This is a summary of the fourth quarter fiscal 2008 earnings call conducted by AutoNation, Inc. (AN) on January 29, 2009.
Management:
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Vice President, Investor Relations: Derek A. Fiebig
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Chairman of the Board, Chief Executive Officer: Mike J. Jackson
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President, Chief Operating Officer, Director: Michael E. Maroone
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Chief Financial Officer, Executive VP: Michael J. Short
Key Investor Issues:
- Profit rose 30% to $67.1 million, or 38 cents per share, from $51.7 million, or 28 cents per share, in the same quarter last year.
- Revenue declined 34% to $2.74 billion from $4.14 billion, as new vehicle sales plunged 41% to $1.43 billion and used vehicle sales fell 33% to $640.9 million.
- For the full year 2008, AutoNation posted a loss of $1.24 billion, or $6.99 per share, vs. a 2007 profit of $278.7 million, or $1.39 per share last year. Revenue fell to $7.76 billion from $10.01 billion a year earlier.
Fourth Quarter Highlights:
- AutoNation reported fourth quarter EPS from continuing operations of $0.40, compared to a year-ago EPS of $0.28.
- In the quarter, the company had net benefit from tax and other items.
- After adjusting for these items, net income from continuing operation for the 2008 fourth quarter was $0.12 per share.
Fourth quarter 2008 revenue totaled $2.7 billion, compared to $4.1 billion in the year-ago period, driven primarily by lower vehicle sales.
In the fourth quarter, total U.S. industry new vehicle retail sales declined 49%, based on C&W research data. In comparison, in the fourth quarter, AutoNation''s new vehicle units sales declined 40%. In the fourth quarter, AutoNation continued to remain profitable, even with the U.S. selling rate near ten million new vehicle units, a 27-year low.
The fourth quarter was negatively impacted by the credit panic triggered on September 15th by the bankruptcy of Lehman Brothers.
Automotive retail sales collapsed from one day to the next by an additional 25%, which credit for the customers was withdrawn from the market. Credit from captive finance companies and prime lending institutions declined over 40% from Q3 2008 to Q4 2008.
AutoNation saw a 99% decline in December ''08 versus December ''07 from GMAC and Chrysler Financial Services.
This panic continued to erode consumer confidence and accelerate the decline of the U.S. economy in the auto retail market.
In July AutoNation announced its plan to reduce costs by $100 million on a annual run-rate basis, and has successfully achieved this goal, a significant accomplishment in its own right.
As market conditions collapsed in the second half of September, additional actions became necessary to further reduce costs. AutoNation has successfully implemented an additional cost reduction program of another $100 million. Taken together, AutoNation''s total annual cost saving is $200 million.
For the full year ended December 31, 2008, the company reported net loss from continuing operations of $6.89 per share, compared to net income from continuing operations of $1.44 per share in the prior year.
After adjusting for the impairment charges and certain other items, net income from continued operations for the full year ended December 31, 2008 at $1.02 per share, or $1.38 per share in the prior year.
The company''s revenue for the year ended December 31, 2008 totaled $14.1 billion, down 19%, compared to $17.3 billion in the prior year.
For the fourth quarter, AutoNation reported net income from continuing operations of $70 million, or $0.40 per share.
AutoNation recognized a gain of $24 million after tax, or $0.14 per share in the quarter, related to the repurchase of a $145 million notional value of senior notes. AutoNation also had net favorable tax items of $32 million, or $0.18 per share, and $8 million of after-tax impairment charges worth $0.04. After these items, adjusted net income for the quarter was $22 million, or $0.12 per share, compared to $0.28 for the fourth quarter of 2007.
For the full year of 2008, AutoNation reported a net loss of $1.2 billion.
