AutoNation Reports Third-Quarter 2005 Earnings
* Third quarter revenue of $5.2 billion, up 5.0%, driven by increased sales of new and used vehicles, parts and service, and finance and insurance products * 90-basis point reduction in SG&A as a percent of gross profit * Excluding $0.04 per share benefit from the resolution of certain tax matters, EPS from continuing operations was $0.41, up 17%
FORT LAUDERDALE, Fla., Oct. 27 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2005 third- quarter net income from continuing operations of $120 million or $0.45 per share, compared to year-ago net income from continuing operations of $96 million or $0.35 per share, an increase in EPS of 29%. Excluding the $0.04 per share benefit from the resolution of certain tax matters, the Company's third-quarter EPS from continuing operations was $0.41, up 17% compared to a year ago. This increase was primarily a result of solid growth in both revenue and gross profit in every area of the business coupled with continued share repurchases and the leveraging of the Company's cost structure.
Third-quarter 2005 revenue totaled $5.2 billion, an increase of 5% compared to the year-ago period, and resulted primarily from revenue growth in new vehicles of 2%, retail used vehicles of 10%, parts and service of 9%, and finance and insurance of 6%. Selling, general and administrative expenses (SG&A) in the quarter were $567 million or 70.2% of total gross profit, a 90- basis point improvement versus the prior year. Operating income for the third quarter was $220 million, a third-quarter record, up 13% versus the prior year.
Commenting on the third-quarter performance, AutoNation Chairman and Chief Executive Officer Mike Jackson said, "AutoNation's team of 347 franchises and 27,000 employees can be very proud of their performance over the past quarter. Once again, our Company delivered record third-quarter earnings per share, increased revenue and increased net income -- all indicators of just how strong and efficient our organization has become. In addition to operational improvements in nearly every area of the business -- new and used vehicles, parts and service, finance and insurance -- we benefited during this time from the employee discount programs launched by the Detroit 3. During the third-quarter 2005 our markets were not significantly affected by hurricanes as we were in the third-quarter 2004. However, in the fourth-quarter Hurricane Wilma has impacted our South Florida operations, where we have 33 dealerships representing approximately 20% of our national business. We have a short-term disruption to our South Florida business at this point and we are in the process of accessing the damage. We do not expect a long-term effect on our business."
At the end of the third-quarter 2005, AutoNation's new vehicle inventory level was 43 days supply versus 53 days at the end of the third-quarter 2004, representing a decline of 17,000 units or 22%.
For the nine-month period ended September 30, 2005, the Company reported net income from continuing operations of $315 million or $1.17 per share. The Company's revenue for the nine-month period totaled $14.8 billion, up 3%.
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and a component of the Standard and Poor's 500 Index. In 2004, AutoNation was named America's Most Admired Automotive Retailer for the 4th year in a row. AutoNation has approximately 27,000 full- time employees and owns and operates 347 new vehicle franchises in 17 states. For additional information, please visit http://corp.autonation.com/ or http://www.autonation.com/ , where more than 100,000 vehicles are available for sale.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenue:
New vehicle $3,160.8 $3,090.0 $8,885.4 $8,754.9
Used vehicle 1,172.9 1,062.0 3,392.3 3,201.0
Parts and service 673.0 617.5 1,974.4 1,836.9
Finance and insurance 167.9 158.6 475.1 459.6
Other 21.8 20.6 65.7 65.2
Total revenue 5,196.4 4,948.7 14,792.9 14,317.6
Cost of sales:
New vehicle 2,933.8 2,874.9 8,244.9 8,135.4
Used vehicle 1,064.5 967.1 3,062.0 2,900.3
Parts and service 380.4 349.6 1,115.4 1,032.0
Other 10.3 9.5 30.7 28.9
Total cost of sales 4,389.0 4,201.1 12,453.0 12,096.6
Gross profit 807.4 747.6 2,339.9 2,221.0
Selling, general and
administrative expenses 566.8 531.6 1,649.8 1,589.0
Depreciation and amortization 19.7 19.9 60.4 57.8
Other expenses 1.2 0.9 0.6 1.3
Operating income 219.7 195.2 629.1 572.9
Floorplan interest expense (25.0) (20.4) (79.1) (57.2)
Other interest expense (15.9) (18.3) (48.9) (57.3)
Other interest expense -
senior note repurchases -- -- (15.1) --
Interest income 1.5 0.9 4.4 2.3
Other losses (0.1) (2.0) (0.2) (3.4)
Income from continuing
operations before income
taxes 180.2 155.4 490.2 457.3
Provision for income taxes 60.1 59.7 175.0 176.3
Net income from continuing
operations 120.1 95.7 315.2 281.0
Income (loss) from
discontinued operations, net
of income taxes 9.2 (3.3) 106.0 (9.2)
Net income $129.3 $92.4 $421.2 $271.8
Diluted earnings per share:
Continuing operations $0.45 $0.35 $1.17 $1.03
Discontinued operations $0.03 $(0.01) $0.39 $(0.03)
Net income $0.48 $0.34 $1.57 $0.99
Weighted average common and
common equivalent shares
outstanding 267.2 270.6 269.1 273.2
Common shares outstanding 261.4 264.4 261.4 264.4
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended September 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $3,160.8 $3,090.0 $70.8 2.3
Retail used vehicle 936.6 852.5 84.1 9.9
Wholesale 236.3 209.5 26.8 12.8
Used vehicle 1,172.9 1,062.0 110.9 10.4
Parts and service 673.0 617.5 55.5 9.0
Finance and insurance 167.9 158.6 9.3 5.9
Other 21.8 20.6 1.2
Total revenue $5,196.4 $4,948.7 $247.7 5.0
Gross profit:
New vehicle $227.0 $215.1 $11.9 5.5
Retail used vehicle 110.0 95.4 14.6 15.3
Wholesale (1.6) (0.5) (1.1)
Used vehicle 108.4 94.9 13.5 14.2
Parts and service 292.6 267.9 24.7 9.2
Finance and insurance 167.9 158.6 9.3 5.9
Other 11.5 11.1 0.4
Total gross profit 807.4 747.6 59.8 8.0
Selling, general and
administrative expenses 566.8 531.6 (35.2) (6.6)
Depreciation and amortization 19.7 19.9 0.2
Other expenses 1.2 0.9 (0.3)
Operating income 219.7 195.2 24.5 12.6
Floorplan interest expense (25.0) (20.4) (4.6)
Other interest expense (15.9) (18.3) 2.4
Other interest expense - senior
note repurchases -- -- --
Interest income 1.5 0.9 0.6
Other losses (0.1) (2.0) 1.9
Income from continuing
operations before income
taxes $180.2 $155.4 $24.8 16.0
Retail vehicle unit sales:
New 110,288 107,568 2,720 2.5
Used 62,281 58,523 3,758 6.4
172,569 166,091 6,478 3.9
Revenue per vehicle retailed:
New $28,660 $28,726 $(66) (0.2)
Used $15,038 $14,567 $471 3.2
Gross profit per vehicle
retailed:
New $2,058 $2,000 $58 2.9
Used $1,766 $1,630 $136 8.3
Finance and insurance $973 $955 $18 1.9
Operating Highlights Nine Months Ended September 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $8,885.4 $8,754.9 $130.5 1.5
Retail used vehicle 2,743.8 2,609.0 134.8 5.2
Wholesale 648.5 592.0 56.5 9.5
Used vehicle 3,392.3 3,201.0 191.3 6.0
Parts and service 1,974.4 1,836.9 137.5 7.5
Finance and insurance 475.1 459.6 15.5 3.4
Other 65.7 65.2 0.5
Total revenue $14,792.9 $14,317.6 $475.3 3.3
Gross profit:
New vehicle $640.5 $619.5 $21.0 3.4
Retail used vehicle 328.2 298.9 29.3 9.8
Wholesale 2.1 1.8 0.3
Used vehicle 330.3 300.7 29.6 9.8
Parts and service 859.0 804.9 54.1 6.7
Finance and insurance 475.1 459.6 15.5 3.4
Other 35.0 36.3 (1.3)
Total gross profit 2,339.9 2,221.0 118.9 5.4
Selling, general and
administrative expenses 1,649.8 1,589.0 (60.8) (3.8)
Depreciation and
amortization 60.4 57.8 (2.6)
Other expenses 0.6 1.3 0.7
Operating income 629.1 572.9 56.2 9.8
Floorplan interest
expense (79.1) (57.2) (21.9)
Other interest expense (48.9) (57.3) 8.4
Other interest expense -
senior note repurchases (15.1) -- (15.1)
Interest income 4.4 2.3 2.1
Other losses (0.2) (3.4) 3.2
Income from continuing
operations before
income taxes $490.2 $457.3 $32.9 7.2
Retail vehicle unit
sales:
New 305,595 305,867 (272) (0.1)
Used 182,154 179,570 2,584 1.4
487,749 485,437 2,312 0.5
Revenue per vehicle
retailed:
New $29,076 $28,623 $453 1.6
Used $15,063 $14,529 $534 3.7
Gross profit per vehicle
retailed:
New $2,096 $2,025 $71 3.5
Used $1,802 $1,665 $137 8.2
Finance and
insurance $974 $947 $27 2.9
Operating Percentages Three Months Ended Nine Months Ended
September 30, September 30,
% 2005 % 2004 % 2005 % 2004
Revenue mix percentages:
New vehicle 60.8 62.4 60.1 61.1
Used vehicle 22.6 21.5 22.9 22.4
Parts and service 13.0 12.5 13.3 12.8
Finance and insurance 3.2 3.2 3.2 3.2
Other 0.4 0.4 0.5 0.5
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 28.1 28.8 27.4 27.9
Used vehicle 13.4 12.7 14.1 13.5
Parts and service 36.2 35.8 36.7 36.2
Finance and insurance 20.8 21.2 20.3 20.7
Other 1.5 1.5 1.5 1.7
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.2 7.0 7.2 7.1
Used vehicle - retail 11.7 11.2 12.0 11.5
Parts and service 43.5 43.4 43.5 43.8
Total 15.5 15.1 15.8 15.5
Selling, general and
administrative expenses 10.9 10.7 11.2 11.1
Operating income 4.2 3.9 4.3 4.0
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 70.2 71.1 70.5 71.5
Operating income 27.2 26.1 26.9 25.8
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Information Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Capital expenditures,
excluding property
operating lease
buy-outs $34.6 $26.9 $91.9 $81.3
Property operating lease
buy-outs $ -- $-- $10.3 $77.7
Stock repurchases $38.7 $82.9 $187.2 $190.8
Acquisitions $5.4 $(0.1) $13.4 $154.3
Proceeds from exercises
of stock options $24.0 $18.2 $76.7 $68.1
Senior note repurchases $-- $-- $112.4 $--
Floorplan Assistance and Expense
Three Months Ended September 30,
2005 2004 Variance
Floorplan assistance
(included in cost of
sales) $30.5 $31.8 $(1.3)
Floorplan interest
expense (25.0) (20.4) (4.6)
Net floorplan benefit $5.5 $11.4 $(5.9)
Nine Months Ended September 30,
2005 2004 Variance
Floorplan assistance
(included in cost of
sales) $88.9 $87.5 $1.4
Floorplan interest
expense (79.1) (57.2) (21.9)
Net floorplan benefit $9.8 $30.3 $(20.5)
Balance Sheet and Other Highlights
Sept. 30, Dec. 31, Sept. 30,
2005 2004 2004
Cash and cash equivalents $277.5 $107.9 $93.1
Inventory $2,203.5 $2,580.7 $2,543.0
Floorplan notes payable $1,946.7 $2,462.3 $2,360.8
Non-vehicle debt $675.1 $812.6 $817.4
Equity $4,599.2 $4,263.1 $4,113.0
New days supply (industry
standard of selling
days, including fleet) 43 days 53 days 53 days
Used days supply (trailing
30 days) 42 days 37 days 44 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Detroit 3:
Ford (Ford, Lincoln-
Mercury) 20.0 21.5 19.0 21.3
General Motors (Chevrolet,
Pontiac, Buick, Cadillac,
GMC) 15.4 20.2 16.7 19.6
Chrysler (Chrysler, Jeep,
Dodge) 9.6 9.6 9.1 9.4
Detroit 3 total 45.0 51.3 44.8 50.3
Premium Luxury:
Mercedes 8.6 8.0 8.8 8.3
BMW 4.5 4.8 4.6 4.5
Lexus 3.0 2.5 3.1 3.0
Other premium luxury
(Jaguar, Rolls Royce) 0.9 1.1 1.1 1.1
Premium Luxury total 17.0 16.4 17.6 16.9
Imports:
Honda 8.1 6.8 7.8 7.1
Toyota 11.8 11.3 12.2 11.3
Nissan 10.0 8.6 10.0 8.7
Other imports 8.1 5.6 7.6 5.7
Import total 38.0 32.3 37.6 32.8
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations
Three Months Ended September 30,
Diluted Earnings
Net Income Per Share
2005 2004 2005 2004
As reported $129.3 $92.4 $0.48 $0.34
Discontinued operations - store
divestitures, net of income
taxes (6.2) 3.3 $(0.02) 0.01
Discontinued operations - tax
adjustments (3.0) -- $(0.01) --
From continuing operations, as
reported $120.1 $95.7 $0.45 $0.35
Income tax adjustments (9.4) -- (0.04) --
Adjusted $110.7 $95.7 $0.41 $0.35
Nine Months Ended September 30,
Net Income Diluted Earnings
Per Share
2005 2004 2005 2004
As reported $421.2 $271.8 $1.57 $0.99
Discontinued operations - store
divestitures, net of income
taxes 4.4 9.2 $0.02 0.03
Discontinued operations - tax
adjustments (110.4) -- $(0.41) --
From continuing operations, as
reported 315.2 281.0 $1.17 $1.03
Senior note repurchases 9.1 -- 0.03 --
Income tax adjustments (16.2) -- (0.06) --
Adjusted $308.1 $281.0 $1.14 $1.03
Business Assumptions Impacting Long-term Average EPS Growth Target
of 10% to 12% Per Year:
U.S. light vehicle intensely competitive,
annual unit sales high 16 million units
SGA % reduction (over approximately 100 bp
2006, 2007 and 2008)
(SGA % of gross profit
less floorplan interest
expense)
Continued opportunistic share repurchase, debt
redeployment of cash flow reduction, capital
expenditures and
acquisitions
Targeted return on approximately 15% after-tax
incremental
invested capital
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended September 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $3,141.7 $3,090.0 $51.7 1.7
Retail used vehicle 931.6 852.6 79.0 9.3
Wholesale 232.9 208.6 24.3 11.6
Used vehicle 1,164.5 1,061.2 103.3 9.7
Parts and service 669.0 617.5 51.5 8.3
Finance and insurance 167.3 158.6 8.7 5.5
Other 7.5 8.0 (0.5) (6.3)
Total revenue $5,150.0 $4,935.3 $214.7 4.4
Gross profit:
New vehicle $225.5 $215.0 $10.5 4.9
Retail used vehicle 109.6 95.3 14.3 15.0
Wholesale (2.4) (1.5) (0.9)
Used vehicle 107.2 93.8 13.4 14.3
Parts and service 290.6 267.9 22.7 8.5
Finance and insurance 167.3 158.6 8.7 5.5
Other 6.8 6.7 0.1 1.5
Total gross profit $797.4 $742.0 $55.4 7.5
Retail vehicle unit sales:
New 109,766 107,568 2,198 2.0
Used 62,012 58,523 3,489 6.0
171,778 166,091 5,687 3.4
Revenue per vehicle retailed:
New $28,622 $28,726 $(104) (0.4)
Used $15,023 $14,569 $454 3.1
Gross profit per vehicle
retailed:
New $2,054 $1,999 $55 2.8
Used $1,767 $1,628 $139 8.5
Finance and insurance $974 $955 $19 2.0
Operating Highlights Nine Months Ended September 30,
2005 2004 $Variance %Variance
Revenue:
New vehicle $8,778.2 $8,750.9 $27.3 0.3
Retail used vehicle 2,714.1 2,607.8 106.3 4.1
Wholesale 633.9 589.1 44.8 7.6
Used vehicle 3,348.0 3,196.9 151.1 4.7
Parts and service 1,953.1 1,835.7 117.4 6.4
Finance and insurance 471.6 459.8 11.8 2.6
Other 23.8 24.1 (0.3) (1.2)
Total revenue $14,574.7 $14,267.4 $307.3 2.2
Gross profit:
New vehicle $632.0 $619.4 $12.6 2.0
Retail used vehicle 325.4 298.7 26.7 8.9
Wholesale 0.1 (0.3) 0.4
Used vehicle 325.5 298.4 27.1 9.1
Parts and service 848.5 804.4 44.1 5.5
Finance and insurance 471.6 459.8 11.8 2.6
Other 19.7 20.5 (0.8) (3.9)
Total gross profit $2,297.3 $2,202.5 $94.8 4.3
Retail vehicle unit sales:
New 302,812 305,701 (2,889) (0.9)
Used 180,802 179,454 1,348 0.8
483,614 485,155 (1,541) (0.3)
Revenue per vehicle retailed:
New $28,989 $28,626 $363 1.3
Used $15,011 $14,532 $479 3.3
Gross profit per vehicle
retailed:
New $2,087 $2,026 $61 3.0
Used $1,800 $1,664 $136 8.2
Finance and insurance $975 $948 $27 2.8
Three Months Ended Nine Months Ended
Operating Percentages September 30, September 30,
% 2005 % 2004 % 2005 % 2004
Revenue mix percentages:
New vehicle 61.0 62.6 60.2 61.3
Used vehicle 22.6 21.5 23.0 22.4
Parts and service 13.0 12.5 13.4 12.9
Finance and insurance 3.2 3.2 3.2 3.2
Other 0.2 0.2 0.2 0.2
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 28.3 29.0 27.5 28.1
Used vehicle 13.4 12.6 14.2 13.5
Parts and service 36.4 36.1 36.9 36.5
Finance and insurance 21.0 21.4 20.5 20.9
Other 0.9 0.9 0.9 1.0
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross Profit
New vehicle 7.2 7.0 7.2 7.1
Used vehicle - retail 11.8 11.2 12.0 11.5
Parts and service 43.4 43.4 43.4 43.8
Total 15.5 15.0 15.8 15.4