AutoNation reports record profits

  • Sun Sentinel
  • Wednesday, October 28, 2015 2:47pm
  • Business

FORT LAUDERDALE, Fla. — AutoNation on Wednesday reported record quarterly profits and its biggest purchase in 15 years.

The country’s largest auto dealer chain said profits from continuing operations reached an all-time high of $119 million, up 12 percent from last year’s third quarter.

The Fort Lauderdale company also announced plans to buy 12 stores in Texas that have annual revenues of roughly $800 million. The stores in the Allen Samuels Group of Waco sold about 19,500 new and used vehicles on a retail level last year. Those outlets in Houston, Dallas-Fort Worth, Corpus Christi, Tyler, Ennis and Waco now employ about 1,000 people and mainly sell Chrysler-related brands.

“This acquisition will enhance our brand mix in the state of Texas,” AutoNation CEO Mike Jackson said in a statement early Wednesday. Texas will account for about 25 percent of company revenue when the acquisition is completed, probably early next year.

AutoNation has been soaring, analysts say, because of a mix of factors: a strong U.S. auto market rebounding from the Great Recession, savvy management, plus investments in technology that have helped adapt its inventory, websites and other basics to changing customer demand. Rebranding most stores under the AutoNation name in 2013 also has built the company’s reputation coast-to-coast.

-The financial results: AutoNation on Wednesday reported its 20th straight quarter of double-digit growth in earnings per share from continuing operations. Those earnings reached an all-time record of $1.05 in the third quarter, up 17 percent from a year earlier.

Quarterly revenue increased at a slower pace, up 9 percent from a year earlier to reach $5.4 billion.

Profits are rising faster than sales, partly because the company increased its focus on higher-profit service operations and shaved expenses.

Operating income hit an all-time high of $236 million, up 14 percent from a year earlier, executives said.

Some gains came from shifting more business to its own websites. AutoNation said its company websites now generate about 25 percent of the vehicles it sells. The share of sales from external sites, which cost more in commissions, now run about 9 percent, down from roughly 13 percent in late 2014.

AutoNation also has been bulking up through acquisitions.

So far this year, it has announced plans to buy stores that have annual revenues around $1.7 billion. Nearly $1 billion of that new revenue comes from brands related to the Chrysler group.

The latest purchase will bring AutoNation’s store count to 265 and its brand franchise tally to 372. Some stores, such as Chrysler Dodge Jeep Ram locales, have more than one brand offered.

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