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AutoNation Inc., the largest auto retailer in the U.S., said Wednesday that its first-quarter performance far exceeded Wall Street's expectations in a sign the beleaguered auto market is beginning to recover, The Wall Street Journal reported.
The company also announced plans to refinance its term loan and credit facility and to sell up to $400 million in debt to fund the buyback of other borrowings.
AutoNation said an 18 percent increase in new-vehicle sales helped drive revenue to $2.8 billion for the quarter, up $400 million from a year ago.
The outlook is a bright spot following a disastrous 2009 for the auto industry, when the economic slump and bankruptcies of General Motors Co. and Chrysler LLC drove sales to multidecade lows.
"We are pleased with our performance in a recovering but historically weak auto retail market. We saw a continuation of the gradual industry recovery in the first quarter of 2010," AutoNation CEO Mike Jackson said in a statement.
Industry analysts, encouraged by a strong start to the March, are predicting monthly sales could hit a level the industry hasn't seen in 18 months except for last August, when "cash for clunkers" rebates spurred sales. Auto makers plan to release monthly sales figures on Thursday.
Ft. Lauderdale, Fla.-based AutoNation expects first-quarter earnings of 29 cents to 32 cents a share on revenue of $2.8 billion. Analysts polled by Thomson Reuters recently projected 30 cents and $2.7 billion, respectively.
The company is offering to repurchase notes for slightly above face value, including an early tender premium, for $146.1 million of floating-rate senior notes due 2013 and $132.6 million of senior notes maturing a year later.
Separately, the retailer is asking lenders to extend its term loan and revolving credit facility by two years. AutoNation's interest rate would increase by about 1.375% and it would reduce the combined amounts by $164 million to $1.1 billion. The credit extension and debt moves are expected to cut 2010 earnings by about six cents a share, excluding transactions expenses.
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