AutoNation Inc. (AN) reported a 9% fall in net income to $58.5 million for the third quarter of 2010 from $64.4 million in the year-ago period. However, on earnings per share basis, profit rose 8% to 39 cents from 36 cents in the third quarter of 2009 as the company had 149.6 million shares outstanding for the quarter ended on September 30, 2010, down from 179.2 million for the quarter ended on September 30, 2009. With this, the company has missed the Zacks Consensus Estimate by 3 cents per share.
Total revenues amounted to $3.27 billion, up 13% from $2.89 billion recorded last year led by higher new and used retail vehicle sales. Revenues were marginally higher than the Zacks Consensus estimate of $3.20 billion. Operating income increased marginally to $120.9 million from $118 million a year ago.
New vehicles added $1.77 billion to total revenues, up 9.7% from $1.62 billion in the prior year. New vehicle sales rose 3% to 56,121 units in sharp contrast to a 4% decline in the same in the U.S.industry (based on CNW Research data). This transformed into per vehicle revenue of $31,598, an increase of 6.5%. The company continues to expect industry new vehicle sales of 11.5 million units for full year 2010.
Used vehicles revenues were $812.4 million, a 27.5% rise from $637.1 million in the same period last year. As many as 42,904 units of used vehicles were sold during the quarter generating a per vehicle revenue of $17,073, an increase of 4.5% from $16,330 in the prior year.
Revenues in the parts and services business grew 6.3% to $564.1 million while that in the finance and insurance business rose 17.8% to $111.9 million.
Segment Performance
Revenues in the Domestic segment – comprising stores that sell vehicles manufactured by General Motors (MTLQQ), Ford Motor (F) and Chrysler –improved 21.8% to $1.10 billion from $905.6 million, driven mainly by strong performance of Ford and Chevrolet lineups.
The segment sold 17,635 new vehicles during the quarter, an increase of 15.4% from the year-ago level. Operating income was $42.5 million versus $32.9 million in the third quarter of 2009.
Revenues in the Import segment – comprising stores that sell vehicles manufactured primarily by Toyota Motor (TM), Honda Motor (HMC) and Nissan Motor (NSANY) – expanded 7.4% to $1.28 billion from $1.19 billion a year ago. Unit sales in the segment fell 3% to 29,858 vehicles. Segment operating income was $51.3 million versus $62.9 million in the year ago quarter.
Revenues in the Premium Luxury segment – comprising stores that sell vehicles manufactured primarily by Daimler’s (DDAIF) Mercedes, and BMW and Lexus – went up 11.4% to $863.3 million from $775.3 million in the same period of 2009. Unit sales rose 2.8% to 8,628 vehicles. Segment operating income was $47.7 million versus $43.5 million in the third quarter of 2009.
Financial Position
AutoNation had cash and cash equivalents of $84.5 million as of September 30, 2010, declining drastically from $204.3 million as of September 30, 2009. During the first nine months of the year, capital expenditure totaled $80.3 million compared with $40.5 million during the same period of 2009.
During the quarter, the company repurchased 2.9 million shares of its common stock for $55 million, reflecting an average purchase price of $18.97. On July 20, 2010, the board of directors of the company authorized the repurchase of up to an additional $250 million of its common stock. The company had 149.6 million shares outstanding for the quarter ended on September 30, 2010, down from 179.2 million from the quarter ended on September 30, 2009.
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