AutoNation Reports First-Quarter 2007 Earnings
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- Board authorized additional share repurchases of $500 million
FORT LAUDERDALE, Fla., April 26 -- AutoNation, Inc. America's largest automotive retailer, today reported earnings from continuing operations of $0.39 per share compared to year-ago earnings from continuing operations of $0.37 per share, an increase of 5%. The first- quarter EPS was positively affected by the accretive impact of share repurchases, including the $1.15 billion April 2006 share buyback, and certain tax adjustments, substantially offset by a decline in new vehicle sales especially in California and Florida.
In the first quarter, industry new vehicle retail sales for California and Florida were off approximately 13%, based on CNW Research data, in line with AutoNation's decline for new vehicle sales for California and Florida. Together, California and Florida represent approximately 50% of the Company's new vehicle business.
Commenting on the first-quarter and year ahead, Mike Jackson, chairman and chief executive officer said, "It is a very challenging economic environment for new vehicle sales, driven in large part by continued softening in the housing market and higher interest rates, especially in California and Florida." Mr. Jackson also noted, "As long as the housing market continues to be soft in California and Florida, it will continue to be a challenging market for new vehicle sales. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term."
First quarter 2007 net income from continuing operations was $83 million compared to year-ago net income from continuing operations of $98 million. Results were negatively impacted by an after-tax $9 million increase ($15 million pre-tax) in other interest expense in 2007, primarily due to additional debt incurred in connection with our April 2006 share buyback which was accretive to EPS, as well as lower new vehicle sales especially in California and Florida. Additionally, the first quarter benefited from certain tax adjustments.
Separately, the Company's Board of Directors has authorized an additional $500 million for the repurchase of its common stock. The Company has $42.1 million remaining under the $250 million share repurchase program authorized in June 2006.
The first quarter conference call may be accessed at 11:00 a.m. Eastern Time by phone at 888-531-2987 or via the Internet (audio webcast) at http://www.autonation.com/ by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 2:30 p.m. Eastern Time April 26, 2007 through May 3, 2007 by calling 800-475-6701 (access code # 867361).
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. A component of the Standard and Poor's 500 Index, AutoNation has approximately 25,000 full-time employees and owns and operates 327 new vehicle franchises in 16 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com, where more than 90,000 vehicles are available for sale.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended March 31,
2007 2006
Revenue:
New vehicle $2,473.9 $2,638.4
Used vehicle 1,095.1 1,119.0
Parts and service 660.0 645.3
Finance and insurance, net 149.1 149.6
Other 17.2 18.8
Total revenue 4,395.3 4,571.1
Cost of sales:
New vehicle 2,294.0 2,441.4
Used vehicle 989.8 1,006.3
Parts and service 371.8 361.3
Other 6.6 7.8
Total cost of sales 3,662.2 3,816.8
Gross profit 733.1 754.3
Selling, general and
administrative expenses 524.4 532.7
Depreciation and amortization 21.3 19.4
Operating income 187.4 202.2
Floorplan interest expense (32.8) (31.2)
Other interest expense (26.5) (12.0)
Interest income 0.9 3.5
Other gains, net 0.2 -
Income from continuing
operations before income taxes 129.2 162.5
Provision for income taxes 46.3 64.5
Net income from continuing
operations 82.9 98.0
Loss from discontinued
operations, net of income
taxes (5.3) (10.8)
Net income $77.6 $87.2
Diluted earnings (loss) per
share:
Continuing operations $0.39 $0.37
Discontinued operations $(0.03) $(0.04)
Net income $0.37 $0.33
Weighted average common and
common equivalent shares
outstanding 210.7 267.4
Common shares outstanding, net
of treasury stock 209.7 264.5
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
2007 2006 $ Variance % Variance
Revenue:
New vehicle $2,473.9 $2,638.4 $(164.5) (6.2)
Retail used vehicle 885.7 904.6 (18.9) (2.1)
Wholesale 209.4 214.4 (5.0) (2.3)
Used vehicle 1,095.1 1,119.0 (23.9) (2.1)
Parts and service 660.0 645.3 14.7 2.3
Finance and insurance, net 149.1 149.6 (0.5) (0.3)
Other 17.2 18.8 (1.6)
Total revenue $4,395.3 $4,571.1 $(175.8) (3.8)
Gross profit:
New vehicle $179.9 $197.0 $(17.1) (8.7)
Retail used vehicle 102.5 110.2 (7.7) (7.0)
Wholesale 2.8 2.5 0.3
Used vehicle 105.3 112.7 (7.4) (6.6)
Parts and service 288.2 284.0 4.2 1.5
Finance and insurance 149.1 149.6 (0.5) (0.3)
Other 10.6 11.0 (0.4)
Total gross profit 733.1 754.3 (21.2) (2.8)
Selling, general and
administrative expenses 524.4 532.7 8.3 1.6
Depreciation and amortization 21.3 19.4 (1.9)
Operating income 187.4 202.2 (14.8) (7.3)
Floorplan interest expense (32.8) (31.2) (1.6)
Other interest expense (26.5) (12.0) (14.5)
Interest income 0.9 3.5 (2.6)
Other gains, net 0.2 - 0.2
Income from continuing
operations before income
taxes $129.2 $162.5 $(33.3) (20.5)
Retail vehicle unit sales:
New 79,894 87,464 (7,570) (8.7)
Used 54,500 56,676 (2,176) (3.8)
134,394 144,140 (9,746) (6.8)
Revenue per vehicle retailed:
New $30,965 $30,166 $799 2.6
Used $16,251 $15,961 $290 1.8
Gross profit per vehicle retailed:
New $2,252 $2,252 $- -
Used $1,881 $1,944 $(63) (3.2)
Finance and insurance $1,109 $1,038 $71 6.8
Operating Percentages Three Months Ended March 31,
% 2007 % 2006
Revenue mix percentages:
New vehicle 56.3 57.7
Used vehicle 24.9 24.5
Parts and service 15.0 14.1
Finance and insurance, net 3.4 3.3
Other 0.4 0.4
100.0 100.0
Gross profit mix percentages:
New vehicle 24.5 26.1
Used vehicle 14.4 14.9
Parts and service 39.3 37.7
Finance and insurance 20.3 19.8
Other 1.5 1.5
100.0 100.0
Operating items as a
percentage of revenue:
Gross profit:
New vehicle 7.3 7.5
Used vehicle - retail 11.6 12.2
Parts and service 43.7 44.0
Total 16.7 16.5
Selling, general and
administrative expenses 11.9 11.7
Operating income 4.3 4.4
Operating items as a
percentage of total gross
profit:
Selling, general and
administrative expenses 71.5 70.6
Operating income 25.6 26.8
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Cash Flow Information Three Months Ended March 31,
2007 2006
Capital expenditures $42.4 $19.8
Acquisitions $- $67.4
Proceeds from exercises of stock options $76.1 $32.3
Stock repurchases:
Aggregate purchase price $50.3 $-
Shares repurchased (in millions) 2.3 -
Floorplan Assistance and Expense Three Months Ended March 31,
2007 2006 Variance
Floorplan assistance earned (included in
cost of sales) $24.9 $26.2 $(1.3)
Floorplan interest expense (32.8) (31.2) (1.6)
Net floorplan cost $(7.9) $(5.0) $(2.9)
Balance Sheet and Other Highlights
March 31, 2007 December 31, 2006 March 31, 2006
Cash and cash equivalents $42.8 $52.3 $258.1
Inventory $2,258.2 $2,335.0 $2,585.0
Total floorplan notes
payable $2,048.7 $2,241.5 $2,296.9
Non-vehicle debt $1,374.5 $1,571.5 $523.6
Equity $3,830.7 $3,712.7 $4,798.3
New days supply (industry
standard of selling days,
including fleet) 52 days 51 days 54 days
Used days supply (trailing
30 days) 38 days 42 days 41 days
Brand Mix - New Vehicle Revenue %
Three Months Ended March 31,
% 2007 % 2006
Detroit 3:
Ford, Lincoln-Mercury 14.7 17.3
Chevrolet, Pontiac, Buick, Cadillac, GMC 14.0 13.9
Chrysler, Jeep, Dodge 7.0 8.3
Detroit 3 total 35.7 39.5
Import Premium Luxury:
Mercedes 12.0 10.5
BMW 5.9 5.1
Lexus 4.0 3.4
Other premium luxury (Land Rover, Porsche) 2.9 2.8
Premium Luxury total 24.8 21.8
Volume Imports:
Honda 8.9 8.3
Toyota 14.5 13.3
Nissan 9.7 10.6
Other imports 6.4 6.5
Import total 39.5 38.7
100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended March 31,
Net Income Diluted Earnings Per Share
2007 2006 2007 2006
As reported $77.6 $87.2 $0.37 $0.33
Discontinued
operations, net of
income taxes 5.3 10.8 $0.03 $0.04
From continuing operations,
as reported 82.9 98.0 $0.39 $0.37
Income tax adjustments (5.1) - $(0.02) $-
Adjusted $77.8 $98.0 $0.37 $0.37
* Please refer to the "Non-GAAP Financial Measures" section of the Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target of 10% to 12% Per Year:
U.S. light vehicle annual unit intensely competitive, low 16
sales million units
SGA % reduction (over 2007, 2008 approximately 100 bp, excluding
and 2009) stock option expense
(SGA % of gross profit less
floorplan interest expense)
Continued opportunistic redeployment share repurchase, capital
of cash flow expenditures and acquisitions
Targeted return on incremental approximately 15% after-tax
invested capital
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
2007 2006 $ Variance % Variance
Revenue:
New vehicle $2,436.3 $2,638.4 $(202.1) (7.7)
Retail used vehicle 875.5 904.6 (29.1) (3.2)
Wholesale 202.5 213.8 (11.3) (5.3)
Used vehicle 1,078.0 1,118.4 (40.4) (3.6)
Parts and service 649.5 645.3 4.2 0.7
Finance and insurance, net 149.1 149.6 (0.5) (0.3)
Other 7.0 7.2 (0.2)
Total revenue $4,319.9 $4,558.9 $(239.0) (5.2)
Gross profit:
New vehicle $176.5 $197.0 $(20.5) (10.4)
Retail used vehicle 101.7 110.2 (8.5) (7.7)
Wholesale 2.1 2.0 0.1
Used vehicle 103.8 112.2 (8.4) (7.5)
Parts and service 282.7 283.3 (0.6) (0.2)
Finance and insurance 149.1 149.6 (0.5) (0.3)
Other 6.7 6.5 0.2
Total gross profit $718.8 $748.6 $(29.8) (4.0)
Retail vehicle unit sales:
New 79,156 87,464 (8,308) (9.5)
Used 54,189 56,676 (2,487) (4.4)
133,345 144,140 (10,795) (7.5)
Revenue per vehicle retailed:
New $30,778 $30,166 $612 2.0
Used $16,156 $15,961 $195 1.2
Gross profit per vehicle retailed:
New $2,230 $2,252 $(22) (1.0)
Used $1,877 $1,944 $(67) (3.4)
Finance and insurance $1,118 $1,038 $80 7.7
Operating Percentages Three Months Ended March 31,
% 2007 % 2006
Revenue mix percentages:
New vehicle 56.4 57.9
Used vehicle 25.0 24.5
Parts and service 15.0 14.2
Finance and insurance, net 3.5 3.3
Other 0.1 0.1
100.0 100.0
Gross profit mix percentages:
New vehicle 24.6 26.3
Used vehicle 14.4 15.0
Parts and service 39.3 37.8
Finance and insurance 20.7 20.0
Other 1.0 0.9
100.0 100.0
Operating items as a percentage of revenue:
Gross Profit:
New vehicle 7.2 7.5
Used vehicle - retail 11.6 12.2
Parts and service 43.5 43.9
Total 16.6 16.4