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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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73-1105145
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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200 SW 1st Avenue, Fort Lauderdale, Florida
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33301
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1A.
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Item 2.
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Item 6.
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March 31,
2017 |
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December 31,
2016 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
56.3
|
|
|
$
|
64.8
|
|
Receivables, net
|
830.3
|
|
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1,032.9
|
|
||
Inventory
|
3,692.6
|
|
|
3,520.1
|
|
||
Other current assets
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97.6
|
|
|
97.0
|
|
||
Total Current Assets
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4,676.8
|
|
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4,714.8
|
|
||
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $1.1 billion and $1.1 billion, respectively
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2,897.0
|
|
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2,843.2
|
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||
GOODWILL
|
1,515.6
|
|
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1,511.3
|
|
||
OTHER INTANGIBLE ASSETS, NET
|
600.6
|
|
|
598.2
|
|
||
OTHER ASSETS
|
402.7
|
|
|
392.5
|
|
||
Total Assets
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$
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10,092.7
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$
|
10,060.0
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LIABILITIES AND SHAREHOLDERS’ EQUITY
|
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|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Vehicle floorplan payable - trade
|
$
|
2,286.7
|
|
|
$
|
2,308.8
|
|
Vehicle floorplan payable - non-trade
|
1,581.8
|
|
|
1,540.4
|
|
||
Accounts payable
|
308.6
|
|
|
303.7
|
|
||
Commercial paper
|
765.0
|
|
|
942.0
|
|
||
Current maturities of long-term debt
|
165.4
|
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167.5
|
|
||
Other current liabilities
|
615.0
|
|
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566.8
|
|
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Total Current Liabilities
|
5,722.5
|
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5,829.2
|
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LONG-TERM DEBT, NET OF CURRENT MATURITIES
|
1,615.8
|
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1,611.1
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|
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DEFERRED INCOME TAXES
|
95.6
|
|
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91.5
|
|
||
OTHER LIABILITIES
|
224.6
|
|
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217.9
|
|
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COMMITMENTS AND CONTINGENCIES (Note 12)
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|
||||
SHAREHOLDERS’ EQUITY:
|
|
|
|
||||
Preferred stock, par value $0.01 per share; 5,000,000 shares authorized; none issued
|
—
|
|
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—
|
|
||
Common stock, par value $0.01 per share; 1,500,000,000 shares authorized; 120,562,149 shares issued at March 31, 2017, and December 31, 2016, including shares held in treasury
|
1.2
|
|
|
1.2
|
|
||
Additional paid-in capital
|
17.0
|
|
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18.2
|
|
||
Retained earnings
|
3,231.3
|
|
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3,133.3
|
|
||
Treasury stock, at cost; 19,269,317 and 19,909,940 shares held, respectively
|
(815.3
|
)
|
|
(842.4
|
)
|
||
Total Shareholders’ Equity
|
2,434.2
|
|
|
2,310.3
|
|
||
Total Liabilities and Shareholders’ Equity
|
$
|
10,092.7
|
|
|
$
|
10,060.0
|
|
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Three Months Ended
|
||||||
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March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
New vehicle
|
$
|
2,796.2
|
|
|
$
|
2,800.2
|
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Used vehicle
|
1,240.9
|
|
|
1,241.6
|
|
||
Parts and service
|
845.1
|
|
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820.4
|
|
||
Finance and insurance, net
|
221.6
|
|
|
223.1
|
|
||
Other
|
35.6
|
|
|
34.3
|
|
||
TOTAL REVENUE
|
5,139.4
|
|
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5,119.6
|
|
||
Cost of sales:
|
|
|
|
||||
New vehicle
|
2,651.9
|
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2,651.0
|
|
||
Used vehicle
|
1,163.9
|
|
|
1,150.6
|
|
||
Parts and service
|
474.1
|
|
|
465.7
|
|
||
Other
|
29.7
|
|
|
26.4
|
|
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TOTAL COST OF SALES (excluding depreciation shown below)
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4,319.6
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4,293.7
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|
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Gross Profit:
|
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|
||||
New vehicle
|
144.3
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149.2
|
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Used vehicle
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77.0
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91.0
|
|
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Parts and service
|
371.0
|
|
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354.7
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|
||
Finance and insurance
|
221.6
|
|
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223.1
|
|
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Other
|
5.9
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7.9
|
|
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TOTAL GROSS PROFIT
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819.8
|
|
|
825.9
|
|
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Selling, general, and administrative expenses
|
595.3
|
|
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588.7
|
|
||
Depreciation and amortization
|
37.3
|
|
|
34.8
|
|
||
Other income, net
|
(19.5
|
)
|
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(5.0
|
)
|
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OPERATING INCOME
|
206.7
|
|
|
207.4
|
|
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Non-operating income (expense) items:
|
|
|
|
||||
Floorplan interest expense
|
(21.5
|
)
|
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(18.9
|
)
|
||
Other interest expense
|
(28.8
|
)
|
|
(28.3
|
)
|
||
Interest income
|
0.4
|
|
|
0.1
|
|
||
Other income (loss), net
|
3.0
|
|
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(3.4
|
)
|
||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
159.8
|
|
|
156.9
|
|
||
Income tax provision
|
61.6
|
|
|
60.7
|
|
||
NET INCOME FROM CONTINUING OPERATIONS
|
98.2
|
|
|
96.2
|
|
||
Loss from discontinued operations, net of income taxes
|
(0.1
|
)
|
|
(0.3
|
)
|
||
NET INCOME
|
$
|
98.1
|
|
|
$
|
95.9
|
|
BASIC EARNINGS (LOSS) PER SHARE:
|
|
|
|
||||
Continuing operations
|
$
|
0.97
|
|
|
$
|
0.90
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
$
|
0.97
|
|
|
$
|
0.90
|
|
Weighted average common shares outstanding
|
101.1
|
|
|
106.7
|
|
||
DILUTED EARNINGS (LOSS) PER SHARE:
|
|
|
|
||||
Continuing operations
|
$
|
0.97
|
|
|
$
|
0.90
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
$
|
0.97
|
|
|
$
|
0.89
|
|
Weighted average common shares outstanding
|
101.6
|
|
|
107.4
|
|
||
COMMON SHARES OUTSTANDING, net of treasury stock, at period end
|
101.3
|
|
|
103.1
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
BALANCE AT DECEMBER 31, 2016
|
120,562,149
|
|
|
$
|
1.2
|
|
|
$
|
18.2
|
|
|
$
|
3,133.3
|
|
|
$
|
(842.4
|
)
|
|
$
|
2,310.3
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
98.1
|
|
|
—
|
|
|
98.1
|
|
|||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
|||||
Shares awarded under stock-based compensation plans
|
—
|
|
|
—
|
|
|
(6.0
|
)
|
|
—
|
|
|
27.5
|
|
|
21.5
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
—
|
|
|
0.1
|
|
|||||
BALANCE AT MARCH 31, 2017
|
120,562,149
|
|
|
$
|
1.2
|
|
|
$
|
17.0
|
|
|
$
|
3,231.3
|
|
|
$
|
(815.3
|
)
|
|
$
|
2,434.2
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
98.1
|
|
|
$
|
95.9
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Loss from discontinued operations
|
0.1
|
|
|
0.3
|
|
||
Depreciation and amortization
|
37.3
|
|
|
34.8
|
|
||
Amortization of debt issuance costs and accretion of debt discounts
|
1.4
|
|
|
1.3
|
|
||
Stock-based compensation expense
|
4.6
|
|
|
15.3
|
|
||
Deferred income tax provision
|
4.2
|
|
|
4.8
|
|
||
Net gain related to business/property dispositions
|
(9.6
|
)
|
|
(6.1
|
)
|
||
Non-cash impairment charges
|
—
|
|
|
0.9
|
|
||
Excess tax benefit from stock-based awards
|
—
|
|
|
(0.6
|
)
|
||
Other
|
(7.3
|
)
|
|
3.8
|
|
||
(Increase) decrease, net of effects from business combinations and divestitures:
|
|
|
|
||||
Receivables
|
201.6
|
|
|
161.2
|
|
||
Inventory
|
(185.8
|
)
|
|
(146.5
|
)
|
||
Other assets
|
(16.0
|
)
|
|
(23.7
|
)
|
||
Increase (decrease), net of effects from business combinations and divestitures:
|
|
|
|
||||
Vehicle floorplan payable - trade, net
|
(8.4
|
)
|
|
13.7
|
|
||
Accounts payable
|
6.7
|
|
|
2.5
|
|
||
Other liabilities
|
58.9
|
|
|
40.8
|
|
||
Net cash provided by continuing operations
|
185.8
|
|
|
198.4
|
|
||
Net cash used in discontinued operations
|
(0.2
|
)
|
|
(0.2
|
)
|
||
Net cash provided by operating activities
|
185.6
|
|
|
198.2
|
|
||
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(90.1
|
)
|
|
(54.7
|
)
|
||
Property operating lease buy-outs
|
(3.3
|
)
|
|
(5.0
|
)
|
||
Proceeds from the sale of property and equipment
|
0.3
|
|
|
—
|
|
||
Proceeds from assets held for sale
|
13.4
|
|
|
—
|
|
||
Insurance recoveries on property and equipment
|
1.2
|
|
|
—
|
|
||
Cash received from business divestitures, net of cash relinquished
|
9.9
|
|
|
6.1
|
|
||
Cash used in business acquisitions, net of cash acquired
|
(5.8
|
)
|
|
(256.6
|
)
|
||
Net change in restricted cash
|
(0.7
|
)
|
|
—
|
|
||
Other
|
(0.9
|
)
|
|
(0.5
|
)
|
||
Net cash used in continuing operations
|
(76.0
|
)
|
|
(310.7
|
)
|
||
Net cash used in discontinued operations
|
—
|
|
|
—
|
|
||
Net cash used in investing activities
|
(76.0
|
)
|
|
(310.7
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
|
|
|
|
||||
Repurchases of common stock
|
(0.4
|
)
|
|
(371.1
|
)
|
||
Proceeds from revolving credit facility
|
260.0
|
|
|
440.0
|
|
||
Payments of revolving credit facility
|
(260.0
|
)
|
|
(440.0
|
)
|
||
Net proceeds from (payments of) commercial paper
|
(177.0
|
)
|
|
326.5
|
|
||
Net proceeds from vehicle floorplan payable - non-trade
|
41.4
|
|
|
132.8
|
|
||
Payments of mortgage facility
|
(2.5
|
)
|
|
(2.5
|
)
|
||
Payments of capital leases and other debt obligations
|
(1.1
|
)
|
|
(0.7
|
)
|
||
Proceeds from the exercise of stock options
|
21.5
|
|
|
0.6
|
|
||
Excess tax benefit from stock-based awards
|
—
|
|
|
0.6
|
|
||
Net cash provided by (used in) continuing operations
|
(118.1
|
)
|
|
86.2
|
|
||
Net cash used in discontinued operations
|
—
|
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(118.1
|
)
|
|
86.2
|
|
||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(8.5
|
)
|
|
(26.3
|
)
|
||
CASH AND CASH EQUIVALENTS at beginning of period
|
64.8
|
|
|
74.1
|
|
||
CASH AND CASH EQUIVALENTS at end of period
|
$
|
56.3
|
|
|
$
|
47.8
|
|
1.
|
INTERIM FINANCIAL STATEMENTS
|
2.
|
RECEIVABLES, NET
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Trade receivables
|
$
|
144.1
|
|
|
$
|
147.6
|
|
Manufacturer receivables
|
203.6
|
|
|
234.9
|
|
||
Other
|
49.2
|
|
|
48.7
|
|
||
|
396.9
|
|
|
431.2
|
|
||
Less: allowances for doubtful accounts
|
(5.0
|
)
|
|
(5.8
|
)
|
||
|
391.9
|
|
|
425.4
|
|
||
Contracts-in-transit and vehicle receivables
|
438.4
|
|
|
595.9
|
|
||
Income taxes receivable (see Note 6)
|
—
|
|
|
11.6
|
|
||
Receivables, net
|
$
|
830.3
|
|
|
$
|
1,032.9
|
|
3.
|
INVENTORY AND VEHICLE FLOORPLAN PAYABLE
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
New vehicles
|
$
|
2,931.6
|
|
|
$
|
2,761.5
|
|
Used vehicles
|
562.8
|
|
|
559.1
|
|
||
Parts, accessories, and other
|
198.2
|
|
|
199.5
|
|
||
Inventory
|
$
|
3,692.6
|
|
|
$
|
3,520.1
|
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Vehicle floorplan payable - trade
|
$
|
2,286.7
|
|
|
$
|
2,308.8
|
|
Vehicle floorplan payable - non-trade
|
1,581.8
|
|
|
1,540.4
|
|
||
Vehicle floorplan payable
|
$
|
3,868.5
|
|
|
$
|
3,849.2
|
|
4.
|
GOODWILL AND INTANGIBLE ASSETS, NET
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Goodwill
|
$
|
1,515.6
|
|
|
$
|
1,511.3
|
|
|
|
|
|
||||
Franchise rights - indefinite-lived
|
$
|
589.4
|
|
|
$
|
589.4
|
|
Other intangibles
|
18.9
|
|
|
16.3
|
|
||
|
608.3
|
|
|
605.7
|
|
||
Less: accumulated amortization
|
(7.7
|
)
|
|
(7.5
|
)
|
||
Other intangible assets, net
|
$
|
600.6
|
|
|
$
|
598.2
|
|
5.
|
LONG-TERM DEBT AND COMMERCIAL PAPER
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
6.75% Senior Notes due 2018
|
$
|
400.0
|
|
|
$
|
400.0
|
|
5.5% Senior Notes due 2020
|
350.0
|
|
|
350.0
|
|
||
3.35% Senior Notes due 2021
|
300.0
|
|
|
300.0
|
|
||
4.5% Senior Notes due 2025
|
450.0
|
|
|
450.0
|
|
||
Revolving credit facility due 2019
|
—
|
|
|
—
|
|
||
Mortgage facility
(1)
|
150.7
|
|
|
153.2
|
|
||
Capital leases and other debt
|
140.7
|
|
|
136.2
|
|
||
|
1,791.4
|
|
|
1,789.4
|
|
||
Less: unamortized debt discounts and debt issuance costs
|
(10.2
|
)
|
|
(10.8
|
)
|
||
Less: current maturities
|
(165.4
|
)
|
|
(167.5
|
)
|
||
Long-term debt, net of current maturities
|
$
|
1,615.8
|
|
|
$
|
1,611.1
|
|
(1)
The mortgage facility requires monthly principal and interest payments of $1.6 million based on a fixed amortization schedule with a balloon payment of $143.9 million due November 2017.
|
6.
|
INCOME TAXES
|
7.
|
SHAREHOLDERS’ EQUITY
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Shares repurchased
|
—
|
|
|
7.9
|
|
||
Aggregate purchase price
|
$
|
—
|
|
|
$
|
370.6
|
|
Average purchase price per share
|
$
|
—
|
|
|
$
|
47.20
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Shares issued (in actual number of shares)
|
632,041
|
|
|
26,261
|
|
||
Proceeds from the exercise of stock options
|
$
|
21.5
|
|
|
$
|
0.6
|
|
Average exercise price per share
|
$
|
34.03
|
|
|
$
|
22.94
|
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2017
|
|
2016
|
||
Shares issued
|
—
|
|
|
138,424
|
|
Shares surrendered to AutoNation to satisfy tax withholding obligations in connection with the vesting of restricted stock
|
8,124
|
|
|
8,760
|
|
8.
|
STOCK-BASED COMPENSATION
|
9.
|
EARNINGS PER SHARE
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net income from continuing operations
|
$
|
98.2
|
|
|
$
|
96.2
|
|
Loss from discontinued operations, net of income taxes
|
(0.1
|
)
|
|
(0.3
|
)
|
||
Net income
|
$
|
98.1
|
|
|
$
|
95.9
|
|
|
|
|
|
||||
Weighted average common shares outstanding used in calculating basic EPS
|
101.1
|
|
|
106.7
|
|
||
Effect of dilutive stock options
|
0.5
|
|
|
0.7
|
|
||
Weighted average common shares outstanding used in calculating diluted EPS
|
101.6
|
|
|
107.4
|
|
||
|
|
|
|
||||
Basic EPS amounts
(1)
:
|
|
|
|
||||
Continuing operations
|
$
|
0.97
|
|
|
$
|
0.90
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
$
|
0.97
|
|
|
$
|
0.90
|
|
|
|
|
|
||||
Diluted EPS amounts
(1)
:
|
|
|
|
||||
Continuing operations
|
$
|
0.97
|
|
|
$
|
0.90
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
Net income
|
$
|
0.97
|
|
|
$
|
0.89
|
|
(1)
Earnings per share amounts are calculated discretely and therefore may not add up to the total due to rounding.
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2017
|
|
2016
|
||
Anti-dilutive options excluded from the computation of diluted earnings per share
|
3.1
|
|
|
2.5
|
|
10.
|
DIVESTITURES
|
11.
|
ACQUISITIONS
|
12.
|
COMMITMENTS AND CONTINGENCIES
|
13.
|
SEGMENT INFORMATION
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revenue:
|
|
|
|
||||
Domestic
|
$
|
1,800.8
|
|
|
$
|
1,848.2
|
|
Import
|
1,631.7
|
|
|
1,675.0
|
|
||
Premium Luxury
|
1,616.6
|
|
|
1,540.3
|
|
||
Total
|
5,049.1
|
|
|
5,063.5
|
|
||
Corporate and other
|
90.3
|
|
|
56.1
|
|
||
Total consolidated revenue
|
$
|
5,139.4
|
|
|
$
|
5,119.6
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Segment income
(1)
:
|
|
|
|
||||
Domestic
|
$
|
61.4
|
|
|
$
|
77.4
|
|
Import
|
71.7
|
|
|
76.1
|
|
||
Premium Luxury
|
80.5
|
|
|
83.0
|
|
||
Total
|
213.6
|
|
|
236.5
|
|
||
Corporate and other
|
(28.4
|
)
|
|
(48.0
|
)
|
||
Other interest expense
|
(28.8
|
)
|
|
(28.3
|
)
|
||
Interest income
|
0.4
|
|
|
0.1
|
|
||
Other income (loss), net
|
3.0
|
|
|
(3.4
|
)
|
||
Income from continuing operations before income taxes
|
$
|
159.8
|
|
|
$
|
156.9
|
|
(1)
Segment income represents income for each of our reportable segments and is defined as operating income less floorplan interest expense.
|
14.
|
BUSINESS AND CREDIT CONCENTRATIONS
|
15.
|
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
|
Level 1
|
Quoted prices in active markets for identical assets or liabilities
|
|
|
Level 2
|
Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
|
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities
|
•
|
Cash and cash equivalents, receivables, other current assets, vehicle floorplan payable, accounts payable, other current liabilities, commercial paper, and variable rate debt
: The amounts reported in the accompanying Unaudited Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature or the existence of variable interest rates that approximate prevailing market rates.
|
•
|
Fixed rate long-term debt
: Our fixed rate long-term debt primarily consists of amounts outstanding under our senior unsecured notes and mortgages. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 1). We estimate the fair value of our mortgages using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of the aggregate carrying values and fair values of our fixed rate long-term debt is as follows:
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Carrying value
|
$
|
1,781.2
|
|
|
$
|
1,778.6
|
|
Fair value
|
$
|
1,858.4
|
|
|
$
|
1,862.2
|
|
|
|
2017
|
|
2016
|
||||||||||||
Description
|
|
Fair Value
Measurements Using Significant Unobservable Inputs (Level 3) |
|
Gain/(Loss)
|
|
Fair Value
Measurements Using Significant Unobservable Inputs (Level 3) |
|
Gain/(Loss)
|
||||||||
Long-lived assets held for sale:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.0
|
|
|
$
|
(0.9
|
)
|
Discontinued operations
|
|
—
|
|
|
—
|
|
|
13.2
|
|
|
(0.2
|
)
|
||||
Total long-lived assets held for sale
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18.2
|
|
|
$
|
(1.1
|
)
|
16.
|
CASH FLOW INFORMATION
|
($ in millions, except per vehicle data)
|
Three Months Ended March 31,
|
|||||||||||||
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
2,796.2
|
|
|
$
|
2,800.2
|
|
|
$
|
(4.0
|
)
|
|
(0.1
|
)
|
Retail used vehicle
|
1,156.1
|
|
|
1,119.9
|
|
|
36.2
|
|
|
3.2
|
|
|||
Wholesale
|
84.8
|
|
|
121.7
|
|
|
(36.9
|
)
|
|
(30.3
|
)
|
|||
Used vehicle
|
1,240.9
|
|
|
1,241.6
|
|
|
(0.7
|
)
|
|
(0.1
|
)
|
|||
Finance and insurance, net
|
221.6
|
|
|
223.1
|
|
|
(1.5
|
)
|
|
(0.7
|
)
|
|||
Total variable operations
(1)
|
4,258.7
|
|
|
4,264.9
|
|
|
(6.2
|
)
|
|
(0.1
|
)
|
|||
Parts and service
|
845.1
|
|
|
820.4
|
|
|
24.7
|
|
|
3.0
|
|
|||
Other
|
35.6
|
|
|
34.3
|
|
|
1.3
|
|
|
|
||||
Total revenue
|
$
|
5,139.4
|
|
|
$
|
5,119.6
|
|
|
$
|
19.8
|
|
|
0.4
|
|
Gross profit:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
144.3
|
|
|
$
|
149.2
|
|
|
$
|
(4.9
|
)
|
|
(3.3
|
)
|
Retail used vehicle
|
74.9
|
|
|
93.7
|
|
|
(18.8
|
)
|
|
(20.1
|
)
|
|||
Wholesale
|
2.1
|
|
|
(2.7
|
)
|
|
4.8
|
|
|
|
||||
Used vehicle
|
77.0
|
|
|
91.0
|
|
|
(14.0
|
)
|
|
(15.4
|
)
|
|||
Finance and insurance
|
221.6
|
|
|
223.1
|
|
|
(1.5
|
)
|
|
(0.7
|
)
|
|||
Total variable operations
(1)
|
442.9
|
|
|
463.3
|
|
|
(20.4
|
)
|
|
(4.4
|
)
|
|||
Parts and service
|
371.0
|
|
|
354.7
|
|
|
16.3
|
|
|
4.6
|
|
|||
Other
|
5.9
|
|
|
7.9
|
|
|
(2.0
|
)
|
|
|
||||
Total gross profit
|
819.8
|
|
|
825.9
|
|
|
(6.1
|
)
|
|
(0.7
|
)
|
|||
Selling, general, and administrative expenses
|
595.3
|
|
|
588.7
|
|
|
(6.6
|
)
|
|
(1.1
|
)
|
|||
Depreciation and amortization
|
37.3
|
|
|
34.8
|
|
|
(2.5
|
)
|
|
|
||||
Other income, net
|
(19.5
|
)
|
|
(5.0
|
)
|
|
14.5
|
|
|
|
||||
Operating income
|
206.7
|
|
|
207.4
|
|
|
(0.7
|
)
|
|
(0.3
|
)
|
|||
Non-operating income (expense) items:
|
|
|
|
|
|
|
|
|||||||
Floorplan interest expense
|
(21.5
|
)
|
|
(18.9
|
)
|
|
(2.6
|
)
|
|
|
||||
Other interest expense
|
(28.8
|
)
|
|
(28.3
|
)
|
|
(0.5
|
)
|
|
|
||||
Interest income
|
0.4
|
|
|
0.1
|
|
|
0.3
|
|
|
|
||||
Other income (loss), net
|
3.0
|
|
|
(3.4
|
)
|
|
6.4
|
|
|
|
||||
Income from continuing operations before income taxes
|
$
|
159.8
|
|
|
$
|
156.9
|
|
|
$
|
2.9
|
|
|
1.8
|
|
Retail vehicle unit sales:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
75,798
|
|
|
79,007
|
|
|
(3,209
|
)
|
|
(4.1
|
)
|
|||
Used vehicle
|
60,608
|
|
|
58,103
|
|
|
2,505
|
|
|
4.3
|
|
|||
|
136,406
|
|
|
137,110
|
|
|
(704
|
)
|
|
(0.5
|
)
|
|||
Revenue per vehicle retailed:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
36,890
|
|
|
$
|
35,442
|
|
|
$
|
1,448
|
|
|
4.1
|
|
Used vehicle
|
$
|
19,075
|
|
|
$
|
19,274
|
|
|
$
|
(199
|
)
|
|
(1.0
|
)
|
Gross profit per vehicle retailed:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
1,904
|
|
|
$
|
1,888
|
|
|
$
|
16
|
|
|
0.8
|
|
Used vehicle
|
$
|
1,236
|
|
|
$
|
1,613
|
|
|
$
|
(377
|
)
|
|
(23.4
|
)
|
Finance and insurance
|
$
|
1,625
|
|
|
$
|
1,627
|
|
|
$
|
(2
|
)
|
|
(0.1
|
)
|
Total variable operations
(2)
|
$
|
3,232
|
|
|
$
|
3,399
|
|
|
$
|
(167
|
)
|
|
(4.9
|
)
|
|
|
|
|
|
|
|
|
|||||||
(1)
Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
|
||||||||||||||
(2)
Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
|
|
Three Months Ended
|
||
|
March 31,
|
||
|
2017 (%)
|
|
2016 (%)
|
Revenue mix percentages:
|
|
|
|
New vehicle
|
54.4
|
|
54.7
|
Used vehicle
|
24.1
|
|
24.3
|
Parts and service
|
16.4
|
|
16.0
|
Finance and insurance, net
|
4.3
|
|
4.4
|
Other
|
0.8
|
|
0.6
|
Total
|
100.0
|
|
100.0
|
Gross profit mix percentages:
|
|
|
|
New vehicle
|
17.6
|
|
18.1
|
Used vehicle
|
9.4
|
|
11.0
|
Parts and service
|
45.3
|
|
42.9
|
Finance and insurance
|
27.0
|
|
27.0
|
Other
|
0.7
|
|
1.0
|
Total
|
100.0
|
|
100.0
|
Operating items as a percentage of revenue:
|
|
|
|
Gross profit:
|
|
|
|
New vehicle
|
5.2
|
|
5.3
|
Used vehicle - retail
|
6.5
|
|
8.4
|
Parts and service
|
43.9
|
|
43.2
|
Total
|
16.0
|
|
16.1
|
Selling, general, and administrative expenses
|
11.6
|
|
11.5
|
Operating income
|
4.0
|
|
4.1
|
Operating items as a percentage of total gross profit:
|
|
|
|
Selling, general, and administrative expenses
|
72.6
|
|
71.3
|
Operating income
|
25.2
|
|
25.1
|
|
|
||
|
March 31,
|
||
|
2017
|
|
2016
|
Inventory days supply:
|
|
|
|
New vehicle (industry standard of selling days)
|
71 days
|
|
81 days
|
Used vehicle (trailing calendar month days)
|
37 days
|
|
39 days
|
|
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions, except per vehicle data)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
2,701.0
|
|
|
$
|
2,718.1
|
|
|
$
|
(17.1
|
)
|
|
(0.6
|
)
|
Retail used vehicle
|
1,127.9
|
|
|
1,086.2
|
|
|
41.7
|
|
|
3.8
|
|
|||
Wholesale
|
79.7
|
|
|
117.7
|
|
|
(38.0
|
)
|
|
(32.3
|
)
|
|||
Used vehicle
|
1,207.6
|
|
|
1,203.9
|
|
|
3.7
|
|
|
0.3
|
|
|||
Finance and insurance, net
|
216.9
|
|
|
217.7
|
|
|
(0.8
|
)
|
|
(0.4
|
)
|
|||
Total variable operations
(1)
|
4,125.5
|
|
|
4,139.7
|
|
|
(14.2
|
)
|
|
(0.3
|
)
|
|||
Parts and service
|
820.3
|
|
|
794.9
|
|
|
25.4
|
|
|
3.2
|
|
|||
Other
|
35.5
|
|
|
34.2
|
|
|
1.3
|
|
|
|
||||
Total revenue
|
$
|
4,981.3
|
|
|
$
|
4,968.8
|
|
|
$
|
12.5
|
|
|
0.3
|
|
Gross profit:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
138.9
|
|
|
$
|
146.8
|
|
|
$
|
(7.9
|
)
|
|
(5.4
|
)
|
Retail used vehicle
|
73.5
|
|
|
91.3
|
|
|
(17.8
|
)
|
|
(19.5
|
)
|
|||
Wholesale
|
1.9
|
|
|
(2.4
|
)
|
|
4.3
|
|
|
|
||||
Used vehicle
|
75.4
|
|
|
88.9
|
|
|
(13.5
|
)
|
|
(15.2
|
)
|
|||
Finance and insurance
|
216.9
|
|
|
217.7
|
|
|
(0.8
|
)
|
|
(0.4
|
)
|
|||
Total variable operations
(1)
|
431.2
|
|
|
453.4
|
|
|
(22.2
|
)
|
|
(4.9
|
)
|
|||
Parts and service
|
360.8
|
|
|
343.5
|
|
|
17.3
|
|
|
5.0
|
|
|||
Other
|
5.8
|
|
|
7.6
|
|
|
(1.8
|
)
|
|
|
||||
Total gross profit
|
$
|
797.8
|
|
|
$
|
804.5
|
|
|
$
|
(6.7
|
)
|
|
(0.8
|
)
|
Retail vehicle unit sales:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
73,639
|
|
|
76,246
|
|
|
(2,607
|
)
|
|
(3.4
|
)
|
|||
Used vehicle
|
59,131
|
|
|
55,960
|
|
|
3,171
|
|
|
5.7
|
|
|||
|
132,770
|
|
|
132,206
|
|
|
564
|
|
|
0.4
|
|
|||
Revenue per vehicle retailed:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
36,679
|
|
|
$
|
35,649
|
|
|
$
|
1,030
|
|
|
2.9
|
|
Used vehicle
|
$
|
19,075
|
|
|
$
|
19,410
|
|
|
$
|
(335
|
)
|
|
(1.7
|
)
|
Gross profit per vehicle retailed:
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
$
|
1,886
|
|
|
$
|
1,925
|
|
|
$
|
(39
|
)
|
|
(2.0
|
)
|
Used vehicle
|
$
|
1,243
|
|
|
$
|
1,632
|
|
|
$
|
(389
|
)
|
|
(23.8
|
)
|
Finance and insurance
|
$
|
1,634
|
|
|
$
|
1,647
|
|
|
$
|
(13
|
)
|
|
(0.8
|
)
|
Total variable operations
(2)
|
$
|
3,233
|
|
|
$
|
3,448
|
|
|
$
|
(215
|
)
|
|
(6.2
|
)
|
|
|
|
|
|
|
|
|
|||||||
(1)
Total variable operations includes new vehicle, used vehicle (retail and wholesale), and finance and insurance results.
|
||||||||||||||
(2)
Total variable operations gross profit per vehicle retailed is calculated by dividing the sum of new vehicle, retail used vehicle, and finance and insurance gross profit by total retail vehicle unit sales.
|
|
Three Months Ended
|
||
|
March 31,
|
||
|
2017 (%)
|
|
2016 (%)
|
Revenue mix percentages:
|
|
|
|
New vehicle
|
54.2
|
|
54.7
|
Used vehicle
|
24.2
|
|
24.2
|
Parts and service
|
16.5
|
|
16.0
|
Finance and insurance, net
|
4.4
|
|
4.4
|
Other
|
0.7
|
|
0.7
|
Total
|
100.0
|
|
100.0
|
Gross profit mix percentages:
|
|
|
|
New vehicle
|
17.4
|
|
18.2
|
Used vehicle
|
9.5
|
|
11.1
|
Parts and service
|
45.2
|
|
42.7
|
Finance and insurance
|
27.2
|
|
27.1
|
Other
|
0.7
|
|
0.9
|
Total
|
100.0
|
|
100.0
|
Operating items as a percentage of revenue:
|
|
|
|
Gross profit:
|
|
|
|
New vehicle
|
5.1
|
|
5.4
|
Used vehicle - retail
|
6.5
|
|
8.4
|
Parts and service
|
44.0
|
|
43.2
|
Total
|
16.0
|
|
16.2
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions, except per vehicle data)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Reported:
|
|
|
|
|
|
|
|
|||||||
Revenue
|
$
|
2,796.2
|
|
|
$
|
2,800.2
|
|
|
$
|
(4.0
|
)
|
|
(0.1
|
)
|
Gross profit
|
$
|
144.3
|
|
|
$
|
149.2
|
|
|
$
|
(4.9
|
)
|
|
(3.3
|
)
|
Retail vehicle unit sales
|
75,798
|
|
|
79,007
|
|
|
(3,209
|
)
|
|
(4.1
|
)
|
|||
Revenue per vehicle retailed
|
$
|
36,890
|
|
|
$
|
35,442
|
|
|
$
|
1,448
|
|
|
4.1
|
|
Gross profit per vehicle retailed
|
$
|
1,904
|
|
|
$
|
1,888
|
|
|
$
|
16
|
|
|
0.8
|
|
Gross profit as a percentage of revenue
|
5.2
|
%
|
|
5.3
|
%
|
|
|
|
|
|||||
Inventory days supply (industry standard of selling days)
|
71 days
|
|
|
81 days
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|||||||
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Same Store:
|
|
|
|
|
|
|
|
|||||||
Revenue
|
$
|
2,701.0
|
|
|
$
|
2,718.1
|
|
|
$
|
(17.1
|
)
|
|
(0.6
|
)
|
Gross profit
|
$
|
138.9
|
|
|
$
|
146.8
|
|
|
$
|
(7.9
|
)
|
|
(5.4
|
)
|
Retail vehicle unit sales
|
73,639
|
|
|
76,246
|
|
|
(2,607
|
)
|
|
(3.4
|
)
|
|||
Revenue per vehicle retailed
|
$
|
36,679
|
|
|
$
|
35,649
|
|
|
$
|
1,030
|
|
|
2.9
|
|
Gross profit per vehicle retailed
|
$
|
1,886
|
|
|
$
|
1,925
|
|
|
$
|
(39
|
)
|
|
(2.0
|
)
|
Gross profit as a percentage of revenue
|
5.1
|
%
|
|
5.4
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||||||
(In millions)
|
2017
|
|
2016
|
|
Variance
|
||||||
Floorplan assistance
|
$
|
28.3
|
|
|
$
|
29.3
|
|
|
$
|
(1.0
|
)
|
New vehicle floorplan interest expense
|
(20.2
|
)
|
|
(17.9
|
)
|
|
(2.3
|
)
|
|||
Net new vehicle inventory carrying benefit
|
$
|
8.1
|
|
|
$
|
11.4
|
|
|
$
|
(3.3
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions, except per vehicle data)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Reported:
|
|
|
|
|
|
|
|
|||||||
Retail revenue
|
$
|
1,156.1
|
|
|
$
|
1,119.9
|
|
|
$
|
36.2
|
|
|
3.2
|
|
Wholesale revenue
|
84.8
|
|
|
121.7
|
|
|
(36.9
|
)
|
|
(30.3
|
)
|
|||
Total revenue
|
$
|
1,240.9
|
|
|
$
|
1,241.6
|
|
|
$
|
(0.7
|
)
|
|
(0.1
|
)
|
Retail gross profit
|
$
|
74.9
|
|
|
$
|
93.7
|
|
|
$
|
(18.8
|
)
|
|
(20.1
|
)
|
Wholesale gross profit (loss)
|
2.1
|
|
|
(2.7
|
)
|
|
4.8
|
|
|
|
||||
Total gross profit
|
$
|
77.0
|
|
|
$
|
91.0
|
|
|
$
|
(14.0
|
)
|
|
(15.4
|
)
|
Retail vehicle unit sales
|
60,608
|
|
|
58,103
|
|
|
2,505
|
|
|
4.3
|
|
|||
Revenue per vehicle retailed
|
$
|
19,075
|
|
|
$
|
19,274
|
|
|
$
|
(199
|
)
|
|
(1.0
|
)
|
Gross profit per vehicle retailed
|
$
|
1,236
|
|
|
$
|
1,613
|
|
|
$
|
(377
|
)
|
|
(23.4
|
)
|
Gross profit as a percentage of revenue
|
6.5
|
%
|
|
8.4
|
%
|
|
|
|
|
|||||
Inventory days supply (trailing calendar month days)
|
37 days
|
|
|
39 days
|
|
|
|
|
|
|||||
|
|
|||||||||||||
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Same Store:
|
|
|
|
|
|
|
|
|||||||
Retail revenue
|
$
|
1,127.9
|
|
|
$
|
1,086.2
|
|
|
$
|
41.7
|
|
|
3.8
|
|
Wholesale revenue
|
79.7
|
|
|
117.7
|
|
|
(38.0
|
)
|
|
(32.3
|
)
|
|||
Total revenue
|
$
|
1,207.6
|
|
|
$
|
1,203.9
|
|
|
$
|
3.7
|
|
|
0.3
|
|
Retail gross profit
|
$
|
73.5
|
|
|
$
|
91.3
|
|
|
$
|
(17.8
|
)
|
|
(19.5
|
)
|
Wholesale gross profit (loss)
|
1.9
|
|
|
(2.4
|
)
|
|
4.3
|
|
|
|
||||
Total gross profit
|
$
|
75.4
|
|
|
$
|
88.9
|
|
|
$
|
(13.5
|
)
|
|
(15.2
|
)
|
Retail vehicle unit sales
|
59,131
|
|
|
55,960
|
|
|
3,171
|
|
|
5.7
|
|
|||
Revenue per vehicle retailed
|
$
|
19,075
|
|
|
$
|
19,410
|
|
|
$
|
(335
|
)
|
|
(1.7
|
)
|
Gross profit per vehicle retailed
|
$
|
1,243
|
|
|
$
|
1,632
|
|
|
$
|
(389
|
)
|
|
(23.8
|
)
|
Gross profit as a percentage of revenue
|
6.5
|
%
|
|
8.4
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
($ in millions)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
||||||
Reported:
|
|
|
|
|
|
|
|
||||||
Revenue
|
$
|
845.1
|
|
|
$
|
820.4
|
|
|
$
|
24.7
|
|
|
3.0
|
Gross Profit
|
$
|
371.0
|
|
|
$
|
354.7
|
|
|
$
|
16.3
|
|
|
4.6
|
Gross profit as a percentage of revenue
|
43.9
|
%
|
|
43.2
|
%
|
|
|
|
|
||||
Same Store:
|
|
|
|
|
|
|
|
||||||
Revenue
|
$
|
820.3
|
|
|
$
|
794.9
|
|
|
$
|
25.4
|
|
|
3.2
|
Gross Profit
|
$
|
360.8
|
|
|
$
|
343.5
|
|
|
$
|
17.3
|
|
|
5.0
|
Gross profit as a percentage of revenue
|
44.0
|
%
|
|
43.2
|
%
|
|
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions, except per vehicle data)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Reported:
|
|
|
|
|
|
|
|
|||||||
Revenue and gross profit
|
$
|
221.6
|
|
|
$
|
223.1
|
|
|
$
|
(1.5
|
)
|
|
(0.7
|
)
|
Gross profit per vehicle retailed
|
$
|
1,625
|
|
|
$
|
1,627
|
|
|
$
|
(2
|
)
|
|
(0.1
|
)
|
Same Store:
|
|
|
|
|
|
|
|
|||||||
Revenue and gross profit
|
$
|
216.9
|
|
|
$
|
217.7
|
|
|
$
|
(0.8
|
)
|
|
(0.4
|
)
|
Gross profit per vehicle retailed
|
$
|
1,634
|
|
|
$
|
1,647
|
|
|
$
|
(13
|
)
|
|
(0.8
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Revenue
|
$
|
1,800.8
|
|
|
$
|
1,848.2
|
|
|
$
|
(47.4
|
)
|
|
(2.6
|
)
|
Segment income
|
$
|
61.4
|
|
|
$
|
77.4
|
|
|
$
|
(16.0
|
)
|
|
(20.7
|
)
|
Retail new vehicle unit sales
|
26,259
|
|
|
27,736
|
|
|
(1,477
|
)
|
|
(5.3
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Revenue
|
$
|
1,631.7
|
|
|
$
|
1,675.0
|
|
|
$
|
(43.3
|
)
|
|
(2.6
|
)
|
Segment income
|
$
|
71.7
|
|
|
$
|
76.1
|
|
|
$
|
(4.4
|
)
|
|
(5.8
|
)
|
Retail new vehicle unit sales
|
34,315
|
|
|
35,781
|
|
|
(1,466
|
)
|
|
(4.1
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Revenue
|
$
|
1,616.6
|
|
|
$
|
1,540.3
|
|
|
$
|
76.3
|
|
|
5.0
|
|
Segment income
|
$
|
80.5
|
|
|
$
|
83.0
|
|
|
$
|
(2.5
|
)
|
|
(3.0
|
)
|
Retail new vehicle unit sales
|
15,224
|
|
|
15,490
|
|
|
(266
|
)
|
|
(1.7
|
)
|
|
Three Months Ended March 31,
|
|||||||||||||
($ in millions)
|
2017
|
|
2016
|
|
Variance
Favorable /
(Unfavorable)
|
|
%
Variance
|
|||||||
Reported:
|
|
|
|
|
|
|
|
|||||||
Compensation
|
$
|
377.2
|
|
|
$
|
373.1
|
|
|
$
|
(4.1
|
)
|
|
(1.1
|
)
|
Advertising
|
45.7
|
|
|
42.7
|
|
|
(3.0
|
)
|
|
(7.0
|
)
|
|||
Store and corporate overhead
|
172.4
|
|
|
172.9
|
|
|
0.5
|
|
|
0.3
|
|
|||
Total
|
$
|
595.3
|
|
|
$
|
588.7
|
|
|
$
|
(6.6
|
)
|
|
(1.1
|
)
|
|
|
|
|
|
|
|
|
|||||||
SG&A as a % of total gross profit:
|
|
|
|
|
|
|
|
|||||||
Compensation
|
46.0
|
|
|
45.2
|
|
|
(80
|
)
|
|
bps
|
||||
Advertising
|
5.6
|
|
|
5.2
|
|
|
(40
|
)
|
|
bps
|
||||
Store and corporate overhead
|
21.0
|
|
|
20.9
|
|
|
(10
|
)
|
|
bps
|
||||
Total
|
72.6
|
|
|
71.3
|
|
|
(130
|
)
|
|
bps
|
(In millions)
|
March 31,
2017 |
|
December 31,
2016 |
||||
Cash and cash equivalents
|
$
|
56.3
|
|
|
$
|
64.8
|
|
Revolving credit facility
(1)
|
$
|
1,194.6
|
|
(2)
|
$
|
1,058.7
|
|
Secured used vehicle floorplan facilities
(3)
|
$
|
0.5
|
|
|
$
|
0.3
|
|
(1)
|
As limited by the maximum consolidated leverage ratio contained in our credit agreement.
|
(2)
|
At
March 31, 2017
, we had
$48.5 million
of letters of credit outstanding. In addition, we use the revolving credit facility under our credit agreement as a liquidity backstop for borrowings under our commercial paper program. We had
$765.0 million
of commercial paper notes outstanding at
March 31, 2017
, which in effect reduced the available liquidity under our revolving credit facility to
$986.5 million
at
March 31, 2017
. See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
|
(3)
|
Based on the eligible used vehicle inventory that could have been pledged as collateral. See Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements for more information.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(In millions, except per share data)
|
2017
|
|
2016
|
||||
Shares repurchased
|
—
|
|
|
7.9
|
|
||
Aggregate purchase price
|
$
|
—
|
|
|
$
|
370.6
|
|
Average purchase price per share
|
$
|
—
|
|
|
$
|
47.20
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Purchases of property and equipment, including operating lease buy-outs
(1)
|
$
|
86.8
|
|
|
$
|
50.7
|
|
(1)
|
Includes accrued construction in progress and excludes property associated with capital leases entered into during the year.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Cash received from (used in) business acquisitions, net
(1)
|
$
|
(5.8
|
)
|
|
$
|
(256.6
|
)
|
Cash received from (used in) business divestitures, net
|
$
|
9.9
|
|
|
$
|
6.1
|
|
(1)
|
Excludes capital leases and deferred purchase price commitments.
|
(In millions)
|
March 31,
2017 |
|
December 31,
2016 |
||||
6.75% Senior Notes due 2018
|
$
|
400.0
|
|
|
$
|
400.0
|
|
5.5% Senior Notes due 2020
|
350.0
|
|
|
350.0
|
|
||
3.35% Senior Notes due 2021
|
300.0
|
|
|
300.0
|
|
||
4.5% Senior Notes due 2025
|
450.0
|
|
|
450.0
|
|
||
Revolving credit facility due 2019
|
—
|
|
|
—
|
|
||
Mortgage facility
(1)
|
150.7
|
|
|
153.2
|
|
||
Capital leases and other debt
|
140.7
|
|
|
136.2
|
|
||
|
1,791.4
|
|
|
1,789.4
|
|
||
Less: unamortized debt discounts and debt issuance costs
|
(10.2
|
)
|
|
(10.8
|
)
|
||
Less: current maturities
|
(165.4
|
)
|
|
(167.5
|
)
|
||
Long-term debt, net of current maturities
|
$
|
1,615.8
|
|
|
$
|
1,611.1
|
|
|
|
|
|
||||
(1)
The mortgage facility requires monthly principal and interest payments of $1.6 million based on a fixed amortization schedule with a balloon payment of $143.9 million due November 2017.
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Vehicle floorplan payable - trade
|
$
|
2,286.7
|
|
|
$
|
2,308.8
|
|
Vehicle floorplan payable - non-trade
|
1,581.8
|
|
|
1,540.4
|
|
||
Vehicle floorplan payable
|
$
|
3,868.5
|
|
|
$
|
3,849.2
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
(In millions)
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
185.6
|
|
|
$
|
198.2
|
|
Net cash used in investing activities
|
$
|
(76.0
|
)
|
|
$
|
(310.7
|
)
|
Net cash provided by (used in) financing activities
|
$
|
(118.1
|
)
|
|
$
|
86.2
|
|
•
|
The automotive retail industry is sensitive to changing economic conditions and various other factors. Our business and results of operations are substantially dependent on new vehicle sales levels in the United States and in our particular geographic markets and the level of gross profit margins that we can achieve on our sales of new vehicles, all of which are very difficult to predict.
|
•
|
Our new vehicle sales are impacted by incentive, marketing, and other programs of vehicle manufacturers.
|
•
|
We are dependent upon the success and continued financial viability of the vehicle manufacturers and distributors with which we hold franchises.
|
•
|
If we are not able to maintain and enhance our retail brands and reputation or to attract consumers to our own digital channels, or if events occur that damage our retail brands, reputation, or sales channels, our business and financial results may be harmed. We are investing significantly in the next phase of our brand extension strategy, and if our strategic initiatives are not successful, we will have incurred significant expenses without the benefit of improved financial results.
|
•
|
New laws, regulations, or governmental policies regarding fuel economy and greenhouse gas emission standards, or changes to existing standards, may affect vehicle manufacturers’ ability to produce cost-effective vehicles or vehicles
|
•
|
Natural disasters and adverse weather events can disrupt our business.
|
•
|
We are subject to restrictions imposed by, and significant influence from, vehicle manufacturers that may adversely impact our business, financial condition, results of operations, cash flows, and prospects, including our ability to acquire additional stores.
|
•
|
We are subject to numerous legal and administrative proceedings, which, if the outcomes are adverse to us, could materially adversely affect our business, results of operations, financial condition, cash flows, and prospects.
|
•
|
Our operations are subject to extensive governmental laws and regulations. If we are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect our operations, our business, operating results, and prospects could suffer.
|
•
|
A failure of our information systems or any security breach or unauthorized disclosure of confidential information could have a material adverse effect on our business.
|
•
|
Our debt agreements contain certain financial ratios and other restrictions on our ability to conduct our business, and our substantial indebtedness could adversely affect our financial condition and operations and prevent us from fulfilling our debt service obligations.
|
•
|
We are subject to interest rate risk in connection with our vehicle floorplan payables, revolving credit facility, and commercial paper program that could have a material adverse effect on our profitability.
|
•
|
Goodwill and other intangible assets comprise a significant portion of our total assets. We must test our goodwill and other intangible assets for impairment at least annually, which could result in a material, non-cash write-down of goodwill or franchise rights and could have a material adverse impact on our results of operations and shareholders’ equity.
|
•
|
Our largest stockholders, as a result of their ownership stakes in us, may have the ability to exert substantial influence over actions to be taken or approved by our stockholders or Board of Directors. In addition, future share repurchases and fluctuations in the levels of ownership of our largest stockholders could impact the volume of trading, liquidity, and market price of our common stock.
|
•
|
AutoNation’s Twitter feed (
www.twitter.com/autonation
)
|
•
|
Mike Jackson’s Twitter feed (
www.twitter.com/CEOMikeJackson
)
|
•
|
AutoNation’s Facebook page (
www.facebook.com/autonation
)
|
•
|
Mike Jackson’s Facebook page (
www.facebook.com/CEOMikeJackson
)
|
Period
|
Total Number of
Shares Purchased
(1)
|
|
Avg. Price
Paid Per
Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Approximate Dollar Value of
Shares That May Yet Be
Purchased Under The
Programs (in millions)
(1)
|
||||||
January 1, 2017 - January 31, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
298.6
|
|
February 1, 2017 - February 28, 2017
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
298.6
|
|
March 1, 2017 - March 31, 2017
|
8,124
|
|
|
$
|
46.50
|
|
|
—
|
|
|
$
|
298.6
|
|
Total
|
8,124
|
|
|
|
|
—
|
|
|
|
(1)
|
Our Board of Directors from time to time authorizes the repurchase of shares of our common stock up to a certain monetary limit. As of
March 31, 2017
,
$298.6 million
remained available under our stock repurchase authorization limit. The Board’s authorization has no expiration date. During the
first
quarter of
2017
, all of the shares reflected in the table above were surrendered to AutoNation to satisfy tax withholding obligations in connection with the vesting of restricted stock.
|
Exhibit No.
|
Description
|
|
|
10.1
|
Amendment to the AutoNation, Inc. 2014 Non-Employee Director Equity Plan, effective as of January 31, 2017.
|
10.2
|
Retirement Agreement and General Release of All Claims, dated March 7, 2017, by and between AutoNation, Inc. and Jonathan P. Ferrando (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 8, 2017).
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
|
32.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
|
32.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
AUTONATION, INC.
|
|
|
|
|
|
Date:
|
April 25, 2017
|
By:
|
/s/ Christopher Cade
|
|
|
|
Christopher Cade
Vice President and Chief Accounting Officer
|
|
|
|
|
|
|
|
(Duly Authorized Officer and Principal Accounting Officer)
|
1.
|
Section 3.1 of the Plan is hereby amended such that the number 1,000,000 is amended to 600,000.
|
2.
|
The Plan, as hereby amended, remains in full force and effect.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of AutoNation, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Michael J. Jackson
|
Michael J. Jackson
|
Chairman of the Board and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of AutoNation, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Cheryl Miller
|
Cheryl Miller
|
Executive Vice President and Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Michael J. Jackson
|
Michael J. Jackson
|
Chairman of the Board and Chief Executive Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Cheryl Miller
|
Cheryl Miller
|
Executive Vice President and Chief Financial Officer
|