Fort Lauderdale, Florida-based AutoNation, Inc., America’s largest car dealer with 365 outlets in 18 states, has reported net income for the second quarter 2004 of $US92 million, or $0.34 per share, including the impact of $4 million net of tax, or $0.01 per share of loss from discontinued operations, primarily due to store divestitures.

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That was in line with the company’s lowered guidance of 34 to 35 cents a share announced two weeks ago.


The company posted net income from continuing operations of $96 million, or $0.35 per share, on revenue of $5.0 billion for the quarter ended June 30. The results compare with 2003 second-quarter net income from continuing operations of $107 million, or $0.37 per share, on revenue of $5.0 billion.


“As previously announced, a number of factors directly impacted the company’s second-quarter earnings,” said chairman and chief executive Mike Jackson.


“Our cost structure was targeted for vehicle sales volume levels that did not materialise, particularly in June, with significant declines in sales of Ford and General Motors products. Low volume when combined with high inventories also caused a gross margin decline in our new vehicle business.”

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The decline in new and used vehicle gross profit was partially offset by improved gross profit performances in parts and service and finance and insurance.


“The economic environment for American retailers in the month of June was particularly challenging, led by a 1.1% decline in retail sales, the largest drop in 16 months,” added Jackson. “The automotive retail component of that decline was significant; the industry reported a 4.3% decrease, a notable falloff when compared to May’s 3.2% gain.”


For the six-month period ended June 30, 2004, AutoNation earned net income from continuing operations of $184 million or $0.67 per share. Net income from continuing operations for the six-month period ended June 30, 2003 was $1.10 per share. Excluding the $0.44 per share benefit of the first- quarter 2003 IRS tax settlement, earnings per share from continuing operations for the six-month period ended June 30, 2003 was $0.66. The company’s revenue for the six-month period ended June 30, 2004 totalled $9.7 billion, up 4% versus the prior year.


Looking ahead, Jackson said, “Although the second-quarter earnings were disappointing, our cash flow is strong and our strategy sound. We expect to report third-quarter EPS from continuing operations in the range of $0.36 to $0.38 per share. As previously announced, in light of the second-quarter results and the difficult new vehicle environment that we are operating in, our full-year 2004 guidance for EPS from continuing operations is in the range of $1.35 to $1.40.”