AutoNation Posts Record Fourth Quarter
The dealer group realized its 17th consecutive quarter of double-digit year-over-year growth in earnings per share, with net income from continuing operations reaching a record $117 million in the end-of-year quarter.
FORT LAUDERDALE, Fla. — Stepping down after 15 years as president and COO, Mike Maroone said during the company’s quarterly investor call this week that he was “very optimistic” about AutoNation’s future. The dealer group realized record earnings per share from continuing operations in the fourth quarter 2014 and its strongest year in company history.
“We are extremely pleased with our fourth quarter performance, where we delivered revenue and gross profit growth across the business, an exceptional 4.5% operating margin, an all-time record quarterly and annual EPS, and the 17th consecutive quarter of double-digit EPS growth,” said Maroone.
AutoNation reported 2014 fourth quarter net income from continuing operations of $117 million, or $1.02 per share — a 23% improvement on a per-share basis from the prior year. The dealer group’s revenue for the quarter totaled $5 billion, an increase of 12%, driven by strong performance in all of the company’s business sectors, including F&I, new vehicles, used vehicles, and parts and service.
“Revenue for the full year was $19.1 billion, up 9% over the prior year,” added Mike Jackson, AutoNation’s chairman and CEO, who will take over as president when Maroone steps down on April 1. “Operating income for the full year was $821 million, an increase of 11% over the prior year.”
In the fourth quarter, AutoNation's retail new-vehicle unit sales increased 11% overall and 9% on a same-store basis, while retail used-vehicle unit sales increased 9% overall and 7% on a same-store basis. For full year 2014, AutoNation's retail new-vehicle unit sales increased 9% overall and 7% on a same-store basis, while retail used-vehicle unit sales increased 5% overall and 4% on a same-store basis.
During the call, Jackson also touched on the dealer group’s digital strategy, including the December launch of AutoNation Express, the dealer group’s digital storefront.
“Our investment in AutoNation Express will increase significantly in 2015 as compared to 2014,” Jackson noted. “That includes investment in the brand. It includes investment in IT capabilities and it includes investment in the store as far as features that have to be in the store.”
AutoNation Express is part of the dealer group’s strategy to turn its websites from informational to transactional. Starting in December, customers of several AutoNation stores located in Florida were able to use their credit cards to reserve the vehicle they wanted to purchase.
“Its benefits are down the road,” Jackson noted. “… The next piece of the puzzle is transactional websites and traffic to our websites. Traffic to our website is growing at double-digit, significant double-digit rates. Our own websites now generate more business than all the third parties combined. So there is significant progress. But if I look at the level of investment relative to those factors, I would say we are still very much in investment period. And I would say that will certainly be for all of 2015.”
AutoNation announced its intention to cut spending on third-party lead providers back in April, officials saying the group could achieve a better handoff between its sites and stores without middlemen like AutoTrader and TrueCar.
“As far as my conviction, are we on the right course or not?” Jackson asked. “I am 100% convinced … that the strategy we are pursuing, over time, will be a sustainable competitive advantage for AutoNation, which is one of the hardest things to do in business.”
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