AutoNation Announces Loss of $232 Million in the First Quarter of 2020
Auto retailer offers AutoNation Vehicle Protection Plan in conjunction with The Warranty Group
AutoNation, Inc. (NYSE: AN), America's largest and most recognized automotive retailer, today reported first quarter 2020 GAAP net loss from continuing operations of $232 million, or $2.58 per share, compared to net income from continuing operations of $92 million, or $1.02 per share, in the prior year period. First quarter 2020 adjusted net income from continuing operations was $82 million, or $0.91 per share, compared to adjusted net income from continuing operations of $86 million, or $0.95 per share, in the prior year period.
Sales strengthening in April with same store New and Used retail unit sales down 19% during the final 10 days, compared to down 52% during the first 10 days, resulting in the full month down 37%
In the first quarter of 2020, the Company recorded non-cash goodwill, franchise rights, and other impairment charges totaling $315 million after-tax, or $3.49 per share. These non-cash charges were primarily the result of COVID-19 related impacts to the business and market valuation. First quarter 2019 net income from continuing operations included net gains from store divestitures of $6 million after-tax, or $0.07 per share. Reconciliations of non-GAAP financial measures are included in the attached financial tables.
The COVID-19 pandemic and related shelter in place orders enacted in the second half of March 2020 caused significant disruption to the Company's first quarter 2020 results. Same store first quarter 2020 revenue was $4.7 billion, a decrease of 5% compared to the same period a year ago. Same store first quarter 2020 gross profit totaled $812 million, a decrease of 3% compared to the year-ago period. Same store total variable gross profit was $423 million, a decrease of 5% compared to the year-ago period. Same store Customer Financial Services gross profit per vehicle retailed was an all-time record of $2,089, up $179 or 9% compared to the year-ago period. Same store Customer Care gross profit was $389 million, a decrease of 1 percent compared to the year-ago period.
The COVID-19 pandemic has adversely impacted and is expected to continue to adversely impact, AutoNation's operations. As of early April 2020, states from which we derive approximately 95% of our total revenue were under extensive "shelter in place" or "stay at home" orders from federal, state, and local governments, which significantly restricted our business operations, in particular our sales activities.
The health and safety of AutoNation's Customers and Associates is our top priority. AutoNation stores are cleaned and sanitized multiple times a day, including sanitizing high touch areas such as keyboards, telephones, and guest common areas. The company has implemented social distancing best practices within the workplace and in all Associate and Customer interactions.
In April 2020, the Company announced various actions taken to attempt to mitigate the financial impact of COVID-19 including placing employees on unpaid leave, implementing temporary base pay reductions for our executive officers and associates, freezing corporate new hiring, reducing advertising spending, reducing discretionary spending, postponing capital expenditures, and reducing our Board of Directors' fees.
AutoNation experienced strengthening sales in April, with same store New and Used retail unit sales down 19% during the final 10 days compared to down 52% during the first 10 days, resulting in the full month down 37%.(1) As of May 8, 2020, states from which we derive approximately 51% of our total revenue were largely still under "shelter in place" or "stay at home" orders.
Balance Sheet and Liquidity
Under the amended and restated credit agreement, the Company has a $1.8 billion revolving credit facility that matures on March 26, 2025. As of May 8, 2020, the Company had in excess of $1.4 billion of liquidity, including over $750 million of cash and approximately $650 million of availability under our revolving credit facility. The non-cash impairment charges did not have a negative impact on any covenants within the credit facility.
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