AutoNation Reports Fourth-Quarter 2006 Earnings
FORT LAUDERDALE, Fla., Feb. 7, 2007 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2006 fourth- quarter net income from continuing operations of $74 million or $0.35 per share on revenue of $4.5 billion, compared to year-ago net income from continuing operations of $82 million or $0.31 per share on revenue of $4.4 billion. Fourth-quarter EPS from continuing operations increased 13%.
Fourth quarter 2006 results were positively impacted by a 2% increase in total revenue driven by increases of 2% in new vehicle, 5% in parts and service and 8% in finance and insurance. This was offset by lower used vehicle gross profit, higher floor plan and other interest expense and $.01 per share in stock option expense. Additionally, the fourth quarter EPS was positively impacted by continued share repurchases. Fourth quarter 2005 earnings were negatively affected by Hurricane Wilma in Florida.
For full-year 2006, the Company reported net income from continuing operations of $331 million or $1.45 per share, compared to $397 million or $1.48 per share in 2005. After adjusting for certain items as disclosed in the attached financial tables, the Company's full-year EPS from continuing operations for 2006 increased 8% to $1.54 from $1.43 in 2005. The Company's revenue for the full year totaled $19.0 billion, an increase of 1% versus the prior year.
Full year 2006 results were positively impacted by increased gross profits in parts and service and finance and insurance, offset by lower used vehicle gross profit, higher floor plan and other interest expense and $.04 per share stock option expense impact. The effect on EPS of higher other interest expense was more than offset by the 19% reduction in shares outstanding due to the 50 million share buyback in the second quarter.
Commenting on the fourth-quarter and year ahead, Mike Jackson, chairman and chief executive officer said, "The retail environment was challenging during the fourth-quarter and we expect this to continue in 2007. We believe that in 2007, U.S. new vehicle sales will decline to the low 16 million unit level."
The fourth quarter conference call may be accessed at 11:00 am Eastern Time by phone at 888-639-6205 or via the Internet (audio webcast) at http://www.autonation.com/ by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 2:30 p.m. Eastern Time February 7, 2007 through February 14, 2007 by calling 800-475-6701 (access code # 859958).
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. A component of the Standard and Poor's 500 Index, AutoNation has approximately 26,000 full-time employees and owns and operates 331 new vehicle franchises in 16 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com, where more than 90,000 vehicles are available for sale.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
Revenue:
New vehicle $2,652.8 $2,605.1 $11,163.0 $11,224.0
Used vehicle 1,023.2 1,016.5 4,518.1 4,315.0
Parts and service 631.8 600.1 2,600.4 2,508.5
Finance and insurance, net 148.8 138.3 634.3 601.0
Other 16.5 18.4 72.8 81.0
Total revenue 4,473.1 4,378.4 18,988.6 18,729.5
Cost of sales:
New vehicle 2,461.4 2,413.8 10,345.8 10,407.3
Used vehicle 936.1 919.9 4,109.0 3,896.2
Parts and service 358.5 329.9 1,459.0 1,408.5
Other 6.4 4.9 30.4 33.4
Total cost of sales 3,762.4 3,668.5 15,944.2 15,745.4
Gross profit 710.7 709.9 3,044.4 2,984.1
Selling, general and
administrative expenses 512.1 511.4 2,165.0 2,100.9
Depreciation and
amortization 21.2 19.9 82.9 78.4
Other expenses (income) - (0.1) (0.1) 0.8
Operating income 177.4 178.7 796.6 804.0
Floorplan interest expense (36.5) (30.3) (142.0) (105.5)
Other interest expense (26.5) (14.4) (90.9) (63.3)
Other interest expense -
senior note repurchases - (2.3) (34.5) (17.4)
Interest income 0.8 3.1 8.3 7.5
Other income (loss) 3.3 0.2 4.6 (0.1)
Income from continuing
operations before income
taxes 118.5 135.0 542.1 625.2
Provision for income taxes 44.4 53.2 210.7 228.3
Net income from continuing
operations 74.1 81.8 331.4 396.9
Income (loss) from
discontinued operations,
net of income taxes 1.1 (6.5) (14.5) 99.6
Net income $75.2 $75.3 $316.9 $496.5
Diluted earnings per share:
Continuing operations $0.35 $0.31 $1.45 $1.48
Discontinued operations $0.01 $(0.02) $(0.06) $0.37
Net income $0.36 $0.28 $1.38 $1.85
Weighted average common and
common equivalent shares
outstanding 211.5 266.8 229.3 268.0
Common shares outstanding 206.8 262.2 206.8 262.2
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights
Three Months Ended December 31,
2006 2005 $ Variance % Variance
Revenue:
New vehicle $2,652.8 $2,605.1 $47.7 1.8
Retail used vehicle 810.7 820.5 (9.8) (1.2)
Wholesale 212.5 196.0 16.5 8.4
Used vehicle 1,023.2 1,016.5 6.7 0.7
Parts and service 631.8 600.1 31.7 5.3
Finance and insurance, net 148.8 138.3 10.5 7.6
Other 16.5 18.4 (1.9)
Total revenue $4,473.1 $4,378.4 $94.7 2.2
Gross profit:
New vehicle $191.4 $191.3 $0.1 0.1
Retail used vehicle 88.3 96.0 (7.7) (8.0)
Wholesale (1.2) 0.6 (1.8)
Used vehicle 87.1 96.6 (9.5) (9.8)
Parts and service 273.3 270.2 3.1 1.1
Finance and insurance 148.8 138.3 10.5 7.6
Other 10.1 13.5 (3.4)
Total gross profit 710.7 709.9 0.8 0.1
Selling, general and
administrative expenses 512.1 511.4 (0.7) (0.1)
Depreciation and amortization 21.2 19.9 (1.3)
Other expenses (income) - (0.1) (0.1)
Operating income 177.4 178.7 (1.3) (0.7)
Floorplan interest expense (36.5) (30.3) (6.2)
Other interest expense (26.5) (14.4) (12.1)
Other interest expense - senior
note repurchases - (2.3) 2.3
Interest income 0.8 3.1 (2.3)
Other income (loss) 3.3 0.2 3.1
Income from continuing
operations before
income taxes $118.5 $135.0 $(16.5) (12.2)
Retail vehicle unit sales:
New 84,048 84,833 (785) (0.9)
Used 49,790 51,887 (2,097) (4.0)
133,838 136,720 (2,882) (2.1)
Revenue per vehicle retailed:
New $31,563 $30,709 $854 2.8
Used $16,282 $15,813 $469 3.0
Gross profit per vehicle retailed:
New $2,277 $2,255 $22 1.0
Used $1,773 $1,850 $(77) (4.2)
Finance and insurance $1,112 $1,012 $100 9.9
Operating Highlights
Twelve Months Ended December 31,
2006 2005 $ Variance % Variance
Revenue:
New vehicle $11,163.0 $11,224.0 $(61.0) (0.5)
Retail used vehicle 3,621.2 3,487.9 133.3 3.8
Wholesale 896.9 827.1 69.8 8.4
Used vehicle 4,518.1 4,315.0 203.1 4.7
Parts and service 2,600.4 2,508.5 91.9 3.7
Finance and insurance, net 634.3 601.0 33.3 5.5
Other 72.8 81.0 (8.2)
Total revenue $18,988.6 $18,729.5 $259.1 1.4
Gross profit:
New vehicle $817.2 $816.7 $0.5 0.1
Retail used vehicle 409.8 415.9 (6.1) (1.5)
Wholesale (0.7) 2.9 (3.6)
Used vehicle 409.1 418.8 (9.7) (2.3)
Parts and service 1,141.4 1,100.0 41.4 3.8
Finance and insurance 634.3 601.0 33.3 5.5
Other 42.4 47.6 (5.2)
Total gross profit 3,044.4 2,984.1 60.3 2.0
Selling, general and
administrative expenses 2,165.0 2,100.9 (64.1) (3.1)
Depreciation and amortization 82.9 78.4 (4.5)
Other expenses (income) (0.1) 0.8 0.9
Operating income 796.6 804.0 (7.4) (0.9)
Floorplan interest expense (142.0) (105.5) (36.5)
Other interest expense (90.9) (63.3) (27.6)
Other interest expense -
senior note repurchases (34.5) (17.4) (17.1)
Interest income 8.3 7.5 0.8
Other income (loss) 4.6 (0.1) 4.7
Income from continuing
operations before income
taxes $542.1 $625.2 $(83.1) (13.3)
Retail vehicle unit sales:
New 369,567 381,082 (11,515) (3.0)
Used 225,609 228,528 (2,919) (1.3)
595,176 609,610 (14,434) (2.4)
Revenue per vehicle retailed:
New $30,206 $29,453 $753 2.6
Used $16,051 $15,262 $789 5.2
Gross profit per vehicle retailed:
New $2,211 $2,143 $68 3.2
Used $1,816 $1,820 $(4) (0.2)
Finance and insurance $1,066 $986 $80 8.1
Operating Percentages
Three Months Ended Twelve Months Ended
December 31, December 31,
% 2006 % 2005 % 2006 % 2005
Revenue mix percentages:
New vehicle 59.3 59.5 58.8 59.9
Used vehicle 22.9 23.2 23.8 23.0
Parts and service 14.1 13.7 13.7 13.4
Finance and insurance 3.3 3.2 3.3 3.2
Other 0.4 0.4 0.4 0.5
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 26.9 26.9 26.8 27.4
Used vehicle 12.3 13.6 13.4 14.0
Parts and service 38.5 38.1 37.5 36.9
Finance and insurance 20.9 19.5 20.8 20.1
Other 1.4 1.9 1.5 1.6
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross profit:
New vehicle 7.2 7.3 7.3 7.3
Used vehicle - retail 10.9 11.7 11.3 11.9
Parts and service 43.3 45.0 43.9 43.9
Total 15.9 16.2 16.0 15.9
Selling, general and
administrative expenses 11.4 11.7 11.4 11.2
Operating income 4.0 4.1 4.2 4.3
Operating items as a
percentage of total
gross profit:
Selling, general and
administrative expenses 72.1 72.0 71.1 70.4
Operating income 25.0 25.2 26.2 26.9
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Information
Three Twelve
Months Ended Months Ended
December 31, December 31,
2006 2005 2006 2005
Capital expenditures, excluding
property operating lease buy-outs $39.2 $39.4 $176.1 $130.9
Property operating lease buy-outs $- $- $- $10.3
Acquisitions $77.9 $2.5 $166.4 $15.9
Proceeds from exercises of
stock options $13.6 $36.1 $75.7 $112.8
Senior note repurchases $- $23.6 $334.2 $136.0
Stock repurchases:
Aggregate purchase price $43.3 $49.9 $1,380.6 $237.1
Shares repurchased (in millions) 2.1 2.4 61.2 11.8
Floorplan Assistance and Expense
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 Variance 2006 2005 Variance
Floorplan assistance
earned (included in
cost of sales) $25.4 $24.8 $0.6 $111.6 $109.8 $1.8
Floorplan interest
expense (36.5) (30.3) (6.2) (142.0) (105.5) (36.5)
Net floorplan
benefit (cost) $(11.1) $(5.5) $(5.6) $(30.4) $4.3 $(34.7)
Balance Sheet and Other Highlights
December 31, 2006 December 31, 2005
Cash and cash equivalents $52.2 $245.7
Inventory $2,361.4 $2,584.6
Total floorplan notes payable $2,265.0 $2,445.7
Non-vehicle debt $1,571.5 $525.0
Equity $3,712.7 $4,669.5
New days supply (industry
standard of selling days,
including fleet) 52 days 55 days
Used days supply (trailing 30 days) 42 days 42 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Twelve Months Ended
December 31, December 31,
% 2006 % 2005 % 2006 % 2005
Detroit 3:
Ford, Lincoln-Mercury 13.7 16.1 16.3 18.0
Chevrolet, Pontiac,
Buick, Cadillac, GMC 14.1 12.6 14.3 15.0
Chrysler, Jeep, Dodge 7.3 8.1 7.6 9.0
Detroit 3 total 35.1 36.8 38.2 42.0
Import Premium Luxury:
Mercedes 14.1 11.4 11.8 9.6
BMW 5.9 5.8 5.0 5.0
Lexus 4.0 4.0 3.4 3.4
Other premium luxury (Land
Rover, Porsche) 3.3 3.3 2.7 2.3
Premium Luxury total 27.3 24.5 22.9 20.3
Volume Imports:
Honda 8.1 8.5 8.4 8.2
Toyota 14.2 12.6 14.2 12.6
Nissan 8.7 10.0 9.8 10.1
Other imports 6.6 7.6 6.5 6.8
Import total 37.6 38.7 38.9 37.7
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended December 31,
Diluted Earnings
Net Income Per Share
2006 2005 2006 2005
As reported $75.2 $75.3 $0.36 $0.28
Discontinued operations -
store divestitures, net
of income taxes (1.1) 6.5 $(0.01) $0.02
Discontinued operations -
tax adjustments - - $- $-
From continuing operations,
as reported 74.1 81.8 $0.35 $0.31
Income tax adjustments - - $- $-
Senior note repurchases - 1.5 $0.01
Proforma stock option
compensation expense
(per 2005 disclosures) - (2.1) $- $(0.01)
Adjusted $74.1 $81.2 $0.35 $0.30
Twelve Months Ended December 31,
Diluted Earnings
Net Income Per Share
2006 2005 2006 2005
As reported $316.9 $496.5 $1.38 $1.85
Discontinued operations -
store divestitures, net of
income taxes 14.5 10.8 $0.06 $0.04
Discontinued operations -
tax adjustments - (110.4) $- $(0.41)
From continuing operations,
as reported 331.4 396.9 $1.45 $1.48
Senior note repurchases 21.1 10.6 $0.09 $0.04
Income tax adjustments - (16.2) $- $(0.06)
Proforma stock option
compensation expense
(per 2005 disclosures) - (9.3) $- $(0.03)
Adjusted $352.5 $382.0 $1.54 $1.43
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target
of 10% to 12% Per Year:
U.S. light vehicle annual unit sales intensely competitive, low
16 million units
SGA % reduction (over 2007, 2008 and 2009) approximately 100 bp
(SGA % of gross profit less
floorplan interest expense)
Continued opportunistic redeployment of share repurchase, capital
cash flow expenditures and acquisitions
Targeted return on incremental invested approximately 15% after-tax
capital
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights
Three Months Ended December 31,
2006 2005 $ Variance % Variance
Revenue:
New vehicle $2,606.3 $2,605.1 $1.2 -
Retail used vehicle 800.4 820.5 (20.1) (2.4)
Wholesale 205.8 195.4 10.4 5.3
Used vehicle 1,006.2 1,015.9 (9.7) (1.0)
Parts and service 622.4 600.1 22.3 3.7
Finance and insurance, net 147.9 138.3 9.6 6.9
Other 6.0 7.1 (1.1) (15.5)
Total revenue $4,388.8 $4,366.5 $22.3 0.5
Gross profit:
New vehicle $187.1 $191.3 $(4.2) (2.2)
Retail used vehicle 87.5 96.1 (8.6) (8.9)
Wholesale (1.7) - (1.7)
Used vehicle 85.8 96.1 (10.3) (10.7)
Parts and service 269.3 270.2 (0.9) (0.3)
Finance and insurance 147.9 138.3 9.6 6.9
Other 6.3 8.1 (1.8) (22.2)
Total gross profit $696.4 $704.0 $(7.6) (1.1)
Retail vehicle unit sales:
New 83,230 84,833 (1,603) (1.9)
Used 49,525 51,887 (2,362) (4.6)
132,755 136,720 (3,965) (2.9)
Revenue per vehicle retailed:
New $31,314 $30,709 $605 2.0
Used $16,162 $15,813 $349 2.2
Gross profit per vehicle
retailed:
New $2,248 $2,255 $(7) (0.3)
Used $1,767 $1,852 $(85) (4.6)
Finance and insurance $1,114 $1,012 $102 10.1
Operating Highlights
Twelve Months Ended December 31,
2006 2005 $ Variance % Variance
Revenue:
New vehicle $11,050.5 $11,224.0 $(173.5) (1.5)
Retail used vehicle 3,595.4 3,487.8 107.6 3.1
Wholesale 876.7 824.5 52.2 6.3
Used vehicle 4,472.1 4,312.3 159.8 3.7
Parts and service 2,572.7 2,508.5 64.2 2.6
Finance and insurance, net 632.3 600.5 31.8 5.3
Other 27.6 28.2 (0.6) (2.1)
Total revenue $18,755.2 $18,673.5 $81.7 0.4
Gross profit:
New vehicle $806.6 $816.7 $(10.1) (1.2)
Retail used vehicle 407.3 415.9 (8.6) (2.1)
Wholesale (2.7) 0.3 (3.0)
Used vehicle 404.6 416.2 (11.6) (2.8)
Parts and service 1,126.8 1,099.9 26.9 2.4
Finance and insurance 632.3 600.5 31.8 5.3
Other 25.5 27.1 (1.6) (5.9)
Total gross profit $2,995.8 $2,960.4 $35.4 1.2
Retail vehicle unit sales:
New 367,665 381,082 (13,417) (3.5)
Used 224,980 228,528 (3,548) (1.6)
592,645 609,610 (16,965) (2.8)
Revenue per vehicle retailed:
New $30,056 $29,453 $603 2.0
Used $15,981 $15,262 $719 4.7
Gross profit per vehicle
retailed:
New $2,194 $2,143 $51 2.4
Used $1,810 $1,820 $(10) (0.5)
Finance and insurance $1,067 $985 $82 8.3
Operating Percentages
Three Months Ended Twelve Months Ended
December 31, December 31,
% 2006 % 2005 % 2006 % 2005
Revenue mix percentages:
New vehicle 59.4 59.7 58.9 60.1
Used vehicle 22.9 23.3 23.8 23.1
Parts and service 14.2 13.7 13.7 13.4
Finance and insurance 3.4 3.2 3.4 3.2
Other 0.1 0.1 0.2 0.2
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 26.9 27.2 26.9 27.6
Used vehicle 12.3 13.7 13.5 14.1
Parts and service 38.7 38.4 37.6 37.2
Finance and insurance 21.2 19.6 21.1 20.3
Other 0.9 1.1 0.9 0.8
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.2 7.3 7.3 7.3
Used vehicle - retail 10.9 11.7 11.3 11.9
Parts and service 43.3 45.0 43.8 43.8
Total 15.9 16.1 16.0 15.9