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AutoNation Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 21, 2011 05:26PM

AutoNation Inc. (AN) filed Quarterly Report for the period ended 2011-09-30. Autonation Inc. has a market cap of $5.53 billion; its shares were traded at around $37.95 with a P/E ratio of 21.3 and P/S ratio of 0.4. Autonation Inc. had an annual average earning growth of 3.9% over the past 10 years.



Highlight of Business Operations:

For the nine months ended September 30, 2011, new vehicle sales accounted for approximately 53% of our total revenue, but approximately 23% of our total gross profit. Used vehicle sales accounted for approximately 26% of our total revenue, and approximately 13% of our total gross profit. Our parts and service and finance and insurance operations, while comprising approximately 20% of our total revenue for the nine months ended September 30, 2011, contributed approximately 63% of our total gross profit for the same period.

SG&A expenses increased $8.5 million during the three months ended September 30, 2011, as compared to the same period in 2010, due to a $4.6 million increase in compensation expense and a $5.1 million increase in other SG&A expenses, partially offset by a $1.4 million decrease in gross advertising expenditures. As a percentage of total gross profit, SG&A expenses decreased to 71.5% during the three months ended September 30, 2011, from 73.9% in the same period in 2010, resulting from our continued effective management of our cost structure and improved gross profit.

During the nine months ended September 30, 2010, we (1) accepted for payment, and thereafter cancelled, all of our outstanding Floating Rate Senior Notes due 2013 and 88.9% of our 7% Senior Notes due 2014, representing an aggregate principal amount of $264.0 million of old notes, (2) amended the indenture for the old notes to eliminate most of the restrictive covenants and certain events of default and to shorten the notice periods required to undertake an optional redemption, (3) issued $400.0 million aggregate principal amount of 6.75% Senior Notes due 2018, and (4) amended and extended our credit agreement. The 6.75% Senior Notes due 2018 were sold at 98.488% of the aggregate principal amount providing for a yield to maturity of 7.0%.

Other interest expense was $48.6 million for the nine months ended September 30, 2011, compared to $39.8 million for the same period in 2010. The increase in other interest expense of $8.8 million during the nine months ended September 30, 2011, as compared to the same period in 2010, was primarily due to $9.8 million increase in interest expense resulting from higher levels of debt outstanding during the period associated with our 6.75% Senior Notes due 2018 and revolving credit facilities, and a $1.4 million increase in interest expense resulting from higher interest rates on our extended term loan facility, partially offset by a decrease in interest expense of $3.6 million resulting from lower levels of debt outstanding during the period associated with our 7% Senior Notes due 2014, Floating Rate Senior Notes due 2013, and mortgage facility.

SG&A expenses increased $77.3 million during the nine months ended September 30, 2011, as compared to the same period in 2010, due to a $47.8 million increase in compensation expense, a $21.4 million increase in other SG&A expenses, a $4.2 million increase associated with hail storm-related losses, and a $5.3 million increase in gross advertising expenditures, partially offset by a $1.4 million increase in advertising reimbursements from manufacturers. As a percentage of total gross profit, SG&A expenses decreased to 71.7% during the nine months ended September 30, 2011, from 73.2% in the same period in 2010, resulting from our continued effective management of our cost structure and improved gross profit.

Read the The complete Report



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