EX-99.1 2 an8kearningsrelease33114ex.htm PRESS RELEASE AN 8K Earnings Release 3/31/14 EX99.1


Exhibit 99.1
 
 
 
 
Contact: Marc Cannon
(954) 769-3146
cannonm@autonation.com
 
Investor contact: Robert Quartaro
(954) 769-7342
quartaror@autonation.com

AutoNation Reports Record First Quarter EPS from Continuing Operations
 
•
Adjusted EPS from continuing operations was $0.75, a record for first quarter results and an increase of 10% compared to the year-ago period
•
On a GAAP basis, first quarter 2014 EPS from continuing operations was $0.79, up 16% compared to the first quarter of 2013
•
Total revenue of $4.4 billion, up 7% compared to the year-ago period, increasing across all major business sectors; operating income of $189 million, an increase of 12% compared to the year-ago period

FORT LAUDERDALE, Fla., (April 17, 2014) — AutoNation, Inc. (NYSE: AN), America’s largest automotive retailer, today reported 2014 first quarter adjusted net income from continuing operations of $91 million, or $0.75 per share, compared to net income from continuing operations of $83 million, or $0.68 per share, for the same period in the prior year, a 10% improvement on a per-share basis. On a GAAP basis, first quarter 2014 net income from continuing operations was $96 million, or $0.79 per share. Reconciliations of non-GAAP financial measures are included in the attached financial tables.
2014 first quarter revenue totaled $4.4 billion, compared to $4.1 billion in the year-ago period, an increase of 7%, driven by stronger performance in all business sectors - new vehicles, used vehicles, parts and service, and finance and insurance. In the first quarter of 2014, AutoNation’s retail new vehicle unit sales increased 4% on a same store basis and 6% overall.
Mike Jackson, Chairman and Chief Executive Officer, said, “AutoNation delivered solid growth in EPS and operating income in the first quarter of 2014 compared to the prior year, driven by gross profit growth in all of our business sectors. We continue to expect U.S. industry new vehicle unit sales to increase 3% to 5%, bringing U.S. industry new vehicle sales above 16 million units in 2014.”
During the first quarter of 2014, AutoNation repurchased 2.4 million shares of common stock for an aggregate purchase price of $115.7 million. As of April 16, 2014, AutoNation has approximately $400 million remaining Board authorization for share repurchase and 119 million shares outstanding.
Segment results(1) for the first quarter of 2014 were as follows:
•
Domestic – Domestic segment income(2) was $64 million compared to year-ago segment income of $59 million, an increase of 9%.
•
Import – Import segment income(2) was $65 million compared to year-ago segment income of $71 million, a decrease of 8%.
•
Premium Luxury – Premium Luxury segment income(2) was $83 million compared to year-ago segment income of $69 million, an increase of 21%.
The first quarter conference call may be accessed by telephone at (888) 769-8515 (password: AutoNation) at 11:00 a.m. Eastern Time or on AutoNation’s investor relations website at investors.autonation.com.
The webcast will also be available on our website under “Events & Presentations” following the call. A playback of the conference call will be available after 1:00 p.m. Eastern Time on April 17, 2014, through April 24, 2014 by calling (800) 839-2314 (password 75300).
  
(1) 
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, Nissan, and Hyundai; and the




Premium Luxury segment is comprised of stores that sell vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, and Audi.
(2) 
Segment income for each of our segments is defined as operating income less floorplan interest expense.
About AutoNation, Inc.
AutoNation is transforming the automotive retail industry through bold leadership. We deliver a superior automotive retail experience through our customer-focused sales and service processes. Owning and operating 270 new vehicle franchises, which sell 33 new vehicle brands across 15 states, AutoNation is America’s largest automotive retailer, with state-of-the-art operations and the ability to leverage economies of scale that benefit the customer. As an indication of our leadership position in our industry, AutoNation is a component of the S&P 500 Index. 
Please visit investors.autonation.com, www.autonation.com, www.twitter.com/autonation, www.twitter.com/CEOMikeJackson, www.facebook.com/autonation, and www.facebook.com/CEOMikeJackson, where AutoNation discloses additional information about the Company, its business, and its results of operations.
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. Statements regarding our expectations for the future performance of our franchises and the automotive retail industry, as well as statements that describe our objectives, goals, or plans, are forward-looking statements. Our 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: our ability to integrate successfully acquired and awarded franchises and to attain planned sales volumes within our expected time frames; 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 provides reconciliations of these measures to the most directly comparable GAAP measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure, provide 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 improve the period-to-period comparability of the Company's results from its core business operations.




AUTONATION, INC.
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
($ in millions, except per share data)
 
 
 
Three Months Ended March 31,
 
 
2014
 
2013
Revenue:
 
 
 
 
New vehicle
 
$
2,428.6

 
$
2,257.7

Used vehicle
 
1,049.7

 
1,009.7

Parts and service
 
671.0

 
636.6

Finance and insurance, net
 
172.4

 
155.6

Other
 
41.8

 
36.8

Total revenue
 
4,363.5

 
4,096.4

Cost of sales:
 
 
 
 
New vehicle
 
2,282.7

 
2,116.0

Used vehicle
 
955.4

 
923.7

Parts and service
 
384.3

 
364.3

Other
 
33.7

 
28.4

Total cost of sales
 
3,656.1

 
3,432.4

Gross profit
 
707.4

 
664.0

Selling, general and administrative expenses
 
500.7

 
473.3

Depreciation and amortization
 
25.6

 
22.7

Other income, net
 
(8.0
)
 
(1.4
)
Operating income
 
189.1

 
169.4

Non-operating income (expense) items:
 
 
 
 
Floorplan interest expense
 
(13.2
)
 
(12.9
)
Other interest expense
 
(21.6
)
 
(22.3
)
Interest income
 
—

 
0.1

Other income, net
 
1.5

 
1.6

Income from continuing operations before income taxes
 
155.8

 
135.9

Income tax provision
 
60.3

 
52.7

Net income from continuing operations
 
95.5

 
83.2

Loss from discontinued operations, net of income taxes
 
(0.4
)
 
(0.2
)
Net income
 
$
95.1

 
$
83.0

Diluted earnings (loss) per share*:
 
 
 
 
Continuing operations
 
$
0.79

 
$
0.68

Discontinued operations
 
$
—

 
$
—

Net income
 
$
0.78

 
$
0.67

Weighted average common shares outstanding
 
121.3

 
123.0

Common shares outstanding, net of treasury stock, at period end
 
119.4

 
121.3



* Earnings per share amounts are calculated discretely and therefore may not add up to the total.




AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions, except per vehicle data)
Operating Highlights
Three Months Ended March 31,
 
2014
 
2013
 
$ Variance
 
% Variance
Revenue:
 
 
 
 
 
 
 
New vehicle
$
2,428.6

 
$
2,257.7

 
$
170.9

 
7.6

Retail used vehicle
945.8

 
899.2

 
46.6

 
5.2

Wholesale
103.9

 
110.5

 
(6.6
)
 
(6.0
)
Used vehicle
1,049.7

 
1,009.7

 
40.0

 
4.0

Finance and insurance, net
172.4

 
155.6

 
16.8

 
10.8

Total variable operations
3,650.7

 
3,423.0

 
227.7

 
6.7

Parts and service
671.0

 
636.6

 
34.4

 
5.4

Other
41.8

 
36.8

 
5.0

 

Total revenue
$
4,363.5

 
$
4,096.4

 
$
267.1

 
6.5

Gross profit:
 
 
 
 
 
 
 
New vehicle
$
145.9

 
$
141.7

 
$
4.2

 
3.0

Retail used vehicle
92.8

 
83.4

 
9.4

 
11.3

Wholesale
1.5

 
2.6

 
(1.1
)
 
 
Used vehicle
94.3

 
86.0

 
8.3

 
9.7

Finance and insurance
172.4

 
155.6

 
16.8

 
10.8

Total variable operations
412.6

 
383.3

 
29.3

 
7.6

Parts and service
286.7

 
272.3

 
14.4

 
5.3

Other
8.1

 
8.4

 
(0.3
)
 
 
Total gross profit
707.4

 
664.0

 
43.4

 
6.5

Selling, general and administrative expenses
500.7

 
473.3

 
(27.4
)
 
(5.8
)
Depreciation and amortization
25.6

 
22.7

 
(2.9
)
 
 
Other income, net
(8.0
)
 
(1.4
)
 
6.6

 
 
Operating income
189.1

 
169.4

 
19.7

 
11.6

Non-operating income (expense) items:
 
 
 
 
 
 
 
Floorplan interest expense
(13.2
)
 
(12.9
)
 
(0.3
)
 
 
Other interest expense
(21.6
)
 
(22.3
)
 
0.7

 
 
Interest income
—

 
0.1

 
(0.1
)
 
 
Other income, net
1.5

 
1.6

 
(0.1
)
 
 
Income from continuing operations before income taxes
$
155.8

 
$
135.9

 
$
19.9

 
14.6

Retail vehicle unit sales:
 
 
 
 
 
 
 
New
71,223

 
67,159

 
4,064

 
6.1

Used
52,136

 
50,505

 
1,631

 
3.2

 
123,359

 
117,664

 
5,695

 
4.8

Revenue per vehicle retailed:
 
 
 
 
 
 
 
New
$
34,099

 
$
33,617

 
$
482

 
1.4

Used
$
18,141

 
$
17,804

 
$
337

 
1.9

Gross profit per vehicle retailed:
 
 
 
 
 
 
 
New
$
2,048

 
$
2,110

 
$
(62
)
 
(2.9
)
Used
$
1,780

 
$
1,651

 
$
129

 
7.8

Finance and insurance
$
1,398

 
$
1,322

 
$
76

 
5.7

Total variable operations(1)
$
3,333

 
$
3,235

 
$
98

 
3.0

 
 
 
 
 
 
 
 
(1) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.





Operating Percentages
 
Three Months Ended March 31,
 
 
2014 (%)
 
2013 (%)
Revenue mix percentages:
 
 
 
 
New vehicle
 
55.7
 
55.1
Used vehicle
 
24.1
 
24.6
Parts and service
 
15.4
 
15.5
Finance and insurance, net
 
4.0
 
3.8
Other
 
0.8
 
1.0
 
 
100.0
 
100.0
Gross profit mix percentages:
 
 
 
 
New vehicle
 
20.6
 
21.3
Used vehicle
 
13.3
 
13.0
Parts and service
 
40.5
 
41.0
Finance and insurance
 
24.4
 
23.4
Other
 
1.2
 
1.3
 
 
100.0
 
100.0
Operating items as a percentage of revenue:
 
 
 
 
Gross profit:
 
 
 
 
New vehicle
 
6.0
 
6.3
Used vehicle - retail
 
9.8
 
9.3
Parts and service
 
42.7
 
42.8
Total
 
16.2
 
16.2
Selling, general and administrative expenses
 
11.5
 
11.6
Operating income
 
4.3
 
4.1
Operating items as a percentage of total gross profit:
 
 
 
 
Selling, general and administrative expenses
 
70.8
 
71.3
Operating income
 
26.7
 
25.5
 





AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA
($ in millions)
 
Segment Operating Highlights
 
Three Months Ended March 31,
 
 
2014
 
2013
 
$ Variance
 
% Variance
Revenue:
 
 
 
 
 
 
 
 
Domestic
 
$
1,473.0

 
$
1,378.0

 
$
95.0

 
6.9

Import
 
1,549.4

 
1,503.7

 
45.7

 
3.0

Premium luxury
 
1,306.4

 
1,172.9

 
133.5

 
11.4

Total segment revenue
 
4,328.8

 
4,054.6

 
274.2

 
6.8

Corporate and other
 
34.7

 
41.8

 
(7.1
)
 
(17.0
)
Total consolidated revenue
 
$
4,363.5

 
$
4,096.4

 
$
267.1

 
6.5

 
 
 
 
 
 
 
 
 
*Segment income
 
 
 
 
 
 
 
 
Domestic
 
$
63.8

 
$
58.6

 
$
5.2

 
8.9

Import
 
65.4

 
71.0

 
(5.6
)
 
(7.9
)
Premium luxury
 
83.3

 
68.8

 
14.5

 
21.1

Total segment income
 
212.5

 
198.4

 
14.1

 
7.1

Corporate and other
 
(36.6
)
 
(41.9
)
 
5.3

 
 
Add: Floorplan interest expense
 
13.2

 
12.9

 
0.3

 
 
Operating income
 
$
189.1

 
$
169.4

 
$
19.7

 
11.6

 
* Segment income for each of our segments is defined as operating income less floorplan interest expense
 
 
 
 
 
 
 
 
 
Retail new vehicle unit sales:
 
 
 
 
 
 
 
 
Domestic
 
23,815

 
22,544

 
1,271

 
5.6

Import
 
34,925

 
33,032

 
1,893

 
5.7

Premium luxury
 
12,483

 
11,583

 
900

 
7.8

 
 
71,223

 
67,159

 
4,064

 
6.1

 
 
 
 
 
Brand Mix - New Vehicle Retail Units Sold
 
Three Months Ended
 
 
 
March 31,
 
 
 
 
2014 (%)
 
2013 (%)
 
 
 
 
Domestic:
 
 
 
 
 
 
 
 
Ford, Lincoln
 
17.7

 
18.3

 
 
 
 
Chevrolet, Buick, Cadillac, GMC
 
10.0

 
10.3

 
 
 
 
Chrysler, Jeep, Dodge
 
5.7

 
5.0

 
 
 
 
Domestic total
 
33.4

 
33.6

 
 
 
 
Import:
 
 
 
 
 
 
 
 
Honda
 
11.4

 
11.1

 
 
 
 
Toyota
 
19.0

 
20.1

 
 
 
 
Nissan
 
11.6

 
11.0

 
 
 
 
Other imports
 
7.1

 
7.0

 
 
 
 
Import total
 
49.1

 
49.2

 
 
 
 
Premium Luxury:
 
 
 
 
 
 
 
 
Mercedes-Benz
 
7.5

 
7.4

 
 
 
 
BMW
 
4.6

 
4.7

 
 
 
 
Lexus
 
2.6

 
2.2

 
 
 
 
Audi
 
1.0

 
1.2

 
 
 
 
Other premium luxury (Land Rover, Porsche)
 
1.8

 
1.7

 
 
 
 
Premium Luxury total
 
17.5

 
17.2

 
 
 
 
 
 
100.0

 
100.0

 
 
 
 
  




AUTONATION, INC.
UNAUDITED SUPPLEMENTARY DATA, Continued
($ in millions)
 
Capital Expenditures / Stock Repurchases
Three Months Ended March 31,
 
2014
 
2013
Capital expenditures (1)
$
34.9

 
$
23.1

Cash paid for acquisitions
$
—

 
$
2.8

Proceeds from exercises of stock options
$
15.3

 
$
7.9

Stock repurchases:
 
 
 
Aggregate purchase price
$
115.7

 
$
2.2

Shares repurchased (in millions)
2.4

 
0.1

 
Floorplan Assistance and Expense
Three Months Ended March 31,
 
2014
 
2013
 
Variance
Floorplan assistance earned (included in cost of sales)
$
24.0

 
$
18.6

 
$
5.4

New vehicle floorplan interest expense
(12.7
)
 
(12.3
)
 
(0.4
)
Net new vehicle inventory carrying benefit
$
11.3

 
$
6.3

 
$
5.0

 
Balance Sheet and Other Highlights
 
March 31, 2014
 
December 31, 2013
 
March 31, 2013
Cash and cash equivalents
 
$
69.2

 
$
69.2

 
$
46.3

Inventory
 
$
2,712.0

 
$
2,827.2

 
$
2,499.8

Total floorplan notes payable
 
$
2,844.2

 
$
3,029.0

 
$
2,541.0

Non-vehicle debt
 
$
1,803.9

 
$
1,839.9

 
$
1,957.3

Equity
 
$
2,068.9

 
$
2,061.7

 
$
1,786.6

 
 
 
 
 
 
 
New days supply (industry standard of selling days)
 
61 days

 
62 days

 
62 days

Used days supply (trailing calendar month days)(2)
 
31 days

 
35 days

 
29 days

 
 
Key Credit Agreement Covenant Compliance Calculations
 
 
Ratio of funded indebtedness/
 
 
Adjusted EBITDA
 
2.16x
Covenant
less than
3.75x
 
Ratio of funded indebtedness including floorplan/
 
 
Total capitalization including floorplan
 
56.4
%
Covenant
less than
65.0
%
 

(1) Includes accrued construction in progress and excludes property acquired under capital leases.
(2) As of December 31, 2013, we have revised our method of calculating new vehicle days supply to exclude fleet sales and in-transit inventory. We have revised prior periods to conform to our revised method of calculation.






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**
 
 
2014
 
2013
 
2014
 
2013
As reported
 
$
95.1

 
$
83.0

 
$
0.78

 
$
0.67

Discontinued operations, net of income taxes
 
0.4

 
0.2

 
$
—

 
$
—

From continuing operations, as reported
 
95.5

 
83.2

 
$
0.79

 
$
0.68

Net gain related to business/property dispositions
 
(5.0
)
 
—

 
$
(0.04
)
 
$
—

Adjusted
 
$
90.5

 
$
83.2

 
$
0.75

 
$
0.68

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*
Please refer to the “Non-GAAP Financial Measures” section of the Press Release.
**
Diluted earnings per share amounts are calculated discretely and therefore may not add up to the total.





AUTONATION, INC.
UNAUDITED SAME STORE DATA
($ in millions, except per vehicle data)
 
Operating Highlights
Three Months Ended March 31,
 
2014
 
2013
 
$ Variance
 
% Variance
Revenue:
 
 
 
 
 
 
 
New vehicle
$
2,388.2

 
$
2,257.7

 
$
130.5

 
5.8

Retail used vehicle
931.5

 
899.2

 
32.3

 
3.6

Wholesale
102.0

 
110.5

 
(8.5
)
 
(7.7
)
Used vehicle
1,033.5

 
1,009.7

 
23.8

 
2.4

Finance and insurance, net
170.0

 
155.6

 
14.4

 
9.3

Total variable operations
3,591.7

 
3,423.0

 
168.7

 
4.9

Parts and service
660.5

 
636.6

 
23.9

 
3.8

Other
40.6

 
36.8

 
3.8

 
 
Total revenue
$
4,292.8

 
$
4,096.4

 
$
196.4

 
4.8

 
 
 
 
 
 
 
 
Gross profit:
 
 
 
 
 
 
 
New vehicle
$
143.6

 
$
141.7

 
$
1.9

 
1.3

Retail used vehicle
91.4

 
83.4

 
8.0

 
9.6

Wholesale
1.4

 
2.6

 
(1.2
)
 
 
Used vehicle
92.8

 
86.0

 
6.8

 
7.9

Finance and insurance
170.0

 
155.6

 
14.4

 
9.3

Total variable operations
406.4

 
383.3

 
23.1

 
6.0

Parts and service
282.3

 
272.3

 
10.0

 
3.7

Other
8.0

 
8.4

 
(0.4
)
 
 
Total gross profit
$
696.7

 
$
664.0

 
$
32.7

 
4.9

 
 
 
 
 
 
 
 
Retail vehicle unit sales:
 
 
 
 
 
 
 
New
69,724

 
67,159

 
2,565

 
3.8

Used
51,111

 
50,505

 
606

 
1.2

 
120,835

 
117,664

 
3,171

 
2.7

 
 
 
 
 
 
 
 
Revenue per vehicle retailed:
 
 
 
 
 
 
 
New
$
34,252

 
$
33,617

 
$
635

 
1.9

Used
$
18,225

 
$
17,804

 
$
421

 
2.4

 
 
 
 
 
 
 
 
Gross profit per vehicle retailed:
 
 
 
 
 
 
 
New
$
2,060

 
$
2,110

 
$
(50
)
 
(2.4
)
Used
$
1,788

 
$
1,651

 
$
137

 
8.3

Finance and insurance
$
1,407

 
$
1,322

 
$
85

 
6.4

Total variable operations(1)
$
3,352

 
$
3,235

 
$
117

 
3.6

 
 
 
 
 
 
 
 
(1) Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
 




Operating Percentages
 
Three Months Ended March 31,
 
 
2014 (%)
 
2013 (%)
Revenue mix percentages:
 
 
 
 
New vehicle
 
55.6
 
55.1
Used vehicle
 
24.1
 
24.6
Parts and service
 
15.4
 
15.5
Finance and insurance, net
 
4.0
 
3.8
Other
 
0.9
 
1.0
 
 
100.0
 
100.0
Gross profit mix percentages:
 
 
 
 
New vehicle
 
20.6
 
21.3
Used vehicle
 
13.3
 
13.0
Parts and service
 
40.5
 
41.0
Finance and insurance
 
24.4
 
23.4
Other
 
1.2
 
1.3
 
 
100.0
 
100.0
Operating items as a percentage of revenue:
 
 
 
 
Gross Profit:
 
 
 
 
New vehicle
 
6.0
 
6.3
Used vehicle - retail
 
9.8
 
9.3
Parts and service
 
42.7
 
42.8
Total
 
16.2
 
16.2