AutoNation Reports 2010 Second Quarter Results

FORT LAUDERDALE, Fla., July 22 /PRNewswire-FirstCall/ --

• 20% growth in second quarter revenue and retail vehicle unit sales over the prior year
• Second quarter adjusted EPS from continuing operations was $0.38 ($0.31 on a GAAP basis), a 36% increase compared to $0.28 in the prior year ($0.30 on a GAAP basis)
• AutoNation repurchased 20.9 million shares of its common stock for $414.4 million in the second quarter and on July 20 the Board of Directors authorized the repurchase of up to an additional $250 million of AutoNation common stock
• AutoNation announces the acquisition of Toyota Mall of Georgia, one of the largest Toyota stores in the United States, and two Hyundai stores, one in Atlanta and the other in Seattle.

AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2010 second quarter adjusted net income from continuing operations of $62 million or $0.38 per share compared to adjusted net income of $50 million or $0.28 per share for the same period in the prior year, a 36% improvement on a per-share basis. Adjusted net income for the second quarter of 2010 excludes debt refinancing costs of $12 million after-tax, or $0.07 per share and for 2009 a gain on asset sales of $4 million after-tax, or $0.02 per share.  On a GAAP basis, 2010 second quarter net income from continuing operations was $50 million or $0.31 per share, compared to 2009 second quarter net income from continuing operations of $54 million or $0.30 per share.

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AutoNation's 2010 second quarter revenue totaled $3.1 billion, compared to $2.6 billion in the year-ago period, an increase of 20%, driven primarily by stronger new and used retail vehicle revenue which increased 25%.  Based on CNW Research data, in the second quarter, total U.S. industry new retail vehicle unit sales increased 12%.  AutoNation's new vehicle unit sales increased 20%.

AutoNation's 2010 second quarter used retail vehicle revenue increased 28% compared to the year-ago period, as retail unit sales increased 20% and revenue per vehicle retailed increased 7%. Parts and service revenue increased 3% and finance and insurance revenue increased 18% compared to the second quarter 2009.

Mike Jackson, Chairman and Chief Executive Officer, said, "We delivered strong double-digit growth in the second quarter, which was driven by both new and used vehicle unit sales and revenue.  We continue to expect full year industry new vehicle unit sales to be in the range of 11.5 million new units.  We expect third quarter new vehicle industry sales will equal or surpass third quarter 2009 new vehicle industry sales even though the prior year included the highly successful Cash for Clunkers program. We continue to see a solid automotive recovery going forward."  

AutoNation repurchased 20.9 million shares of its common stock in the second quarter for $414.4 million ($19.83 per share).  On July 20, 2010, the Board of Directors authorized the repurchase of up to an additional $250 million of AutoNation common stock.  As of such date, AutoNation had utilized substantially all of the amounts previously approved by its Board of Directors under its existing share repurchase program. As a result of the share buybacks, AutoNation had 149.3 million shares outstanding at the end of the second quarter, down from 169.9 million at the end of the first quarter.  There are currently 146.4 million shares outstanding.

AutoNation also announced that it has signed agreements to acquire Toyota Mall of Georgia and Hyundai Mall of Georgia in the Atlanta market and that it recently completed the acquisition of Hyundai of Seattle.  Toyota Mall of Georgia, which includes Scion, is one of the largest Toyota dealerships in the United States.  The annual revenue run rate for all three acquisitions is approximately $200 million.  The acquisitions of Toyota Mall of Georgia and Hyundai Mall of Georgia are subject to customary closing conditions and are expected to be completed in third quarter 2010.

Mr. Jackson stated, "We believe that we have a compelling opportunity to create significant value for stockholders over the next several years as the industry recovers.  Our stock repurchases, together with the acquisitions that we announced, reflect our confidence in AutoNation's financial and operating strength and the long-term prospects in the auto industry.  The combination of these drivers presents a significant long term growth and value creation opportunity."

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 second quarter were as follows:

• Domestic - Domestic segment income (1) was $41 million compared to year-ago segment income of $24 million.  Second quarter Domestic retail new vehicle unit sales increased 30%.  We had a solid performance from our domestic stores, especially Ford and Chevrolet.

• Import - Import segment income was $52 million compared to year-ago segment income of $42 million.  Second quarter Import retail new vehicle unit sales increased 16%.

• Premium Luxury - Premium Luxury segment income was $49 million compared to year-ago segment income of $43 million.  Second quarter Premium Luxury retail new vehicle unit sales increased 15%.

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

For the six-month period ended June 30, 2010, the Company reported adjusted net income from continuing operations of $121 million or $0.72 per share compared to $90 million or $0.51 for the same period in the prior year.  Adjusted net income excludes refinancing costs of $12 million after-tax, or $0.07 per share, for the first half of 2010, and a net benefit of $17 million after-tax, or $0.09 per share, primarily related to a net gain on asset sales and a gain on senior note repurchases for the first half of 2009.  On a GAAP basis, net income from continuing operations for the six-month period ended June 30, 2010 was $108 million or $0.65 per share compared to $107 million or $0.60 per share for prior year period.  The Company's revenue for the six-month period ended June 30, 2010 totaled $6.0 billion, up 19% compared to $5.0 billion in the prior year.

The second 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 corp.autonation.com/investors under "Webcasts & Presentations." A playback of the conference call will be available after 1:00 p.m. Eastern Time on July 22, 2010 through July 30, 2010 by calling 800-944-3031 (password: 75300).

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and has been named America's Most Admired Automotive Retailer by FORTUNE Magazine five times. A component of the Standard and Poor's 500 Index, AutoNation owns and operates 249 new vehicle franchises in 15 states. For additional information, please visit corp.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 total industry new vehicle unit sales for 2010, and pending acquisitions, as well as 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 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 has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides 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 improves the period-to-period comparability of the Company's results from its core business operations.

SOURCE AutoNation, Inc.