AutoNation Reports Fourth-Quarter Earnings
FORT LAUDERDALE, Fla., Feb. 9, 2006 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2005 fourth- quarter net income from continuing operations of $80 million or $0.30 per share, on revenue of $4.5 billion. The results compare to 2004 fourth-quarter net income from continuing operations of $116 million or $0.43 per share on revenue of $4.8 billion. Excluding certain items disclosed in the attached financial tables, the Company's fourth-quarter EPS from continuing operations was $0.31 versus $0.34 in the prior year, a decline of 9%.
"Two factors directly impacted our fourth-quarter earnings," said Mike Jackson, chairman and chief executive officer of AutoNation. "We suffered an estimated $0.04 per share impact from Hurricane Wilma, which caused substantial property damage and disruption to our business in Florida. In addition, the auto retail sales environment was challenging in the fourth quarter."
For full-year 2005, the Company reported net income from continuing operations of $396 million or $1.48 per share, compared to $397 million or $1.46 per share in 2004. Excluding certain items disclosed in the attached financial tables, the Company's full-year EPS from continuing operations was $1.45, up 7% from $1.36 in the prior year. The Company's revenue for the full year totaled $19.3 billion, an increase of 1% versus the prior year. Operating income for full-year 2005 was $807 million, an increase of over 5%.
Commenting on the year ahead, Jackson said, "Looking ahead, we believe that in 2006 U.S. industry sales of new vehicles will be nearly 17 million units for the eighth year in a row."
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. For the 4th year in a row, AutoNation was named America's Most Admired Automotive Retailer. AutoNation has approximately 27,000 full-time employees and owns and operates 345 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.
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 long-term growth targets.
NON-GAAP FINANCIAL MEASURES
This release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as net income and diluted earnings per share from continuing operations for the three and twelve-month periods ended December 31, 2005 and 2004, adjusted in each case to exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides 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 improves the period-to-period comparability of the Company's results from its core business operations.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Revenue:
New vehicle $2,661.5 $2,925.0 $11,532.2 $11,664.9
Used vehicle 1,043.3 1,039.4 4,430.6 4,236.4
Parts and service 620.8 616.8 2,593.6 2,451.9
Finance and insurance 141.2 150.1 615.6 608.7
Other 18.5 19.8 81.4 82.7
Total revenue 4,485.3 4,751.1 19,253.4 19,044.6
Cost of sales:
New vehicle 2,466.8 2,710.6 10,697.6 10,831.6
Used vehicle 945.3 944.4 4,002.6 3,841.1
Parts and service 341.7 346.5 1,456.3 1,377.5
Other 4.8 8.3 33.2 35.4
Total cost of sales 3,758.6 4,009.8 16,189.7 16,085.6
Gross profit 726.7 741.3 3,063.7 2,959.0
Selling, general and
administrative expenses 528.3 521.8 2,175.5 2,108.1
Depreciation and
amortization 20.4 23.8 80.7 81.5
Other expenses (income) (0.1) 2.7 0.5 4.0
Operating income 178.1 193.0 807.0 765.4
Floorplan interest expense (31.8) (22.0) (110.7) (79.1)
Other interest expense (14.4) (19.0) (63.3) (76.3)
Other interest expense -
senior note repurchases (2.3) (0.6) (17.4) (0.6)
Interest income 3.1 1.2 7.5 3.5
Other losses -- (1.7) (0.2) (5.1)
Income from continuing
operations before income
taxes 132.7 150.9 622.9 607.8
Provision for income taxes 52.3 34.5 227.4 210.7
Net income from continuing
operations 80.4 116.4 395.5 397.1
Income (loss) from
discontinued operations,
net of income taxes (5.1) 45.4 101.0 36.5
Net income $75.3 $161.8 $496.5 $433.6
Diluted earnings per share:
Continuing operations $0.30 $0.43 $1.48 $1.46
Discontinued operations $(0.02) $0.17 $0.38 $0.13
Net income $0.28 $0.60 $1.85 $1.59
Weighted average common and
common equivalent shares
outstanding 266.8 270.3 268.0 272.5
Common shares outstanding 262.2 264.3 262.2 264.3
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended December 31,
$ %
2005 2004 Variance Variance
Revenue:
New vehicle $2,661.5 $2,925.0 $(263.5) (9.0)
Retail used vehicle 842.1 846.7 (4.6) (0.5)
Wholesale 201.2 192.7 8.5 4.4
Used vehicle 1,043.3 1,039.4 3.9 0.4
Parts and service 620.8 616.8 4.0 0.6
Finance and insurance 141.2 150.1 (8.9) (5.9)
Other 18.5 19.8 (1.3)
Total revenue $4,485.3 $4,751.1 $(265.8) (5.6)
Gross profit:
New vehicle $194.7 $214.4 $(19.7) (9.2)
Retail used vehicle 97.7 95.3 2.4 2.5
Wholesale 0.3 (0.3) 0.6
Used vehicle 98.0 95.0 3.0 3.2
Parts and service 279.1 270.3 8.8 3.3
Finance and insurance 141.2 150.1 (8.9) (5.9)
Other 13.7 11.5 2.2
Total gross profit 726.7 741.3 (14.6) (2.0)
Selling, general and
administrative expenses 528.3 521.8 (6.5) (1.2)
Depreciation and amortization 20.4 23.8 3.4
Other expenses (income) (0.1) 2.7 2.8
Operating income 178.1 193.0 (14.9) (7.7)
Floorplan interest expense (31.8) (22.0) (9.8)
Other interest expense (14.4) (19.0) 4.6
Other interest expense - senior
note repurchases (2.3) (0.6) (1.7)
Interest income 3.1 1.2 1.9
Other losses -- (1.7) 1.7
Income from continuing
operations before income
taxes $132.7 $150.9 $(18.2) (12.1)
Retail vehicle unit sales:
New 86,721 97,098 (10,377) (10.7)
Used 53,386 55,378 (1,992) (3.6)
140,107 152,476 (12,369) (8.1)
Revenue per vehicle retailed:
New $30,690 $30,124 $566 1.9
Used $15,774 $15,289 $485 3.2
Gross profit per vehicle
retailed:
New $2,245 $2,208 $37 1.7
Used $1,830 $1,721 $109 6.3
Finance and insurance $1,008 $984 $24 2.4
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Year Ended December 31,
$ %
2005 2004 Variance Variance
Revenue:
New vehicle $11,532.2 $11,664.9 $(132.7) (1.1)
Retail used vehicle 3,582.6 3,452.1 130.5 3.8
Wholesale 848.0 784.3 63.7 8.1
Used vehicle 4,430.6 4,236.4 194.2 4.6
Parts and service 2,593.6 2,451.9 141.7 5.8
Finance and insurance 615.6 608.7 6.9 1.1
Other 81.4 82.7 (1.3)
Total revenue $19,253.4 $19,044.6 $208.8 1.1
Gross profit:
New vehicle $834.6 $833.3 $1.3 0.2
Retail used vehicle 425.6 393.8 31.8 8.1
Wholesale 2.4 1.5 0.9
Used vehicle 428.0 395.3 32.7 8.3
Parts and service 1,137.3 1,074.4 62.9 5.9
Finance and insurance 615.6 608.7 6.9 1.1
Other 48.2 47.3 0.9
Total gross profit 3,063.7 2,959.0 104.7 3.5
Selling, general and
administrative expenses 2,175.5 2,108.1 (67.4) (3.2)
Depreciation and amortization 80.7 81.5 0.8
Other expenses (income) 0.5 4.0 3.5
Operating income 807.0 765.4 41.6 5.4
Floorplan interest expense (110.7) (79.1) (31.6)
Other interest expense (63.3) (76.3) 13.0
Other interest expense -
senior note repurchases (17.4) (0.6) (16.8)
Interest income 7.5 3.5 4.0
Other losses (0.2) (5.1) 4.9
Income from continuing
operations before income
taxes $622.9 $607.8 $15.1 2.5
Retail vehicle unit sales:
New 391,698 402,303 (10,605) (2.6)
Used 235,313 234,598 715 0.3
627,011 636,901 (9,890) (1.6)
Revenue per vehicle retailed:
New $29,442 $28,995 $447 1.5
Used $15,225 $14,715 $510 3.5
Gross profit per vehicle
retailed:
New $2,131 $2,071 $60 2.9
Used $1,809 $1,679 $130 7.7
Finance and insurance $982 $956 $26 2.7
Three Months Ended Year Ended
Operating Percentages December 31, December 31,
% 2005 % 2004 % 2005 % 2004
Revenue mix percentages:
New vehicle 59.3 61.6 59.9 61.3
Used vehicle 23.3 21.9 23.0 22.2
Parts and service 13.8 13.0 13.5 12.9
Finance and insurance 3.1 3.2 3.2 3.2
Other 0.5 0.3 0.4 0.4
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 26.8 28.9 27.2 28.2
Used vehicle 13.5 12.8 14.0 13.4
Parts and service 38.4 36.5 37.1 36.3
Finance and insurance 19.4 20.2 20.1 20.6
Other 1.9 1.6 1.6 1.5
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.3 7.3 7.2 7.1
Used vehicle - retail 11.6 11.3 11.9 11.4
Parts and service 45.0 43.8 43.9 43.8
Total 16.2 15.6 15.9 15.5
Selling, general and
administrative expenses 11.8 11.0 11.3 11.1
Operating income 4.0 4.1 4.2 4.0
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 72.7 70.4 71.0 71.2
Operating income 24.5 26.0 26.3 25.9
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Three Months
Ended Year Ended
Cash Flow Information December 31, December 31,
2005 2004 2005 2004
Capital expenditures, excluding
property operating lease
buy-outs $39.6 $51.6 $131.5 $133.2
Property operating lease
buy-outs $-- $-- $10.3 $77.7
Stock repurchases $49.9 $46.0 $237.1 $236.8
Acquisitions $2.5 $43.6 $15.9 $197.9
Proceeds from exercises of
stock options $36.1 $26.1 $112.8 $94.2
Senior note repurchases $23.6 $3.9 $136.0 $3.9
Floorplan Assistance Three Months Ended Year Ended
and Expense December 31, December 31,
2005 2004 Variance 2005 2004 Variance
Floorplan assistance
(included in cost of
sales) $25.6 $26.7 $(1.1) $114.4 $114.0 $0.4
Floorplan interest
expense (31.8) (22.0) (9.8) (110.7) (79.1) (31.6)
Net floorplan benefit $(6.2) $4.7 $(10.9) $3.7 $34.9 $(31.2)
Balance Sheet and Other Highlights
December 31, 2005 December 31, 2004
Cash and cash equivalents $243.8 $108.2
Inventory $2,682.7 $2,576.0
Floorplan notes payable $2,540.0 $2,458.0
Non-vehicle debt $525.0 $812.6
Equity $4,669.6 $4,263.1
New days supply (industry
standard of selling days,
including fleet) 56 days 53 days
Used days supply (trailing
30 days) 43 days 37 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Detroit 3:
Ford (Ford, Lincoln-Mercury) 16.6 18.0 18.5 20.5
General Motors (Chevrolet, Pontiac,
Buick, Cadillac, GMC) 13.2 17.1 15.9 19.0
Chrysler (Chrysler, Jeep, Dodge) 8.1 8.7 8.9 9.2
Detroit 3 total 37.9 43.8 43.3 48.7
Premium Luxury:
Mercedes 11.2 10.6 9.3 8.9
BMW 5.7 3.8 4.9 4.4
Lexus 4.0 3.6 3.3 3.1
Other premium luxury (Jaguar,
Rolls Royce) 1.4 0.9 1.1 1.1
Premium Luxury total 22.3 18.9 18.6 17.5
Imports:
Honda 8.3 7.0 7.9 7.1
Toyota 12.3 11.1 12.3 11.3
Nissan 9.7 9.1 9.8 8.7
Other imports 9.5 10.1 8.1 6.7
Import total 39.8 37.3 38.1 33.8
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended December 31,
Diluted Earnings
Net Income Per Share
2005 2004 2005 2004
As reported $75.3 $161.8 $0.28 $0.60
Discontinued operations - store
divestitures, net of income
taxes 5.1 6.8 $0.02 $0.03
Discontinued operations - tax
adjustments (52.2) $-- $(0.19)
From continuing operations, as
reported $80.4 $116.4 $0.30 $0.43
Income tax adjustments (24.6) -- $(0.09)
Senior note repurchases 1.5 .5 $0.01 $--
Adjusted $81.9 $92.3 $0.31 $0.34
Year Ended December 31,
Diluted Earnings
Net Income Per Share
2005 2004 2005 2004
As reported $496.5 $433.6 $1.85 $1.59
Discontinued operations - store
divestitures, net of income
taxes 9.4 15.7 $0.04 $0.06
Discontinued operations - tax
adjustments (110.4) (52.2) $(0.41) $(0.19)
From continuing operations, as
reported 395.5 397.1 $1.48 $1.46
Senior note repurchases 10.6 .5 $0.04 $--
Income tax adjustments (16.2) (25.8) $(0.06) $(0.09)
Adjusted $389.9 $371.8 $1.45 $1.36
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target
of 10% to 12% Per Year:
U.S. light vehicle annual unit intensely competitive, nearly
sales 17 million units
SGA % reduction (over 2006,
2007 and 2008) approximately 100 bp
(SGA % of gross profit less
floorplan interest expense)
Continued opportunistic share repurchase, capital
redeployment of cash flow expenditures and acquisitions
Targeted return on incremental
invested capital approximately 15% after-tax
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended December 31,
$ %
2005 2004 Variance Variance
Revenue:
New vehicle $2,653.6 $2,924.9 $(271.3) (9.3)
Retail used vehicle 840.3 846.8 (6.5) (0.8)
Wholesale 199.6 192.0 7.6 4.0
Used vehicle 1,039.9 1,038.8 1.1 0.1
Parts and service 619.6 616.8 2.8 0.5
Finance and insurance 141.0 149.8 (8.8) (5.9)
Other 7.1 7.3 (0.2) (2.7)
Total revenue $4,461.2 $4,737.6 $(276.4) (5.8)
Gross profit:
New vehicle $193.9 $214.3 $(20.4) (9.5)
Retail used vehicle 97.6 95.1 2.5 2.6
Wholesale (0.2) (0.9) 0.7
Used vehicle 97.4 94.2 3.2 3.4
Parts and service 278.5 270.2 8.3 3.1
Finance and insurance 141.0 149.8 (8.8) (5.9)
Other 8.1 6.8 1.3 19.1
Total gross profit $718.9 $735.3 $(16.4) (2.2)
Retail vehicle unit sales:
New 86,554 97,098 (10,544) (10.9)
Used 53,312 55,382 (2,070) (3.7)
139,866 152,480 (12,614) (8.3)
Revenue per vehicle retailed:
New $30,658 $30,123 $535 1.8
Used $15,762 $15,290 $472 3.1
Gross profit per vehicle
retailed:
New $2,240 $2,207 $33 1.5
Used $1,831 $1,717 $114 6.6
Finance and insurance $1,008 $982 $26 2.6
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Year Ended December 31,
$ %
2005 2004 Variance Variance
Revenue:
New vehicle $11,417.1 $11,660.9 $(243.8) (2.1)
Retail used vehicle 3,551.1 3,450.9 100.2 2.9
Wholesale 831.9 780.8 51.1 6.5
Used vehicle 4,383.0 4,231.7 151.3 3.6
Parts and service 2,571.1 2,450.7 120.4 4.9
Finance and insurance 611.9 608.7 3.2 0.5
Other 28.2 28.9 (0.7) (2.4)
Total revenue $19,011.3 $18,980.9 $30.4 0.2
Gross profit:
New vehicle $825.3 $833.2 $(7.9) (0.9)
Retail used vehicle 422.7 393.4 29.3 7.4
Wholesale (0.1) (1.2) 1.1
Used vehicle 422.6 392.2 30.4 7.8
Parts and service 1,126.2 1,073.8 52.4 4.9
Finance and insurance 611.9 608.7 3.2 0.5
Other 27.4 26.7 0.7 2.6
Total gross profit $3,013.4 $2,934.6 $78.8 2.7
Retail vehicle unit sales:
New 388,748 402,137 (13,389) (3.3)
Used 233,887 234,486 (599) (0.3)
622,635 636,623 (13,988) (2.2)
Revenue per vehicle retailed:
New $29,369 $28,997 $372 1.3
Used $15,183 $14,717 $466 3.2
Gross profit per vehicle
retailed:
New $2,123 $2,072 $51 2.5
Used $1,807 $1,678 $129 7.7
Finance and insurance $983 $956 $27 2.8
Three Months
Ended Year Ended
Operating Percentages December 31, December 31,
% 2005 % 2004 % 2005 % 2004
Revenue mix percentages:
New vehicle 59.5 61.7 60.1 61.4
Used vehicle 23.3 21.9 23.1 22.3
Parts and service 13.9 13.0 13.5 12.9
Finance and insurance 3.2 3.2 3.2 3.2
Other 0.1 0.2 0.1 0.2
100.0 100.0 100.0 100.0
Gross profit mix
percentages:
New vehicle 27.0 29.1 27.4 28.4
Used vehicle 13.5 12.8 14.0 13.4
Parts and service 38.7 36.7 37.4 36.6
Finance and insurance 19.6 20.4 20.3 20.7
Other 1.2 1.0 0.9 0.9
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.3 7.3 7.2 7.1
Used vehicle - retail 11.6 11.2 11.9 11.4
Parts and service 44.9 43.8 43.8 43.8
Total 16.1 15.5 15.9 15.5
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