AutoNation Reports 2007 Fourth Quarter and Full Year Results of Operations
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FORT LAUDERDALE, Fla., Feb. 7, 2008 -- AutoNation, Inc. , America's largest automotive retailer, today reported 2007 fourth quarter net income from continuing operations of $50 million or $0.27 per share on revenue of $4.2 billion, compared to year-ago fourth quarter net income from continuing operations of $74 million or $0.35 per share on revenue of $4.4 billion. Results for the fourth quarter of 2007 reflected a decline in vehicle sales especially in California and Florida, partially offset by continued share repurchases. Together, California and Florida represent approximately 50% of the Company's new vehicle business, in contrast to 20% of industry retail new vehicles sold in the U.S.
For full year 2007, the Company reported net income from continuing operations of $288 million or $1.44 per share, compared to $331 million or $1.44 per share in 2006. After adjusting for certain items as disclosed in the attached financial tables, the Company's full-year EPS from continuing operations for 2007 was $1.38 compared to $1.53 in 2006. The Company's revenue for 2007 totaled $17.7 billion, a decrease of 5% versus the prior year.
Commenting on the year ahead, Mike Jackson, chairman and chief executive officer said, "We expect to continue to see a challenging new vehicle retail market, especially in California and Florida. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term." Jackson also added, "We believe that in 2008, U.S. new vehicle industry sales will decline to the mid-15 million unit level from 16.1 million units in 2007. However, the recent action by the Federal Reserve to reduce interest rates could improve the automotive retail outlook in the second half of 2008."
The fourth quarter conference call may be accessed at 11:00 am Eastern Time by phone at 888-769-8515 (passcode: AutoNation) or via the Internet (audio webcast) at http://www.autonation.com/ by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 2:30 p.m. Eastern Time on February 7, 2008 through February 14, 2008 by calling 800-759-3449.
About AutoNation, Inc.
AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. A component of the Standard and Poor's 500 Index, AutoNation has approximately 25,000 full-time employees and owns and operates 322 new vehicle franchises in 15 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com, where more than 90,000 vehicles are available for sale.
NON-GAAP FINANCIAL MEASURES
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
Revenue:
New vehicle $2,446.7 $2,614.6 $10,195.6 $10,985.0
Used vehicle 972.6 1,001.5 4,241.2 4,413.3
Parts and service 635.9 615.4 2,592.7 2,532.6
Finance and insurance, net 141.5 146.6 593.7 623.1
Other 17.1 16.5 68.3 72.5
Total revenue 4,213.8 4,394.6 17,691.5 18,626.5
Cost of sales:
New vehicle 2,274.6 2,425.8 9,475.6 10,179.8
Used vehicle 899.6 916.0 3,882.3 4,012.9
Parts and service 360.4 348.7 1,460.5 1,419.6
Other 7.6 6.6 28.7 31.4
Total cost of sales 3,542.2 3,697.1 14,847.1 15,643.7
Gross profit 671.6 697.5 2,844.4 2,982.8
Selling, general and
administrative expenses 496.9 499.8 2,046.2 2,109.9
Depreciation and
amortization 26.8 20.8 91.7 81.4
Other expenses (income), net 0.1 - 1.7 (0.2)
Operating income 147.8 176.9 704.8 791.7
Floorplan interest expense (33.7) (35.6) (133.1) (138.2)
Other interest expense (31.7) (26.5) (114.3) (90.9)
Other interest expense -
senior note repurchases - - - (34.5)
Interest income 0.8 0.8 3.4 8.3
Other gains (losses), net (1.6) 3.2 (1.5) 4.8
Income from continuing
operations before income
taxes 81.6 118.8 459.3 541.2
Provision for income taxes 31.9 44.6 171.3 210.4
Net income from continuing
operations 49.7 74.2 288.0 330.8
Income (loss) from
discontinued operations,
net of income taxes 2.0 1.0 (9.3) (13.9)
Net income $51.7 $75.2 $278.7 $316.9
Diluted earnings (loss) per
share:
Continuing operations $0.27 $0.35 $1.44 $1.44
Discontinued operations $0.01 $0.00 $(0.05) $(0.06)
Net income $0.28 $0.36 $1.39 $1.38
Weighted average common
shares outstanding 183.5 211.5 200.0 229.3
Common shares outstanding,
net of treasury stock 180.4 206.8 180.4 206.8
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended December 31,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $2,446.7 $2,614.6 $(167.9) (6.4)
Retail used vehicle 776.7 792.3 (15.6) (2.0)
Wholesale 195.9 209.2 (13.3) (6.4)
Used vehicle 972.6 1,001.5 (28.9) (2.9)
Parts and service 635.9 615.4 20.5 3.3
Finance and insurance, net 141.5 146.6 (5.1) (3.5)
Other 17.1 16.5 0.6
Total revenue $4,213.8 $4,394.6 $(180.8) (4.1)
Gross profit:
New vehicle $172.1 $188.8 $(16.7) (8.8)
Retail used vehicle 75.3 86.5 (11.2) (12.9)
Wholesale (2.3) (1.0) (1.3)
Used vehicle 73.0 85.5 (12.5) (14.6)
Parts and service 275.5 266.7 8.8 3.3
Finance and insurance 141.5 146.6 (5.1) (3.5)
Other 9.5 9.9 (0.4)
Total gross profit 671.6 697.5 (25.9) (3.7)
Selling, general and
administrative expenses 496.9 499.8 2.9 0.6
Depreciation and amortization 26.8 20.8 (6.0)
Other expenses (income), net 0.1 - (0.1)
Operating income 147.8 176.9 (29.1) (16.4)
Floorplan interest expense (33.7) (35.6) 1.9
Other interest expense (31.7) (26.5) (5.2)
Other interest expense - senior
note repurchases - - -
Interest income 0.8 0.8 -
Other gains (losses), net (1.6) 3.2 (4.8)
Income from continuing
operations before income
taxes $81.6 $118.8 $(37.2) (31.3)
Retail vehicle unit sales:
New 76,865 82,672 (5,807) (7.0)
Used 46,782 48,526 (1,744) (3.6)
123,647 131,198 (7,551) (5.8)
Revenue per vehicle retailed:
New $31,831 $31,626 $205 0.6
Used $16,603 $16,327 $276 1.7
Gross profit per vehicle
retailed:
New $2,239 $2,284 $(45) (2.0)
Used $1,610 $1,783 $(173) (9.7)
Finance and insurance $1,144 $1,117 $27 2.4
Operating Highlights Twelve Months Ended December 31,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $10,195.6 $10,985.0 $(789.4) (7.2)
Retail used vehicle 3,389.0 3,531.7 (142.7) (4.0)
Wholesale 852.2 881.6 (29.4) (3.3)
Used vehicle 4,241.2 4,413.3 (172.1) (3.9)
Parts and service 2,592.7 2,532.6 60.1 2.4
Finance and insurance, net 593.7 623.1 (29.4) (4.7)
Other 68.3 72.5 (4.2)
Total revenue $17,691.5 $18,626.5 $(935.0) (5.0)
Gross profit:
New vehicle $720.0 $805.2 $(85.2) (10.6)
Retail used vehicle 358.8 400.4 (41.6) (10.4)
Wholesale 0.1 - 0.1
Used vehicle 358.9 400.4 (41.5) (10.4)
Parts and service 1,132.2 1,113.0 19.2 1.7
Finance and insurance 593.7 623.1 (29.4) (4.7)
Other 39.6 41.1 (1.5)
Total gross profit 2,844.4 2,982.8 (138.4) (4.6)
Selling, general and
administrative expenses 2,046.2 2,109.9 63.7 3.0
Depreciation and amortization 91.7 81.4 (10.3)
Other expenses (income), net 1.7 (0.2) (1.9)
Operating income 704.8 791.7 (86.9) (11.0)
Floorplan interest expense (133.1) (138.2) 5.1
Other interest expense (114.3) (90.9) (23.4)
Other interest expense - senior
note repurchases - (34.5) 34.5
Interest income 3.4 8.3 (4.9)
Other gains (losses), net (1.5) 4.8 (6.3)
Income from continuing
operations before income
taxes $459.3 $541.2 $(81.9) (15.1)
Retail vehicle unit sales:
New 328,963 362,895 (33,932) (9.4)
Used 206,140 219,271 (13,131) (6.0)
535,103 582,166 (47,063) (8.1)
Revenue per vehicle retailed:
New $30,993 $30,270 $723 2.4
Used $16,440 $16,107 $333 2.1
Gross profit per vehicle
retailed:
New $2,189 $2,219 $(30) (1.4)
Used $1,741 $1,826 $(85) (4.7)
Finance and insurance $1,110 $1,070 $40 3.7
Three Months Ended Twelve Months Ended
Operating Percentages December 31, December 31,
% 2007 % 2006 % 2007 % 2006
Revenue mix percentages:
New vehicle 58.1 59.5 57.6 59.0
Used vehicle 23.1 22.8 24.0 23.7
Parts and service 15.1 14.0 14.7 13.6
Finance and insurance, net 3.4 3.3 3.4 3.3
Other 0.3 0.4 0.3 0.4
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 25.6 27.1 25.3 27.0
Used vehicle 10.9 12.3 12.6 13.4
Parts and service 41.0 38.2 39.8 37.3
Finance and insurance 21.1 21.0 20.9 20.9
Other 1.4 1.4 1.4 1.4
100.0 100.0 100.0 100.0
Operating items as a percentage
of revenue:
Gross profit:
New vehicle 7.0 7.2 7.1 7.3
Used vehicle - retail 9.7 10.9 10.6 11.3
Parts and service 43.3 43.3 43.7 43.9
Total 15.9 15.9 16.1 16.0
Selling, general and
administrative expenses 11.8 11.4 11.6 11.3
Operating income 3.5 4.0 4.0 4.3
Operating items as a percentage
of total gross profit:
Selling, general and
administrative expenses 74.0 71.7 71.9 70.7
Operating income 22.0 25.4 24.8 26.5
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Capital Expenditures / Stock Three Months Twelve Months
Repurchases Ended December 31, Ended December 31,
2007 2006 2007 2006
Capital expenditures $31.2 $39.1 $160.2 $175.6
Acquisitions $2.5 $78.2 $6.7 $166.7
Proceeds from exercises of
stock options $4.7 $13.6 $96.6 $75.7
Stock repurchases:
Aggregate purchase price $64.9 $43.3 $645.7 $1,380.6
Shares repurchased (in
millions) 4.0 2.1 33.2 61.2
Floorplan Assistance and Three Months Ended Twelve Months Ended
Expense December 31, December 31,
2007 2006 Variance 2007 2006 Variance
Floorplan assistance
earned (included in
cost of sales) $22.9 $24.8 $(1.9) $100.0 $108.8 $(8.8)
Floorplan interest
expense (33.7) (35.6) 1.9 (133.1) (138.2) 5.1
Net inventory carrying
cost $(10.8) $(10.8) $- $(33.1) $(29.4) $(3.7)
Balance Sheet and Other Highlights
December 31, December 31,
2007 2006
Cash and cash equivalents $32.8 $52.8
Inventory $2,325.7 $2,305.0
Total floorplan notes payable $2,181.8 $2,213.6
Non-vehicle debt $1,775.8 $1,571.5
Equity $3,473.5 $3,712.7
New days supply (industry
standard of selling
days, including fleet) 53 days 51 days
Used days supply (trailing 30
days) 44 days 42 days
Brand Mix - New Vehicle Revenue %
Three Months Ended Twelve Months Ended
December 31, December 31,
% 2007 % 2006 % 2007 % 2006
Detroit 3:
Ford, Lincoln-Mercury 12.9 13.8 14.2 16.4
Chevrolet, Pontiac,
Buick, Cadillac, GMC 13.8 13.8 13.6 14.0
Chrysler, Jeep, Dodge 6.6 7.0 7.0 7.4
Detroit 3 total 33.3 34.6 34.8 37.8
Import Premium Luxury:
Mercedes 14.1 14.3 12.2 12.0
BMW 6.8 6.0 6.4 5.1
Lexus 4.5 4.1 4.0 3.5
Other premium luxury
(Land Rover, Porsche) 3.1 3.3 3.0 2.7
Premium Luxury total 28.5 27.7 25.6 23.3
Volume Imports:
Honda 8.9 8.2 9.2 8.6
Toyota 14.6 14.4 15.2 14.5
Nissan 8.8 8.5 9.2 9.5
Other imports 5.9 6.6 6.0 6.3
Import total 38.2 37.7 39.6 38.9
100.0 100.0 100.0 100.0
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
Three Months Ended December 31,
Diluted Earnings
Net Income Per Share
2007 2006 2007 2006
As reported $51.7 $75.2 $0.28 $0.36
Discontinued operations, net of
income taxes (2.0) (1.0) $(0.01) $(0.00)
From continuing operations, as
reported 49.7 74.2 $0.27 $0.35
Twelve Months Ended December 31,
Net Income Diluted Earnings
Per Share
2007 2006 2007 2006
As reported $278.7 $316.9 $1.39 $1.38
Discontinued operations, net of
income taxes 9.3 13.9 $0.05 $0.06
From continuing operations, as
reported 288.0 330.8 $1.44 $1.44
Income tax adjustments (12.0) - $(0.06) $-
Senior note repurchases - 21.1 $ - $0.09
Adjusted $276.0 $351.9 $1.38 $1.53
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
Business Assumptions Impacting Long-term Average EPS Growth Target of 10%
to 12% Per Year:
U.S. light vehicle annual unit sales assumes recovery in key markets
Continued opportunistic redeployment share repurchase, capital
of cash flow expenditures and acquisitions
Targeted return on incremental approximately 15% after-tax
invested capital
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended December 31,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $2,438.5 $2,614.6 $(176.1) (6.7)
Retail used vehicle 773.8 792.3 (18.5) (2.3)
Wholesale 194.5 208.6 (14.1) (6.8)
Used vehicle 968.3 1,000.9 (32.6) (3.3)
Parts and service 631.2 615.4 15.8 2.6
Finance and insurance, net 143.4 147.1 (3.7) (2.5)
Other 6.0 5.9 0.1 1.7
Total revenue $4,187.4 $4,383.9 $(196.5) (4.5)
Gross profit:
New vehicle $171.7 $188.8 $(17.1) (9.1)
Retail used vehicle 75.2 86.6 (11.4) (13.2)
Wholesale (2.7) (1.5) (1.2)
Used vehicle 72.5 85.1 (12.6) (14.8)
Parts and service 273.1 267.1 6.0 2.2
Finance and insurance 143.4 147.1 (3.7) (2.5)
Other 6.2 6.0 0.2
Total gross profit $666.9 $694.1 $(27.2) (3.9)
Retail vehicle unit sales:
New 76,687 82,672 (5,985) (7.2)
Used 46,674 48,526 (1,852) (3.8)
123,361 131,198 (7,837) (6.0)
Revenue per vehicle retailed:
New $31,798 $31,626 $172 0.5
Used $16,579 $16,327 $252 1.5
Gross profit per vehicle
retailed:
New $2,239 $2,284 $(45) (2.0)
Used $1,611 $1,785 $(174) (9.7)
Finance and insurance $1,162 $1,121 $41 3.7
Operating Highlights Twelve Months Ended December 31,
$ %
2007 2006 Variance Variance
Revenue:
New vehicle $10,107.7 $10,985.0 $(877.3) (8.0)
Retail used vehicle 3,367.4 3,531.7 (164.3) (4.7)
Wholesale 838.3 879.2 (40.9) (4.7)
Used vehicle 4,205.7 4,410.9 (205.2) (4.7)
Parts and service 2,563.9 2,532.5 31.4 1.2
Finance and insurance,
net 596.5 624.6 (28.1) (4.5)
Other 25.1 27.8 (2.7) (9.7)
Total revenue $17,498.9 $18,580.8 $(1,081.9) (5.8)
Gross profit:
New vehicle $712.6 $805.2 $(92.6) (11.5)
Retail used vehicle 357.3 400.5 (43.2) (10.8)
Wholesale (2.1) (2.3) 0.2
Used vehicle 355.2 398.2 (43.0) (10.8)
Parts and service 1,116.4 1,111.7 4.7 0.4
Finance and insurance 596.5 624.6 (28.1) (4.5)
Other 25.7 24.5 1.2
Total gross profit $2,806.4 $2,964.2 $(157.8) (5.3)
Retail vehicle unit sales:
New 327,372 362,895 (35,523) (9.8)
Used 205,490 219,271 (13,781) (6.3)
532,862 582,166 (49,304) (8.5)
Revenue per vehicle
retailed:
New $30,875 $30,270 $605 2.0
Used $16,387 $16,107 $280 1.7
Gross profit per vehicle
retailed:
New $2,177 $2,219 $(42) (1.9)
Used $1,739 $1,827 $(88) (4.8)
Finance and insurance $1,119 $1,073 $46 4.3
Three Months Ended Twelve Months
Operating Percentages December 31, Ended December 31,
% 2007 % 2006 % 2007 % 2006
Revenue mix percentages:
New vehicle 58.2 59.6 57.8 59.1
Used vehicle 23.1 22.8 24.0 23.7
Parts and service 15.1 14.0 14.7 13.6
Finance and insurance,
net 3.4 3.4 3.4 3.4
Other 0.2 0.2 0.1 0.2
100.0 100.0 100.0 100.0
Gross profit mix percentages:
New vehicle 25.7 27.2 25.4 27.2
Used vehicle 10.9 12.3 12.7 13.4
Parts and service 41.0 38.5 39.8 37.5
Finance and insurance 21.5 21.2 21.3 21.1
Other 0.9 0.8 0.8 0.8
100.0 100.0 100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.0 7.2 7.1 7.3
Used vehicle - retail 9.7 10.9 10.6 11.3
Parts and service 43.3 43.4 43.5 43.9
Total 15.9 15.8 16.0 16.0