AutoNation Reports First-Quarter Earnings From Continuing Operations of $0.37 Per Share
* Record first-quarter operating income of $203 million * Revenue growth of 4% * Premium luxury new vehicle revenue up 15%
FORT LAUDERDALE, Fla., April 27 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2006 first- quarter net income from continuing operations of $98 million or $0.37 per share, compared to year-ago net income from continuing operations of $89 million or $0.33 per share, an increase of 12% per share. First-quarter results include approximately $0.01 per share of non-cash compensation expense related to employee stock options, which is a component of selling, general and administrative (SG&A) expenses. The prior year's first-quarter results included a $0.03 per share charge from senior note repurchases.
First-quarter 2006 revenue totaled $4.7 billion, an increase of 4% compared to the year-ago period, with revenue growth in new vehicles of 2%, retail used vehicles of 5%, parts and service of 5%, and finance and insurance of 5%. New vehicle revenue was driven by a 15% increase in premium luxury revenue. Gross profit increased 4% and was up in all areas of the business. Operating income was a first-quarter record of $203 million, up 2% versus the prior year.
Commenting on the quarter, Mike Jackson, AutoNation Chairman and Chief Executive Officer, stated, "AutoNation delivered solid results in the first quarter across the board and we're especially pleased with the growth in premium luxury and our high-margin parts and service business. Also in March we closed on the acquisition of Autohaus Mercedes-Benz in Pompano Beach, Florida, with annual revenues of approximately $230 million, which will further enhance the contribution of premium luxury to our brand mix."
Mr. Jackson also stated, "In April, we successfully completed our tender offer for 50 million shares of our stock, which allowed us to deliver $1.15 billion of cash to stockholders while retaining financial flexibility to take advantage of future opportunities. As previously announced, we expect the transaction and related debt financing will be accretive to future earnings in the range of $0.13 to $0.15 per share on an annual basis."
The first quarter conference call may be accessed at 11:00 a.m. Eastern Time, by phone at 800-230-1085 or via the Internet (audio webcast) 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 April 27, 2006 through May 4, 2006 by calling 800-475-6701 (access code #823916).
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. 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 and EPS accretion estimates.
NON-GAAP FINANCIAL MEASURES
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-month period ended March 31, 2005, adjusted to exclude the effect of repurchases during the first quarter of 2005 of the Company's 9% senior unsecured notes due 2008. 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 March 31,
2006 2005
Revenue:
New vehicle $2,691.3 $2,640.2
Used vehicle 1,144.1 1,065.2
Parts and service 667.4 635.3
Finance and insurance 152.4 144.7
Other 18.8 19.5
Total revenue 4,674.0 4,504.9
Cost of sales:
New vehicle 2,491.1 2,445.4
Used vehicle 1,029.4 952.3
Parts and service 374.2 360.0
Other 7.7 8.1
Total cost of sales 3,902.4 3,765.8
Gross profit 771.6 739.1
Selling, general and
administrative expenses 548.6 519.5
Depreciation and amortization 19.8 19.9
Other expenses -- 0.1
Operating income 203.2 199.6
Floorplan interest expense (32.5) (24.7)
Other interest expense (12.0) (17.6)
Other interest expense - senior
note repurchases -- (14.4)
Interest income 3.5 1.5
Other losses -- (0.9)
Income from continuing
operations before income taxes 162.2 143.5
Provision for income taxes 64.4 54.2
Net income from continuing
operations 97.8 89.3
Income (loss) from discontinued
operations, net of income
taxes (10.6) 7.7
Net income $87.2 $97.0
Diluted earnings per share:
Continuing operations $0.37 $0.33
Discontinued operations $(0.04) $0.03
Net income $0.33 $0.36
Weighted average common and
common equivalent shares
outstanding 267.4 270.3
Common shares outstanding 264.5 262.7
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
2006 2005 $ Variance % Variance
Revenue:
New vehicle $2,691.3 $2,640.2 $51.1 1.9
Retail used vehicle 925.8 878.7 47.1 5.4
Wholesale 218.3 186.5 31.8 17.1
Used vehicle 1,144.1 1,065.2 78.9 7.4
Parts and service 667.4 635.3 32.1 5.1
Finance and insurance 152.4 144.7 7.7 5.3
Other 18.8 19.5 (0.7)
Total revenue $4,674.0 $4,504.9 $169.1 3.8
Gross profit:
New vehicle $200.2 $194.8 $5.4 2.8
Retail used vehicle 112.2 109.8 2.4 2.2
Wholesale 2.5 3.1 (0.6)
Used vehicle 114.7 112.9 1.8 1.6
Parts and service 293.2 275.3 17.9 6.5
Finance and insurance 152.4 144.7 7.7 5.3
Other 11.1 11.4 (0.3)
Total gross profit 771.6 739.1 32.5 4.4
Selling, general and
administrative expenses 548.6 519.5 (29.1) (5.6)
Depreciation and
amortization 19.8 19.9 0.1
Other expenses -- 0.1 0.1
Operating income 203.2 199.6 3.6 1.8
Floorplan interest expense (32.5) (24.7) (7.8)
Other interest expense (12.0) (17.6) 5.6
Other interest expense
- senior note repurchases -- (14.4) 14.4
Interest income 3.5 1.5 2.0
Other losses -- (0.9) 0.9
Income from continuing
operations before
income taxes $162.2 $143.5 $18.7 13.0
Retail vehicle unit sales:
New 89,279 89,955 (676) (0.8)
Used 58,091 58,624 (533) (0.9)
147,370 148,579 (1,209) (0.8)
Revenue per vehicle
retailed:
New $30,145 $29,350 $795 2.7
Used $15,937 $14,989 $948 6.3
Gross profit per vehicle
retailed:
New 2,242 $2,166 $76 3.5
Used $1,931 $1,873 $58 3.1
Finance and
insurance $1,034 $974 $60 6.2
Operating Percentages Three Months Ended March 31,
% 2006 % 2005
Revenue mix percentages:
New vehicle 57.6 58.6
Used vehicle 24.5 23.6
Parts and service 14.3 14.1
Finance and insurance 3.3 3.2
Other 0.3 0.5
100.0 100.0
Gross profit mix percentages:
New vehicle 25.9 26.4
Used vehicle 14.9 15.3
Parts and service 38.0 37.2
Finance and insurance 19.8 19.6
Other 1.4 1.5
100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.4 7.4
Used vehicle - retail 12.1 12.5
Parts and service 43.9 43.3
Total 16.5 16.4
Selling, general and
administrative expenses 11.7 11.5
Operating income 4.3 4.4
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 71.1 70.3
Operating income 26.3 27.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Information Three Months Ended March 31,
2006 2005
Capital expenditures,
excluding property
operating lease
buy-outs $19.9 $20.4
Property operating
lease buy-outs $-- $--
Stock repurchases $-- $70.9
Acquisitions $67.4 $2.1
Proceeds from exercises
of stock options $32.3 $23.0
Senior note repurchases $-- $106.0
Floorplan Assistance and Expense Three Months Ended March 31
2006 2005 Variance
Floorplan assistance earned
(included in cost of sales) $27.1 $26.4 $0.7
Floorplan interest expense (32.5) (24.7) (7.8)
Net floorplan benefit (cost) $(5.4) $1.7 $(7.1)
Balance Sheet and Other Highlights
March 31, December 31, March 31,
2006 2005 2005
Cash and cash
equivalents $256.6 $244.9 $31.1
Inventory $2,673.6 $2,637.8 $2,757.1
Total floorplan
notes payable $2,376.3 $2,497.5 $2,561.7
Non-vehicle debt $523.6 $525.0 $686.4
Equity $4,798.3 $4,669.5 $4,322.4
New days supply
(industry standard
of selling days,
including fleet) 55 days 55 days 61 days
Used days supply
(trailing 30 days) 41 days 43 days 39 days
Brand Mix - New Vehicle Revenue %
Three Months Ended March 31,
% 2006 % 2005
Detroit 3:
Ford, Lincoln-Mercury 17.6 18.8
Chevrolet, Pontiac, Buick,
Cadillac, GMC 14.3 15.9
Chrysler, Jeep, Dodge 8.3 8.8
Detroit 3 total 40.2 43.5
Premium Luxury:
Mercedes 10.3 9.1
BMW 5.0 4.8
Lexus 3.4 3.2
Other premium luxury (Land Rover,
Porsche, Jaguar) 2.8 2.0
Premium Luxury total 21.5 19.1
Imports:
Honda 8.2 7.6
Toyota 13.1 12.8
Nissan 10.7 10.3
Other imports 6.3 6.7
Import total 38.3 37.4
100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended March 31,
Diluted Earnings
Net Income Per Share
2006 2005 2006 2005
As reported $87.2 $97.0 $0.33 $0.36
Discontinued operations - store
divestitures, net of income
taxes 10.6 4.0 $0.04 0.01
Discontinued operations - tax
adjustments -- (11.7) $-- $(0.04)
From continuing operations, as
reported $97.8 $89.3 $0.37 $0.33
Senior note repurchases -- 8.7 -- $0.03
Adjusted $97.8 $98.0 $0.37 $0.36
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target
of 10% to 12% Per Year:
U.S. light vehicle annual unit intensely competitive, nearly 17
sales million units
SGA % reduction (over 2006,
2007 and 2008) approximately 100 bp
(SGA % of gross profit
less floorplan interest
expense)
Continued opportunistic share repurchase, capital
redeployment of cash flow expenditures and acquisitions
Targeted return on incremental
invested capital approximately 15% after-tax
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
2006 2005 $ Variance % Variance
Revenue:
New vehicle $2,678.0 $2,640.2 $37.8 1.4
Retail used
vehicle 922.9 878.6 44.3 5.0
Wholesale 216.4 185.9 30.5 16.4
Used vehicle 1,139.3 1,064.5 74.8 7.0
Parts and service 663.7 635.3 28.4 4.5
Finance and insurance 152.1 144.3 7.8 5.4
Other 7.1 7.0 0.1 1.4
Total revenue $4,640.2 $4,491.3 $148.9 3.3
Gross profit:
New vehicle $198.9 $194.8 $4.1 2.1
Retail used
vehicle 112.0 109.7 2.3 2.1
Wholesale 1.9 2.5 (0.6)
Used vehicle 113.9 112.2 1.7 1.5
Parts and service 290.8 275.3 15.5 5.6
Finance and insurance 152.1 144.3 7.8 5.4
Other 6.6 6.2 0.4 6.5
Total gross profit $762.3 $732.8 $29.5 4.0
Retail vehicle unit sales:
New 89,063 89,955 (892) (1.0)
Used 58,025 58,624 (599) (1.0)
147,088 148,579 (1,491) (1.0)
Revenue per vehicle
retailed:
New $30,069 $29,350 $719 2.4
Used $15,905 $14,987 $918 6.1
Gross profit per vehicle
retailed:
New $2,233 $2,166 $67 3.1
Used $1,930 $1,871 $59 3.2
Finance and
insurance $1,034 $971 $63 6.5
Operating Percentages Three Months Ended March 31,
% 2006 % 2005
Revenue mix percentages:
New vehicle 57.7 58.8
Used vehicle 24.6 23.7
Parts and service 14.3 14.1
Finance and insurance 3.3 3.2
Other 0.1 0.2
100.0 100.0
Gross profit mix
percentages:
New vehicle 26.1 26.6
Used vehicle 14.9 15.3
Parts and service 38.1 37.6
Finance and insurance 20.0 19.7
Other 0.9 0.8
100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.4 7.4
Used vehicle - retail 12.1 12.5
Parts and service 43.8 43.3
Total 16.4 16.3
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