Fort Lauderdale, Fla. — AutoNation Inc. reported earnings from continuing operations of $0.39 per share compared to year-ago earnings from continuing operations of $0.37 per share, an increase of 5 percent. The first-quarter EPS was positively affected by the accretive impact of share repurchases, including the $1.15 billion April 2006 share buyback, and certain tax adjustments, substantially offset by a decline in new vehicle sales especially in California and Florida.
In the first quarter, industry new vehicle retail sales for California and Florida were off approximately 13 percent, based on CNW Research data, in line with AutoNation's decline for new vehicle sales for California and Florida. Together, California and Florida represent approximately 50 percent of the Company's new vehicle business.
Commenting on the first-quarter and year ahead, Mike Jackson, chairman and chief executive officer said, "It is a very challenging economic environment for new vehicle sales, driven in large part by continued softening in the housing market and higher interest rates, especially in California and Florida." Jackson also noted, "As long as the housing market continues to be soft in California and Florida, it will continue to be a challenging market for new vehicle sales. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term."
First quarter 2007 net income from continuing operations was $83 million compared to year-ago net income from continuing operations of $98 million. Results were negatively impacted by an after-tax $9 million increase ($15 million pre-tax) in other interest expense in 2007, primarily due to additional debt incurred in connection with our April 2006 share buyback which was accretive to EPS, as well as lower new vehicle sales especially in California and Florida. Additionally, the first quarter benefited from certain tax adjustments.
Separately, the Company's Board of Directors has authorized an additional $500 million for the repurchase of its common stock. The Company has $42.1 million remaining under the $250 million share repurchase program authorized in June 2006.