AutoNation Reports Sixth Consecutive All-Time Record Quarter

FORT LAUDERDALE, Fla., Oct. 21, 2021 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest and most recognized automotive retailer, today reported its sixth consecutive all-time record quarter. During the quarter, consumer demand continued to outpace supply, driven by consumer desire for personal transportation and ongoing manufacturing supply chain disruptions. New vehicle inventory remains at historically low levels, which combined with strong execution, has supported record profitability. With personal transportation remaining a top priority, many Customers are shifting from new to pre-owned vehicles. AutoNation continues to outperform the industry due to strong sourcing capabilities, with third quarter 2021 same store used vehicle revenue up 53% year-over-year. Ninety percent of all pre-owned vehicles retailed by AutoNation in the third quarter were self-sourced.

Mike Jackson, AutoNation's Chief Executive Officer, stated, "Demand continues to outpace supply for new vehicles. New vehicle sales are constrained by reduced production volume with low inventory levels. We expect this pent up demand to support sales for the foreseeable future."

Third quarter 2021 net income from continuing operations was $362 million, or $5.12 per share. Third quarter 2020 net income from continuing operations was $183 million, or $2.05 per share, which included charges of $28 million after-tax, or $0.31 per share, related to the closing of the AutoNation Collision Parts business and a non-cash unrealized loss related to our investment in Vroom of $2 million after-tax, or $0.02 per share. Reconciliations of non-GAAP financial measures are included in the attached financial tables.

Operational Summary
Third quarter 2021 Operational Summary:

• Revenue – Same-store revenue was $6.4 billion, an increase of 18% compared to the year-ago period and an increase of 18% compared to the third quarter of 2019.
• New Vehicle Revenue – Same-store new vehicle revenue was flat compared to the prior year and decreased 3% compared to the third quarter of 2019.
• Used Vehicle Revenue– Same-store used vehicle revenue increased 53% compared to the prior year and increased 67% compared to the third quarter of 2019
• Gross Profit - Same-store gross profit totaled $1.3 billion, an increase of 29% compared to the year-ago period and an increase of 45% compared to the third quarter of 2019.
• New Vehicle Gross Profit - Same-store new vehicle gross profit per vehicle retailed was a record $5,484, up $2,949 or 116% compared to the year-ago period and up 238% compared to the third quarter of 2019.
• Used Vehicle Gross Profit - Same-store used vehicle gross profit per vehicle retailed was $2,104, up $108 or 5% compared to the year-ago period and up 51% compared to the third quarter of 2019.
• Customer Financial Services Gross Profit - Same-store Customer Financial Services gross profit per vehicle retailed was a record $2,573, up $417 or 19% compared to the year-ago period and up 32% compared to the third quarter of 2019.
• Customer Care Gross Profit - Same-store Customer Care gross profit was $424 million, an increase of 8% compared to the year-ago period and an increase of 6% compared to the third quarter of 2019.
• SG&A as a Percentage of Gross Profit –SG&A as a percentage of gross profit was 56.9%, an improvement of 750 basis points compared to adjusted SG&A as a percentage of gross profit of 64.4% in the prior year and a 1,550 basis improvement compared to the third quarter of 2019.

Capital Allocation
The Company's seventh and eighth AutoNation USA stores opened in Denver as scheduled in September and October of 2021. AutoNation remains on track to open two additional AutoNation USA stores in the fourth quarter of 2021, including a store in Phoenix and entering a new market in Charlotte, North Carolina. The Company will open 12 additional new stores in 2022. These stores will continue to leverage the AutoNation brand, scale, and proven Customer-centric processes to capture a larger share of the used vehicle market.

AutoNation today announced it has signed an agreement to acquire Priority 1 Automotive Group, representing approximately $420 million in annual revenue. This transaction is subject to customary terms and conditions, including manufacturer approval, and is expected to close in the fourth quarter of 2021. Together with the previously announced acquisition of Peacock Automotive Group, during 2021, AutoNation has announced acquisitions representing in the aggregate $800 million in annual revenue.

During the third quarter of 2021, AutoNation repurchased 7.9 million shares of common stock, or almost 11% of the shares outstanding at the beginning of the third quarter for an aggregate purchase price of $879 million. For the last twelve months through September 30, 2021, AutoNation repurchased 23.9 million shares of common stock, or 27% of the shares outstanding, for an aggregate purchase price of $2.2 billion. 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 $1.3 billion remaining Board authorization for share repurchase. As of October 19, 2021, AutoNation had approximately 66 million shares outstanding.

Liquidity and Leverage
As of September 30, 2021, AutoNation had $1.8 billion of liquidity, including $72 million in cash and approximately $1.8 billion of availability under our revolving credit facility. The Company's covenant leverage ratio was 1.4x at quarter-end. AutoNation had approximately $2.7 billion of non-vehicle debt outstanding as of September 30, 2021.

Segment Results
Segment results⁽¹⁾ for the third quarter 2021 were as follows:

Third Quarter 2021 Segment Results

• Domestic - Domestic segment income⁽²⁾ was $149 million compared to year-ago segment income of $112 million, an increase of 33%. 
• Import - Import segment income⁽²⁾ was $201 million compared to year-ago segment income of $124 million, an increase of 63%.
• Premium Luxury - Premium Luxury segment income⁽²⁾ was $206 million compared to year-ago segment income of $144 million, an increase of 43%.

For the nine-month period ended September 30, 2021, AutoNation reported net income from continuing operations of $986 million, or $12.63 per share, compared to $230 million, or $2.59 per share, in the prior year.  Adjusted net income from continuing operations for the nine-month period ended September 30, 2021, was $980 million, or $12.55 per share, compared to $418 million, or $4.70 per share in the prior year. Reconciliations of non-GAAP financial measures are included in the attached financial tables.

The third quarter conference call may be accessed by telephone 844-200-6205 (Conference ID:577526) 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 October 21, 2021, through November 11, 2021, by calling 866-813-9403 (Conference ID: 527886). 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 admired automotive retailer, is transforming the automotive industry through its bold leadership, innovation, and comprehensive brand extensions. As of September 30, 2021, AutoNation owned and operated over 300 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 $28 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 news 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," "projects," "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); pending acquisitions; and 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 (including with respect to new and pre-owned vehicle sales targets), 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; our ability to implement successfully our strategic initiatives, partnerships, and investments, including the planned expansion of our AutoNation USA stores; our ability to identify, acquire, and build out suitable locations in a timely manner; our ability to acquire and integrate successfully new franchises; restrictions imposed by vehicle manufacturers and our ability to obtain manufacturer approval for acquisitions; our ability to develop successfully our digital and online capabilities and other brand extension strategies; supply chain disruptions and inventory availability; our ability to maintain and enhance our retail brands and reputation and to attract consumers to our own digital channels; our ability to attain planned sales volumes within our expected time frames; new and used vehicle margins; our ability to successfully implement and maintain expense controls; the success and financial viability and the incentive and marketing programs of vehicle manufacturers and distributors with which we hold franchises; the response by federal, state, and local governments and other third parties to, and the economic impacts of, the COVID-19 pandemic;  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.