AutoNation Reports Third-Quarter 2007 Earnings
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- Board authorized additional share repurchases of $250 million
FORT LAUDERDALE, Fla., Oct. 24 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2007 third- quarter net income from continuing operations of $77 million or $0.39 per share, compared to year-ago net income from continuing operations of $85 million or $0.40 per share. Results for the third quarter of 2007 reflected a decline in new vehicle retail sales especially in California and Florida, partially offset by tax adjustments and continued share repurchases.
Third-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 third-quarter, industry new vehicle retail sales for California and Florida were off approximately 11% compared to last year, based on CNW Research data. AutoNation's decline for new vehicle unit sales for California and Florida was 11%. 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 third-quarter, Mike Jackson, Chairman and Chief Executive Officer, said, "The third 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. "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 nine-month period ended September 30, 2007, the Company reported net income from continuing operations of $238 million or $1.16 per share, compared to $257 million or $1.09 per share in the prior year.
AutoNation also announced earlier it has signed an agreement to acquire Don Mackey BMW in Tucson, Arizona. The store will be renamed BMW Tucson after the anticipated completion of the transaction in January 2008. BMW Tucson will become the 22nd new vehicle franchise owned by AutoNation in Arizona and AutoNation's 13th BMW dealership nationwide. Terms of the all-cash transaction, which is subject to customary conditions and approvals, were not disclosed. AutoNation estimates that revenue generated by the dealership in 2007 will total approximately $45 million.
Separately, the Company's Board of Directors has authorized an additional $250 million for the repurchase of its common stock. The Company has $11.6 million remaining under the $500 million share repurchase program authorized in April 2007.
The third quarter conference call may be accessed at 11:00 a.m. Eastern Time today by phone at 866-230-1059 or via the Internet (audio webcast) at http://www.autonation.com/ by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 2:30 p.m. Eastern Time October 24, 2007 through October 31, 2007 by calling 800-475-6701 (access code # 885245).
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and has been named America's Most Admired Automotive Retailer by FORTUNE Magazine in five of the last six years. A component of the Standard and Poor's 500 Index, AutoNation owns and operates 325 new vehicle franchises in 16 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com, where more than 80,000 vehicles are available for sale along with AutoNation's E-Vehicle program.
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Revenue:
New vehicle $2,681.0 $2,887.2 $7,750.8 $8,374.4
Used vehicle 1,094.8 1,151.8 3,275.8 3,421.7
Parts and service 655.5 636.6 1,957.8 1,918.5
Finance and insurance, net 153.4 162.4 452.7 477.3
Other 17.1 17.0 51.3 56.0
Total revenue 4,601.8 4,855.0 13,488.4 14,247.9
Cost of sales:
New vehicle 2,492.0 2,675.6 7,202.8 7,757.9
Used vehicle 1,006.3 1,050.8 2,989.5 3,106.1
Parts and service 368.7 356.1 1,100.8 1,071.6
Other 8.0 7.7 21.1 24.8
Total cost of sales 3,875.0 4,090.2 11,314.2 11,960.4
Gross profit 726.8 764.8 2,174.2 2,287.5
Selling, general and
administrative expenses 518.1 541.4 1,550.6 1,612.0
Depreciation and amortization 22.3 20.8 64.9 60.6
Other expenses (income), net 0.1 (0.3) 1.6 (0.2)
Operating income 186.3 202.9 557.1 615.1
Floorplan interest expense (34.0) (36.1) (99.5) (102.7)
Other interest expense (29.6) (27.2) (82.6) (64.4)
Other interest expense -
senior note repurchases - - - (34.5)
Interest income 0.8 0.9 2.6 7.5
Other gains (losses), net (0.9) 0.5 0.1 1.2
Income from continuing
operations before income
taxes 122.6 141.0 377.7 422.2
Provision for income taxes 46.1 55.6 139.4 165.7
Net income from continuing
operations 76.5 85.4 238.3 256.5
Loss from discontinued
operations, net of income
taxes (4.4) (3.6) (11.3) (14.8)
Net income $72.1 $81.8 $227.0 $241.7
Diluted earnings (loss) per
share:
Continuing operations $0.39 $0.40 $1.16 $1.09
Discontinued operations $(0.02) $(0.02) $(0.05) $(0.06)
Net income $0.37 $0.38 $1.10 $1.03
Weighted average common shares
outstanding 197.5 215.0 205.6 235.0
Common shares outstanding, net
of treasury stock 183.9 207.7 183.9 207.7
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended September 30,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $2,681.0 $2,887.2 $(206.2) (7.1)
Retail used vehicle 869.2 922.9 (53.7) (5.8)
Wholesale 225.6 228.9 (3.3) (1.4)
Used vehicle 1,094.8 1,151.8 (57.0) (4.9)
Parts and service 655.5 636.6 18.9 3.0
Finance and insurance, net 153.4 162.4 (9.0) (5.5)
Other 17.1 17.0 0.1
Total revenue $4,601.8 $4,855.0 $(253.2) (5.2)
Gross profit:
New vehicle $189.0 $211.6 $(22.6) (10.7)
Retail used vehicle 89.7 103.2 (13.5) (13.1)
Wholesale (1.2) (2.2) 1.0
Used vehicle 88.5 101.0 (12.5) (12.4)
Parts and service 286.8 280.5 6.3 2.2
Finance and insurance 153.4 162.4 (9.0) (5.5)
Other 9.1 9.3 (0.2)
Total gross profit 726.8 764.8 (38.0) (5.0)
Selling, general and
administrative expenses 518.1 541.4 23.3 4.3
Depreciation and amortization 22.3 20.8 (1.5)
Other expenses (income), net 0.1 (0.3) (0.4)
Operating income 186.3 202.9 (16.6) (8.2)
Floorplan interest expense (34.0) (36.1) 2.1
Other interest expense (29.6) (27.2) (2.4)
Other interest expense - senior
note repurchases - - -
Interest income 0.8 0.9 (0.1)
Other gains (losses), net (0.9) 0.5 (1.4)
Income from continuing
operations before income
taxes $122.6 $141.0 $(18.4) (13.0)
Retail vehicle unit sales:
New 87,773 97,405 (9,632) (9.9)
Used 53,441 58,091 (4,650) (8.0)
141,214 155,496 (14,282) (9.2)
Revenue per vehicle retailed:
New $30,545 $29,641 $904 3.0
Used $16,265 $15,887 $378 2.4
Gross profit per vehicle
retailed:
New $2,153 $2,172 $(19) (0.9)
Used $1,678 $1,777 $(99) (5.6)
Finance and insurance $1,086 $1,044 $42 4.0
Operating Highlights Nine Months Ended September 30,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $7,750.8 $8,374.4 $(623.6) (7.4)
Retail used vehicle 2,618.9 2,748.5 (129.6) (4.7)
Wholesale 656.9 673.2 (16.3) (2.4)
Used vehicle 3,275.8 3,421.7 (145.9) (4.3)
Parts and service 1,957.8 1,918.5 39.3 2.0
Finance and insurance, net 452.7 477.3 (24.6) (5.2)
Other 51.3 56.0 (4.7)
Total revenue $13,488.4 $14,247.9 $(759.5) (5.3)
Gross profit:
New vehicle $548.0 $616.5 $(68.5) (11.1)
Retail used vehicle 284.0 314.7 (30.7) (9.8)
Wholesale 2.3 0.9 1.4
Used vehicle 286.3 315.6 (29.3) (9.3)
Parts and service 857.0 846.9 10.1 1.2
Finance and insurance 452.7 477.3 (24.6) (5.2)
Other 30.2 31.2 (1.0)
Total gross profit 2,174.2 2,287.5 (113.3) (5.0)
Selling, general and
administrative expenses 1,550.6 1,612.0 61.4 3.8
Depreciation and amortization 64.9 60.6 (4.3)
Other expenses (income), net 1.6 (0.2) (1.8)
Operating income 557.1 615.1 (58.0) (9.4)
Floorplan interest expense (99.5) (102.7) 3.2
Other interest expense (82.6) (64.4) (18.2)
Other interest expense - senior
note repurchases - (34.5) 34.5
Interest income 2.6 7.5 (4.9)
Other gains (losses), net 0.1 1.2 (1.1)
Income from continuing
operations before income
taxes $377.7 $422.2 $(44.5) (10.5)
Retail vehicle unit sales:
New 252,190 280,423 (28,233) (10.1)
Used 159,811 171,344 (11,533) (6.7)
412,001 451,767 (39,766) (8.8)
Revenue per vehicle retailed:
New $30,734 $29,863 $871 2.9
Used $16,387 $16,041 $346 2.2
Gross profit per vehicle
retailed:
New $2,173 $2,198 $(25) (1.1)
Used $1,777 $1,837 $(60) (3.3)
Finance and insurance $1,099 $1,057 $42 4.0
Three Months Ended Nine Months Ended
Operating Percentages September 30, September 30,
% 2007 % 2006 % 2007 % 2006
Revenue mix percentages:
New vehicle 58.3 59.5 57.5 58.8
Used vehicle 23.8 23.7 24.3 24.0
Parts and service 14.2 13.1 14.5 13.5
Finance and insurance, net 3.3 3.3 3.4 3.3
Other 0.4 0.4 0.3 0.4
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 26.0 27.7 25.2 27.0
Used vehicle 12.2 13.2 13.2 13.8
Parts and service 39.5 36.7 39.4 37.0
Finance and insurance 21.1 21.2 20.8 20.9
Other 1.2 1.2 1.4 1.3
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.0 7.3 7.1 7.4
Used vehicle - retail 10.3 11.2 10.8 11.4
Parts and service 43.8 44.1 43.8 44.1
Total 15.8 15.8 16.1 16.1
Selling, general and
administrative expenses 11.3 11.2 11.5 11.3
Operating income 4.0 4.2 4.1 4.3
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 71.3 70.8 71.3 70.5
Operating income 25.6 26.5 25.6 26.9
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Capital Expenditures/Stock Three Months Ended Nine Months Ended
Repurchases September 30, September 30,
2007 2006 2007 2006
Capital expenditures $49.8 $87.6 $129.0 $136.5
Acquisitions $3.4 $21.1 $4.2 $88.5
Proceeds from exercises of stock
options $3.3 $10.5 $91.9 $62.1
Stock repurchases:
Aggregate purchase price $340.9 $118.7 $580.8 $1,337.3
Shares repurchased (in
millions) 18.2 6.0 29.3 59.1
Floorplan Assistance and Three Months Ended Nine Months Ended
Expense September 30, September 30,
2007 2006 Variance 2007 2006 Variance
Floorplan assistance
earned (included in cost
of sales) $28.0 $29.0 $(1.0) $77.2 $84.0 $(6.8)
Floorplan interest expense (34.0) (36.1) 2.1 (99.5) (102.7) 3.2
Net inventory carrying
cost $(6.0) $(7.1) $1.1 $(22.3) $(18.7) $(3.6)
Balance Sheet and Other Highlights
September 30, December 31, September 30,
2007 2006 2006
Cash and cash equivalents $28.4 $52.8 $31.0
Inventory $2,230.1 $2,306.3 $2,299.7
Total floorplan notes
payable $2,033.7 $2,214.2 $2,065.7
Non-vehicle debt $1,731.7 $1,571.5 $1,501.8
Equity $3,476.8 $3,712.7 $3,660.5
New days supply (industry
standard of selling
days, including fleet) 49 days 51 days 51 days
Used days supply (trailing
30 days) 43 days 42 days 38 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Nine Months Ended
September 30, September 30,
% 2007 % 2006 % 2007 % 2006
Detroit 3:
Ford, Lincoln-Mercury 14.0 17.6 14.6 17.2
Chevrolet, Pontiac,
Buick, Cadillac, GMC 13.9 14.6 13.5 14.0
Chrysler, Jeep, Dodge 7.4 7.0 7.1 7.5
Detroit 3 total 35.3 39.2 35.2 38.7
Import Premium Luxury:
Mercedes 11.4 11.1 11.6 11.3
BMW 6.0 4.4 6.2 4.8
Lexus 3.6 3.1 3.8 3.3
Other premium luxury
(Land Rover, Porsche) 2.9 2.2 3.0 2.5
Premium Luxury total 23.9 20.8 24.6 21.9
Volume Imports:
Honda 9.5 8.7 9.2 8.7
Toyota 15.7 15.1 15.4 14.4
Nissan 9.6 9.7 9.5 10.0
Other imports 6.0 6.5 6.1 6.3
Import total 40.8 40.0 40.2 39.4
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended September 30,
Diluted Earnings
Net Income Per Share
2007 2006 2007 2006
As reported $72.1 $81.8 $0.37 $0.38
Discontinued operations, net of
income taxes 4.4 3.6 $0.02 $0.02
From continuing operations, as
reported 76.5 85.4 $ 0.39 $0.40
Income tax adjustments (3.4) - $(0.02) $ -
Adjusted $73.1 $85.4 $0.37 $0.40
Nine Months Ended September 30,
Net Income Diluted Earnings
Per Share
2007 2006 2007 2006
As reported $227.0 $241.7 $1.10 $1.03
Discontinued operations, net of
income taxes 11.3 14.8 $0.05 $0.06
From continuing operations, as
reported 238.3 256.5 $1.16 $1.09
Income tax adjustments (12.0) - $(0.06) $ -
Senior note repurchases - 20.9 $ - $0.09
Adjusted $226.3 $277.4 $ 1.10 $1.18
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target of 10%
to 12% Per Year:
U.S. light vehicle annual unit sales intensely competitive, low 16
million units
Continued opportunistic redeployment share repurchase, capital
of cash flow expenditures and acquisitions
Targeted return on incremental approximately 15% after-tax
invested capital
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended September 30,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $2,633.5 $2,887.2 $(253.7) (8.8)
Retail used vehicle 844.5 922.9 (78.4) (8.5)
Wholesale 220.3 228.4 (8.1) (3.5)
Used vehicle 1,064.8 1,151.3 (86.5) (7.5)
Parts and service 637.8 636.6 1.2 0.2
Finance and insurance, net 152.3 163.0 (10.7) (6.6)
Other 5.6 6.9 (1.3)
Total revenue $4,494.0 $4,845.0 $(351.0) (7.2)
Gross profit:
New vehicle $185.1 $211.7 $(26.6) (12.6)
Retail used vehicle 87.7 103.2 (15.5) (15.0)
Wholesale (1.7) (2.8) 1.1
Used vehicle 86.0 100.4 (14.4) (14.3)
Parts and service 278.1 280.0 (1.9) (0.7)
Finance and insurance 152.3 163.0 (10.7) (6.6)
Other 6.0 6.1 (0.1)
Total gross profit $707.5 $761.2 $(53.7) (7.1)
Retail vehicle unit sales:
New 87,209 97,405 (10,196) (10.5)
Used 53,043 58,091 (5,048) (8.7)
140,252 155,496 (15,244) (9.8)
Revenue per vehicle retailed:
New $30,198 $29,641 $557 1.9
Used $15,921 $15,887 $34 0.2
Gross profit per vehicle
retailed:
New $2,122 $2,173 $(51) (2.3)
Used $1,653 $1,777 $(124) (7.0)
Finance and insurance $1,086 $1,048 $38 3.6
Operating Highlights Nine Months Ended September 30,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $7,647.0 $8,374.4 $(727.4) (8.7)
Retail used vehicle 2,580.1 2,748.5 (168.4) (6.1)
Wholesale 641.9 671.4 (29.5) (4.4)
Used vehicle 3,222.0 3,419.9 (197.9) (5.8)
Parts and service 1,923.3 1,918.6 4.7 0.2
Finance and insurance,
net 452.2 478.2 (26.0) (5.4)
Other 19.1 21.9 (2.8)
Total revenue $13,263.6 $14,213.0 $(949.4) (6.7)
Gross profit:
New vehicle $539.0 $616.5 $(77.5) (12.6)
Retail used vehicle 280.9 314.6 (33.7) (10.7)
Wholesale 0.5 (0.9) 1.4
Used vehicle 281.4 313.7 (32.3) (10.3)
Parts and service 839.3 845.2 (5.9) (0.7)
Finance and insurance 452.2 478.2 (26.0) (5.4)
Other 19.5 18.6 0.9
Total gross profit $2,131.4 $2,272.2 $(140.8) (6.2)
Retail vehicle unit sales:
New 250,629 280,423 (29,794) (10.6)
Used 159,038 171,344 (12,306) (7.2)
409,667 451,767 (42,100) (9.3)
Revenue per vehicle retailed:
New $30,511 $29,863 $648 2.2
Used $16,223 $16,041 $182 1.1
Gross profit per vehicle
retailed:
New $2,151 $2,198 $(47) (2.1)
Used $1,766 $1,836 $(70) (3.8)
Finance and insurance $1,104 $1,059 $45 4.2
Three Months Ended Nine Months Ended
Operating Percentages September 30, September 30,
% 2007 % 2006 % 2007 % 2006
Revenue mix percentages:
New vehicle 58.6 59.6 57.7 58.9
Used vehicle 23.7 23.8 24.3 24.1
Parts and service 14.2 13.1 14.5 13.5
Finance and insurance,
net 3.4 3.4 3.4 3.4
Other 0.1 0.1 0.1 0.1
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 26.2 27.8 25.3 27.1
Used vehicle 12.2 13.2 13.2 13.8
Parts and service 39.3 36.8 39.4 37.2
Finance and insurance 21.5 21.4 21.2 21.0
Other 0.8 0.8 0.9 0.9
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.0 7.3 7.0 7.4
Used vehicle - retail 10.4 11.2 10.9 11.4
Parts and service 43.6 44.0 43.6 44.1
Total 15.7 15.7 16.1 16.0