Sales recovery pushes AutoNation Q1 profits up
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AutoNation Inc., the nation's largest dealership group, posted higher net income for the first quarter as U.S. consumers replaced their aging vehicles at an increasing clip.
AutoNation reported net income from continuing operations of $73.5 million in the first three months of 2012, up 5 percent from last year's first quarter. On a per-share basis, that translated to a quarterly record of 56 cents, up 22 percent. The retailer repurchased 11.7 million shares of common stock -- 9 percent of its outstanding shares -- during the first quarter.
Stronger new-vehicle sales led to a 10 percent increase in total revenue to $3.7 billion. AutoNation's new-vehicle unit sales rose 8 percent on a same-store basis and 10 percent overall, the company said in a statement today.
AutoNation CEO Mike Jackson attributed the recovery to consumers' need to replace aging vehicles, good credit availability and refreshed products.
"We had improvements in every sector of our business," Jackson told Automotive News.
Across the board
AutoNation reported that new-vehicle revenue rose by 12 percent, used vehicles by 11 percent, parts and service by 5 percent, and finance and insurance by 18 percent.
AutoNation's stock price dropped after the release. The share price fell 35 cents to close at $32.23 today. Ravi Shanker of Morgan Stanley said in a report that AutoNation's revenue came in lower than he had expected. Weaker-than-expected new- and used-vehicle unit sales were partially offset by stronger pricing, he said.
AutoNation's per-share earnings of 56 cents beat the analyst consensus of 53 cents.
"We view this as an impressive start to the new year," analyst James Albertine of Stifel Nicolaus wrote in a report.
Jackson said first-quarter sales improved as "consumers enjoyed a broader array of choices than ever before, as well as a strong credit environment. We believe that the accelerated product launches, replacement demand and robust consumer credit will continue to support a strong sales environment even if fuel prices increase."
Continued recovery
Even with higher fuel prices this year, sales of cars and trucks will continue to recover, Jackson said, as manufacturers have improved fuel economy across vehicle segments. Of all vehicles sold during the first quarter, 75 percent carried fuel economy ratings of more than 25 mpg, according to AutoNation. Forty percent were rated more than 30 mpg.
For the quarter, AutoNation reported increased profits in all business sectors. Gross profit totaled $603 million, up from $566 millionThe 6 percent increase was driven primarily by increased finance and insurance gross profit, plus retail new-vehicle gross profit, the company said.
AutoNation said domestic-brand new-vehicle sales rose by 16 percent, import brand sales by 6 percent and luxury-brand sales by 14 percent. Sales also continued to recover in key markets. In Texas, new-vehicle sales rose 17 percent. They were up 13 percent in Florida and 6 percent in California.
The sales recovery is expected to continue throughout 2012.
Said Jackson: "We have increased our 2012 U.S. industry new-vehicle sales forecast to mid-14 million units as we see continued momentum in U.S. auto sales."
You can reach Amy Wilson at awilson@crain.com.
