AutoNation Reports First-Quarter 2005
* Record first-quarter operating income of $199 million, up 9% * Repurchased $95 million in senior notes, reducing net income $.03 per share in the quarter * Excluding $.03 per share impact of senior note repurchases, first- quarter adjusted EPS from continuing operations was $.36, up 13% from last year
FORT LAUDERDALE, Fla., April 28 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2005 first- quarter net income from continuing operations of $88 million or $0.33 per share, compared to year-ago net income from continuing operations of $89 million or $0.32 per share. During the quarter, the Company repurchased $95 million in face value of its senior notes, incurring repurchase costs of approximately $9 million after tax, or $.03 per share. Excluding this impact, the Company's first-quarter adjusted net income from continuing operations was $97 million or $0.36 per share, an increase of 13% over the prior year, primarily as a result of strong revenue growth in parts and service, gross margin increases in new and used vehicles, continued leverage of the Company's cost structure, and the repurchase of common stock, partially offset by higher floorplan interest expense due to rising rates.
First-quarter 2005 revenue totaled $4.6 billion, up slightly from a year ago. Operating income was a record for the first-quarter at $199 million, an increase of 9% compared to the prior year.
Commenting on first-quarter 2005 performance, AutoNation Chairman and Chief Executive Officer Mike Jackson said, "We are especially pleased with our ability to grow operating income by 9% and adjusted EPS by 13% in a challenging new vehicle environment. AutoNation's performance in the first- quarter was driven by an increase in new vehicle gross margins, greatly improved used vehicle pricing, and strong parts and service growth combined with our continued discipline in cost and inventory management and redeployment of cash. During the first-quarter, we took advantage of our financial flexibility to capitalize on an opportunity to retire a significant portion of our most expensive debt." At the end of first-quarter 2005, AutoNation's new vehicle inventory level was 60 days supply versus 67 days at the end of first-quarter 2004, representing a decline of 12,000 units, or 13%.
AutoNation will discuss these results and information regarding the Company's business and operating environment during a conference call and audio webcast this morning at 11:00 a.m. Eastern Time. To listen to the live conference call, dial (800) 762-6067 or listen to the audio webcast via the Internet at http://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 2:30 p.m. Eastern Time through May 5, 2005 by calling (800) 475-6701 (access code #778614) or via the Internet as outlined above.
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and a component of the Standard and Poor's 500 Index. In 2004 AutoNation was named America's Most Admired Automotive Retailer for the 4th year in a row. AutoNation has approximately 27,000 full- time employees and owns and operates 352 new vehicle franchises in 17 states. For additional information, please visit http://corp.autonation.com/ or http://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 March 31,
2005 2004
Revenue:
New vehicle $2,705.8 $2,740.3
Used vehicle 1,091.6 1,075.3
Parts and service 653.9 618.4
Finance and insurance 147.9 148.3
Other 21.1 23.6
Total revenue 4,620.3 4,605.9
Cost of sales:
New vehicle 2,507.2 2,543.1
Used vehicle 976.2 970.0
Parts and service 370.8 347.9
Other 9.1 9.7
Total cost of sales 3,863.3 3,870.7
Gross profit 757.0 735.2
Selling, general and
administrative expenses 537.2 532.4
Depreciation and amortization 20.5 18.7
Other losses 0.1 1.8
Operating income 199.2 182.3
Floorplan interest expense (25.8) (16.9)
Other interest expense (17.6) (19.3)
Other interest expense - senior
note repurchases (14.4) --
Interest income 1.5 0.7
Other losses (1.0) (0.5)
Income from continuing
operations before income taxes 141.9 146.3
Provision for income taxes 53.6 57.8
Net income from continuing
operations 88.3 88.5
Income (loss) from discontinued
operations, net of income taxes 8.7 (1.2)
Net income $97.0 $87.3
Diluted earnings per share:
Continuing operations $0.33 $0.32
Discontinued operations $0.03 --
Net income $0.36 $0.32
Weighted average common and
common equivalent shares
outstanding 270.3 275.7
Common shares outstanding 262.7 267.3
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
2005 2004 $ Variance % Variance
Revenue:
New vehicle $2,705.8 $2,740.3 $(34.5) (1.3)
Retail used vehicle 900.5 888.6 11.9 1.3
Wholesale 191.1 186.7 4.4 2.4
Used vehicle 1,091.6 1,075.3 16.3 1.5
Parts and service 653.9 618.4 35.5 5.7
Finance and insurance 147.9 148.3 (0.4) (0.3)
Other 21.1 23.6 (2.5)
$4,620.3 $4,605.9 $14.4 0.3
Gross profit:
New vehicle $198.6 $197.2 $1.4 0.7
Retail used vehicle 112.2 104.6 7.6 7.3
Wholesale 3.2 0.7 2.5
Used vehicle 115.4 105.3 10.1 9.6
Parts and service 283.1 270.5 12.6 4.7
Finance and insurance 147.9 148.3 (0.4) (0.3)
Other 12.0 13.9 (1.9)
757.0 735.2 21.8 3.0
Selling, general and
administrative expenses 537.2 532.4 (4.8) (0.9)
Depreciation and
amortization 20.5 18.7 (1.8)
Other losses (gains) 0.1 1.8 1.7
Operating income 199.2 182.3 16.9 9.3
Floorplan interest expense (25.8) (16.9) (8.9)
Other interest expense (17.6) (19.3) 1.7
Other interest expense -
senior note repurchases (14.4) -- (14.4)
Interest income 1.5 0.7 0.8
Other income (1.0) (0.5) (0.5)
Income from continuing
operations before
income taxes $141.9 $146.3 $(4.4) (3.0)
Retail vehicle unit sales:
New 92,342 95,572 (3,230) (3.4)
Used 60,300 61,673 (1,373) (2.2)
152,642 157,245 (4,603) (2.9)
Revenue per vehicle
retailed:
New $29,302 $28,673 $629 2.2
Used $14,934 $14,408 $526 3.7
Gross profit per vehicle
retailed:
New $2,151 $2,063 $88 4.3
Used $1,861 $1,696 $165 9.7
Finance and insurance $969 $943 $26 2.8
Operating Percentages Three Months Ended
March 31,
% 2005 % 2004
Revenue mix percentages:
New vehicle 58.6 59.5
Used vehicle 23.6 23.3
Parts and service 14.2 13.4
Finance and insurance 3.2 3.2
Other 0.4 0.6
100.0 100.0
Gross profit mix percentages:
New vehicle 26.2 26.8
Used vehicle 15.2 14.3
Parts and service 37.4 36.8
Finance and insurance 19.5 20.2
Other 1.7 1.9
100.0 100.0
Operating items as a
percentage of revenue:
Gross profit:
New vehicle 7.3 7.2
Used vehicle - retail 12.5 11.8
Parts and service 43.3 43.7
Total 16.4 16.0
Selling, general and
administrative expenses 11.6 11.6
Operating income 4.3 4.0
Operating items as a
percentage of total
gross profit:
Selling, general and
administrative expenses 71.0 72.4
Operating income 26.3 24.8
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Information Three Months Ended March 31,
2005 2004
Capital expenditures,
excluding property
operating lease buy-outs $20.5 $21.4
Property operating lease buy-
outs $-- $77.7
Stock repurchases $70.9 $58.1
Acquisitions $2.1 $87.9
Proceeds from exercises of
stock options $23.0 $12.7
Senior note repurchases $106.0 $--
Floorplan Assistance and Expense Three Months Ended March 31,
2005 2004 Variance
Floorplan assistance (included
in cost of sales) $27.4 $26.4 $1.0
Floorplan interest expense (25.8) (16.9) (8.9)
Net floorplan benefit $1.6 $9.5 $(7.9)
Balance Sheet and Other Highlights
March 31, December 31, March 31,
2005 2004 2004
Cash and cash equivalents $28.7 $107.5 $34.5
Inventory $2,856.5 $2,623.5 $3,040.2
Floorplan notes payable $2,655.7 $2,501.1 $2,868.4
Non-vehicle debt $686.4 $812.6 $821.8
Equity $4,322.4 $4,263.1 $3,990.4
New days supply (industry
standard of selling days,
including fleet) 60 days 53 days 67 days
Used days supply (trailing 30
days) 39 days 37 days 38 days
Brand Mix - New Vehicle Revenue %
Three Months Ended March 31,
2005 2004
Detroit 3:
Ford (Ford, Lincoln-Mercury) 19.2 21.8
General Motors
(Chevrolet, Pontiac, Buick,
Cadillac, GMC) 17.1 19.1
Chrysler (Chrysler, Jeep, Dodge) 9.1 9.2
Detroit 3 total 45.4 50.1
Premium Luxury:
Mercedes 8.9 8.6
BMW 5.0 3.9
Lexus 3.1 3.3
Other premium luxury
(Jaguar, Rolls Royce) 1.1 1.2
Premium Luxury total 18.1 17.0
Imports:
Honda 7.5 7.0
Toyota 12.2 11.2
Nissan 10.3 8.9
Other imports 6.5 5.8
Import total 36.5 32.9
100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations
Three Months Ended March 31,
Net Diluted Earnings
Income Per Share
2005 2004 2005 2004
As reported $97.0 $87.3 $0.36 $0.32
Discontinued operations -
store divestitures, net of
income taxes 3.0 1.2 $0.01 --
Discontinued operations - tax
adjustments (11.7) -- $(0.04) --
From continuing operations, as
reported 88.3 88.5 $0.33 $0.32
Senior note repurchases 8.7 -- $0.03
Adjusted $97.0 $88.5 $0.36 $0.32
Business Assumptions Impacting Long-term Average EPS Growth Target of
10% to 12% Per Year:
U.S. light vehicle annual unit sales intensely competitive, high 16
million units
SGA % reduction (over 2005 and 2006) approximately 110 bp
(SGA % of gross profit less
floorplan interest expense)
Continued opportunistic redeployment share repurchase, debt
of cash flow reduction, capital expenditures
and acquisitions
Targeted return on incremental
invested capital approximately 15% after-tax
Note
The Company's parts and service departments provide reconditioning repair work for used vehicles acquired by the used vehicle department and minor preparatory work for new vehicles. The parts and service departments charge the new and used departments as if they were third parties in order to account for total activity performed by that department. The Company has determined that the revenue and related cost of sales of both new and used vehicles had not been reduced by the intracompany charge for such work. Commencing with the second quarter of 2004, the Company is making the adjustment and has revised amounts previously reported by reducing new and used vehicle revenue and cost of sales by the amount of the intracompany charge. The adjustments have no impact on total gross profit, operating income, income from continuing operations, net income, earnings per share, cash flows, or financial position for any period or their respective trends.
The effect of the adjustments was to reduce both revenue and cost of sales for new vehicles by $21 million for the three months ended March 31, 2004, respectively, and for used vehicles by $50 million for the same period, respectively. Accordingly, the Company's revenue-based performance metrics, such as revenue per vehicle, gross profit as a percent of revenue, and SG&A as a percent of revenue, also have been revised. These revisions do not have a material impact on the amounts for any period or respective trends.
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
2005 2004 $ Variance % Variance
Revenue:
New vehicle $2,644.5 $2,736.9 $(92.4) (3.4)
Retail used vehicle 882.3 887.4 (5.1) (0.6)
Wholesale 183.3 185.9 (2.6) (1.4)
Used vehicle 1,065.6 1,073.3 (7.7) (0.7)
Parts and service 642.2 617.4 24.8 4.0
Finance and insurance 145.8 148.7 (2.9) (2.0)
Other 8.3 8.7 (0.4) (4.6)
$4,506.4 $4,585.0 $(78.6) (1.7)
Gross profit:
New vehicle $193.8 $197.2 $(3.4) (1.7)
Retail used vehicle 110.6 104.5 6.1 5.8
Wholesale 2.6 0.7 1.9
Used vehicle 113.2 105.2 8.0 7.6
Parts and service 277.4 270.0 7.4 2.7
Finance and insurance 145.8 148.7 (2.9) (2.0)
Other 6.7 7.1 (0.4) (5.6)
$736.9 $728.2 $8.7 1.2
Retail vehicle unit sales:
New 90,809 95,429 (4,620) (4.8)
Used 59,510 61,567 (2,057) (3.3)
150,319 156,996 (6,677) (4.3)
Revenue per vehicle
retailed:
New $29,122 $28,680 $442 1.5
Used $14,826 $14,414 $412 2.9
Gross profit per vehicle
retailed:
New $2,134 $2,066 $68 3.3
Used $1,859 $1,697 $162 9.5
Finance and insurance $970 $947 $23 2.4
Operating Percentages Three Months Ended
March 31,
% 2005 % 2004
Revenue mix percentages:
New vehicle 58.7 59.7
Used vehicle 23.6 23.4
Parts and service 14.3 13.5
Finance and insurance 3.2 3.2
Other 0.2 0.2
100.0 100.0
Gross profit mix percentages:
New vehicle 26.3 27.1
Used vehicle 15.4 14.4
Parts and service 37.6 37.1
Finance and insurance 19.8 20.4
Other 0.9 1.0
100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.3 7.2
Used vehicle - retail 12.5 11.8
Parts and service 43.2 43.7
Total 16.4 15.9
AUTONATION, INC.
UNAUDITED QUARTERLY CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
The following unaudited quarterly consolidated income statements for the
periods presented have been adjusted to classify certain stores as
discontinued operations as of March 31, 2005.
Three Months Ended Year Ended
March 31, June 30, Sept. 30, Dec. 31, Dec. 31,
2004 2004 2004 2004 2004
Revenue:
New vehicle $2,740.3 $2,995.4 $3,130.8 $2,962.2 $11,828.7
Retail used
vehicle 888.6 892.0 864.8 859.0 3,504.4
Wholesale 186.7 202.6 212.9 196.1 798.3
Used vehicle 1,075.3 1,094.6 1,077.7 1,055.1 4,302.7
Parts and service 618.4 619.2 627.0 626.6 2,491.2
Finance and
insurance 148.3 155.5 160.2 151.6 615.6
Other 23.6 22.5 21.6 21.5 89.2
Total revenue 4,605.9 4,887.2 5,017.3 4,817.0 19,327.4
Cost of sales:
New vehicle 2,543.1 2,783.9 2,913.2 2,745.2 10,985.4
Retail used
vehicle 784.0 790.7 768.2 762.4 3,105.3
Wholesale 186.0 201.1 213.7 196.6 797.4
Used vehicle 970.0 991.8 981.9 959.0 3,902.7
Parts and service 347.9 345.3 355.3 352.3 1,400.8
Other 9.7 10.6 10.0 9.4 39.7
Total cost of sales 3,870.7 4,131.6 4,260.4 4,065.9 16,328.6
Gross profit 735.2 755.6 756.9 751.1 2,998.8
Selling, general and
administrative
expenses 532.4 541.8 540.2 530.9 2,145.3
Depreciation and
amortization 18.7 19.7 20.2 24.1 82.7
Other losses (gains) 1.8 (1.4) 0.9 2.7 4.0
Operating income 182.3 195.5 195.6 193.4 766.8
Floorplan interest
expense (16.9) (20.7) (20.9) (22.4) (80.9)
Other interest
expense (19.3) (19.7) (18.4) (19.6) (77.0)
Interest income 0.7 0.7 0.9 1.2 3.5
Other losses (0.5) (0.9) (1.8) (1.7) (4.9)
Income from
continuing
operations before
income taxes 146.3 154.9 155.4 150.9 607.5
Provision for income
taxes 57.8 58.6 59.6 34.5 210.5
Net income from
continuing
operations 88.5 96.3 95.8 116.4 397.0
Income (loss) from
discontinued
operations, net of
income taxes (1.2) (4.2) (3.4) 45.4 36.6
Net income $87.3 $92.1 $92.4 $161.8 $433.6
Diluted earnings per
share:
Continuing
operations $0.32 $0.35 $0.35 $0.43 $1.46
Discontinued
operations -- $(0.02) $(0.01) $0.17 $0.13
Net income $0.32 $0.34 $0.34 $0.60 $1.59
Weighted average
common and common
equivalent shares
outstanding 275.7 273.2 270.6 270.3 272.5
Common shares
outstanding 267.3 267.7 264.4 264.3 264.3
Retail vehicle unit
sales:
New 95,572 105,256 109,004 98,438 408,270
Used 61,673 61,274 59,483 56,307 238,737