AutoNation Q3 net income rises on record F&I business
Higher volumes and record finance-and-insurance income counteracted a slipping new-vehicle margin to help AutoNation Inc. to a 15 percent jump in total profits in the third quarter.
AutoNation, the largest U.S. retailer, today reported third-quarter net income of $81.6 million, up from $70.7 million in the same period last year. Operating income rose 14 percent to $163.7 million. Revenue rose 12 percent to $3.9 billion, driven largely by a 21 percent gain in AutoNation's retail new-vehicle unit sales.
With earnings per share of 66 cents, AutoNation fell just under analysts' expectations of 67 cents, Bloomberg reported. The company's shares fell 4.7 percent to close at $45.76 today, but are up 24 percent this year, Bloomberg said.
Profitability increased in all four of AutoNation's business sectors -- new vehicles, used vehicles, parts and service and F&I, CEO Mike Jackson said. The 21 percent gain in finance-and-insurance gross profit was particularly strong.
"During the third quarter, we continued to see a strong improvement in auto industry sales as consumers enjoyed a broader array of choices than ever before, the recovery of supply from depressed levels as a result of the Japanese tsunami and its aftermath, as well as a strong credit environment," Jackson said in a statement.
A year ago, supply shortages caused by the tsunami drove up prices and new-vehicle profits for AutoNation and other retailers. With import-brand inventory levels restored to normal, prices and profits slipped in this year's third quarter, as expected.
Gross profit per new vehicle retailed dropped 14 percent to $2,117. But because of the higher volumes, total gross profits from new vehicles rose 5 percent to $144.7 million.
Used-vehicle retail unit sales rose 3 percent, and gross profits from retail used vehicles increased 8 percent to $72.5 million. Gross profit per used vehicle increased 4 percent to $1,589.
Parts-and-service gross profits climbed 4 percent to $251.2 million.
F&I gains contributed more than half of AutoNation's increase in total gross profits. F&I gross profits jumped 20 percent to $147 million. On a per-vehicle basis, the F&I gain was 6 percent, to a record quarterly level of $1,290 per vehicle.
AutoNation said earnings per share from continuing operations were 66 cents, matching an all-time record and setting a new record for third-quarter results. It also was a 38 percent gain from a year ago. AutoNation, which has aggressively repurchased its own shares during the past year, had 14 percent fewer shares outstanding at the end of September compared with the end of September 2011.
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