AutoNation Reports Record Third Quarter Results

FORT LAUDERDALE, Fla., Oct. 20, 2011 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2011 third quarter net income from continuing operations of $71 million, or $0.48 per share, compared to net income from continuing operations of $59 million, or $0.39 per share, for the same period in the prior year, a 23% improvement on a per-share basis.  

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2011 third quarter revenue totaled $3.5 billion, compared to $3.3 billion in the year-ago period, an increase of 7%, driven primarily by higher new and used vehicle average selling prices.  AutoNation's new vehicle unit sales decreased 2% on a same store basis and were flat overall, as the Japanese earthquake affected availability of vehicles produced by Japanese manufacturers.  Based on CNW Research data, in the third quarter, total U.S. industry new retail vehicle unit sales increased 1%.

AutoNation's 2011 third quarter retail used vehicle revenue increased 7%. Parts and service revenue increased 2%, and finance and insurance revenue increased 9% compared to the 2010 third quarter.

2011 third quarter gross profit totaled $575 million, compared to $545 million in the year-ago period, an increase of 5%, primarily due to an increase in retail new vehicle gross profit, as well as an increase in finance and insurance gross profit.  On a per-vehicle basis, gross profit per new vehicle retailed increased $460 or 23%, while finance and insurance gross profit per vehicle retailed increased $83 or 7%, as compared to the year-ago period.

Mike Jackson, Chairman and Chief Executive Officer, said, "We continued to deliver solid double-digit growth in operating income in the third quarter, which was driven by strong gross margins in new vehicles and finance and insurance."  Mr. Jackson added, "While shipments from the Japanese manufacturers improved in the third quarter, inventory levels of these vehicles remained constrained.  We would expect that the improving supply environment will result in lower margins on these vehicles in the fourth quarter."

Mr. Jackson concluded, "We believe that the new vehicle sales environment will continue to improve in the fourth quarter, and we remain optimistic about the long-term recovery of the U.S. auto market."

AutoNation repurchased 7.2 million shares from July 1, 2011 through October 19, 2011, for an aggregate purchase price of $247.7 million. AutoNation today announced that the Board of Directors authorized the repurchase of up to an additional $250 million of AutoNation common stock.  With the increased authorization, as of October 19, 2011, AutoNation had approximately $316 million remaining Board authorization for share repurchase.

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 third quarter were as follows:

• Domestic - Domestic segment income(1) was $47 million compared to year-ago segment income of $43 million.  Third quarter Domestic retail new vehicle unit sales increased 12%.
• Import - Import segment income(1) was $65 million compared to year-ago segment income of $51 million.  Third quarter Import retail new vehicle unit sales decreased 10%.
• Premium Luxury - Premium Luxury segment income(1) was $50 million compared to year-ago segment income of $48 million.  Third quarter Premium Luxury retail new vehicle unit sales increased 11%.

For the nine-month period ended September 30, 2011, the Company reported net income from continuing operations of $214 million, or $1.43 per share, compared to adjusted net income from continuing operations of $179 million, or $1.11 per share for the same period in the prior year, an improvement of 29% on a per-share basis.  Adjusted net income from continuing operations for the nine-month period ended September 30, 2010 excludes debt refinancing costs of $12 million after-tax, or $0.07 per share, as disclosed in the attached financial tables.  There were no adjusting items for the nine-month period ended September 30, 2011.  On a GAAP basis, net income from continuing operations for the nine-month period ended September 30, 2010 was $167 million, or $1.04 per share.  The Company's revenue for the nine-month period ended September 30, 2011, totaled $10.2 billion, up 10% compared to $9.2 billion for the same period in the prior year.

The third 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 investors.autonation.com under "Webcasts & Presentations." A playback of the conference call will be available after 1:00 p.m. Eastern Time on October 20, 2011 through October 27, 2011 by calling (866)-463-2174 (password: 75300).

(1) Segment income is defined as operating income less floorplan interest expense.

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 owned and operated 257 new vehicle franchises in 15 states as of September 30, 2011. For additional information, please visit investors.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. Statements regarding our expectations for the automotive retail industry, including statements regarding the impact on our business of the earthquake and tsunami that struck Japan, 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: 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; the duration and severity of production and supply chain disruptions resulting from the natural disasters in Japan; 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.