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AutoNation Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 25, 2012 05:14PM

AutoNation Inc. (AN) filed Quarterly Report for the period ended 2012-03-31. Autonation Inc has a market cap of $4.2 billion; its shares were traded at around $33.26 with a P/E ratio of 17.4 and P/S ratio of 0.3. Autonation Inc had an annual average earning growth of 4.9% over the past 10 years.



Highlight of Business Operations:

At March 31, 2012, we had three operating and reportable segments: (1) Domestic, (2) Import, and (3) Premium Luxury. As of March 31, 2012, we revised the basis of segmentation for our Import and Premium Luxury segments to reclassify Audi franchises from the Import segment to the Premium Luxury segment. In connection with this change, we have reclassified historical amounts to conform to our current segment presentation. We have five Audi franchises for which we reclassified revenue of $49.3 million and segment income of $3.5 million during the three months ended March 31, 2012, and revenue of $39.7 million and segment income of $2.5 million during the three months ended March 31, 2011.

For the three months ended March 31, 2012, new vehicle sales accounted for approximately 55% of our total revenue, but approximately 22% of our total gross profit. Used vehicle sales accounted for approximately 25% 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 three months ended March 31, 2012, contributed approximately 63% of our total gross profit for the same period.

During the three months ended March 31, 2012, same store parts and service gross profit increased as compared to the same period in 2011, primarily due to increases in gross profit associated with the preparation of vehicles for sale and service work outsourced to third-parties of $6.7 million and customer-pay service of $2.3 million, partially offset by a decline in gross profit associated with warranty of $5.4 million.

As of March 31, 2012, we revised the basis of segmentation for our Import and Premium Luxury segments to reclassify Audi franchises from the Import segment to the Premium Luxury segment. In connection with this change, we have reclassified historical amounts to conform to our current segment presentation. We have five Audi franchises for which we reclassified revenue of $49.3 million and segment income of $3.5 million during the three months ended March 31, 2012, and revenue of $39.7 million and segment income of $2.5 million during the three months ended March 31, 2011.

SG&A expenses increased during the three months ended March 31, 2012, as compared to the same period in 2011, due to a volume-driven increase in compensation expense, an increase in store and corporate overhead expenses, and an increase in gross advertising expenditures, partially offset by an increase in advertising reimbursements from manufacturers. As a percentage of total gross profit, SG&A expenses decreased to 71.8% during the three months ended March 31, 2012, from 72.0% in the same period in 2011, resulting from our continued effective management of our cost structure and improved gross profit. Gross profit in the prior year period was favorably impacted by $4.6 million of certain performance-based manufacturer incentives related to premium luxury vehicles previously sold. These incentives benefited SG&A as a percentage of total gross profit by 60 basis points during the three months ended March 31, 2011.

Read the The complete Report



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