OREANDA-NEWS. AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported first quarter 2016 net income from continuing operations of $96 million, or $0.90 per share, compared to net income from continuing operations of $112 million, or $0.97 per share, for the same period in the prior year. Net income from continuing operations for the first quarter of 2016 was negatively impacted by approximately $6.8 million after-tax, or $0.06 per share, consisting of hail-related expenses of approximately $3.6 million after-tax, or $0.03 per share, and a shift of approximately $3.2 million after-tax, or $0.03 per share, in stock-based compensation expense into the first quarter, due to a change from quarterly to annual stock option grants.

Mike Jackson, Chairman, Chief Executive Officer and President, said, "As we stated last quarter, the market is in a plateau environment. Industry retail sales for the quarter were flat despite year over year manufacturer incentive increases of 14%, new vehicle sales lease penetration over 30%, and high retail inventories. We still believe the industry will be above 17 million units for the year."

Acquisitions
In February 2016, AutoNation completed the previously announced acquisition of 12 stores operating in the Houston, Dallas-Fort Worth, Corpus Christi, Tyler, Ennis, and Waco, Texas markets from Allen Samuels Auto Group.

Share Repurchase
During the first quarter of 2016, AutoNation repurchased 7.9 million shares of common stock for an aggregate purchase price of $371 million. As of April 21, 2016, AutoNation has approximately $175 million remaining Board authorization for share repurchase and 103 million shares outstanding.

Segment Results
Segment results(1) for the first quarter of 2016 were as follows:

  • Domestic - Domestic segment income(2) was $77 million compared to year-ago segment income of $79 million, a decrease of 2%. 
  • Import - Import segment income(2) was $76 million compared to year-ago segment income of $75 million, an increase of 1%.
  • Premium Luxury - Premium Luxury segment income(2) was $83 million compared to year-ago segment income of $94 million, a decrease of 12%.

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 http://investors.autonation.com.  

The webcast will also be available on AutoNation's 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 22, 2016, through May 06, 2016 by calling (888) 562-6281 (password 5423).

(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 FCA US (formerly 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 represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.

About AutoNation, Inc.
AutoNation is America's largest automotive retailer, currently owning and operating 375 new vehicle franchises from coast to coast. AutoNation sold its 10 millionth vehicle in 2015, the first automotive retailer to reach this milestone. A commitment to delivering a peerless experience through customer-focused sales and service processes is what drives AutoNation's success. AutoNation supports the Breast Cancer Research Foundation through its Drive Pink Campaign. AutoNation is transforming the automotive industry through bold leadership, technology and innovation.

 

AUTONATION, INC. 

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS

(In millions, except per share data)
             
     

Three Months Ended March 31,

  
     

2016

  

2015

  
             

Revenue:

          
 

New vehicle

  

$

2,800.2

  

$

2,769.6

  
 

Used vehicle

  

1,241.6

  

1,193.2

  
 

Parts and service

  

820.4

  

743.4

  
 

Finance and insurance, net

  

223.1

  

207.6

  
 

Other

  

34.3

  

30.4

  

Total revenue

  

5,119.6

  

4,944.2

  
             

Cost of sales:

          
 

New vehicle

  

2,651.0

  

2,608.1

  
 

Used vehicle

  

1,150.6

  

1,089.5

  
 

Parts and service

  

465.7

  

423.4

  
 

Other

  

26.4

  

23.3

  

Total cost of sales

  

4,293.7

  

4,144.3

  
             

Gross profit

  

825.9

  

799.9

  
             

Selling, general, and administrative expenses

  

588.7

  

557.6

  

Depreciation and amortization

  

34.8

  

28.7

  

Other income, net

  

(5.0)

  

(1.3)

  
             

Operating income

  

207.4

  

214.9

  
             

Non-operating income (expense) items:

          
 

Floorplan interest expense

  

(18.9)

  

(13.2)

  
 

Other interest expense

  

(28.3)

  

(21.4)

  
 

Interest income

  

0.1

  

0.1

  
 

Other income (loss), net

  

(3.4)

  

1.1

  
             

Income from continuing operations before income taxes

  

156.9

  

181.5

  
             

Income tax provision

  

60.7

  

69.8

  
             

Net income from continuing operations

  

96.2

  

111.7

  
             

Loss from discontinued operations, net of income taxes

  

(0.3)

  

(0.2)

  
             
             

Net income

  

$

95.9

  

$

111.5

  
             
             

Diluted earnings (loss) per share*:

          
 

Continuing operations

  

$

0.90

  

$

0.97

  
 

Discontinued operations

  

$

-

  

$

-

  
             
 

Net income

  

$

0.89

  

$

0.97

  
             
             

Weighted average common shares outstanding

  

107.4

  

115.1

  
             

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

  

103.1

  

113.9

  
             
             

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

 AUTONATION, INC. 

 UNAUDITED SUPPLEMENTARY DATA 

 ($ in millions, except per vehicle data) 
                       
                       
   

Operating Highlights

  

Three Months Ended March 31,

  
       

2016

  

2015

  

$ Variance

  

% Variance

  

Revenue:

                  
   

New vehicle

  

$

2,800.2

  

$

2,769.6

  

$

30.6

  

1.1

  
   

  Retail used vehicle

  

1,119.9

  

1,094.1

  

25.8

  

2.4

  
   

  Wholesale

  

121.7

  

99.1

  

22.6

  

22.8

  
   

Used vehicle

  

1,241.6

  

1,193.2

  

48.4

  

4.1

  
   

Finance and insurance, net

  

223.1

  

207.6

  

15.5

  

7.5

  
 

Total variable operations

  

4,264.9

  

4,170.4

  

94.5

  

2.3

  
 

Parts and service

  

820.4

  

743.4

  

77.0

  

10.4

  
 

Other

  

34.3

  

30.4

  

3.9

      

Total revenue

  

$

5,119.6

  

$

4,944.2

  

$

175.4

  

3.5

  
                       
                       

Gross profit:

                  
   

New vehicle

  

$

149.2

  

$

161.5

  

$

(12.3)

  

(7.6)

  
   

  Retail used vehicle

  

93.7

  

102.5

  

(8.8)

  

(8.6)

  
   

  Wholesale

  

(2.7)

  

1.2

  

(3.9)

      
   

Used vehicle

  

91.0

  

103.7

  

(12.7)

  

(12.2)

  
   

Finance and insurance

  

223.1

  

207.6

  

15.5

  

7.5

  
 

Total variable operations

  

463.3

  

472.8

  

(9.5)

  

(2.0)

  
 

Parts and service

  

354.7

  

320.0

  

34.7

  

10.8

  
 

Other

  

7.9

  

7.1

  

0.8

      

Total gross profit

  

825.9

  

799.9

  

26.0

  

3.3

  
                       

Selling, general, and administrative expenses

  

588.7

  

557.6

  

(31.1)

  

(5.6)

  
                       

Depreciation and amortization

  

34.8

  

28.7

  

(6.1)

      

Other income, net

  

(5.0)

  

(1.3)

  

3.7

      

 Operating income 

  

207.4

  

214.9

  

(7.5)

  

(3.5)

  
                       

Non-operating income (expense) items:

                  
   

Floorplan interest expense

  

(18.9)

  

(13.2)

  

(5.7)

      
   

Other interest expense

  

(28.3)

  

(21.4)

  

(6.9)

      
   

Interest income

  

0.1

  

0.1

  

-

      
   

Other income (loss), net

  

(3.4)

  

1.1

  

(4.5)

      

Income from continuing operations before income taxes

  

$

156.9

  

$

181.5

  

$

(24.6)

  

(13.6)

  
                       

Retail vehicle unit sales:

                  
   

New 

  

79,007

  

78,560

  

447

  

0.6

  
   

Used

  

58,103

  

58,624

  

(521)

  

(0.9)

  
       

137,110

  

137,184

  

(74)

  

(0.1)

  
                       

Revenue per vehicle retailed:

                  
   

New 

  

$

35,442

  

$

35,255

  

$

187

  

0.5

  
   

Used

  

$

19,274

  

$

18,663

  

$

611

  

3.3

  
                       

Gross profit per vehicle retailed:

                  
   

New 

  

$

1,888

  

$

2,056

  

$

(168)

  

(8.2)

  
   

Used

  

$

1,613

  

$

1,748

  

$

(135)

  

(7.7)

  
   

Finance and insurance

  

$

1,627

  

$

1,513

  

$

114

  

7.5

  
   

Total variable operations(1)

  

$

3,399

  

$

3,438

  

$

(39)

  

(1.1)

  
                       
                       
   

Operating Percentages

  

 Three Months Ended March 31, 

          
       

2016 (%)

  

2015 (%)

          
                       

Revenue mix percentages:

                  
   

New vehicle

  

54.7

  

56.0

          
   

Used vehicle

  

24.3

  

24.1

          
   

Parts and service

  

16.0

  

15.0

          
   

Finance and insurance, net

  

4.4

  

4.2

          
   

Other

  

0.6

  

0.7

          
       

100.0

  

100.0

          
                       

Gross profit mix percentages:

                  
   

New vehicle

  

18.1

  

20.2

          
   

Used vehicle

  

11.0

  

13.0

          
   

Parts and service

  

42.9

  

40.0

          
   

Finance and insurance

  

27.0

  

26.0

          
   

Other

  

1.0

  

0.8

          
       

100.0

  

100.0

          
                       

Operating items as a percentage of revenue:

                  
   

Gross profit:

                  
   

   New vehicle

  

5.3

  

5.8

          
   

   Used vehicle - retail

  

8.4

  

9.4

          
   

   Parts and service

  

43.2

  

43.0

          
   

   Total

  

16.1

  

16.2

          
   

Selling, general, and administrative expenses

  

11.5

  

11.3

          
   

Operating income

  

4.1

  

4.3

          
                       

Operating items as a percentage of total gross profit:

                  
   

Selling, general, and administrative expenses

  

71.3

  

69.7

          
   

Operating income

  

25.1

  

26.9

          
                       
                       

(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.

 AUTONATION, INC. 

 UNAUDITED SUPPLEMENTARY DATA 

 ($ in millions) 
                     
                     
 

Segment Operating Highlights

  

Three Months Ended March 31,

  
     

2016

  

2015

  

$ Variance

  

% Variance

  
                     
                     

Revenue:

                  
 

Domestic

  

$

1,848.2

  

$

1,665.7

  

$

182.5

  

11.0

  
 

Import

  

1,675.0

  

1,678.7

  

(3.7)

  

(0.2)

  
 

Premium luxury

  

1,540.3

  

1,563.2

  

(22.9)

  

(1.5)

  
 

    Total

  

5,063.5

  

4,907.6

  

155.9

  

3.2

  
 

Corporate and other

  

56.1

  

36.6

  

19.5

  

53.3

  
 

    Total consolidated revenue

  

$

5,119.6

  

$

4,944.2

  

$

175.4

  

3.5

  
                     
                     

Segment income*:

                  
 

Domestic

  

$

77.4

  

$

79.3

  

$

(1.9)

  

(2.4)

  
 

Import

  

76.1

  

75.0

  

1.1

  

1.5

  
 

Premium luxury

  

83.0

  

94.1

  

(11.1)

  

(11.8)

  
 

    Total 

  

236.5

  

248.4

  

(11.9)

  

(4.8)

  
                     

Corporate and other

  

(48.0)

  

(46.7)

  

(1.3)

      

Add:  Floorplan interest expense

  

18.9

  

13.2

  

5.7

      

Operating income

  

$

207.4

  

$

214.9

  

$

(7.5)

  

(3.5)

  
                     

* Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
                     

Retail new vehicle unit sales:

                  
 

Domestic

  

27,736

  

25,750

  

1,986

  

7.7

  
 

Import

  

35,781

  

36,914

  

(1,133)

  

(3.1)

  
 

Premium luxury

  

15,490

  

15,896

  

(406)

  

(2.6)

  
     

79,007

  

78,560

  

447

  

0.6

  
                     
                     
 

Brand Mix - New Vehicle Retail Units Sold

                  
     

 Three Months Ended March 31, 

          
     

2016 (%)

  

2015 (%)

          
                     
 

Domestic:

                  
 

   Ford, Lincoln

  

15.2

  

16.5

          
 

   Chevrolet, Buick, Cadillac, GMC

  

11.3

  

9.8

          
 

   Chrysler, Dodge, Jeep, Ram

  

8.6

  

6.5

          
 

     Domestic total

  

35.1

  

32.8

          
                     
 

Import:

                  
 

   Toyota

  

17.3

  

18.7

          
 

   Honda

  

11.9

  

10.9

          
 

   Nissan

  

9.1

  

10.1

          
 

   Other Import

  

7.0

  

7.3

          
 

     Import total

  

45.3

  

47.0

          
                     
 

Premium Luxury:

                  
 

   Mercedes-Benz

  

8.2

  

8.1

          
 

   BMW

  

4.2

  

4.9

          
 

   Lexus

  

3.0

  

3.2

          
 

   Audi

  

2.0

  

1.9

          
 

   Other Premium Luxury (Land Rover, Porsche)

  

2.2

  

2.1

          
 

     Premium Luxury total

  

19.6

  

20.2

          
                     
     

100.0

  

100.0

          

 AUTONATION, INC

 UNAUDITED SUPPLEMENTARY DATA, Continued

 ($ in millions)
                   
                   
                   
                   
 

Capital Expenditures / Stock Repurchases

  

 Three Months Ended March 31,

      
       

2016

  

2015

      
                   
 

Capital expenditures (1)

  

$

50.7

  

$

62.9

      
 

Cash paid for acquisitions, net of cash acquired (2)

  

$

256.6

  

$

27.7

      
 

Proceeds from exercises of stock options

  

$

0.6

  

$

12.4

      
 

Stock repurchases:

              
   

Aggregate purchase price

  

$

370.6

  

$

9.1

      
   

Shares repurchased (in millions)

  

7.9

  

0.2

      
                   
                   
   

Floorplan Assistance and Expense

  

 Three Months Ended March 31,

  
       

2016

  

2015

  

 Variance

  
                   
                   
 

Floorplan assistance earned (included in cost of sales)

  

$

29.3

  

$

26.7

  

$

2.6

  
 

New vehicle floorplan interest expense

  

(17.9)

  

(12.5)

  

(5.4)

  
                   
   

Net new vehicle inventory carrying benefit

  

$

11.4

  

$

14.2

  

$

(2.8)

  
                   
                   
   

Balance Sheet and Other Highlights

              
                   
       

March 31, 2016

  

December 31, 2015

  

March 31, 2015

  
                   
 

Cash and cash equivalents

  

$

47.8

  

$

74.1

  

$

74.1

  
 

Inventory

  

$

3,927.8

  

$

3,612.0

  

$

2,928.4

  
 

Total floorplan notes payable

  

$

4,039.4

  

$

3,727.1

  

$

3,002.4

  
 

Non-vehicle debt (3)

  

$

2,680.5

  

$

2,356.5

  

$

2,051.3

  
 

Equity

  

$

2,090.6

  

$

2,349.3

  

$

2,205.6

  
 

New days supply (industry standard of selling days)

  

 81 days

  

 68 days

  

 52 days

  
 

Used days supply (trailing calendar month days)

  

 39 days

  

 43 days

  

 34 days

  
                   
                   
                   
   

Key Credit Agreement Covenant Compliance Calculations(4)

              
                   
 

Leverage ratio

      

 2.60x

      
 

Covenant

less than or equal to

  

 3.75x

      
                   
 

Capitalization ratio

      

64.9%

      
 

Covenant

less than or equal to

  

70.0%

      
                   
                   
 

(1)

Includes accrued construction in progress and excludes property associated with capital leases entered into during the period.

    
 

(2)

Excludes capital leases and deferred purchase price commitments.

    
 

(3)

Pursuant to an accounting standard update effective January 1, 2016, all debt issuance costs have been reclassified, with the exception of those related to our revolving credit facility, as a direct reduction from the carrying amount of the related debt liability for both current and prior periods.

    
 

(4)

Calculated in accordance with our credit agreement as filed with the SEC.

      

 AUTONATION, INC. 

 UNAUDITED SAME STORE DATA 

 ($ in millions, except per vehicle data) 
                       
                       
   

Operating Highlights

  

Three Months Ended March 31,

  
       

2016

  

2015

  

$ Variance

  

% Variance

  

Revenue:

                  
   

New vehicle

  

$

2,634.1

  

$

2,755.5

  

$

(121.4)

  

(4.4)

  
   

  Retail used vehicle

  

1,045.9

  

1,085.2

  

(39.3)

  

(3.6)

  
   

  Wholesale

  

118.1

  

98.7

  

19.4

  

19.7

  
   

Used vehicle

  

1,164.0

  

1,183.9

  

(19.9)

  

(1.7)

  
   

Finance and insurance, net

  

211.8

  

206.6

  

5.2

  

2.5

  
 

Total variable operations

  

4,009.9

  

4,146.0

  

(136.1)

  

(3.3)

  
 

Parts and service

  

770.1

  

736.2

  

33.9

  

4.6

  
 

Other

  

34.0

  

30.3

  

3.7

      

Total revenue

  

$

4,814.0

  

$

4,912.5

  

$

(98.5)

  

(2.0)

  
                       
                       

Gross profit:

                  
   

New vehicle

  

$

140.1

  

$

160.6

  

$

(20.5)

  

(12.8)

  
   

  Retail used vehicle

  

88.0

  

101.6

  

(13.6)

  

(13.4)

  
   

  Wholesale

  

(2.6)

  

1.2

  

(3.8)

      
   

Used vehicle

  

85.4

  

102.8

  

(17.4)

  

(16.9)

  
   

Finance and insurance

  

211.8

  

206.6

  

5.2

  

2.5

  
 

Total variable operations

  

437.3

  

470.0

  

(32.7)

  

(7.0)

  
 

Parts and service

  

333.5

  

316.6

  

16.9

  

5.3

  
 

Other

  

7.3

  

7.1

  

0.2

      

Total gross profit

  

$

778.1

  

$

793.7

  

$

(15.6)

  

(2.0)

  
                       
                       

Retail vehicle unit sales:

                  
   

New 

  

74,323

  

78,027

  

(3,704)

  

(4.7)

  
   

Used

  

54,157

  

58,039

  

(3,882)

  

(6.7)

  
       

128,480

  

136,066

  

(7,586)

  

(5.6)

  
                       

Revenue per vehicle retailed:

                  
   

New 

  

$

35,441

  

$

35,315

  

$

126

  

0.4

  
   

Used

  

$

19,312

  

$

18,698

  

$

614

  

3.3

  
                       

Gross profit per vehicle retailed:

                  
   

New 

  

$

1,885

  

$

2,058

  

$

(173)

  

(8.4)

  
   

Used

  

$

1,625

  

$

1,751

  

$

(126)

  

(7.2)

  
   

Finance and insurance

  

$

1,649

  

$

1,518

  

$

131

  

8.6

  
   

Total variable operations(1)

  

$

3,424

  

$

3,445

  

$

(21)

  

(0.6)

  
                       
                       
   

Operating Percentages

  

 Three Months Ended March 31, 

          
       

2016 (%)

  

2015 (%)

          
                       

Revenue mix percentages:

                  
   

New vehicle

  

54.7

  

56.1

          
   

Used vehicle

  

24.2

  

24.1

          
   

Parts and service

  

16.0

  

15.0

          
   

Finance and insurance, net

  

4.4

  

4.2

          
   

Other

  

0.7

  

0.6

          
       

100.0

  

100.0

          
                       

Gross profit mix percentages:

                  
   

New vehicle

  

18.0

  

20.2

          
   

Used vehicle

  

11.0

  

13.0

          
   

Parts and service

  

42.9

  

39.9

          
   

Finance and insurance

  

27.2

  

26.0

          
   

Other

  

0.9

  

0.9

          
       

100.0

  

100.0

          
                       

Operating items as a percentage of revenue:

                  
   

Gross profit:

                  
   

   New vehicle

  

5.3

  

5.8

          
   

   Used vehicle - retail

  

8.4

  

9.4

          
   

   Parts and service

  

43.3

  

43.0

          
   

   Total

  

16.2

  

16.2

          
                       
                       

(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.
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