Despite 10 weeks of problematic winter weather to start the year, a late March rebound in dealership traffic helped drive AutoNation Inc.’s net income 15 percent higher in the first quarter of 2014 from the year-earlier period, the company said today.
Net income for the nation’s largest dealership group rose to $95.1 million for the quarter as AutoNation reported higher gross profits in all four of its business categories: new cars, used cars, finance and insurance and parts and service. Revenue rose 7 percent to $4.36 billion.
AutoNation CEO Mike Jackson said the sales gains the retailer experienced as spring began are likely to persist throughout 2014.
“We saw continued strength in auto industry sales in the last 10 days of March as the weather changed,” Jackson said in a prepared statement. “We believe the growth in auto sales will be between 3 percent and 5 percent. As we look at the rest of 2014, we believe the improvement in new vehicle sales will continue and expect industry new vehicle sales to be above 16 million units.”
The company's net income on an adjusted per-share basis came in at 75 cents, beating analysts' average expectations by 2 cents, according to Bloomberg. AutoNation shares rose 2 percent to close the day at $54.99.
Units up 5 percent
During the quarter, AutoNation’s total vehicle unit volume rose 5 percent as the company retailed 71,223 new vehicles, up 6 percent, and 52,136 used vehicles, up 3 percent.
New-vehicle profit margins fell during the quarter. New-vehicle revenue rose 8 percent, but total gross profit in that category rose just 3 percent.
Used-vehicle retail revenue increased 5 percent, but higher used-vehicle margins drove gross profit in that category 11 percent higher. Finance and insurance gross profit jumped 11 percent overall. On a same-store basis, F&I gross profit rose 6 percent to $1,407 per vehicle from $1,322 a year earlier.
Parts-and-service revenue and gross profit both rose 5 percent. Total gross profit in that category rose nearly 7 percent to $707.4 million for the quarter.
Income in AutoNation’s premium luxury segment rose to $83 million, an increase of 21 percent. Domestic-brand segment income rose 9 percent to $64 million. Import-brand segment income fell 8 percent to $65 million.
During the first quarter, AutoNation repurchased 2.4 million shares of common stock for an aggregate purchase price of $115.7 million. That averages out to a purchase price of approximately $48.21 a share. In trading Wednesday, April 16, the stock price closed at $53.83 a share.
As of April 16, the company had $400 million remaining that its board had authorized for share repurchases, and 119 million shares outstanding.