AutoNation, Inc. (NYSE:AN) Q2 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 10:00 am ET


AutoNation, Inc. (NYSE:AN) Q2 2020 Earnings Conference Call - Final Transcript


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Welcome to the AutoNation's Second Quarter 2020 Earnings Conference Call and Audio Webcast. First to speak will be Rob Quartaro, Vice President of Investor Relations. Please go ahead, sir.

Robert Quartaro

Good morning, and welcome to AutoNation's second quarter 2020 conference call and webcast. Leading our call today will be Mike Jackson, our Chairman and Chief Executive Officer; and Joe Lower, our Chief Financial Officer. Following their remarks, we will open up the call for questions. I will be available following the call to address any additional question that you may have.

Before we begin, let me read our brief statement regarding forward-looking comments. Certain statements and information on this call, including any statements regarding our anticipated financial results and objectives constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, including economic conditions and changes in applicable regulations that may cause our actual results or performance to differ materially from such forward-looking statements. Additional discussions of facts that could cause our actual results to differ materially are contained in our press release issued earlier today and in our SEC filings, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K.

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

Mike Jackson

Good morning. Thank you for joining us. AutoNation delivered remarkable results for the second quarter compared to the prior year. Today, we reported an all-time record best ever quarter. Adjusted EPS from continuing operations of $1.41, an increase of 18% compared to last year. No question, the second quarter is certainly one for the history books. In early April, same-store retail unit sales dropped 50% compared to the prior year when the entire country shutdown due to the COVID-19 pandemic. For the month of June, thanks to the monumental effort of our associates, we recovered to achieve unit volume in line with last year. In April, same-store new vehicle unit sales were down approximately 50% and for the month of June only down 13% compared to last year.

Inventory shortages from the manufacturers' plant closures led to strong new vehicle gross profit per vehicle retailed. At the end of the quarter, new vehicle inventory was down 26,000 units or 41% compared to last year. We expect new vehicle margins to normalize as new vehicle inventories recover. At the beginning of April, same-store used vehicle retail unit volume was down approximately 60% and for the month of June increased 14% compared to last year. However, inventory levels are tight, demand is currently outpacing supply. We continue to focus on We'll Buy Your Car initiative, where we sourced over 6,000 units directly from consumers in the quarter. For July, we will source 3,500 units to help build our inventory.

Customer care is also seeing improvement. In April, our average same-store customer care gross profit per service day was down approximately 40% and