Car Dealer AutoNation Reports Record Fourth Quarter
* Eighth consecutive record quarter of EPS from continuing operations * Fourth-quarter record EPS of $0.28 per share exceeds year-ago EPS of $0.26 per share * Excluding the benefit from the first quarter IRS settlement, full-year earnings per share from continuing operations of a record $1.32 compared to $1.19 in 2002 * Fourth-quarter reduction of 100 basis points in SG&A as a percent of gross profit; 90 basis point reduction for the full year * Company issues 2004 first-quarter EPS guidance of $0.29 to $0.31 and confirms 2004 full-year EPS outlook of $1.40 to $1.45
FORT LAUDERDALE, Fla., Feb. 5 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2003 fourth- quarter net income of $79.0 million, or $0.28 per share, compared to year-ago net income of $79.4 million or $0.26 per share. The 8% increase in fourth- quarter earnings per share was driven by further leverage of its cost structure and the continued repurchase of outstanding shares.
Fourth-quarter 2003 revenue totaled $4.6 billion, an increase of $77 million compared to the year-ago period resulting from revenue growth in new vehicles of 4%, parts and service of 1% and finance and insurance of 8%. Selling, general and administrative expense (SG&A) in the quarter was $520.3 million or 75.1% of total gross profit, a 100 basis point improvement compared to a year ago. Operating income in the quarter was $130.7 million, a reduction of 16% compared to a year ago resulting from a real estate impairment charge of $27.5 million ($16.9 million after-tax or $0.06 per share) related to three franchised new vehicle stores that currently operate in converted used vehicle megastores. Excluding the effect of the impairment, operating income in the quarter was $158.2 million, an increase of $3 million or 2% compared to the period a year ago. The real estate impairment was offset by a gain of $10.2 million ($6.2 million after-tax or $0.02 per share) recognized by the Company on the sale of a non-core equity investment as well as a net income tax benefit of $10.3 million or $0.04 per share related primarily to favorable tax adjustments and settlements.
Commenting on fourth-quarter 2003 performance AutoNation Chairman and Chief Executive Officer Mike Jackson said, "AutoNation's performance in the fourth quarter was characterized by continued cost containment and revenue growth resulting from ongoing operational improvements. We were pleased to deliver our eighth consecutive quarter-over-quarter record EPS from continuing operations."
For the full year, the Company reported net income from continuing operations of $506.1 million or $1.76 per share. Excluding the $0.44 per share benefit from the first-quarter 2003 IRS tax settlement, earnings per share from continuing operations were $1.32, an 11% increase versus the prior year. The Company's revenue for the full year totaled $19.4 billion, down less than 1% versus the prior year.
The Company's 2003 accomplishments included:
* The addition of AutoNation to the S&P 500 index.
* The completion of acquisitions representing 13 franchises with an annual
revenue run rate of approximately $300 million.
* A reduction, net of option exercises, of approximately 10% of the
Company's outstanding common shares following the repurchase of 39.2
million shares at a cost of $575 million.
* The second quarter branding of 39 of the Company's franchises in
Southern California that now operate under the Power brand and 34 of
the Company's franchises in the Houston/Corpus Christi/Austin markets
that now operate under the Champion brand.
Commenting on the Company's 2003 performance and the year ahead, Jackson said, "In a highly competitive environment where industry sales were down, we once again delivered double-digit EPS growth. Looking ahead, we maintain our outlook that the 2004 new vehicle market will remain intensely competitive in a stable volume environment. We confirm our full-year 2004 EPS guidance of $1.40 to $1.45 and expect first-quarter earnings per share in the range of $0.29 to $0.31."
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 February 12, 2004 by calling (800) 475-6701 (access code #716118) or via the Internet as outlined above.
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. Ranked No. 93 on the 2003 Fortune 500 and a component of the Standard and Poor's 500 Index, AutoNation employs approximately 28,000 people and owns and operates 372 new vehicle franchises in 18 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 earnings per share from continuing operations excluding the first-quarter tax benefit and fourth-quarter operating income excluding the real estate impairment charge. 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 Year Ended
December 31, December 31,
2003 2002 2003 2002
Revenue:
New vehicle $2,824.1 $2,726.9 $11,791.2 $11,694.8
Used vehicle 1,025.2 1,059.2 4,492.3 4,709.8
Parts and service 599.5 592.3 2,457.2 2,453.3
Finance and insurance 138.7 128.6 601.1 563.7
Other 8.3 11.5 39.3 56.9
Total revenue 4,595.8 4,518.5 19,381.1 19,478.5
Cost of sales:
New vehicle 2,622.9 2,511.8 10,938.9 10,784.9
Used vehicle 941.0 975.4 4,089.2 4,315.1
Parts and service 337.8 334.7 1,385.0 1,385.0
Other 1.0 1.8 5.2 7.0
Total cost of sales 3,902.7 3,823.7 16,418.3 16,492.0
Gross profit 693.1 694.8 2,962.8 2,986.5
Selling, general and
administrative expenses 520.3 528.5 2,157.7 2,200.9
Depreciation 18.0 16.7 69.4 67.3
Amortization 0.3 0.5 1.6 2.4
Loan and lease underwriting
income, net (0.2) (5.0) (6.3) (13.9)
Other losses (gains) 24.0 (1.1) 26.3 3.4
Operating income 130.7 155.2 714.1 726.4
Floorplan interest expense (16.9) (19.5) (71.4) (74.8)
Interest expense - IRS
settlement (1.2) -- (12.1) --
Other interest expense (15.9) (13.7) (59.7) (50.4)
Interest income 0.5 1.8 3.3 10.4
Other income 11.9 4.8 16.8 6.4
Income from continuing
operations before income
taxes 109.1 128.6 591.0 618.0
Provision for income taxes 30.1 49.2 212.4 236.4
Income tax benefit from IRS
settlement -- -- (127.5) --
Net tax provision -
continuing operations 30.1 49.2 84.9 236.4
Net income from continuing
operations 79.0 79.4 506.1 381.6
Loss from discontinued
operations, net of income
taxes -- -- (12.3) --
Net income before cumulative
effect of accounting change 79.0 79.4 493.8 381.6
Cumulative effect of
accounting change, net of
income taxes -- -- (14.6) --
Net income $79.0 $79.4 $479.2 $381.6
Diluted earnings per share:
Continuing operations $0.28 $0.26 $1.76 $1.19
Discontinued operations -- -- (0.04) --
Cumulative effect of
accounting change -- -- (0.05) --
Net income $0.28 $0.26 $1.67 $1.19
Weighted average common and
common
equivalent shares
outstanding 282.2 309.4 287.0 321.5
Common shares outstanding 269.7 298.0 269.7 298.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in million, except per vehicle data)
Operating Highlights Three Months Ended December 31,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $2,824.1 $2,726.9 $97.2 3.6
Used vehicle 1,025.2 1,059.2 (34.0) (3.2)
Parts and service 599.5 592.3 7.2 1.2
Finance and insurance 138.7 128.6 10.1 7.9
Other 8.3 11.5 (3.2)
$4,595.8 $4,518.5 $77.3 1.7
Gross profit:
New vehicle $201.2 $215.1 $(13.9) (6.5)
Used vehicle 83.7 87.4 (3.7) (4.2)
Wholesale 0.5 (3.6) 4.1 (113.9)
Used vehicle 84.2 83.8 0.4 0.5
Parts and service 261.7 257.6 4.1 1.6
Finance and insurance 138.7 128.6 10.1 7.9
Other 7.3 9.7 (2.4)
693.1 694.8 (1.7) (0.2)
Selling, general and
administrative
expenses 520.3 528.5 8.2 1.6
Depreciation 18.0 16.7 (1.3)
Amortization 0.3 0.5 0.2
Loan and lease
underwriting income,
net (0.2) (5.0) (4.8)
Restructuring and
related impairment
charges, net -- -- --
Other losses (gains) 24.0 (1.1) (25.1)
Operating income 130.7 155.2 (24.5) (15.8)
Floorplan interest
expense (16.9) (19.5) 2.6 13.3
Interest expense -
IRS settlement (1.2) -- (1.2)
Other interest expense (15.9) (13.7) (2.2) (16.1)
Interest income 0.5 1.8 (1.3) (72.2)
Other income 11.9 4.8 7.1
Income from continuing
operations before
income taxes $109.1 $128.6 $(19.5) (15.2)
Retail vehicle unit
sales:
New 94,886 95,228 (342) (0.4)
Used 54,618 55,375 (757) (1.4)
149,504 150,603 (1,099) (0.7)
Revenue per vehicle
retailed:
New $ 29,763 $ 28,635 $1,128 3.9
Used $ 15,495 $ 15,543 $ (48) (0.3)
Gross profit per
vehicle retailed:
New $2,120 $2,259 $(139) (6.2)
Used $1,532 $1,578 $ (46) (2.9)
Finance and
insurance $928 $854 $74 8.7
Operating Highlights Year Ended December 31,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $ 11,791.2 $11,694.8 $96.4 0.8
Used vehicle 4,492.3 4,709.8 (217.5) (4.6)
Parts and service 2,457.2 2,453.3 3.9 0.2
Finance and
insurance 601.1 563.7 37.4 6.6
Other 39.3 56.9 (17.6)
$ 19,381.1 $19,478.5 $(97.4) (0.5)
Gross profit:
New vehicle $852.3 $ 909.9 $(57.6) (6.3)
Used vehicle 403.1 394.7 8.4 2.1
Parts and service 1,072.2 1,068.3 3.9 0.4
Finance and
insurance 601.1 563.7 37.4 6.6
Other 34.1 49.9 (15.8) --
2,962.8 2,986.5 (23.7) (0.8)
Selling, general and
administrative
expenses 2,157.7 2,200.9 43.2 2.0
Depreciation 69.4 67.3 (2.1)
Amortization 1.6 2.4 0.8
Loan and lease
underwriting income,
net (6.3) (13.9) (7.6)
Restructuring and
related impairment
charges, net -- -- --
Other losses (gains) 26.3 3.4 (22.9)
Operating income 714.1 726.4 (12.3) (1.7)
Floorplan interest
expense (71.4) (74.8) 3.4 4.5
Interest expense -
IRS settlement (12.1) - (12.1)
Other interest expense (59.7) (50.4) (9.3) (18.5)
Interest income 3.3 10.4 (7.1) (68.3)
Other income 16.8 6.4 10.4
Income from continuing
operations before
income taxes $591.0 $ 618.0 $(27.0) (4.4)
Retail vehicle unit
sales:
New 414,765 426,706 (11,941) (2.8)
Used 244,926 247,365 (2,439) (1.0)
659,691 674,071 (14,380) (2.1)
Revenue per vehicle
retailed:
New $28,429 $27,407 $1,022 3.7
Used $15,131 $15,308 $(177) (1.2)
Gross profit per
vehicle retailed:
New $2,055 $ 2,132 $(77) (3.6)
Used $1,638 $ 1,629 $9 0.6
Finance and
insurance $ 911 $836 $75 9.0
Operating Percentages Three Months Ended Year Ended
December 31, December 31,
% 2003 % 2002 % 2003 % 2002
Revenue mix percentages:
New vehicle 61.4 60.3 60.8 60.0
Used vehicle 22.3 23.4 23.2 24.2
Parts and service 13.0 13.1 12.7 12.6
Finance and insurance 3.0 2.8 3.1 2.9
Other 0.3 0.4 0.2 0.3
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross profit:
New vehicle 7.1 7.9 7.2 7.8
Used vehicle - retail 9.9 10.2 10.8 10.6
Parts and service 43.7 43.5 43.6 43.5
Total 15.1 15.4 15.3 15.3
Selling, general and
administrative
expenses 11.3 11.7 11.1 11.3
Operating income 2.8 3.4 3.7 3.7
Operating items as a
percentage of total
gross profit:
Selling, general and
administrative
expenses 75.1 76.1 72.8 73.7
Operating income 18.9 22.3 24.1 24.3
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in million, except per share data)
Cash Flow Three Months Ended Year Ended
Information December 31, December 31,
2003 2002 2003 2002
Capital
expenditures,
excluding property
operating lease
buy-outs $44.1 $63.5 $123.5 $163.4
Property operating
lease buy-outs $-- $8.8 $9.8 $19.8
Stock repurchases $110.0 $190.9 $575.2 $389.9
Acquisitions $1.0 $2.3 $49.1 $166.5
Proceeds from
exercises of
stock options $14.8 $3.1 $116.7 $78.7
Floorplan Assistance
and Expense Three Months Ended Year Ended
December 31, December 31,
2003 2002 Variance 2003 2002 Variance
Floorplan
assistance
(included in
cost of
operations) $27.8 $31.8 $(4.0) $ 116.5 $ 127.9 $(11.4)
Floorplan
interest
expense (16.9) (19.5) 2.6 (71.4) (74.8) 3.4
Net inventory
carrying
benefit $10.9 $12.3 $(1.4) $45.1 $53.1 $(8.0)
Balance Sheet
and Other
Highlights
December 31, December 31,
2003 2002
Cash and cash
equivalents $170.8 $176.2
Inventory $2,919.3 $2,598.4
Floorplan notes
payable $2,809.8 $2,302.5
Non-vehicle
debt $824.4 $651.3
Equity $3,949.8 $3,910.2
New days supply
(industry
standard of
selling days,
including
fleet) 71 days 63 days
Used days supply
(trailing 30
days) 41 days 40 days
Comparable Basis
Reconciliations Diluted
Net Income Earnings Per Share
Year Ended Year Ended
December 31, December 31,
2003 2002 2003 2002
Net income, as
reported $479.2 $381.6 $1.67 $1.19
Discontinued
operations 12.3 -- 0.04 --
Cumulative effect
of accounting
change 14.6 -- 0.05 --
Net income from
continuing
operations, as
reported 506.1 381.6 1.76 1.19
Income tax benefit
from IRS
settlement (127.5) -- (0.44) --
Net income,
excluding income
tax benefit from
IRS Settlement $378.6 $381.6 $1.32 $1.19
Three Months Ended December 31, 2003
Diluted
Operating Net Earnings
Income Income per Share
Reported earnings
from continuing
operations $130.7 $79.0 $0.28
Gain from income
tax adjustments -- (10.3) (0.04)
Gain on sale of
non-core equity
investment -- (6.2) (0.02)
Impairment loss on
converted
megastores 27.5 16.9 0.06
Adjusted earnings
from continuing
operations $158.2 $79.4 $0.28
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended December 31,
2003 2002 $ Variance % Variance
Revenue:
New vehicle $2,767.2 $2,696.5 $70.7 2.6
Used vehicle 997.8 1,040.9 (43.1) (4.1)
Parts and service 591.9 583.4 8.5 1.5
Finance and insurance 135.6 127.5 8.1 6.4
Other 5.7 8.9 (3.2)
$4,498.2 $4,457.2 $41.0 0.9
Gross profit:
New vehicle $197.2 $213.1 $(15.9) (7.5)
Used vehicle 81.4 82.1 (0.7) (0.9)
Parts and service 258.3 253.9 4.4 1.7
Finance and insurance 135.6 127.5 8.1 6.4
Other 5.4 7.5 (2.1)
$677.9 $684.1 $(6.2) (0.9)
Retail vehicle
unit sales:
New 93,143 94,078 (935) (1.0)
Used 53,679 54,470 (791) (1.5)
146,822 148,548 (1,726) (1.2)
Revenue per vehicle
retailed:
New $29,709 $ 28,662 $1,047 3.7
Used $15,500 $ 15,587 $ (87) (0.6)
Gross profit per
vehicle retailed:
New $2,117 $2,265 $(148) (6.5)
Used $1,535 $1,588 $ (53) (3.3)
Finance and insurance $924 $858 $66 7.7
Operating Highlights Year Ended December 31,
2003 2002 $ Variance % Variance
Revenue
New vehicle $11,541.9 $11,552.7 $(10.8) (0.1)
Used vehicle 4,357.5 4,615.7 (258.2) (5.6)
Parts and service 2,411.4 2,408.1 3.3 0.1
Finance and
insurance 588.6 555.8 32.8 5.9
Other 24.0 37.4 (13.4)
$18,923.4 $19,169.7 $(246.3) (1.3)
Gross profit
New vehicle $835.9 $899.6 $ (63.7) (7.1)
Used vehicle 390.5 387.1 3.4 0.9
Parts and service 1,051.3 1,048.7 2.6 0.2
Finance and
insurance 588.6 555.8 32.8 5.9
Other 21.6 33.4 (11.8)
$2,887.9 $2,924.6 $ (36.7) (1.3)
Retail vehicle
unit sales:
New 406,467 421,151 (14,684) (3.5)
Used 239,750 242,288 (2,538) (1.0)
646,217 663,439 (17,222) (2.6)
Revenue per vehicle
retailed:
New $28,396 $27,431 $965 3.5
Used $15,136 $15,361 $(225) (1.5)
Gross profit per
vehicle retailed:
New $2,057 $2,136 $(79) (3.7)
Used $1,643 $1,641 $2 0.1
Finance and insurance $ 911 $ 838 $73 8.7
Operating Percentages Three Months Ended Year Ended
December 31, December 31,
% 2003 % 2002 % 2003 % 2002
Revenue mix percentages:
New vehicle 61.5 60.5 61.0 60.3
Used vehicle 22.2 23.4 23.0 24.1
Parts and service 13.2 13.1 12.7 12.6
Finance and insurance 3.0 2.9 3.1 2.9
Other 0.1 0.1 0.2 0.1
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.1 7.9 7.2 7.8
Used vehicle - retail 9.9 10.2 10.9 10.7
Parts and service 43.6 43.5 43.6 43.5
Total 15.1 15.3 15.3 15.3
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