AutoNation, America’s largest retailer of new and used vehicles, has reported record first-quarter 2002 earnings per share of $US0.28, or net income of $91.7 million.
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The result exceeded by 65 percent the company’s Q1 2001 earnings per share of $0.17, or net income of $59.9 million, as across-the-board growth in gross margin, lower inventory-carrying costs, an improved cost structure and the elimination of goodwill amortisation helped results.
The record earnings for Q1 2002 occurred as the overall U.S. market for new vehicles declined, leading to revenue of $4.8 billion, down from $4.9 billion a year ago. However, total gross margin for the period increased to $721.7 million, up 4.2 percent from $692.5 million a year ago, as gross margin grew for used vehicles, parts and service, finance and insurance, and new vehicles, which benefited from a $19 million reduction in inventory-carrying costs.
As a result, gross margin as a percentage of total revenue rose to 15.2 percent, up 100 basis points from 14.2 percent a year ago.
Selling, general and administrative expenses (SG&A) as a percentage of total gross margin improved to 75.9 percent from 79.4 percent as initiatives aimed at creating operating efficiencies allowed AutoNation to further improve its cost structure.
Additionally, approximately $14 million ($0.04 per share) of after-tax goodwill amortisation was eliminated in accordance with new accounting rules that went into effect on January 1, 2002.
On a comparable basis, after eliminating goodwill amortisation from 2001 results, first-quarter earnings per share rose 33 percent or $0.07 ($0.28 vs. $0.21).
Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $173.2 million were up 22 percent from $142.5 million a year ago and a first-quarter record.
“While the U.S. new vehicle market is off from a year ago, stronger-than-expected consumer demand in the first quarter suggests 2002 should result in industry sales of over 16 million vehicles,” said AutoNation’s CEO Mike Jackson.
“The company anticipates it will achieve 2002 full-year earnings per share in the range of $1.12 to $1.15, and 2002 second-quarter earnings per share of $0.28 to $0.30,” Jackson added.
