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AutoNation Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: AN

And now I'll turn the call over to AutoNation's Chairman and Chief Executive Officer, Mike Jackson.

Michael J. Jackson

Good morning. Thank you for joining us. Today, we reported an all-time record quarterly adjusted earnings per share from continuing operations of $0.66 for the second quarter, a 35% increase as compared to $0.49 for the same period in the prior year. Second quarter 2012 revenue totaled $3.9 billion compared to $3.3 billion in the year-ago period, an increase of 17%, driven primarily by stronger retail new vehicle unit sales.

And in the second quarter, total U.S. industry new vehicle retail sales increased 15%, based on CNW Research. In comparison, during the same period, AutoNation's new vehicle unit sales increased 29%. Our improved operating leverage in the second quarter reflects our disciplined focus on expense management as well as long-term investments in centralized processes. We have effectively leveraged our scale to drive cost savings and deliver improved shareholder returns.

We've continued to focus on investments in technology and best practices which revolve around the customer experience, leading to efficiencies in our operations. These investments in the customer experience have continued to improve the productivity of our associates.

In the second quarter, we saw a revenue growth of 17%, with the headcount increase of just over 2%. In the second quarter, we saw Import inventories return to normal and Import unit sales growth of 44% over the same period last year when both Toyota and Honda were dealing with a limited supply of parts for production due to the earthquake.

As we previously have discussed, the recovery is driven by a replacement demand as the age of the fleet on the road has now increased to 11 years old. Also, manufacturers have stepped up the launch pace of new models. Finally, the credit environment is very strong, with low interest rates and ample credit availability.

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