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Autonation Reports First Quarter 2016 Results

The following excerpt is from the company's SEC filing.

EPS from continuing operations was

, down

compared to

quarter

EPS from continuing operations of

EPS from continuing operations was negatively impacted by $0.06 per share, consisting of hail-related expenses of $0.03 per share, and a shift of approximately $0.03 per share in stock-based compensation expense into the first quarter, due to a change from quarterly to annual stock option grants

Total revenue of

$5.1 billion

was up

compared to the year-ago period

AutoNation completed the acquisition of Allen Samuels Auto Group, which includ es 12 stores with 31 franchises in 6 Texas markets, representing approximately $800 million in annual revenue

In the first quarter of 2016, AutoNation repurchased

7.9 million

shares of common stock for an aggregate purchase price of

$371 million

FORT LAUDERDALE, Fla., (

April 22, 2016

) — AutoNation, Inc.

(NYSE: AN),

America’s largest automotive retailer, today reported

net income from continuing operations of

$96 million

per share, compared to net income from continuing operations of

$112 million

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

. 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

were as follows:

Domestic

– Domestic segment income

$77 million

compared to year-ago segment income of

$79 million

a decrease

Import

– Import segment income

$76 million

$75 million

an increase

Premium Luxury

– Premium Luxury segment income

$83 million

$94 million

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

through May 6, 2016 by calling (888) 562-6281 (password 5423).

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.

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.

Please visit investors.autonation.com, www.autonation.com, www.autonationdrive.com, www.twitter.com/autonation, www.twitter.com/CEOMikeJackson, www.facebook.com/autonation, and www.facebook.com/CEOMikeJackson, where AutoNation discloses additional information about the Company, its business, and its results of operations.

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 strategic initiatives and expectations for the future performance of our franchises and the automotive retail industry, 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, including conditions in the credit markets and changes in interest rates; new and used vehicle margins; the success and financial viability and the incentive and marketing programs of vehicle manufacturers and distributors with which we hold franchises; our ability to maintain and enhance our retail brands and reputation and to attract consumers to our own digital channels; 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 pending acquisitions; natural disasters and other adverse weather events; the resolution of legal and administrative proceedings; regulatory factors affecting our business, including fuel economy requirements; our ability to identify open 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.

AUTONATION, INC.

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS

($ in millions, except per share data)

Three Months Ended March 31,

Revenue:

New vehicle

2,800.2

2,769.6

Used vehicle

1,241.6

1,193.2

Parts and service

Finance and insurance, net

5,119.6

4,944.2

Cost of sales:

2,651.0

2,608.1

1,150.6

1,089.5

Total cost of sales

4,293.7

4,144.3

Gross profit

Selling, general, and administrative expenses

Depreciation and amortization

Other income, net

Operating income

Non-operating income (expense) items:

Floorplan interest expense

Other interest expense

Interest income

Other income (loss), net

Income from continuing operations before income taxes

Income tax provision

Loss from discontinued operations, net of income taxes

Diluted earnings (loss) per share*:

Continuing operations

Discontinued operations

Weighted average common shares outstanding

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

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

UNAUDITED SUPPLEMENTARY DATA

($ in millions, except per vehicle data)

Operating Highlights

$ Variance

% Variance

Retail used vehicle

1,119.9

1,094.1

Wholesale

Total variable operations

4,264.9

4,170.4

Gross profit:

Total gross profit

Retail vehicle unit sales:

79,007

78,560

58,103

58,624

137,110

137,184

Revenue per vehicle retailed:

35,442

35,255

19,274

18,663

Gross profit per vehicle retailed:

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.

Operating Percentages

2016 (%)

2015 (%)

Revenue mix percentages:

Gross profit mix percentages:

Operating items as a percentage of revenue:

Used vehicle - retail

Selling, general and administrative expenses

Operating items as a percentage of total gross profit:

($ in millions)

Segment Operating Highlights

1,848.2

1,665.7

1,675.0

1,678.7

Premium luxury

1,540.3

1,563.2

5,063.5

4,907.6

Corporate and other

Total consolidated revenue

Segment income*:

Add: Floorplan interest expense

* 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:

27,736

25,750

35,781

36,914

(1,133

15,490

15,896

Brand Mix - New Vehicle Retail Units Sold

Domestic:

Ford, Lincoln

Chevrolet, Buick, Cadillac, GMC

Chrysler, Dodge, Jeep, Ram

Domestic total

Import:

Other imports

Import total

Premium Luxury:

Other premium luxury (Land Rover, Porsche)

Premium Luxury total

UNAUDITED SUPPLEMENTARY DATA, Continued

Capital Expenditures / Stock Repurchases

Capital expenditures

Cash paid for acquisitions, net of cash acquired

Proceeds from exercises of stock options

Stock repurchases:

Aggregate purchase price

Shares repurchased (in millions)

Floorplan Assistance and Expense

Floorplan assistance earned (included in cost of sales)

New vehicle floorplan interest expense

Net new vehicle inventory carrying benefit

Balance Sheet and Other Highlights

March 31, 2016

December 31, 2015

March 31, 2015

Cash and cash equivalents

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

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

Leverage ratio

less than or equal to

Capitalization ratio

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

Excludes capital leases and deferred purchase price commitments.

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.

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

UNAUDITED SAME STORE DATA

2,634.1

2,755.5

(121.4

1,045.9

1,085.2

1,164.0

1,183.9

4,009.9

4,146.0

(136.1

4,814.0

4,912.5

74,323

78,027

(3,704

54,157

58,039

(3,882

128,480

136,066

(7,586

35,441

35,315

19,312

18,698

Gross Profit:

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Additional definitive proxy soliciting materials and Rule 14(a)(12) material - March 29, 2016
AutoNation releases salary data. CEO sees compensation fall -4% - March 29, 2016