AutoNation Swings To Q3 Profit, Revenue Dips

10/29/2009 11:23 AM ET

(RTTNews) - Thursday, automotive retailer AutoNation Inc. (AN: News ) reported a profit for the third quarter, absent hefty impairment charges incurred in the last year quarter. Earnings from continuing operations came in ahead of Street view by a penny, aided by the U.S. government's Cash for Clunkers stimulus program. Meanwhile, revenues declined from last year, hurt primarily by lower vehicle sales in an environment where industry new vehicle sales remain at depression levels.

The Fort Lauderdale, Florida-based company posted net income of $65 million or $0.36 per share for the third quarter, compared to a loss of $1.413 billion or $7.99 per share in the same quarter last year.

Excluding items affecting comparability, net income from continuing operations rose to $64.8 million or $0.36 per share from $44.1 million or $0.25 per share in the year-ago quarter. On average, nine analysts polled by Thomson Reuters expected the company to earn $0.35 per share for the quarter. Analysts' estimates typically exclude special items.

In the year-ago quarter, AutoNation recorded a non-cash goodwill impairment charge of $1.610 billion and franchise rights impairment of $127.4 million.

In the preceding second quarter of fiscal 2009, AutoNation recorded net income of $36.7 million or $0.21 per share, down from $51.8 million or $0.29 per share in the prior-year quarter. Adjusted income from continuing operations totaled $51.1 million or $0.29 per share, compared to $58.6 million or $0.33 per share in the year 2008.

For the quarter under review, revenues declined to $2.916 billion from $3.359 billion in the comparable quarter last year. Revenues fell short of analysts estimate of $3.13 billion. In the prior quarter, total revenues amounted to $2.61 billion, down from $3.66 billion a year ago.

Commenting on the third quarter, Mike Jackson, chairman and chief executive officer said, "AutoNation delivered solid profitability driven by margin recovery, cost reduction, lower interest expenses a disciplined operating model and inventory management."

Jackson said the third quarter profitability improved from third quarter 2008 despite substantially lower new vehicle industry volume compared to last year. Cash for Clunkers stimulus program aided AutoNation's third quarter results by an estimated $0.07 per share.

AutoNation's third quarter revenue from new vehicle sales was down at $1.628 billion compared to $1.891 billion a year ago, while used vehicle sales slipped to $642.2 million from $768.4 million last year. Parts and services generated revenues of $537.9 million, down from $570.9 million a year ago.