Automotive retailer AutoNation, Inc. (AN) reported Thursday an 8% year-over-year decline in profit for the fourth quarter as the year-ago quarter results were boosted by significant income tax gains. However, adjusted earnings per share from continuing operations more-than-doubled and topped analysts' expectations by two cents. Meanwhile, revenues also increased 8% from last year, driven by a strong new vehicle unit sales growth, and came in above consensus estimate.
In a statement, chairman and chief executive officer, Mike Jackson said, "We delivered solid profitability in the fourth quarter, achieved our first year-over-year increase in new vehicle unit sales since the second quarter of 2005, and maintained the benefits of our actions taken in response to the economic downturn. By lowering our structural costs and debt levels and more efficiently managing our inventory, we were able to deliver solid EPS growth in a very difficult environment."
Fourth-Quarter Results
The Fort Lauderdale, Florida-based company posted net income of $61.7 million or $0.35 per share for the fourth quarter, lower than $67.1 million or $0.38 per share in the prior-year quarter. Net income from continuing operations for the quarter declined to $62.4 million or $0.36 per share from $73.4 million or $0.42 per share in the year-ago quarter.
The results for the latest quarter include $12.7 million or $0.07 per share of income tax benefit, while the year-ago quarter primarily included $31.9 million or $0.18 per share of income tax benefit, and $24.1 million or $0.14 per share of gain on senior note repurchases.
Excluding special items, adjusted net income from continuing operations rose to $49.7 million or $0.29 per share from $22.9 million or $0.13 per share in the comparable quarter a year ago. On average, ten analysts polled by Thomson Reuters expected the company to earn $0.27 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter increased 8.4% to $2.82 billion from $2.60 billion in the same quarter last year, and came in above six Wall Street analysts' consensus estimate of $2.67 billion.
Sales growth was driven primarily by a stronger new vehicle unit sales growth of 7%, while the total U.S. industry new vehicle retail unit sales grew only 6%, based on CNW Research data.
AutoNation's revenues from new vehicle sales for the fourth quarter increased 13.8% to $1.55 billion from $1.37 billion in the prior-year quarter, and used vehicle sales revenues were $639.3 million, up 6.1% from $602.7 million in the year-ago quarter. Parts and services revenues edged down 2.5% to $521.4 million from $534.7 million a year ago, while net finance and insurance revenues were $89.3 million, 10.8% higher than $80.6 million last year.
Peer Performance
Among AutoNation's peers, Bloomfield Hills, Michigan-based Penske Automotive Group, Inc. (PAG) is expected to report fourth quarter results on February 19. Analysts estimate earnings of $0.18 per share on revenues of $2.19 billion for the quarter.
Another peer, Houston, Texas-based Group 1 Automotive, Inc. (GPI) is scheduled to report financial result for the fourth quarter later in the day. Analysts are looking for earnings of $0.44 per share for the fourth quarter, on revenues of $1.12 billion.
Segmental Details
AutoNation operates under three operating segments, Domestic, Import, and Premium Luxury.
The company's domestic segment, which comprises stores that sell vehicles manufactured by General Motors, Ford, and Chrysler, generated revenues of $892.8 million, up 5.3% from $847.6 billion in the year-ago quarter. The segment's income surged 64.5% to $25.5 million from $15.5 million a year ago. Domestic retail new vehicle unit sales grew 6.4% to 13,735 units from last year's 12,904 units.
Revenues from import segment, which includes stores that sell vehicles manufactured primarily by Toyota, Honda, and Nissan, increased 9.1% to $1.04 billion from $0.95 billion last year and segment income of $41.2 million almost doubled from $20.7 million a year ago. Import retail new vehicle unit sales increased 7.5% to 23,601 units from 21,959 units in the previous year.
Premium luxury segment that encompass stores that sell vehicles manufactured primarily by Mercedes, BMW, and Lexus, reported revenues of $859.9 million, a 10.4% increase from $778.8 million in the prior-year quarter. The segment income increased 25.4% to $48.4 million from $38.6 million last year. Premium luxury retail new vehicle unit sales rose 8.0% to 9,196 units from 8,516 units a year ago.
Other Metrics
Operating income for the fourth quarter rose 39.5% to $95.0 million from $68.1 million in the prior-year quarter, while operating margin rose 80 basis points to 3.4% from last year's 2.6%.
Gross profit for the quarter was $477.3 million, up 4.6% from $456.1 million in the year-ago quarter, while gross margin percentage declined 60 basis points to 17.0% from last year's 17.6%.
Selling, general and administrative expenses for the quarter edged up 1.2% to $364.5 million from $360.2 million in the prior-year quarter. The year-ago quarter included a gain on senior note repurchases of $39.2 million. The company reported an income tax provision of $14.7 million compared to $7.3 million of income tax benefit in the same quarter last year.
Full-Year Highlights
For fiscal 2009, AutoNation reported net income of $198.0 million or $1.12 per share, compared to a net loss of $1.24 billion or $6.99 per share in the previous year. Net income from continuing operations for the year was $234.2 million or $1.32 per share, compared to a loss of $1.21 billion or $6.82 per share last year.
Excluding special items, adjusted net income from continuing operations rose to $204.1 million or $1.15 per share from $180.3 million or $1.01 per share a year ago. Analysts expected the company to report earnings of $1.15 per share for fiscal 2009.
Total revenues for the full year dipped to $10.76 billion from $13.38 billion posted in fiscal 2008. The Street was looking for full-year 2009 revenues of $10.67 billion.
Looking Ahead...
"We are optimistic for the long-term prospects of the auto industry based on the successful restructuring of the domestic auto industry, the move to a demand-pull system and the rationalization of the dealer network. We agree with the view that volumes will be higher this year. Our planning assumption for 2010 industry new unit sales is 11.5 million units with a gradual increase in the selling rate over the course of the year," Jackson added.
Stock Quote
In Thursday's regular trading session, AN is currently trading at $17.55, down $0.68 or 3.73% on a volume of 1.08 million shares. In the past 52-week period, the stock has been trading in a broad range of $9.21 to $21.60.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.