Automotive retailer AutoNation Inc. (AN) on Tuesday raised its earnings outlook for the first quarter above analysts' estimates, just a week after the company first hiked expectations citing a gradual recovery in the auto market.
While the company has not provided any reasons for raising its earnings outlook, the move could be linked to strong auto sales reported recently by automakers.
The Fort Lauderdale, Florida-based company now expects first-quarter earnings per share from continuing operations in a range of $0.32-$0.35, up from the prior range of $0.29-$0.32 per share announced on March 31, 2010. This compares to adjusted earnings per share from continuing operations of $0.22 for the year-ago period. On a GAAP basis, earnings per share from continuing operations for the prior-year quarter was $0.30.
On average, ten analysts polled by Thomson Reuters expect the company to report earnings of $0.31 per share for the first quarter. Analysts' estimates typically exclude special items.
AutoNation will release its financial results for the first quarter on Thursday, April 22, before the market open.
AutoNation said that its prior forecast for revenue, new vehicle unit sales and used vehicle unit sales for the first quarter remain unchanged. In late March, the company had projected revenues for the first quarter to be approximately $2.8 billion, up 16.7% from $2.4 billion in the previous-year quarter. Analysts have a consensus revenue estimate for the quarter of $2.75 billion.
AutoNation had also said it expects new vehicle sales for the first quarter to be about 45,000 units, or up approximately 18% as compared to the prior-year period. The company projects used vehicle sales for the quarter to be about 38,000 units, or up approximately 12% as compared to the same period in 2009.
At that time, AutoNation had forecast first-quarter earnings from continuing operations in line with analysts' estimates and said it plans to amend and extend its term loan and revolving credit facility, set to expire in July 2012, by two years. The company also said it intends to commence a public offering of $400 million of senior unsecured notes due 2018 to fund the buyback of other borrowings.
Further, AutoNation said it has commenced tender offers to purchase for cash $146.1 million of its outstanding floating rate senior notes due 2013 and $132.6 million of outstanding 7% senior notes due 2014. The company said it expects the credit extension and debt actions to reduce fiscal year 2010 earnings by about $0.06 per share, excluding transactions expenses.
In mid-February, AutoNation reported an 8% decline in profit for the fourth quarter as the year-ago quarter results were boosted by significant income tax gains. The 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. Total revenues for the quarter increased 8.4% to $2.82 billion from $2.60 billion in the year-ago period, driven by strong new vehicle unit sales growth.
Last week, most automakers reported sharp jumps in U.S. vehicle sales for the month of March, driven by strong consumer demand amid huge incentives and a continued economic recovery.
U.S. auto sales rose 24% in March, the industry's largest year-over-year increase in eight years. Recovery of sales suggests more consumer credit and spending, which are seen as critical elements in bringing an end to the worst economic downturn since the Great Depression.
General Motors said its March U.S. vehicle sales increased 20.6% to 188,546 units from 156,380 units in the same month last year, while Ford Motor Co. (F) said its U.S. vehicle sales rose 39.8% to 183,783 units in March from 131,465 units in the same month last year.
Toyota Motor Sales U.S.A. Inc., a unit of Japan's Toyota Motor Corp. (TM), said that its March sales increased 40.7% to 186,863 units from 132,802 units a year ago and Daimler AG (DAI) said its March U.S. sales for the Mercedes-Benz Cars division, Mercedes-Benz and smart combined, grew 19.3% to 20,700 units from 17,348 units a year ago.
Nissan North America Inc., a unit of Nissan Motor Co. Ltd. (NSANY.PK), reported that its March sales increased 43.3% to 95,468 units from 66,634 units a year ago. American Honda Motor Co. Inc., a unit of Japan's Honda Motor Co., Ltd. (HMC), reported that its March sales rose 22.5% to 108,262 units from 88,379 units a year ago.
In Tuesday's regular trading session, AN is trading at $18.45, up $0.41 or 2.27% on a volume of 1.49 million shares. In the past 52 weeks, the stock has been trading in a range of $14.39-$21.60.
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