AutoNation Reports 2010 First Quarter Results
FORT LAUDERDALE, Fla., April 22 -- -- Strong double-digit growth with first quarter revenue and new vehicle
unit sales increasing 19% over the prior year
-- Revenue and gross profit for all major categories, new vehicles, used
vehicles, parts and service, and finance and insurance, are up
compared to first quarter of 2009
-- First quarter EPS from continuing operations was $0.34, a 55% increase
compared to adjusted EPS from continuing operations of $0.22 in the
prior year ($0.30 on a GAAP basis in the prior year)
-- AutoNation successfully executed a debt refinancing resulting in
extended maturities, improved liquidity, and enhanced flexibility at
attractive pricing
AutoNation, Inc. , America's largest automotive retailer, today reported 2010 first quarter net income from continuing operations of $58 million or $0.34 per share, compared to net income from continuing operations of $53 million or $0.30 per share for the same period in the prior year. Net income from continuing operations for the 2010 first quarter improved 55% on a per-share basis, compared to adjusted net income from continuing operations of $40 million or $0.22 per share for the same period in the prior year. Adjusted net income from continuing operations for the 2009 first quarter excludes the items disclosed in the attached financial tables.
2010 first quarter revenue totaled $2.8 billion, compared to $2.4 billion in the year-ago period, an increase of 19%, driven primarily by stronger new and used retail vehicle revenue which increased 24%. Based on CNW Research data, in the first quarter, total U.S. industry new retail vehicle unit sales increased 15%. AutoNation's new vehicle unit sales increased 19%.
AutoNation's 2010 first quarter used retail vehicle revenue increased 23%, as unit sales increased 12% and revenue per vehicle increased 11%. Parts and service revenue increased 1% and finance and insurance revenue increased 25% compared to the first quarter 2009.
Commenting on the first quarter, Mike Jackson, Chairman and Chief Executive Officer, said, "We delivered strong double-digit growth in the first quarter, which was driven by both new and used vehicle unit sales and revenue. We have seen growth in all regions for two quarters led by our largest state Florida, which was one of the first states to experience the effects of the economic downturn. First quarter revenue for Florida was up 29%. We see an improved sales environment going forward." Mr. Jackson also stated, "By lowering our structural costs, and efficiently managing our inventory, we were able to deliver substantial EPS growth in a steadily improving retail sales environment."
Commenting on the debt refinancing transactions previously announced by AutoNation, Michael Short, Executive Vice President and Chief Financial Officer, stated, "These transactions extended our debt maturities, increased our available liquidity, and lowered our exposure to interest rate increases in the future. We believe that these transactions will provide us with additional flexibility to manage our business and optimize capital allocation going forward."
AutoNation has three operating segments: Domestic, Import, and Premium Luxury. The Domestic segment is comprised of stores that sell vehicles manufactured by General Motors, Ford, and Chrysler; the Import segment is comprised of stores that sell vehicles manufactured primarily by Toyota, Honda, and Nissan; and the Premium Luxury segment is comprised of stores that sell vehicles manufactured primarily by Mercedes, BMW, and Lexus. Segment results for the first quarter were as follows:
-- Domestic - Domestic segment income (1) was $32 million compared to
year-ago segment income of $22 million. First quarter Domestic retail
new vehicle unit sales increased 23%.
-- Import - Import segment income was $50 million compared to year-ago
segment income of $30 million. First quarter Import retail new
vehicle unit sales increased 20%.
-- Premium Luxury - Premium Luxury segment income was $47 million
compared to year-ago segment income of $41 million. First quarter
Premium Luxury retail new vehicle unit sales increased 9%.
(1) Segment income is defined as operating income less floorplan
interest expense.
The first quarter conference call may be accessed by telephone at 888-769-8515 (password: AutoNation). The webcast will be available on AutoNation's investor relations website at corp.autonation.com/investors under "Webcasts & Presentations." A playback of the conference call will be available after 1:00 p.m. Eastern Time on April 22, 2010 through May 1, 2010 by calling 800-294-7481 (password: 75300).
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 five times. A component of the Standard and Poor's 500 Index, AutoNation owns and operates 249 new vehicle franchises in 15 states. For additional information, please visit http://corp.autonation.com/ or www.AutoNation.com.
FORWARD LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Words such as "anticipates," "expects," "intends," "goals," "plans," "believes," "continues," "may," "will," and variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties and other factors that are difficult to predict and may cause our actual results, performance or achievements to be materially different from any future results, performance and achievements expressed or implied by these statements. These risks, uncertainties and other factors include, among others: economic conditions generally; conditions in the credit markets and changes in interest rates; the success and financial viability of vehicle manufacturers and distributors with which we hold franchises; factors affecting our goodwill and other intangible asset impairment testing; natural disasters and other adverse weather events; restrictions imposed by vehicle manufacturers; the resolution of legal and administrative proceedings; regulatory factors affecting our business; and other factors described in our news releases and filings made under the securities laws, including, among others, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Forward-looking statements contained in this news release speak only as of the date of this news release, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.
NON-GAAP FINANCIAL MEASURES
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income and earnings per share from continuing operations, which exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improves the period-to-period comparability of the Company's results from its core business operations.
AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in millions, except per share data)
Three Months Ended
March 31,
2010 2009
---- ----
Revenue:
New vehicle $1,465.5 $1,185.1
Used vehicle 734.6 590.5
Parts and service 539.8 535.0
Finance and insurance, net 95.6 76.8
Other 11.7 13.4
---- ----
Total revenue 2,847.2 2,400.8
------- -------
Cost of sales:
New vehicle 1,362.1 1,111.4
Used vehicle 668.1 527.0
Parts and service 302.0 300.0
Other 4.8 6.1
--- ---
Total cost of sales 2,337.0 1,944.5
------- -------
Gross profit 510.2 456.3
Selling, general and administrative expenses 375.4 352.3
Depreciation and amortization 18.9 19.8
Other expenses (income), net 1.2 (10.8)
--- -----
Operating income 114.7 95.0
Floorplan interest expense (9.7) (9.9)
Other interest expense (9.0) (11.8)
Gain on senior note repurchases - 11.9
Interest income 0.2 0.3
Other losses, net (0.2) (1.6)
---- ----
Income from continuing operations before
income taxes 96.0 83.9
Income tax provision 37.6 31.3
---- ----
Net income from continuing operations 58.4 52.6
Loss from discontinued operations, net of
income taxes (3.2) (18.0)
---- -----
Net income $55.2 $34.6
===== =====
Diluted earnings (loss) per share:
Continuing operations $0.34 $0.30
Discontinued operations $(0.02) $(0.10)
Net income $0.32 $0.20
Weighted average common shares outstanding 171.7 177.0
Common shares outstanding, net of treasury
stock, at March 31 169.9 177.1
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating
Highlights Three Months Ended March 31,
----------- ----------------------------
%
2010 2009 $Variance Variance
---- ---- --------- ---------
Revenue:
New vehicle $1,465.5 $1,185.1 $280.4 23.7
Retail used
vehicle 646.0 524.5 121.5 23.2
Wholesale 88.6 66.0 22.6 34.2
Used vehicle 734.6 590.5 144.1 24.4
Parts and service 539.8 535.0 4.8 0.9
Finance and
insurance, net 95.6 76.8 18.8 24.5
Other 11.7 13.4 (1.7)
----
Total revenue $2,847.2 $2,400.8 $446.4 18.6
======== ======== ======
Gross profit:
New vehicle $103.4 $73.7 $29.7 40.3
Retail used
vehicle 63.4 61.6 1.8 2.9
Wholesale 3.1 1.9 1.2
Used vehicle 66.5 63.5 3.0 4.7
Parts and service 237.8 235.0 2.8 1.2
Finance and
insurance 95.6 76.8 18.8 24.5
Other 6.9 7.3 (0.4)
----
Total gross profit 510.2 456.3 53.9 11.8
Selling, general
and
administrative
expenses 375.4 352.3 (23.1) (6.6)
Depreciation and
amortization 18.9 19.8 0.9
Other expenses
(income), net 1.2 (10.8) (12.0)
--- ----- -----
Operating income 114.7 95.0 19.7 20.7
Floorplan interest
expense (9.7) (9.9) 0.2
Other interest
expense (9.0) (11.8) 2.8
Gain on senior
note repurchases - 11.9 (11.9)
Interest income 0.2 0.3 (0.1)
Other losses, net (0.2) (1.6) 1.4
Income from
continuing
operations before
income taxes $96.0 $83.9 $12.1 14.4
===== ===== =====
Retail vehicle
unit sales:
New 45,438 38,268 7,170 18.7
Used 37,773 33,879 3,894 11.5
83,211 72,147 11,064 15.3
Revenue per
vehicle retailed:
New $32,253 $30,968 $1,285 4.1
Used $17,102 $15,482 $1,620 10.5
Gross profit per
vehicle retailed:
New $2,276 $1,926 $350 18.2
Used $1,678 $1,818 $(140) (7.7)
Finance and
insurance $1,149 $1,064 $85 8.0
Three Months Ended
Operating Percentages March 31,
--------------------- ------------------
2010 (%) 2009 (%)
-------- --------
Revenue mix percentages:
New vehicle 51.5 49.4
Used vehicle 25.8 24.6
Parts and service 19.0 22.3
Finance and insurance, net 3.4 3.2
Other 0.3 0.5
100.0 100.0
Gross profit mix percentages:
New vehicle 20.3 16.2
Used vehicle 13.0 13.9
Parts and service 46.6 51.5
Finance and insurance 18.7 16.8
Other 1.4 1.6
100.0 100.0
Operating items as a percentage of
revenue:
Gross profit:
New vehicle 7.1 6.2
Used vehicle - retail 9.8 11.7
Parts and service 44.1 43.9
Total 17.9 19.0
Selling, general and administrative
expenses 13.2 14.7
Operating income 4.0 4.0
Operating items as a percentage of
total gross profit:
Selling, general and administrative
expenses 73.6 77.2
Operating income 22.5 20.8
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Segment
Operating
Highlights Three Months Ended March 31,
----------- ----------------------------
%
2010 2009 $Variance Variance
---- ---- --------- ---------
Revenue:
Domestic $915.4 $777.5 $137.9 17.7
Import 1,077.6 892.6 185.0 20.7
Premium luxury 822.9 704.0 118.9 16.9
Corporate and
other 31.3 26.7 4.6 17.2
---- ---- ---
Total revenue $2,847.2 $2,400.8 $446.4 18.6
======== ======== ======
*Segment income
(loss)
Domestic $31.5 $21.7 $9.8 45.2
Import 50.3 29.5 20.8 70.5
Premium luxury 46.8 40.9 5.9 14.4
Corporate and
other (23.6) (7.0) (16.6)
----- ---- -----
Total segment
income 105.0 85.1 19.9 23.4
Add: Floorplan
interest
expense 9.7 9.9 (0.2)
Operating
income $114.7 $95.0 $19.7 20.7
====== ===== =====
* Segment income (loss) is defined as operating income less floorplan
interest expense
Retail new vehicle unit
sales:
Domestic 13,681 11,129 2,552 22.9
Import 23,994 20,019 3,975 19.9
Premium luxury 7,763 7,120 643 9.0
45,438 38,268 7,170 18.7
====== ====== =====
Brand Mix -New Vehicle Retail Units
Sold
-----------------------------------
Three Months Ended
March 31,
------------------
2010 (%) 2009 (%)
-------- --------
Domestic:
Ford, Lincoln-Mercury 16.2 14.1
Chevrolet, Pontiac, Buick, Cadillac,
GMC 11.7 11.3
Chrysler, Jeep, Dodge 2.2 3.7
Domestic total 30.1 29.1
---- ----
Import:
Honda 13.7 14.0
Toyota 18.4 20.5
Nissan 13.7 10.8
Other imports 7.0 7.0
Import total 52.8 52.3
---- ----
Premium Luxury:
Mercedes 8.1 8.7
BMW 4.5 5.2
Lexus 3.0 2.9
Other premium luxury (Land Rover,
Porsche) 1.5 1.8
Premium Luxury total 17.1 18.6
---- ----
100.0 100.0
===== =====
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Capital Expenditures /Stock and Debt Three Months Ended
Repurchases March 31,
------------------------------------ ------------------
2010 2009
---- ----
Capital expenditures $14.1 $20.4
Acquisitions $12.5 $0.2
Proceeds from exercises of stock
options $0.2 $0.2
Senior note repurchases (aggregate
principal) $- $72.0
Stock repurchases:
Aggregate purchase price $37.2 $-
Shares repurchased (in millions) 2.1 -
Three Months Ended March 31,
Floorplan Assistance and Expense ----------------------------
--------------------------------
2010 2009 Variance
---- ---- --------
Floorplan assistance earned (included
in cost of sales) $12.5 $10.0 $2.5
Floorplan interest expense (new
vehicles) (9.2) (9.2) -
---- ---- ---
Net inventory carrying benefit $3.3 $0.8 $2.5
==== ==== ====
Balance Sheet and Other
Highlights
-----------------------
March 31, December 31, March 31,
2010 2009 2009
---------- ------------- ----------
Cash and cash equivalents $160.8 $173.6 $61.7
Inventory $1,512.4 $1,400.9 $1,500.8
Total floorplan notes payable $1,427.0 $1,381.4 $1,459.3
Non-vehicle debt $1,110.7 $1,112.6 $1,140.9
Equity $2,327.3 $2,303.2 $2,236.7
New days supply (industry
standard of selling
days, including fleet) 50 days 54 days 65 days
Used days supply (trailing 30
days) 39 days 41 days 36 days
AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions, except per share data)
Comparable Basis Reconciliations*
---------------------------------
Three Months Ended March 31,
----------------------------
Diluted Earnings
Net Income Per Share
---------- ----------------
2010 2009 2010 2009
---- ---- ---- ----
As reported $55.2 $34.6 $0.32 $0.20
Discontinued
operations, net
of income taxes 3.2 18.0 $0.02 $0.10
--- ----
From continuing
operations, as
reported 58.4 52.6 $0.34 $0.30
Gain on senior
note repurchases - (7.4) $- $(0.04)
Net gain on asset
sales and
dispositions - (5.9) $- $(0.03)
Property and other
impairments** - 0.3 $- $0.00
--- ---
Adjusted $58.4 $39.6 $0.34 $0.22
===== =====
* Please refer to the "Non-GAAP Financial Measures" section of the
Press Release.
** Property and other impairments for the three months ended March 31,
2009 totaled $4.8 million after-tax, of which $4.5 million was
reclassified to loss from discontinued operations since they related
to dealerships classified as discontinued operations during 2009.
AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
Operating Highlights Three Months Ended March 31,
-------------------- ----------------------------
%
2010 2009 $Variance Variance
---- ---- --------- ---------
Revenue:
New vehicle $1,462.1 $1,180.4 $281.7 23.9
Retail used vehicle 644.3 519.5 124.8 24.0
Wholesale 87.9 65.2 22.7 34.8
Used vehicle 732.2 584.7 147.5 25.2
Parts and service 538.0 532.1 5.9 1.1
Finance and
insurance, net 95.5 76.4 19.1 25.0
Other 11.6 12.8 (1.2)
----
Total revenue $2,839.4 $2,386.4 $453.0 19.0
======== ======== ======
Gross profit:
New vehicle $103.0 $73.4 $29.6 40.3
Retail used vehicle 63.3 60.7 2.6 4.3
Wholesale 3.1 1.9 1.2
Used vehicle 66.4 62.6 3.8 6.1
Parts and service 237.0 233.9 3.1 1.3
Finance and insurance 95.5 76.4 19.1 25.0
Other 6.8 7.0 (0.2)
----
Total gross profit $508.7 $453.3 $55.4 12.2
====== ====== =====
Retail vehicle unit
sales:
New 45,330 38,134 7,196 18.9
Used 37,670 33,510 4,160 12.4
83,000 71,644 11,356 15.9
Revenue per vehicle
retailed:
New $32,255 $30,954 $1,301 4.2
Used $17,104 $15,503 $1,601 10.3
Gross profit per
vehicle retailed:
New $2,272 $1,925 $347 18.0
Used $1,680 $1,811 $(131) (7.2)
Finance and insurance $1,151 $1,066 $85 8.0
Three Months Ended March
Operating Percentages 31,
--------------------- ------------------------
2010 (%) 2009 (%)
-------- --------
Revenue mix percentages:
New vehicle 51.5 49.5
Used vehicle 25.8 24.5
Parts and service 18.9 22.3
Finance and insurance, net 3.4 3.2
Other 0.4 0.5
100.0 100.0
Gross profit mix percentages:
New vehicle 20.2 16.2
Used vehicle 13.1 13.8
Parts and service 46.6 51.6
Finance and insurance 18.8 16.9
Other 1.3 1.5
100.0 100.0
Operating items as a
percentage of revenue:
Gross Profit:
New vehicle 7.0 6.2
Used vehicle - retail 9.8 11.7
Parts and service 44.1 44.0
Total 17.9 19.0
AUTONATION, INC.
KEY CREDIT AGREEMENT COVENANT COMPLIANCE CALCULATIONS
March 31, 2010
($ millions)
Income Statement information for the last
twelve months
(April 1, 2009 - March 31, 2010):
---------------------------------
Net income from continuing operations $238.9
Floorplan and other interest expense 75.8
Income tax provision 122.4
Depreciation and amortization 76.0
Stock-based compensation expense (SFAS No.
123R) 15.7
Impairment charges (including goodwill,
franchise rights, and long-lived assets) 3.7
---
EBITDA 532.5
Floorplan interest expense (35.9)
-----
Adjusted EBITDA $496.6
======
As of March 31, 2010:
---------------------
Funded indebtedness (primarily comprised of
current and long-term debt and letters of
credit) $1,176.6
Vehicle secured indebtedness (floorplan
payables) 1,427.0
-------
Funded indebtedness including floorplan 2,603.6
Shareholders' equity 2,327.4
---
Total capitalization including floorplan $4,931.0
========
Ratio of funded indebtedness/
Adjusted EBITDA 2.37
Covenant (1) less than 2.75
------------ ---------
Ratio of funded indebtedness including
floorplan/
Total capitalization including floorplan 52.8%
Covenant (1) less than 65.0%
------------ --------- ----
(1) The amendment to our credit agreement completed on April 14,
2010, modified certain financial covenants, including an increase in
the maximum leverage ratio from 2.75x to 3.25x and a decrease in the
maximum capitalization ratio from 65% to 60%. In calculating our
leverage ratio, we are no longer required to include letters of
credit in the definition of debt (except to the extent letters of
credit exceed $150.0 million), and in calculating our capitalization
ratio, we are now permitted to add back to shareholders' equity all
goodwill, franchise rights, and long-lived asset impairment charges
subsequent to 2007.
AUTONATION, INC.
NON-VEHICLE LONG-TERM DEBT
($ in millions)
The following table sets forth our non-vehicle long-term
debt as of March 31, 2010:
- on an actual basis; and
- as adjusted to give effect to the sale of $400.0
million aggregate principal amount of 6.75% Senior Notes
due 2018 (which were issued at a discount) and the use of
the net proceeds therefrom to (1) pay for the Floating
Rate Notes due 2013 and the 7% Senior Notes due 2014 that
were validly tendered prior to the early consent deadline
and accepted for payment, and (2) reduce the size of the
term loan facility from $600.0 million to $533.4 million.
At March 31, 2010
-----------------
Actual As Adjusted
------ -----------
Floating Rate Notes due 2013 (1) $146.1 $0.6
7% Senior Notes due 2014 (1) 132.6 14.8
6.75% Senior Notes due 2018 - 394.0
Term loan facility due 2012 (2) 600.0 54.0
Term loan facility due 2014 (2) - 479.4
Revolving credit facility due
2012 (3) - -
Revolving credit facility due
2014 (3) - -
Mortgage facility 224.6 224.6
Other debt due from 2010 to 2025 7.4 7.4
--- ---
1,110.7 1,174.8
Less: current maturities (7.7) (7.7)
---- ----
Long-term debt, net of current
maturities $1,103.0 $1,167.1
======== ========
(1) Holders of 99.6% of the outstanding Floating Rate Notes due 2013 and
holders of 88.8% of the outstanding 7% Senior Notes due 2014,
representing $263.3 million aggregate principal amount of old notes,
validly tendered their old notes and provided their consents prior
to the early consent deadline. The total amount paid of $273.8
million represented the total consideration (including the consent
payments) for the note that were validly tendered plus accrued and
unpaid interest.
(2) Our term loan facility was reduced from $600.0 million to $533.4
million and bifurcated into a $54.0 million tranche due July 18,
2012 (relating to lenders that did not consent to the extension) and
a $479.4 million tranche due July 18, 2014. The portion of the term
loan facility that is due 2012 provides for various interest rates
generally at LIBOR plus 0.875% and the portion of the term loan
facility that is due 2014 provides for various interest rates
generally at LIBOR plus 2.25%.
(3) Our revolving credit facility was reduced from $700.0 million to
$638.6 million and bifurcated into a $57.0 million tranche due July
18, 2012 (relating to lenders that did not consent to the extension)
and a $581.6 million tranche due July 18, 2014. Commitment fees on
the undrawn portion of the revolving credit facility are 15 basis
points for the tranche due 2012 and 50 basis points for the tranche
due 2014.
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