Friday, automotive retailer AutoNation Inc. (AN) posted lower profit for the second quarter, reflecting lower vehicle sales as consumers bought fewer cars amid the recession. On an adjusted basis, earnings from continuing operations fell from last year, yet topped Street view by five cents. In addition, the company said it expects the Cash for Clunkers program to stimulate new vehicle sales.
The Fort Lauderdale, Florida-based company's second-quarter net income was $36.7 million or $0.21 per share, compared to $51.8 million or $0.29 per share in the prior-year quarter.
Income from continuing operations totaled $54.8 million or $0.31 per share, down from $55.5 million or $0.31 per share in the same quarter last year.
Adjusted income from continuing operations was $51.1 million or $0.29 per share for the latest quarter, compared to $58.6 million or $0.33 per share in the year 2008.
On average, 9 analysts polled by Thomson Reuters expected the company to post earnings of $0.24 per share. Analysts' estimates typically exclude special items.
Quarterly total revenues decreased to $2.61 billion from the previous year's revenue of $3.66 billion, and fell behind six Wall Street analysts' consensus revenue estimate of $2.80 billion for the quarter.
The company blamed lower new vehicle sales for the downswing in the second-quarter revenues. During the recent quarter, total U.S. industry retail new vehicle sales declined 40% versus last year, based on CNW Research data. In comparison, in the second quarter AutoNation's new vehicle unit sales fell 38%.
Mike Jackson, chairman and chief executive officer, said, "Long-awaited volume stabilization, the successful government-led restructuring of General Motors and Chrysler, and significant dealer consolidations were accomplished. The industry is now positioned for a healthy rebound when macroeconomic conditions, particularly consumer credit, improved."
Further, the company noted that the stabilization of the Seasonally Adjusted Annual Rate or SAAR in the second quarter is the first step to a gradual recovery and marks the first time since the end of 2007 that it did not witness a significant sequential drop in industry new vehicle sales. AutoNation also expects the 'Cash for Clunkers' program to stimulate new vehicle sales.
The company's Domestic segment, which comprises stores that sell vehicles manufactured by General Motors, Ford, and Chrysler, generated second-quarter revenue of $842.4 million, down 26.6% from $1.15 billion in the same quarter of last year. Segment income for the latest quarter was $26 million, down from $33 million last year. Second quarter Domestic retail new vehicle unit sales declined 34%.
Import segment, which includes stores that sell vehicles manufactured primarily by Toyota, Honda, and Nissan fetched quarterly revenues of $1.00 billion, a decline of 33%, compared to $1.50 billion in the equivalent quarter of the previous year. Segment income dropped to $42 million from the prior year's income of $57 million. Second quarter Import retail new vehicle unit sales fell 41%.
Premium Luxury that encompass stores that sell vehicles manufactured primarily by Mercedes, BMW, and Lexus witnessed 25.7% drop in the second-quarter revenues that totaled $733.9 million, compared to $988.3 million in the year-earlier quarter. Segment income for the recent quarter was $43 million, compared to $52 million posted in the three months ended June 30, 2008. Second quarter Premium Luxury retail new vehicle unit sales descended 34%.
Corporate and other revenues grew 5.9% to $28.9 million from $27.3 million reported in the corresponding quarter of the previous year. Corporate and other unit incurred a loss of $17.2 million, compared to a loss of $27.1 million last year.
For the six-month period, the company reported net income of $71.3 million or $0.40 per share, compared to $102.5 million or $0.57 per share in the year-ago period.
Income from continuing operations amounted to $107.8 million or $0.61 per share, a decline from the prior year's income from continuing operations of $110.6 million or $0.62 per share earned a year earlier.
On an adjusted basis, income from continuing operations dropped to $91.2 million or $0.51 per share from $113.7 million or $0.63 per share in the prior-year period.
Total revenues for the six months ended June 30, 2009 were $5.01 billion, a decline of 32%, compared to $7.39 billion reported in the corresponding period of the previous year.
Looking ahead, the company said it expects a gradual improvement of new vehicle sales beginning in the second half of 2009 and intend to increase its inventory of vehicles in a disciplined manner to meet demand. Having weathered the storm, AutoNation added that it remains on track to capitalize on dealer consolidation and the gradual recovery in industry volumes. "We will continue to benefit from our $200 million structural cost reduction program," the company said.
Among AutoNation's rivals, Group 1 Automotive Inc. (GPI) reported second-quarter net income of $10.08 million or $0.43 per share, compared to $16 million or $0.71 per share in the previous year, reflecting asset impairment charges and a 30% decline in revenues. Total revenues for the quarter declined 30% to $1.11 billion from $1.58 billion last year. Further, the company believes that the automotive retail market has stabilized and is, therefore, reinstated 2009 full-year earnings guidance in a range of $1.25 - $1.35 per share on industry seasonally adjusted annual sales rate of 10.0 million vehicles.
Another peer, Penske Automotive Group Inc. (PAG) posted a sharp decline in second-quarter profit that totaled $14.08 million or $0.15 per share, compared to $37.83 million or $0.40 per share in the prior-year quarter, reflecting a drop in revenues across all segments. Total revenues decreased to $2.32 billion from $3.33 billion in the previous year.
Yet another competitor, Sonic Automotive Inc. (SAH) reported second-quarter net income of $26 thousand or breakeven per share, compared to $9.22 million or $0.22 per share reported a year ago. Total revenues were $1.39 billion compared to $1.80 billion last year.
AutoNation closed Thursday's trading session at $20.63.
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