Sun Sentinel Palm Beach Edition

AutoNation has stormy 1st quarter

Hail damage dents profits

- By Miriam Valverde Staff writer

A hail storm in Texas caused $3.6 million in damage to AutoNation vehicles and contribute­d to a 14 percent drop in profits in the first quarter, the Fort Lauderdale-based auto retailer said Friday.

The nation’s largest auto retailer reported net income from continuing operations of $96 million for the first quarter of 2016, or 90 cents per share, compared with $112 million, or 97 cents per share, for the same quarter 2015.

The hail damage was responsibl­e for a loss of 3 cents per share, AutoNation said.

The company said it generated $5.1 billion in revenue for this year’s first quarter, up 4 percent from same period a year ago.

The results exceeded Wall Street expectatio­ns. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 93 cents per share.

Mike Jackson, AutoNation’s chairman, CEO and president, said the auto industry has reached a plateau. Retail sales in the first quarter were flat, despite high retail inventorie­s and manufactur­er incentives that rose 14 percent, he said.

Jackson told CNBC that without the steep discounts, sales would have been flat

for the quarter, but it didn’t seem to bother investors who pushed AutoNation’s stock up 3 percent to $49.49 on the New York Stock Exchange.

Jackson remains optimistic the industry will sell more than 17 million vehicles this year, slightly less than the 17.5 million sold last year.

During the first quarter, AutoNation completed the acquisitio­n of 12 Texas stores from Allen Samuels Auto Group, expected to bring AutoNation about $800 million in annual revenue. The acquisitio­n adds stores in the Houston, Dallas-Fort Worth, Corpus Christi, Tyler, Ennis and Waco markets.

AutoNation also said Friday that it has about 5 percent of its inventory on sales hold due to open recalls. That includes about 15 percent of its used vehicles.

AutoNation owns and operates 375 new-vehicle franchises across the country.

 ?? RICK LOOMIS/ LOS ANGELES TIMES ?? AutoNation reported a 14 percent drop in profit.
RICK LOOMIS/ LOS ANGELES TIMES AutoNation reported a 14 percent drop in profit.

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