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AutoNation's (AN) CEO Mike Jackson on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Results Earnings Conference Call

April 22, 2016, 11:00 AM ET

Executives

Andrew Wamser - Treasurer and VP of Finance

Mike Jackson - Chairman, CEO and President

Cheryl Miller - EVP and CFO

Bill Berman - COO

Jon Ferrando - EVP, General Counsel, Corporate Development and Human Resources

Analysts

John Murphy - Bank of America

David Lim - Wells Fargo

James Albertine - Stifel

Brian Sponheimer - Gabelli

Colin Langan - UBS

Nick Zangler - Stephens

Bret Jordan - Jefferies

Paresh Jain - Morgan Stanley

Mike Levin - Deutsche Bank

Michael Montani - Evercore

Irina Hodakovsky - KeyBanc

Operator

Welcome to AutoNation's First Quarter 2016 Earnings Conference Call. At this time, all participants are in listen only mode. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] Today's conference is being recorded. If you have any objections you may disconnect at this time.

And now, I will turn the meeting over to Andrew Wamser, Treasurer and Vice President of Finance for AutoNation. Sir, you may begin.

Andrew Wamser

Thank you, operator, and welcome to AutoNation's first quarter 2016 conference call and webcast. Leading our call today will be Mike Jackson, our Chairman, CEO and President; Cheryl Miller, our Chief Financial Officer; Bill Berman, our Chief Operating Officer; and Jon Ferrando, our EVP responsible for M&A. Following their remarks, we will open up the call for questions. Robert Quartaro and I will also be available by phone following the call to address any additional questions that you may have.

Before we begin, let me read our brief statement regarding forward-looking comments. Certain statements and information on this call may constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks, which may cause the actual results or performance to differ materially from such forward-looking statements. Additional discussions of factors that could cause actual results to differ materially are contained in our press release issued earlier today and our SEC filings, including our most-recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K.

Certain non-GAAP financial measures as defined under SEC rules will be discussed on this call. Reconciliations are provided in our press release and on our website located at investors.autonation.com.

And now, I’ll turn the call over to AutoNation's Chairman, CEO and President, Mike Jackson.

Mike Jackson

Good morning, and thank you for joining us.

Today, we reported earnings per share from continuing operations of $0.90, a 7% decrease as compared to EPS from continuing operations of $0.97 for the same period in the prior year. EPS from continuing operations were negatively impacted by $0.06 per share, which included unusual hail-related expenses of $0.03 and a shift approximately of $0.03 per share in stock-based compensation expense into the first quarter, due to a change from quarterly to annual stock option grants.

First quarter 2016 revenue totaled $5.1 billion compared to $4.9 billion a year ago, an increase of 4%. In the first quarter AutoNation's retail new vehicle unit sales increased 1% and were down 5% on a same-store basis.

We continue to see declines in our premium luxury business, which represents roughly 20% of our new vehicle unit sales compared to an industry at 9%. The same-store basis, our premium luxury profits declined 13% year-over-year.

Our energy markets, which represented approximately 25% of our new vehicle unit sales compared to 13% for the industry, also saw a profit decline. On a same-store basis, energy markets were down 20% compared to the first quarter in the prior year.