sales:
New 313,700 327,383 (13,683) (4.2)
Used 186,382 188,321 (1,939) (1.0)
500,082 515,704 (15,622) (3.0)
Revenue per vehicle retailed:
New $28,019 $27,087 $932 3.4
Used $15,035 $15,300 $(265) (1.7)
Gross profit per vehicle
retailed:
New $2,040 $2,101 $(61) (2.9)
Used $1,673 $1,654 $19 1.1
Finance and insurance $806 $751 $55 7.3
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