AlwaysFree: AutoNation Reports Record Fourth Quarter And Full Year Results

• Fourth Quarter 2022 GAAP EPS was $5.72, and adjusted EPS was $6.37 a fourth quarter record
• Full Year 2022 GAAP EPS was $24.29, and adjusted EPS was $24.57 both records and more than 30% higher than a year ago
• Fourth Quarter 2022 Revenue was $6.7 billion, a fourth quarter record, and Full Year 2022 Revenue increased $1.1 billion to a record $27 billion
• After-Sales growth continued with record Fourth Quarter 2022 gross profit up 12% and Full Year 2022 increasing 14% from a year ago to a record $1.9 billion
• Full Year 2022 cash flows from operations were a record $1.7 billion
• In 2022, the Company reduced shares outstanding by 25% as it repurchased 15.6 million shares, including 4.6 million during the fourth quarter

According to the company’s website press release on February 17, 2023, AutoNation, Inc. (NYSE: AN), America's most admired automotive retailer, reported fourth quarter 2022 GAAP EPS of $5.72 and adjusted EPS of $6.37. Fourth quarter 2022 revenue was $6.7 billion, an increase of 2% compared to the same period a year ago. Reconciliations of non-GAAP financial measures are included in the attached financial tables.

"Our fourth quarter results capped off another record year for earnings and revenue as our Associates drove results while providing a superior Customer experience. We closed the year strong with record full-year results for After-Sales and Customer Financial Services. We continue to perform well in the current environment while taking significant steps to address the industry transformation. During the year, we expanded our footprint, introduced additional transportation solutions, and leveraged our strong cash flow to fund investments and return capital to shareholders," said Mike Manley, AutoNation's Chief Executive Officer.

Revenue – Revenue was $6.7 billion, an increase of 2% compared to the year-ago period. Higher average selling prices of vehicles, increased new vehicle unit sales, and continued growth in After-Sales, more than offset lower used vehicle unit sales.

• New Vehicle Revenue – $3.1 billion, an increase of $230 million or 8%.
• Used Vehicle Revenue – $2.2 billion, a decrease of $176 million or 8%.
• After-Sales Revenue – $1.0 billion, an increase of $67 million or 7%.
• Customer Financial Services Revenue – $345 million, compared to $354 million a year ago.

Gross Profit - Gross profit totaled $1.28 billion compared to $1.32 billion a year ago.

• New Vehicle Gross Profit - New vehicle gross profit per vehicle retailed was $5,633, compared to $6,450 a year ago and $5,934 in the Third Quarter 2022.
• Used Vehicle Gross Profit - Used vehicle gross profit per vehicle retailed was $1,847, compared to $2,063 a year ago and $1,870 in the Third Quarter 2022.
• Customer Financial Services Gross Profit - Customer Financial Services gross profit per vehicle retailed was $2,703, compared to $2,678 a year ago and $2,755 in the Third Quarter 2022.
• After-Sales Gross Profit - After-Sales gross profit was $479 million, an increase of $53 million or 12% from a year ago.

SG&A as a Percentage of Gross Profit – SG&A as a percentage of gross profit was 59.8% and 59.2% on an adjusted basis, slightly higher than recent periods reflecting investments in technology and new business initiatives.

Strategy and Business Highlights

"In 2022, we embarked on an ambitious strategy to be the nation's most comprehensive provider of transportation services, meeting Customers' needs throughout their transportation lifecycle. During the year, we made significant progress in expanding our product and service offerings while aligning our core business to serve our Customers and Manufacturer partners. Our progress, combined with disciplined capital allocation, has positioned AutoNation for long-term sustained profitability. Our commitment to our Customers was recognized in Reputations' Automotive Reputation Report as we were ranked the No. 1 Public Dealer for 2022," added Manley. 

AutoNation strengthened its core business by focusing on operational excellence, including Customer satisfaction, sales efficiency, sales effectiveness, and asset utilization. AutoNation extended and enhanced its brand, scale, and footprint, during the year opening four additional AutoNation USA stores and adding nine franchises acquired from the Moreland Auto Group. Additionally, the Company improved its digital retailing experience with an enhanced digital storefront.

AutoNation expanded its service and product offerings to introduce comprehensive transportation solutions to over 11 million AutoNation Customers. The acquisition of CIG Financial and the creation of AutoNation Finance established an in-house Customer Financial Services solution for current and future Customers. We are creating mobility solutions to offer Customers greater flexibility in vehicle procurement. In January 2023, we completed the acquisition of RepairSmith, a mobile solution for automotive repair and maintenance. RepairSmith will expand our ability to innovate and conveniently service our Customers by broadening the reach of our existing After-Sales network, extending our brand, and further leveraging our scale.

In addition to operational and expansion investments of over $500 million, AutoNation continued to utilize its substantial cash flow generation to deploy capital to return funds to shareholders through share repurchases. During 2022, $1.7 billion was deployed to repurchase 15.6 million shares, reducing shares outstanding by 25% from a year ago. As of February 15, 2023, AutoNation had approximately 47 million shares outstanding down from 83 million shares outstanding at the end of 2020.

Full Year 2022 Operational Summary compared to the year-ago period:

Revenue – Revenue was $27 billion, an increase of 4% compared to the year-ago period.

• New Vehicle Revenue – $11.8 billion, a decrease of $327 million or 3%.
• Used Vehicle Revenue – $9.7 billion, an increase of $1.0 billion or 12%.
• After-Sales Revenue – $4.1 billion, an increase of $394 million or 11%.
• Customer Financial Services Revenue – $1.4 billion, an increase of $53 million or 4%.

Gross Profit - Gross profit totaled $5.3 billion, an increase of $313 million or 6%.

• New Vehicle Gross Profit - New vehicle gross profit per vehicle retailed was $5,942, compared to $4,579.
• Used Vehicle Gross Profit - Used vehicle gross profit per vehicle retailed was $1,795, compared to $2,045.
• Customer Financial Services Gross Profit - Customer Financial Services gross profit per vehicle retailed was $2,713, compared to $2,443 a year ago, an 11% increase.
• After-Sales Gross Profit - After-Sales gross profit was $1.9 billion, an increase of $228 million or 14%.

SG&A as a Percentage of Gross Profit – SG&A as a percentage of gross profit was 57.5% and 57.3% on an adjusted basis, compared to 58.0% on an adjusted basis in the prior year.

Liquidity and Leverage

As of December 31, 2022, AutoNation had $1.8 billion of liquidity, including $73 million in cash and approximately $1.75 billion of availability under our revolving credit facility. The Company's covenant leverage ratio was 1.6x at quarter-end, and 1.6x net of cash and used floorplan availability. AutoNation had approximately $3.65 billion of non-vehicle debt outstanding as of December 31, 2022.

Segment Results

Segment results(1) for the fourth quarter and full year 2022 were as follows:

Fourth Quarter 2022 Segment Results

• Domestic - Domestic segment income(2) was $120 million compared to the year-ago segment income of $159 million, a decrease of 25%.
• Import - Import segment income(2) was $175 million compared to the year-ago segment income of $184 million, a decrease of 5%.
• Premium Luxury - Premium Luxury segment income(2) was $247 million, unchanged from a year-ago.

Full Year 2022 Segment Results

• Domestic - Domestic segment income(2) was $565 million compared to the year-ago segment income of $596 million, a decrease of 5%.
• Import - Import segment income(2) was $734 million compared to the year-ago segment income of $715 million, an increase of 3%.
• Premium Luxury - Premium Luxury segment income(2) was $969 million compared to the year-ago segment income of $837 million, an increase of 16%.

The fourth quarter conference call may be accessed by telephone at 844-200-6205 (Conference ID: 779065) at 9:00 a.m. Eastern Time or on AutoNation's investor relations website at investors.autonation.com.

The webcast will also be available on AutoNation's website following the call under "Events & Presentations." A playback of the conference call will be available after 12:00 p.m. Eastern Time on February 17, 2023, through March 10, 2023, by calling 866-813-9403 (Conference ID: 106051). Additional information regarding AutoNation's results can be found in the Investor Presentation available at:investors.autonation.com.  

(1)AutoNation has three reportable segments: Domestic, Import, and Premium Luxury. The Domestic segment is comprised of stores that sell vehicles manufactured by General Motors, Ford, and Stellantis; the Import segment is comprised of stores that sell vehicles manufactured primarily by Toyota, Honda, Hyundai, Subaru, and Nissan; and the Premium Luxury segment is comprised of stores that sell vehicles manufactured primarily by Mercedes-Benz, BMW, Lexus, Audi, and Jaguar Land Rover.

(2)Segment income represents income for each of AutoNation's reportable segments and is defined as operating income less floorplan interest expense.

About AutoNation, Inc.  AutoNation, a provider of personalized transportation services, is driven by innovation and transformation. As one of America's most admired companies, AutoNation delivers a peerless Customer experience recognized by data-driven consumer insight leaders, Reputation and J.D. Power. Through its bold leadership and brand affinity, the AutoNation Brand is synonymous with "DRVPNK" and "What Drives You, Drives Us." AutoNation has a singular focus on personalized transportation services that are easy, transparent, and Customer-centric.

Please visit www.autonation.com, investors.autonation.com, and www.twitter.com/AutoNation, where AutoNation discloses additional information about the Company, its business, and its results of operations. Please also visit www.autonationdrive.com, AutoNation's automotive blog, for information regarding the AutoNation community, the automotive industry, and current automotive news and trends.

NON-GAAP FINANCIAL MEASURES 

This news release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, which exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company provides reconciliations of these measures to the most directly comparable GAAP measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure, provide a meaningful presentation of the Company's results excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Words such as "anticipates," "expects," "intends," "goals," "targets," "projects," "plans," "believes," "continues," "may," "will," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements regarding our strategic initiatives, partnerships, and investments, including the planned expansion of our AutoNation USA pre-owned vehicle stores and our investments in digital and online capabilities and mobility solutions, statements regarding our expectations for the future performance of our business and the automotive retail industry, and other statements that describe our objectives, goals, or plans, are forward-looking statements. Our forward-looking statements reflect our current expectations concerning future results and events, and they involve known and unknown risks, uncertainties, and other factors that are difficult to predict and may cause our actual results, performance, or achievements to be materially different from any future results, performance, and achievements expressed or implied by these statements. These risks, uncertainties, and other factors include, among others: our ability to implement successfully our strategic acquisitions, initiatives, partnerships, and investments, including the planned expansion of our AutoNation USA stores and our investments in digital and online capabilities and mobility solutions; our ability to identify, acquire, and build out suitable locations in a timely manner; our ability to maintain and enhance our retail brands and reputation and to attract consumers to our own digital channels; our ability to acquire and integrate successfully new franchises; restrictions imposed by vehicle manufacturers and our ability to obtain manufacturer approval for acquisitions; economic conditions, including changes in unemployment, interest, and/or inflation rates, consumer demand, fuel prices, and tariffs; supply chain disruptions and inventory availability; new and used vehicle margins; our ability to attain planned sales volumes within our expected time frames; our ability to successfully implement and maintain expense controls; the success and financial viability and the incentive and marketing programs of vehicle manufacturers and distributors with which we hold franchises; the economic impacts of the COVID-19 pandemic; natural disasters and other adverse weather events; the resolution of legal and administrative proceedings; regulatory factors affecting our business, including fuel economy requirements; the announcement of safety recalls; factors affecting our goodwill and other intangible asset impairment testing; and other factors described in our news releases and filings made under the securities laws, including, among others, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Forward-looking statements contained in this news release speak only as of the date of this news release, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.