AutoNation Reports Second-Quarter Earnings
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FORT LAUDERDALE, Fla., July 26 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2007 second- quarter net income from continuing operations of $79 million or $0.38 per share, compared to year-ago net income from continuing operations of $74 million or $0.33 per share. Last year's second quarter results included one- time debt repurchase costs of approximately $21 million after tax, or $.09 per share. Results for the second quarter of 2007 reflected a decline in new vehicle retail sales especially in California and Florida, partially offset by a tax adjustment.
Second-quarter 2007 revenue totaled $4.6 billion, compared to $4.9 billion in the year-ago period, driven primarily by lower new vehicle sales. In the second-quarter, industry new vehicle retail sales for California and Florida were off approximately 14%, based on CNW Research data. AutoNation's decline for new vehicle unit sales for California and Florida was 16%. Together, California and Florida represent approximately 50% of the Company's new vehicle business and 20% of the industry retail new vehicles sold in the U.S.
Commenting on the second-quarter, Mike Jackson, Chairman and Chief Executive Officer, said, "The second quarter was a challenging economic environment for new vehicle sales driven largely by continued weakness in the housing market in our key markets of Florida and California." Mr. Jackson also noted, "A key force behind consumer spending in recent years was the perceived growth in household wealth consumers had from the value of increasing home prices and readily available home equity credit. With the slumping housing market, consumers have been less willing to purchase big-ticket items, including vehicles. We expect to continue to see a challenging new vehicle retail market as long as the housing market difficulties persist. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term."
For the six-month period ended June 30, 2007, the Company reported net income from continuing operations of $162 million or $0.77 per share compared to $172 million or $0.70 per share in the prior year. The Company's revenue for the six-month period ended June 30, 2007 totaled $8.9 billion, down 5% compared to $9.4 billion in the prior year.
The Company also announced today that the Board of Directors approved an extension of the employment agreements of Mr. Jackson and Michael E. Maroone, the President and Chief Operating Officer of the Company, until 2010. Mr. Jackson has served as Chairman of the Board since January 2003 and as our Chief Executive Officer since September 1999. Mr. Maroone joined the Company in 1997 and has served as our President and Chief Operating Officer since August 1999.
The second quarter conference call may be accessed at 11:00 a.m. Eastern Time today by phone at 866-269-9612 or via the Internet (audio webcast) at http://www.autonation.com/ by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 2:30 p.m. Eastern Time July 26, 2007 through August 2, 2007 by calling 800-475-6701 (access code # 875632).
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and has been named America's Most Admired Automotive Retailer by FORTUNE Magazine in five of the last six years. A component of the Standard and Poor's 500 Index, AutoNation owns and operates 321 new vehicle franchises in 16 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com, where more than 80,000 vehicles are available for sale along with AutoNation's E-Vehicle program.
AUTONATION, INC.
UNAUDITED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenue:
New vehicle $2,631.5 $2,884.9 $5,094.7 $5,513.8
Used vehicle 1,104.5 1,171.3 2,193.1 2,282.8
Parts and service 653.8 648.2 1,310.4 1,289.9
Finance and insurance, net 152.3 167.6 300.6 316.4
Other 17.2 20.7 34.3 39.5
Total revenue 4,559.3 4,892.7 8,933.1 9,442.4
Cost of sales:
New vehicle 2,450.1 2,674.2 4,734.1 5,106.9
Used vehicle 1,010.2 1,067.8 1,994.1 2,067.4
Parts and service 366.8 360.5 736.9 720.0
Other 6.5 8.9 13.1 16.7
Total cost of sales 3,833.6 4,111.4 7,478.2 7,911.0
Gross profit 725.7 781.3 1,454.9 1,531.4
Selling, general and
administrative expenses 517.7 548.4 1,038.9 1,077.5
Depreciation and amortization 21.6 20.7 42.8 40.0
Other expenses, net 1.6 0.2 1.6 0.2
Operating income 184.8 212.0 371.6 413.7
Floorplan interest expense (33.5) (36.1) (66.0) (67.0)
Other interest expense (26.5) (25.2) (53.0) (37.2)
Other interest expense -
senior note repurchases - (34.5) - (34.5)
Interest income 0.9 3.1 1.8 6.6
Other gains, net 0.8 0.7 1.0 0.7
Income from continuing
operations before income
taxes 126.5 120.0 255.4 282.3
Provision for income taxes 47.2 46.1 93.4 110.6
Net income from continuing
operations 79.3 73.9 162.0 171.7
Loss from discontinued
operations, net of income
taxes (2.0) (1.2) (7.1) (11.8)
Net income $77.3 $72.7 $154.9 $159.9
Diluted earnings (loss) per
share:
Continuing operations $0.38 $0.33 $0.77 $0.70
Discontinued operations $(0.01) $(0.01) $(0.03) $(0.05)
Net income $0.37 $0.32 $0.74 $0.65
Weighted average common and
common equivalent shares
outstanding 208.6 225.2 209.7 246.5
Common shares outstanding, net
of treasury stock 201.9 213.0 201.9 213.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended June 30,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $2,631.5 $2,884.9 $(253.4) (8.8)
Retail used vehicle 880.1 937.9 (57.8) (6.2)
Wholesale 224.4 233.4 (9.0) (3.9)
Used vehicle 1,104.5 1,171.3 (66.8) (5.7)
Parts and service 653.8 648.2 5.6 0.9
Finance and insurance, net 152.3 167.6 (15.3) (9.1)
Other 17.2 20.7 (3.5)
Total revenue $4,559.3 $4,892.7 $(333.4) (6.8)
Gross profit:
New vehicle $181.4 $210.7 $(29.3) (13.9)
Retail used vehicle 93.6 103.2 (9.6) (9.3)
Wholesale 0.7 0.3 0.4
Used vehicle 94.3 103.5 (9.2) (8.9)
Parts and service 287.0 287.7 (0.7) (0.2)
Finance and insurance 152.3 167.6 (15.3) (9.1)
Other 10.7 11.8 (1.1)
Total gross profit 725.7 781.3 (55.6) (7.1)
Selling, general and
administrative expenses 517.7 548.4 30.7 5.6
Depreciation and amortization 21.6 20.7 (0.9)
Other expenses, net 1.6 0.2 (1.4)
Operating income 184.8 212.0 (27.2) (12.8)
Floorplan interest expense (33.5) (36.1) 2.6
Other interest expense (26.5) (25.2) (1.3)
Other interest expense - senior
note repurchases - (34.5) 34.5
Interest income 0.9 3.1 (2.2)
Other gains, net 0.8 0.7 0.1
Income from continuing
operations before income
taxes $126.5 $120.0 $6.5 5.4
Retail vehicle unit sales:
New 85,768 96,932 (11,164) (11.5)
Used 53,011 57,781 (4,770) (8.3)
138,779 154,713 (15,934) (10.3)
Revenue per vehicle retailed:
New $30,682 $29,762 $920 3.1
Used $16,602 $16,232 $370 2.3
Gross profit per vehicle
retailed:
New $2,115 $2,174 $(59) (2.7)
Used $1,766 $1,786 $(20) (1.1)
Finance and insurance $1,097 $1,083 $14 1.3
Operating Highlights Six Months Ended June 30,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $5,094.7 $5,513.8 $(419.1) (7.6)
Retail used vehicle 1,760.3 1,836.3 (76.0) (4.1)
Wholesale 432.8 446.5 (13.7) (3.1)
Used vehicle 2,193.1 2,282.8 (89.7) (3.9)
Parts and service 1,310.4 1,289.9 20.5 1.6
Finance and insurance, net 300.6 316.4 (15.8) (5.0)
Other 34.3 39.5 (5.2)
Total revenue $8,933.1 $9,442.4 $(509.3) (5.4)
Gross profit:
New vehicle $360.6 $406.9 $(46.3) (11.4)
Retail used vehicle 195.5 212.5 (17.0) (8.0)
Wholesale 3.5 2.9 0.6
Used vehicle 199.0 215.4 (16.4) (7.6)
Parts and service 573.5 569.9 3.6 0.6
Finance and insurance 300.6 316.4 (15.8) (5.0)
Other 21.2 22.8 (1.6)
Total gross profit 1,454.9 1,531.4 (76.5) (5.0)
Selling, general and
administrative expenses 1,038.9 1,077.5 38.6 3.6
Depreciation and amortization 42.8 40.0 (2.8)
Other expenses, net 1.6 0.2 (1.4)
Operating income 371.6 413.7 (42.1) (10.2)
Floorplan interest expense (66.0) (67.0) 1.0
Other interest expense (53.0) (37.2) (15.8)
Other interest expense - senior
note repurchases - (34.5) 34.5
Interest income 1.8 6.6 (4.8)
Other gains, net 1.0 0.7 0.3
Income from continuing
operations before income
taxes $255.4 $282.3 $(26.9) (9.5)
Retail vehicle unit sales:
New 165,279 184,045 (18,766) (10.2)
Used 107,111 114,004 (6,893) (6.0)
272,390 298,049 (25,659) (8.6)
Revenue per vehicle retailed:
New $30,825 $29,959 $866 2.9
Used $16,434 $16,107 $327 2.0
Gross profit per vehicle
retailed:
New $2,182 $2,211 $(29) (1.3)
Used $1,825 $1,864 $(39) (2.1)
Finance and insurance $1,104 $1,062 $42 4.0
Three Months Ended Six Months Ended
Operating Percentages June 30, June 30,
% 2007 % 2006 % 2007 % 2006
Revenue mix percentages:
New vehicle 57.7 59.0 57.0 58.4
Used vehicle 24.2 23.9 24.6 24.2
Parts and service 14.3 13.2 14.7 13.7
Finance and insurance, net 3.3 3.4 3.4 3.4
Other 0.5 0.5 0.3 0.3
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 25.0 27.0 24.8 26.6
Used vehicle 13.0 13.2 13.7 14.1
Parts and service 39.5 36.8 39.4 37.2
Finance and insurance 21.0 21.5 20.7 20.7
Other 1.5 1.5 1.4 1.4
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 6.9 7.3 7.1 7.4
Used vehicle - retail 10.6 11.0 11.1 11.6
Parts and service 43.9 44.4 43.8 44.2
Total 15.9 16.0 16.3 16.2
Selling, general and
administrative expenses 11.4 11.2 11.6 11.4
Operating income 4.1 4.3 4.2 4.4
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 71.3 70.2 71.4 70.4
Operating income 25.5 27.1 25.5 27.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Three Months Ended Six Months Ended
Cash Flow Information June 30, June 30,
2007 2006 2007 2006
Capital expenditures $36.8 $29.1 $79.2 $48.9
Acquisitions $0.8 $ - $0.8 $67.4
Proceeds from exercises of stock
options $12.5 $19.3 $88.6 $51.6
Stock repurchases:
Aggregate purchase price $189.6 $1,218.6 $239.9 $1,218.6
Shares repurchased (in
millions) 8.7 53.1 11.0 53.1
Floorplan Assistance and Three Months Ended Six Months Ended
Expense June 30, June 30,
2007 2006 Variance 2007 2006 Variance
Floorplan assistance
earned (included in cost
of sales) $24.8 $29.3 $(4.5) $49.5 $55.4 $(5.9)
Floorplan interest expense (33.5) (36.1) 2.6 (66.0) (67.0) 1.0
Net floorplan cost $(8.7) $(6.8) $(1.9) $(16.5) $(11.6) $(4.9)
Balance Sheet and Other Highlights
June 30, December 31, June 30,
2007 2006 2006
Cash and cash equivalents $31.2 $52.6 $37.3
Inventory $2,346.6 $2,320.3 $2,706.2
Total floorplan notes
payable $2,099.8 $2,228.3 $2,433.5
Non-vehicle debt $1,528.6 $1,571.5 $1,493.5
Equity $3,738.1 $3,712.7 $3,683.0
New days supply (industry
standard of selling
days, including fleet) 56 days 51 days 60 days
Used days supply (trailing
30 days) 44 days 42 days 43 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Six Months Ended
June 30, June 30,
% 2007 % 2006 % 2007 % 2006
Detroit 3:
Ford, Lincoln-Mercury 15.1 16.5 14.9 16.9
Chevrolet, Pontiac,
Buick, Cadillac, GMC 12.8 13.8 13.3 13.8
Chrysler, Jeep, Dodge 7.1 7.4 7.1 7.8
Detroit 3 total 35.0 37.7 35.3 38.5
Import Premium Luxury:
Mercedes 11.2 12.1 11.6 11.3
BMW 6.6 4.9 6.3 5.0
Lexus 3.8 3.3 3.9 3.4
Other premium luxury
(Land Rover, Porsche) 3.2 2.5 3.0 2.6
Premium Luxury total 24.8 22.8 24.8 22.3
Volume Imports:
Honda 9.1 8.8 9.0 8.6
Toyota 15.7 14.7 15.2 14.1
Nissan 9.1 9.7 9.4 10.1
Other imports 6.3 6.3 6.3 6.4
Import total 40.2 39.5 39.9 39.2
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended June 30,
Diluted Earnings
Net Income Per Share
2007 2006 2007 2006
As reported $77.3 $72.7 $0.37 $0.32
Discontinued operations, net of
income taxes 2.0 1.2 $0.01 $0.01
From continuing operations, as
reported 79.3 73.9 $0.38 $0.33
Income tax adjustments (3.5) - $(0.02) $ -
Senior note repurchases - 21.3 $ - $0.09
Adjusted $75.8 $95.2 $0.36 $0.42
Six Months Ended June 30,
Net Income Diluted Earnings
Per Share
2007 2006 2007 2006
As reported $154.9 $159.9 $0.74 $0.65
Discontinued operations, net of
income taxes 7.1 11.8 $0.03 $0.05
From continuing operations, as
reported 162.0 171.7 $0.77 $0.70
Income tax adjustments (8.6) - $(0.04) $ -
Senior note repurchases - 21.0 $ - $0.09
Adjusted $153.4 $192.7 $0.73 $0.78
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target of 10%
to 12% Per Year:
U.S. light vehicle annual intensely competitive, low 16
unit sales million units
SGA % reduction (over 2007, approximately 100 bp, excluding
2008 and 2009) stock option expense
(SGA % of gross profit less
floorplan interest expense)
Continued opportunistic share repurchase, capital
redeployment of cash flow expenditures and acquisitions
Targeted return on incremental
invested capital approximately 15% after-tax
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended June 30,
2007 2006 $ Variance % Variance
Revenue:
New vehicle $2,610.1 $2,884.9 $(274.8) (9.5)
Retail used vehicle 875.3 937.9 (62.6) (6.7)
Wholesale 221.4 232.7 (11.3) (4.9)
Used vehicle 1,096.7 1,170.6 (73.9) (6.3)
Parts and service 647.3 648.2 (0.9) (0.1)
Finance and insurance, net 152.7 167.9 (15.2) (9.1)
Other 6.6 8.4 (1.8)
Total revenue $4,513.4 $4,880.0 $(366.6) (7.5)
Gross profit:
New vehicle $179.5 $210.7 $(31.2) (14.8)
Retail used vehicle 93.3 103.3 (10.0) (9.7)
Wholesale 0.1 (0.4) 0.5
Used vehicle 93.4 102.9 (9.5) (9.2)
Parts and service 283.4 287.1 (3.7) (1.3)
Finance and insurance 152.7 167.9 (15.2) (9.1)
Other 6.9 6.7 0.2
Total gross profit $715.9 $775.3 $(59.4) (7.7)
Retail vehicle unit sales:
New 85,372 96,932 (11,560) (11.9)
Used 52,875 57,781 (4,906) (8.5)
138,247 154,713 (16,466) (10.6)
Revenue per vehicle retailed:
New $30,573 $29,762 $811 2.7
Used $16,554 $16,232 $322 2.0
Gross profit per vehicle
retailed:
New $2,103 $2,174 $(71) (3.3)
Used $1,765 $1,788 $(23) (1.3)
Finance and insurance $1,105 $1,085 $20 1.8
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Six Months Ended June 30,
2007 2006 $ Variance % Variance
Revenue:
New vehicle $5,038.4 $5,513.8 $(475.4) (8.6)
Retail used vehicle 1,746.2 1,836.4 (90.2) (4.9)
Wholesale 423.1 445.2 (22.1) (5.0)
Used vehicle 2,169.3 2,281.6 (112.3) (4.9)
Parts and service 1,293.7 1,289.9 3.8 0.3
Finance and insurance,
net 301.2 316.7 (15.5) (4.9)
Other 13.5 15.5 (2.0)
Total revenue $8,816.1 $9,417.5 $(601.4) (6.4)
Gross profit:
New vehicle $355.5 $406.9 $(51.4) (12.6)
Retail used vehicle 194.3 212.6 (18.3) (8.6)
Wholesale 2.3 1.6 0.7
Used vehicle 196.6 214.2 (17.6) (8.2)
Parts and service 564.5 568.7 (4.2) (0.7)
Finance and insurance 301.2 316.7 (15.5) (4.9)
Other 13.6 13.3 0.3
Total gross profit $1,431.4 $1,519.8 $(88.4) (5.8)
Retail vehicle unit sales:
New 164,282 184,045 (19,763) (10.7)
Used 106,736 114,004 (7,268) (6.4)
271,018 298,049 (27,031) (9.1)
Revenue per vehicle
retailed:
New $30,669 $29,959 $710 2.4
Used $16,360 $16,108 $252 1.6
Gross profit per vehicle
retailed:
New $2,164 $2,211 $(47) (2.1)
Used $1,820 $1,865 $(45) (2.4)
Finance and
insurance $1,111 $1,063 $48 4.5
Three Months Ended Six Months Ended
Operating Percentages June 30, June 30,
% 2007 % 2006 % 2007 % 2006
Revenue mix percentages:
New vehicle 57.8 59.1 57.1 58.5
Used vehicle 24.3 24.0 24.6 24.2
Parts and service 14.3 13.3 14.7 13.7
Finance and insurance,
net 3.4 3.4 3.4 3.4
Other 0.2 0.2 0.2 0.2
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 25.1 27.2 24.8 26.8
Used vehicle 13.0 13.3 13.7 14.1
Parts and service 39.6 37.0 39.4 37.4
Finance and insurance 21.3 21.7 21.0 20.8
Other 1.0 0.8 1.1 0.9
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 6.9 7.3 7.1 7.4
Used vehicle - retail 10.7 11.0 11.1 11.6
Parts and service 43.8 44.3 43.6 44.1
Total 15.9 15.9 16.2 16.1