 |
April 9, 2001
To Our Shareholders:
By nearly every measure, 2000 will be remembered
as a watershed year for AutoNation.
On a pro forma basis, full-year earnings per share
jumped 27% to 84 cents on income from continuing operations of $303
million, versus 66 cents per share on income from continuing operations
of $289 million in 1999. But the story behind the numbers is
equally compelling.
During the year, we completed the closure of the
former used vehicle megastores, spun off the automotive rental group,
sold most of our non-retail assets and reduced expenses by $100 million.
In brief, we transformed AutoNation from a collection of unrelated
business divisions into a company with a clear focus: to be America's
largest and most-valued pure-play automotive retailer.
By focusing the company in 2000, we have set the
stage to perform well in a challenging new vehicle market in 2001.
And we believe we have positioned ourselves to achieve our annual
earnings-per-share growth target of 10 to 12% each year thereafter.
To achieve these results, AutoNation will execute
a strategic plan that extends its leadership in new vehicles and leverages
its scale to generate margin growth in such key areas as used vehicles,
parts and service, finance and insurance, and collision repair. We
outline this strategy later in this report. But first, let's review
our 2000 financial performance.
2000: A Watershed Year
Revenue in 2000 increased 7% to $20.6 billion,
excluding the impact of the former used vehicle megastores. The growth
in revenue came despite the slowdown in auto sales that hit most retailers
late in 2000, while the significant improvement in earnings per share
reflected the improved efficiency of our operations. The fact that
AutoNation delivered record net income for the fourth quarter of 2000
suggests that the company is positioned to perform well - even in
a challenging retail environment.
(left
to right)
Mike Jackson, Chief Executive Officer
H. Wayne Huizenga, Chairman
Michael E. Maroone, President & Chief Operating
Officer |
|
On average,
AutoNation sells
2,300 vehicles each day. |
|
On average, AutoNation services
25,000 vehicles each day.
|
Also during 2000, AutoNation cemented its position as
the leading online automotive retailer by generating more than $1.5
billion of vehicle sales via the Internet.
The year was filled with other signposts of success.
During 2000, AutoNation:
- Grew earnings before interest, tax, depreciation and amortization
(EBITDA) 25% to $892 million, giving us tremendous financial flexibility
- Improved fourth quarter same-store operating margins by 70
basis points to an industry-leading 5% versus 4.3% at the same
time last year
- Cut corporate overhead 34% versus 1999 and 44% versus the run
rate in fourth quarter 1999
- Sold more than one million cars and light trucks, including
fleet sales, for the second consecutive year
During the year, AutoNation used its cash flow
to upgrade and acquire dealerships, retire more than $300 million
of long-term debt and to repurchase $189 million worth of our shares,
or 7% of our shares outstanding.
The fact that AutoNation generated this financial
performance while simultaneously re-focusing its energy on becoming
a pure-play automotive retailer is a tribute to the talent and
energy of our 31,000 employees.
Building on Success in 2001
How do we build on this success? First, we
leverage our sustainable competitive advantages. Then, we enhance
this performance with a solid growth plan.
What are those advantages? The first would
undoubtedly be our scale. AutoNation is the largest competitor
in one of the largest retail categories in America: the nearly
$1 trillion market that comprises the sale, financing, servicing
and repair of new and used vehicles. On average, we retail about
2,300 cars every day, and we service another 25,000 vehicles as
well. On a revenue basis, AutoNation is more than three times
larger than its nearest competitor and, in fact, is larger than
all of the other publicly traded auto retailers combined. Measured
against other public companies of all types, at #63 on the 2000
Fortune 500, AutoNation is one of the largest companies in America.
That size gives AutoNation a sustainable competitive advantage
in such key areas as cost of capital and volume purchasing on
products and services like insurance, advertising and auto parts.
Another advantage is the critical mass that we
have achieved in many of the fastest growing markets in America. This
includes great markets like Las Vegas, Phoenix, Dallas, Houston, Orlando,
Tampa, Denver, Atlanta, Los Angeles and South Florida, among others.
Our goal is to ensure that if you live or work in one of these markets,
you cannot make an intelligent choice about buying or servicing your
vehicle without considering one of our dealerships. Scale and critical
mass go hand-in-hand. For example, our large size in specific markets
has enabled AutoNation to negotiate advertising rate reductions of
as much as 40%.
A third advantage is the fact that AutoNation has
established framework agreements with all of the major automotive
manufacturers. These agreements set the tone for long-term, mutually-rewarding
relationships with our primary suppliers and provide a clear growth
path.
The fourth competitive advantage is our strong
balance sheet. With a non-vehicle debt-to-equity ratio of about 22%,
AutoNation has the flexibility to take advantage of important growth
opportunities as they arise.
And finally, AutoNation enjoys a leadership position
in automotive e-Commerce, using the Web to sell more vehicles than
any other automotive retailer. Our alliances with America Online and
Microsoft's MSN Carpoint web site leverage our leadership position
and our proprietary e-Commerce infrastructure by providing a continuous
stream of high-quality sales leads for our company-owned dealerships
and for dealers who subscribe to the AutoNation e-Commerce Network.
With this record of financial achievement in 2000,
and with these sustainable competitive advantages as the foundation
for AutoNation's continued progress, we invite you to read the balance
of this report to learn more about how AutoNation will grow in the
years ahead.
As always, we thank you for your continued support.
| |
|
|
|
|
|
H. Wayne Huizenga
Chairman of the Board |
Mike Jackson
Chief Executive Officer |
Michael E. Maroone
President, Chief Operating Officer |
|
|
|
To
Our Shareholders 
