AutoNation Reports Second-Quarter 2005 Earnings From Continuing Operations
* Total store revenue growth of 4% * Same store revenue growth of 2% for new vehicles, 4% for retail used vehicles, 7% for parts and service and 4% for finance and insurance
FORT LAUDERDALE, Fla., July 28 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2005 second- quarter net income from continuing operations of $106 million or $0.40 per share, compared to year-ago net income from continuing operations of $97 million or $0.35 per share, an increase of 14%. This increase was primarily a result of solid growth in both revenue and gross profit coupled with continued share repurchase, resolution of various tax matters and leverage of the Company's cost structure.
Second-quarter 2005 revenue totaled $5.0 billion, an increase of 4% compared to the year-ago period resulting from revenue growth in new vehicles of 3%, retail used vehicles of 4%, parts and service of 8% and finance and insurance of 4%. Selling, general and administrative expense (SG&A) in the quarter was $556 million or 70.8% of total gross profit, a 70 basis point improvement versus prior year. Operating income for the second quarter was $210 million, a second-quarter record, up 7% versus prior year.
Commenting on the quarter, Mike Jackson, AutoNation Chairman and Chief Executive Officer, stated, "AutoNation delivered solid results in the second quarter in every area of the business, including new and used vehicles, finance and insurance and we're especially pleased with our high-margin parts and service business. We also continued to make strides on the cost side of the equation." At the end of the second quarter 2005, AutoNation's new vehicle inventory level was 51 days supply versus 74 days at the end of second quarter 2004, representing a decline of 27,000 units or 26%.
Discontinued operations in the second quarter included a benefit of $0.36 per share from the resolution of various tax matters under audit from prior years.
For the six-month period ended June 30, 2005, the Company earned net income from continuing operations of $195 million or $0.72 per share. Excluding senior note repurchase cost, earnings per share from continuing operations for the six-month period ended June 30, 2005 were $204 million or $0.76 per share, compared to $0.68 per share in the prior year, an increase of 12%. The Company's revenue for the six-month period ended June 30, 2005 totaled $9.6 billion, compared to $9.4 billion in the prior year.
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and a component of the Standard and Poor's 500 Index. In 2004 AutoNation was named America's Most Admired Automotive Retailer for the 4th year in a row. AutoNation has approximately 27,000 full- time employees and owns and operates 349 new vehicle franchises in 17 states. For additional information, please visit http://corp.autonation.com/ or http://www.autonation.com/ , where more than 100,000 vehicles are available for sale.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenue:
New vehicle $3,052.0 $2,966.5 $5,736.6 $5,678.7
Used vehicle 1,143.7 1,082.0 2,224.4 2,145.1
Parts and service 658.3 611.4 1,303.7 1,222.0
Finance and insurance 160.8 154.2 307.6 301.4
Other 23.6 22.4 44.6 46.0
Total revenue 5,038.4 4,836.5 9,616.9 9,393.2
Cost of sales:
New vehicle 2,835.2 2,756.7 5,322.5 5,273.4
Used vehicle 1,035.9 980.2 2,002.0 1,938.8
Parts and service 370.6 340.6 736.2 683.8
Other 11.4 10.5 20.6 20.3
Total cost of sales 4,253.1 4,088.0 8,081.3 7,916.3
Gross profit 785.3 748.5 1,535.6 1,476.9
Selling, general and
administrative expenses 555.9 534.9 1,086.1 1,060.6
Depreciation and amortization 20.5 19.5 40.8 38.0
Other (income) expenses (0.7) (1.4) (0.6) 0.4
Operating income 209.6 195.5 409.3 377.9
Floorplan interest expense (28.8) (20.3) (54.2) (36.9)
Other interest expense (15.4) (19.7) (33.0) (39.0)
Other interest expense -
senior note repurchases (0.7) -- (15.1) --
Interest income 1.4 0.7 2.9 1.4
Other gains (losses) 0.7 (1.0) (0.2) (1.4)
Income from continuing
operations before income
taxes 166.8 155.2 309.7 302.0
Provision for income taxes 61.0 58.7 115.0 116.7
Net income from continuing
operations 105.8 96.5 194.7 185.3
Income (loss) from
discontinued operations, net
of income taxes 89.0 (4.4) 97.1 (5.9)
Net income $194.8 $92.1 $291.8 $179.4
Diluted earnings per share:
Continuing operations $0.40 $0.35 $0.72 $0.68
Discontinued operations $0.33 $(0.02) $0.36 $(0.02)
Net income $0.73 $0.34 $1.08 $0.65
Weighted average common and
common equivalent shares
outstanding 267.8 273.2 269.0 274.5
Common shares outstanding 261.2 267.7 261.2 267.7
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended June 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $3,052.0 $2,966.5 $85.5 2.9
Retail used vehicle 919.5 881.7 37.8 4.3
Wholesale 224.2 200.3 23.9 11.9
Used vehicle 1,143.7 1,082.0 61.7 5.7
Parts and service 658.3 611.4 46.9 7.7
Finance and insurance 160.8 154.2 6.6 4.3
Other 23.6 22.4 1.2
Total revenue $5,038.4 $4,836.5 $201.9 4.2
Gross profit:
New vehicle $216.8 $209.8 $7.0 3.3
Retail used vehicle 107.3 100.2 7.1 7.1
Wholesale 0.5 1.6 (1.1)
Used vehicle 107.8 101.8 6.0 5.9
Parts and service 287.7 270.8 16.9 6.2
Finance and insurance 160.8 154.2 6.6 4.3
Other 12.2 11.9 0.3
Total gross profit 785.3 748.5 36.8 4.9
Selling, general and
administrative expenses 555.9 534.9 (21.0) (3.9)
Depreciation and amortization 20.5 19.5 (1.0)
Other (income) expenses (0.7) (1.4) (0.7)
Operating income 209.6 195.5 14.1 7.2
Floorplan interest expense (28.8) (20.3) (8.5)
Other interest expense (15.4) (19.7) 4.3
Other interest expense - senior
note repurchases (0.7) -- (0.7)
Interest income 1.4 0.7 0.7
Other gains (losses) 0.7 (1.0) 1.7
Income from continuing
operations before income
taxes $166.8 $155.2 $11.6 7.5
Retail vehicle unit sales:
New 104,164 104,201 (37) --
Used 60,554 60,472 82 0.1
164,718 164,673 45 --
Revenue per vehicle retailed:
New $29,300 $28,469 $831 2.9
Used $15,185 $14,580 $605 4.1
Gross profit per vehicle
retailed:
New $2,081 $2,013 $68 3.4
Used $1,772 $1,657 $115 6.9
Finance and insurance $976 $936 $40 4.3
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Six Months Ended June 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $5,736.6 $5,678.7 $57.9 1.0
Retail used vehicle 1,811.3 1,761.0 50.3 2.9
Wholesale 413.1 384.1 29.0 7.6
Used vehicle 2,224.4 2,145.1 79.3 3.7
Parts and service 1,303.7 1,222.0 81.7 6.7
Finance and insurance 307.6 301.4 6.2 2.1
Other 44.6 46.0 (1.4)
Total revenue $9,616.9 $9,393.2 $223.7 2.4
Gross profit:
New vehicle $414.1 $405.3 $8.8 2.2
Retail used vehicle 218.7 203.9 14.8 7.3
Wholesale 3.7 2.4 1.3
Used vehicle 222.4 206.3 16.1 7.8
Parts and service 567.5 538.2 29.3 5.4
Finance and insurance 307.6 301.4 6.2 2.1
Other 24.0 25.7 (1.7)
Total gross profit 1,535.6 1,476.9 58.7 4.0
Selling, general and
administrative expenses 1,086.1 1,060.6 (25.5) (2.4)
Depreciation and amortization 40.8 38.0 (2.8)
Other (income) expenses (0.6) 0.4 1.0
Operating income 409.3 377.9 31.4 8.3
Floorplan interest expense (54.2) (36.9) (17.3)
Other interest expense (33.0) (39.0) 6.0
Other interest expense - senior
note repurchases (15.1) -- (15.1)
Interest income 2.9 1.4 1.5
Other gains (losses) (0.2) (1.4) 1.2
Income from continuing
operations before income
taxes $309.7 $302.0 $7.7 2.5
Retail vehicle unit sales:
New 195,748 198,800 (3,052) (1.5)
Used 120,173 121,396 (1,223) (1.0)
315,921 320,196 (4,275) (1.3)
Revenue per vehicle retailed:
New $29,306 $28,565 $741 2.6
Used $15,072 $14,506 $566 3.9
Gross profit per vehicle
retailed:
New $2,115 $2,039 $76 3.7
Used $1,820 $1,680 $140 8.3
Finance and insurance $974 $941 $33 3.5
Three Months Ended Six Months Ended
Operating Percentages June 30, June 30,
% 2005 % 2004 % 2005 % 2004
Revenue mix percentages:
New vehicle 60.6 61.3 59.7 60.5
Used vehicle 22.7 22.4 23.1 22.8
Parts and service 13.1 12.6 13.6 13.0
Finance and insurance 3.2 3.2 3.2 3.2
Other 0.4 0.5 0.4 0.5
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 27.6 28.0 27.0 27.4
Used vehicle 13.7 13.6 14.5 14.0
Parts and service 36.6 36.2 37.0 36.4
Finance and insurance 20.5 20.6 20.0 20.4
Other 1.6 1.6 1.5 1.8
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.1 7.1 7.2 7.1
Used vehicle - retail 11.7 11.4 12.1 11.6
Parts and service 43.7 44.3 43.5 44.0
Total 15.6 15.5 16.0 15.7
Selling, general and
administrative expenses 11.0 11.1 11.3 11.3
Operating income 4.2 4.0 4.3 4.0
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 70.8 71.5 70.7 71.8
Operating income 26.7 26.1 26.7 25.6
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Three Months Six Month Ended
Cash Flow Information Ended June 30, June 30,
2005 2004 2005 2004
Capital expenditures, excluding
property operating lease
buy-outs $36.8 $33.3 $57.3 $54.7
Property operating lease
buy-outs $10.3 $ -- $10.3 $77.7
Stock repurchases $77.7 $49.8 $148.6 $107.9
Acquisitions $5.9 $66.5 $8.0 $154.4
Proceeds from exercises of
stock options $29.6 $37.2 $52.7 $49.9
Senior note repurchases $6.4 $ -- $112.4 $ --
Floorplan Assistance Three Months Ended Six Month Ended
and Expense June 30, June 30,
2005 2004 Variance 2005 2004 Variance
Floorplan assistance
(included in cost of
sales) $31.5 $29.9 $1.6 $58.6 $56.0 $2.6
Floorplan interest expense (28.8) (20.3) (8.5) (54.2) (36.9) (17.3)
Net floorplan benefit $2.7 $9.6 $(6.9) $4.4 $19.1 $(14.7)
Balance Sheet and Other Highlights
June 30, December 31, June 30,
2005 2004 2004
Cash and cash equivalents $47.8 $107.7 $60.6
Inventory $2,623.6 $2,588.7 $3,227.3
Floorplan notes payable $2,382.6 $2,470.0 $3,055.7
Non-vehicle debt $677.3 $812.6 $821.8
Equity $4,476.6 $4,263.1 $4,083.0
New days supply (industry
standard of selling
days, including fleet) 51 days 53 days 74 days
Used days supply (trailing
30 days) 42 days 37 days 44 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Detroit 3:
Ford (Ford, Lincoln-Mercury) 18.0 20.5 18.4 21.1
General Motors (Chevrolet,
Pontiac, Buick, Cadillac,
GMC) 18.6 19.8 17.6 19.4
Chrysler (Chrysler, Jeep,
Dodge) 8.8 9.6 8.8 9.3
Detroit 3 total 45.4 49.9 44.8 49.8
Premium Luxury:
Mercedes 8.8 8.3 8.9 8.5
BMW 4.6 4.8 4.7 4.4
Lexus 3.0 3.1 3.1 3.2
Other premium luxury
(Jaguar, Rolls Royce) 1.1 1.1 1.0 1.1
Premium Luxury total 17.5 17.3 17.7 17.2
Imports:
Honda 7.8 7.3 7.7 7.2
Toyota 12.4 11.4 12.5 11.3
Nissan 9.7 8.6 10.0 8.8
Other imports 7.2 5.5 7.3 5.7
Import total 37.1 32.8 37.5 33.0
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations
Three Months Ended June 30,
Diluted Earnings
Net Income Per Share
2005 2004 2005 2004
As reported $194.8 $92.1 $0.73 $0.34
Discontinued operations - store
divestitures, net of income
taxes 6.7 4.4 $0.03 0.02
Discontinued operations - tax
adjustments (95.7) -- $(0.36) --
From continuing operations, as
reported $105.8 $96.5 $0.40 $0.35
Six Months Ended June 30,
Net Income Diluted Earnings
Per Share
2005 2004 2005 2004
As reported $291.8 $179.4 $1.08 $0.65
Discontinued operations - store
divestitures, net of income
taxes 10.3 5.9 $0.04 0.02
Discontinued operations - tax
adjustments (107.4) -- $(0.40) --
From continuing operations, as
reported 194.7 185.3 $0.72 $0.68
Senior note repurchases 9.1 0.03
Adjusted $203.8 $185.3 $0.76 $0.68
Business Assumptions Impacting Long-term Average EPS Growth Target
of 10% to 12% Per Year:
U.S. light vehicle annual unit intensely competitive, high 16
sales million units
SGA % reduction (over 2005 and
2006)
(SGA % of gross profit less
floorplan interest expense) approximately 110 bp
Continued opportunistic share repurchase, debt reduction,
redeployment of cash flow capital expenditures and
acquisitions
Targeted return on incremental
invested capital approximately 15% after-tax
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights
Three Months Ended June 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $3,023.9 $2,965.9 $58.0 2.0
Retail used vehicle 912.4 881.5 30.9 3.5
Wholesale 220.7 199.2 21.5 10.8
Used vehicle 1,133.1 1,080.7 52.4 4.8
Parts and service 652.6 611.2 41.4 6.8
Finance and insurance 159.9 154.1 5.8 3.8
Other 8.8 8.8 -- --
Total revenue $4,978.3 $4,820.7 $157.6 3.3
Gross profit:
New vehicle $214.6 $209.8 $4.8 2.3
Retail used vehicle 106.7 100.2 6.5 6.5
Wholesale (0.2) 0.5 (0.7)
Used vehicle 106.5 100.7 5.8 5.8
Parts and service 284.8 270.7 14.1 5.2
Finance and insurance 159.9 154.1 5.8 3.8
Other 6.9 7.2 (0.3) (4.2)
Total gross profit $772.7 $742.5 $30.2 4.1
Retail vehicle unit sales:
New 103,376 104,178 (802) (0.8)
Used 60,215 60,462 (247) (0.4)
163,591 164,640 (1,049) (0.6)
Revenue per vehicle retailed:
New $29,251 $28,470 $781 2.7
Used $15,152 $14,579 $573 3.9
Gross profit per vehicle retailed:
New $2,076 $2,014 $62 3.1
Used $1,772 $1,657 $115 6.9
Finance and insurance $977 $936 $41 4.4
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights
Six Months Ended June 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $5,648.5 $5,674.7 $(26.2) (0.5)
Retail used vehicle 1,786.6 1,759.7 26.9 1.5
Wholesale 402.0 382.2 19.8 5.2
Used vehicle 2,188.6 2,141.9 46.7 2.2
Parts and service 1,286.4 1,220.8 65.6 5.4
Finance and insurance 304.7 301.7 3.0 1.0
Other 17.1 17.5 (0.4) (2.3)
Total revenue $9,445.3 $9,356.6 $88.7 0.9
Gross profit:
New vehicle $407.2 $405.3 $1.9 0.5
Retail used vehicle 216.4 203.8 12.6 6.2
Wholesale 2.4 1.3 1.1
Used vehicle 218.8 205.1 13.7 6.7
Parts and service 558.9 537.7 21.2 3.9
Finance and insurance 304.7 301.7 3.0 1.0
Other 13.5 14.3 (0.8) (5.6)
Total gross profit $1,503.1 $1,464.1 $39.0 2.7
Retail vehicle unit sales:
New 193,487 198,634 (5,147) (2.6)
Used 119,090 121,280 (2,190) (1.8)
312,577 319,914 (7,337) (2.3)
Revenue per vehicle retailed:
New $29,193 $28,569 $624 2.2
Used $15,002 $14,509 $493 3.4
Gross profit per vehicle retailed:
New $2,105 $2,040 $65 3.2
Used $1,817 $1,680 $137 8.2
Finance and insurance $975 $943 $32 3.4
Three Months Ended Six Months Ended
Operating Percentages June 30, June 30,
% 2005 % 2004 % 2005 % 2004
Revenue mix percentages:
New vehicle 60.7 61.5 59.8 60.6
Used vehicle 22.8 22.4 23.2 22.9
Parts and service 13.1 12.7 13.6 13.0
Finance and insurance 3.2 3.2 3.2 3.2
Other 0.2 0.2 0.2 0.3
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 27.8 28.3 27.1 27.7
Used vehicle 13.8 13.6 14.6 14.0
Parts and service 36.9 36.5 37.2 36.7
Finance and insurance 20.7 20.8 20.3 20.6
Other 0.8 0.8 0.8 1.0
100.0 100.0 100.0 100.0
Operating items as a percentage of
revenue:
Gross Profit:
New vehicle 7.1 7.1 7.2 7.1
Used vehicle - retail 11.7 11.4 12.1 11.6
Parts and service 43.6 44.3 43.4 44.0
Total 15.5 15.4 15.9 15.6