AutoNation Profit Jumps 12%
October 28 2015 - 8:20AM
Dow Jones News
AutoNation Inc. reported a 12% jump in profit amid strong U.S.
auto sales and confirmed plans to buy a Texas dealership chain, the
company's largest acquisition in 15 years.
AutoNation, the largest auto dealership chain in the U.S.,
reported third-quarter net income from continuing operations of
$119 million compared with $107 million the same period a year ago.
It posted $1.05 earnings per share from continuing operations, in
line with Wall Street expectations and 17% higher than the
comparable period last year.
The Fort Lauderdale, Fla.-based company is one of several
publicly traded dealer groups riding high as light-vehicle demand
runs at the highest pace in over a decade. Armed with growing cash
reserves and steady revenue streams, these companies are taking
advantage of attractive financing terms to snap up smaller dealers
wanting to cash out of the business.
AutoNation said it has agreed to buy 12 Texas dealerships from
the Allen Samuels Auto Group, adding $800 million in revenue and
19,500 units in sales. Texas will account for about 25% of total
revenue for AutoNation once the deal is completed, the company
said.
Third-quarter revenue rose 9% to $5.4 billion, compared with
$4.9 billion over the same period last year and in line with
analyst expectations for the quarter. Finance and customer service
profits increased 14% and 9% respectively, new-vehicle retail sales
increased 7%, and the company's websites generated 25% of its
sales.
The group reiterated that it wouldn't sell vehicles with open
recalls, a move that impacts preowned inventory due to the large
volume of vehicles recalled over the past 20 months. As of Sept.
30, 6% of AutoNation's inventory wasn't available for sale due to
open recalls, including 16% of its used vehicle inventory.
AutoNation said its used car business should normalize in the
first half of 2016 and that it would be adding used car inventory
to offset the impact of the recalls. Used-vehicle sales are
typically more profitable than sales of new cars and trucks.
Write to Gautham Nagesh at gautham.nagesh@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 28, 2015 09:05 ET (13:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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