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By Michael Ellis
DETROIT, April 28 (Reuters) - AutoNation Inc. , the nation's largest dealer of new and used vehicles, said on Monday that its first-quarter earnings more than doubled, partly from the additional income of a tax settlement.
AutoNation reported a first-quarter net profit of $185 million, or 63 cents a share, up from earnings of $91.7 million, or 28 cents a share, in the year-ago quarter.
The Fort Lauderdale, Florida-based company said its earnings include a benefit of $127.5 million, or 43 cents per share, resulting from the settlement with the U.S. Internal Revenue Service on the tax treatment of some past transactions.
Excluding one-time items, AutoNation recorded a profit from continuing operations of 29 cents per share, above Wall Street forecasts, but in-line with the company's February forecast of 28 cents to 30 cents per share.
Analysts on average had expected the company to earn 27 cents per share excluding one-time items, according to research firm Thomson First Call.
AutoNation shares climbed 35 cents or 2.6 percent to $13.80 on the New York Stock Exchange.
The company said its second-quarter earnings would be lower than Wall Street estimates, and it trimmed its 2003 forecast due to interest expenses resulting from the tax settlement. The company stressed, however, that its earnings outlook for its core operations, excluding the interest expense, was unchanged.
AutoNation said that, as a result of the tax settlement, it expects to incur pre-tax interest expense of $20 million or 4 cents per share for the full year, including $1.9 million incurred in the first quarter.
As a result, the company cut its 2003 earnings per share estimate by 4 cents to a range of $1.21 to $1.26 per share, down from $1.25 to $1.30 per share previously.
For the second quarter, the company expects earnings per share from 29 cents to 31 cents, below analysts' estimates of 32 cents per share, according to Thomson First Call. AutoNation said that interest expense resulting from the tax settlement would cost it about one cent per share in the second quarter.
Revenues fell to $4.46 billion from $4.75 billion previously. The company said it offset lower revenues with share repurchases and cost cuts to boost its earnings.
"Certainly in the first quarter, we had the prospect of war, and an actual war," AutoNation Chairman and Chief Executive Officer Mike Jackson told Reuters. "Anytime you have an event such as that, it has a significant impact on large retail purchases whether its homes or automobiles. So it was a very tough quarter."
AutoNation also recorded two other one-time charges in the first quarter. They were a loss of $12.3 million after-tax, or 4 cents per share, from its exposure to bankrupt ANC Rental Corp. AutoNation's remaining after-tax exposure to ANC could be up to $12 million.
In addition, AutoNation took a charge of $14.6 million after-tax, or 5 cents per share, for an accounting change.