AutoNation Reports Fourth Quarter GAAP EPS from Continuing Operations of $1.73, and All-Time Record Fourth Quarter Adjusted EPS from Continuing Operations of $2.43

FORT LAUDERDALE, Fla., Feb. 16, 2021 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest and most recognized automotive retailer, today reported fourth quarter 2020 net income from continuing operations of $152 million, or $1.73 per share. Fourth quarter 2020 GAAP results were reduced by a non-cash accounting loss related to our equity investment in Vroom of $62 million after-tax, or $0.70 per share. Fourth quarter 2019 net income from continuing operations was $158 million, or $1.74 per share. Fourth quarter 2019 net income from continuing operations included net gains from store and property divestitures of $20 million after-tax, or $0.22 per share, and a non-cash accounting gain related to our equity investment in Vroom of $19 million after-tax, or $0.21 per share. Fourth quarter 2020 Adjusted EPS from continuing operations was a record $2.43, an increase of 94% compared to the fourth quarter 2019 Adjusted EPS from continuing operations of $1.25. Reconciliations of non-GAAP financial measures are included in the attached financial tables.

Operational Summary
Fourth quarter 2020 Operational Summary:

• Revenue – Same-store revenue was $5.8 billion, an increase of 5% compared to the year-ago period.
• Gross Profit - Same-store gross profit totaled $984 million, an increase of 11% compared to the year-ago period.
• New Vehicle Gross Profit - Same-store new vehicle gross profit per vehicle retailed was a record $2,775, up $919 or 50% compared to the year-ago period.
• Used Vehicle Gross Profit - Same-store used vehicle gross profit per vehicle retailed was $1,565, up $127 or 9% compared to the year-ago period.
• Customer Financial Services Gross Profit - Same-store Customer Financial Services gross profit per vehicle retailed was a record $2,209, up $218 or 11% compared to the year-ago period.
• SG&A as a Percentage of Gross Profit –SG&A as a percentage of gross profit was 64.1%. Adjusted SG&A as a percentage of gross profit was 63.8%, an improvement of 820 basis points compared to the prior year.

Digital
AutoNation continues to invest in digital capabilities to enhance its peerless customer experience. The Company significantly upgraded its AutoNation Express integrated retailing solution, providing Customers with a seamless and intuitive omnichannel vehicle shopping and purchase experience. Customers can complete a mobile-optimized step-by-step digital experience to estimate trade-ins instantly, calculate finance/lease/cash payments, select vehicle protection products, apply for financing, schedule in-store pick up or home delivery, and upload key documents. Customers can receive a certified offer and same-day, check-on-the-spot payment through the We'll Buy Your Car "WBYC" program. AutoNation Express empowers Customers to do as much or as little of the transaction online through our digital capabilities and physical stores as they choose. Customer 360, a proprietary tool utilized by AutoNation Associates further complements these new Customer facing capabilities, and leverages real-time data for over 9 million Customers to guide and personalize their experience.

AutoNation USA
The Company plans to build over 100 AutoNation USA pre-owned vehicle stores, with over 50 completed by the end of 2025. The AutoNation USA store expansion will include extending AutoNation's coast to coast footprint into new markets. AutoNation plans to open five new AutoNation USA stores in 2021 in the following markets: Austin, Denver (2 stores), Phoenix, and San Antonio. The Company plans to open an additional 10 new stores in 2022. AutoNation USA stores will leverage the AutoNation brand and its proven processes for a competitive advantage. AutoNation has set the long-term goal of retailing over 1 million combined new and used vehicle units per year.

Liquidity and Leverage
As of December 31, 2020, AutoNation had $2.3 billion of liquidity, including $570 million in cash and approximately $1.8 billion of availability under our revolving credit facility. The Company's covenant leverage ratio was 1.8x at year-end, or 1.3x net of cash and used floorplan availability. AutoNation had approximately $2.1 billion of non-vehicle debt outstanding as of December 31, 2020.

Share Repurchase
During the fourth quarter of 2020, AutoNation repurchased 4.7 million shares of common stock for an aggregate purchase price of $302 million. From January 1, 2021, through February 12, 2021, AutoNation repurchased an additional 1.3 million shares for an aggregate purchase price of $95 million. AutoNation today announced that the Board of Directors authorized the repurchase of up to an additional $1 billion of AutoNation common stock. With the increased authorization, AutoNation has approximately $1.1 billion remaining Board authorization for share repurchase. As of February 12, 2021, AutoNation had approximately 82 million shares outstanding.

Vroom
During the fourth quarter of 2020, AutoNation sold 3.1 million shares of its stake in Vroom, Inc. for proceeds of $105 million, and realized a cash gain of $78 million. In early 2021, AutoNation sold its remaining stake in Vroom for proceeds of $109 million, and realized a cash gain of $87 million. In total, the Company realized a cash gain of $165 million from this investment.

Segment Results
Segment results⁽¹⁾ for the fourth quarter 2020 were as follows:

Fourth Quarter 2020 Segment Results

• Domestic - Domestic segment income⁽²⁾ was $107 million compared to year-ago segment income of $65 million, an increase of 64%.
• Import - Import segment income⁽²⁾ was $109 million compared to year-ago segment income of $78 million, an increase of 40%.
• Premium Luxury - Premium Luxury segment income⁽²⁾ was $165 million compared to year-ago segment income of $113 million, an increase of 47%.

Full Year 2020 Segment Results

• Domestic - Domestic segment income⁽²⁾ was $355 million compared to year-ago segment income of $258 million, an increase of 38%.
• Import - Import segment income⁽²⁾ was $386 million compared to year-ago segment income of $319 million, an increase of 21%.
• Premium Luxury - Premium Luxury segment income⁽²⁾ was $478 million compared to year-ago segment income of $381 million, an increase of 25%.

For the full year ended December 31, 2020, AutoNation reported net income from continuing operations of $382 million, or $4.30 per share, compared to net income from continuing operations of $451 million, or $4.98 per share, in the prior year. Adjusted net income from continuing operations was $631 million, or $7.12 per share, compared to $414 million, or $4.57 per share, in the prior year. AutoNation's revenue for the full year 2020 totaled $20.4 billion, compared to $21.3 billion in the prior year. Reconciliations of non-GAAP financial measures are included in the attached financial tables.

The fourth quarter conference call may be accessed by telephone at (866) 211-3176 (Conference ID: 8496042) at 10:00 a.m. Eastern Time today or on AutoNation's investor relations website at 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 February 16, 2021, through March 9, 2021, by calling (800) 585-8367 (Conference ID: 8496042). Additional information regarding AutoNation's results can be found in the Investor Presentation available at: investors.autonation.com.

About AutoNation, Inc.
AutoNation, America's largest and most recognized automotive retailer, is transforming the automotive industry through its bold leadership, innovation, and comprehensive brand extensions. As of December 31, 2020, AutoNation owned and operated over 315 locations from coast to coast. AutoNation has sold over 13 million vehicles, the first automotive retailer to reach this milestone. AutoNation's success is driven by a commitment to delivering a peerless experience through customer-focused sales and service processes. Since 2013, AutoNation has raised over $25 million to drive out cancer, create awareness, and support critical research through its DRIVE PINK initiative, which was officially branded in 2015.

Please visit www.autonation.com, investors.autonation.com, www.twitter.com/CEOMikeJackson, and www.twitter.com/AutoNation, where AutoNation discloses additional information about the Company, its business, and its results of operations. Please also visit www.autonationdrive.com, AutoNation's automotive blog, for information regarding the AutoNation community, the automotive industry, and current automotive news and trends.

NON-GAAP FINANCIAL MEASURES
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, 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 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. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.

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," "targets," "goals," "plans," "believes," "continues," "may," "will," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements regarding our strategic initiatives, partnerships, or investments, including the planned expansion of our AutoNation USA pre-owned vehicle stores, our investments in digital and online capabilities, and other brand extension strategies, as well as statements regarding our expectations for the future performance of our business and the automotive retail industry, and other 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: economic conditions, including changes in consumer demand, unemployment rates, interest rates, fuel prices, and tariffs; new and used vehicle margins; our ability to successfully implement and maintain expense controls; our ability to implement successfully our strategic initiatives, partnerships, and investments, including the planned expansion of our AutoNation USA stores, our investments in digital and online capabilities, and other brand extension strategies; our ability to identify, acquire, and build out suitable locations in a timely manner; our ability to maintain and enhance our retail brands and reputation and to attract consumers to our own digital channels; the response by federal, state, and local governments and other third parties to, and the economic impacts of, the COVID-19 pandemic; supply chain disruptions; the success and financial viability and the incentive and marketing programs of vehicle manufacturers and distributors with which we hold franchises; our ability to integrate successfully acquired and awarded franchises and to attain planned sales volumes within our expected time frames; restrictions imposed by vehicle manufacturers and our ability to obtain manufacturer approval for acquisitions; natural disasters and other adverse weather events; the resolution of legal and administrative proceedings; regulatory factors affecting our business, including fuel economy requirements; the announcement of safety recalls; factors affecting our goodwill and other intangible asset impairment testing; 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.