Ahead Of AutoNation's Q4 Results

(RTTNews) - America's largest automotive retailer AutoNation Inc. (AN) continues to actively pursue acquisitions and new store opportunities with a focus on enhancing brand representation within its existing markets and markets that can be supported by existing management infrastructure.

During the third-quarter earnings call, the company said it will continue to be selective and prudent with its capital with a focus on investing to produce strong returns and long-term shareholder value.

For the fourth quarter, AutoNation expects a sequential increase in PVRs in the $200 range due to the seasonal mix shift towards Premium Luxury. The company currently expects to report, with its fourth quarter financial results, a decline in both new and used gross profit per vehicle retailed in the range of $250 - $300, as compared to the fourth quarter of 2014.

The company expects to report significant margin declines for the fourth quarter in both of its new and used retail unit sales. Also, the company said it will take the necessary steps to align costs, inventory, and pricing strategy to adjust to the current market. In 2016, industry new vehicle unit sales is expected to continue to exceed 17 million.

Fourth-quarter results are slated to be released before the bell on Thursday, January 28. Analysts polled by Thomson Reuters are estimating earnings of $1.04 per share on revenue of $5.46 billion for the quarter. Analysts' estimate typically exclude certain special items.

Retail sales were 35,962 new vehicles in December 2015, an increase of 9% as compared to December 2014. Unit volumes in December and the fourth quarter of 2015 were achieved with significant retail discounts, especially in the Premium Luxury segment.

Reported retail new vehicle unit sales in the fourth quarter of 2015 were 89,764, an increase of 6% as compared to the fourth quarter of 2014. Reported retail new vehicle unit sales for full year 2015 were 343,753, up 7% as compared to full year 2014.

The company's just bygone quarter was its 20th consecutive quarter of double-digit year-over-year growth in earnings per share from continuing operations.

For the third quarter, the company reported net income from continuing operations of $190 million or $1.05 per share versus net income of $107 million or $0.90 per share during the third quarter of 2014, a 17% improvement on a per share basis.

Third quarter 2015 revenue totaled $5.4 billion compared to $4.9 billion in the year-ago period, an increase of 9%, driven by stronger performance in all of its business sectors.

October 28, 2015, AutoNation announced signing of an agreement to acquire 12 stores, including 31 franchises, in the Houston, Dallas-Fort Worth, Corpus Christi, Tyler, Ennis and Waco, Texas markets from Allen Samuels Auto Group, representing about $800 million in annual revenue and 19,500 retail new and used vehicle unit sales.

Since the beginning of 2015, the company has announced acquisitions with roughly $1.7 billion in annual revenue, of which $1 billion is Chrysler, Jeep, Ram, Dodge related.

Also, in September, AutoNation completed the previously-announced acquisition of Valley Motors in the Baltimore market. And since Q4 2012, AutoNation has announced acquisitions and new franchises awarded by the manufacturers that will generate $3.3 billion in annual revenue once fully operational.

AutoNation said it will continue to pursue acquisitions that leverage its scale, expand the AutoNation brand and provide strong returns for the shareholders.