On the same day AutoNation, the Florida car retailer, reported a net loss of $232 million from operations in the first quarter, its CEO said it has returned $79 million in Paycheck Protection Program (PPP) loans.
Mike Jackson told CNBC’s “Squawk on the Street” the move was because a few weeks into the forgivable loan initiative, the Treasury Department and Secretary Steven Mnuchin revised the PPP’s rules after the firm received its forgivable loan.
“As can happen with government ... they changed their minds and basically Treasury and Mnuchin said if you are above a certain size, even if you dotted all the i’s and crossed all the t’s and gave all the money to your employees, we will not forgive it,” Jackson said. “Well, that’s a game changer and you can see many companies rethinking PPPs.”
Later, on a conference call with analysts, Jackson said AutoNation was clearly eligible for the loan and that publicly traded companies were not excluded.
“We are not in the position to go down that road,” he said, referring to paying back the cash. “I applaud the initial program but once they turned it back into a small business loan program with no clear path to loan forgiveness, we withdrew our pending applications and returned the money we received thus far.”
Founded in 1996, the company has more than 360 retail outlets. On Jan. 1 AutoNation had 26,000 employees. Jackson said the pandemic forced the company to furlough 7,000 employees, or 27 percent of its workforce, in March.
In its earnings report, the company reported $1.4 billion of liquidity, including over $750 million of cash and approximately $650 million of availability on our revolving credit facility as of May 8.
Year over year, same store sales fell by 52 percent during the first 10 days of April and slipped 19 percent during the final 10 days of the month. When all of April is compared to the same month one year ago, sales were off by 37 percent.
First quarter adjusted net income from operations was $82 million, or $0.91 per share, compared to adjusted net income from continuing operations of $86 million, or $0.95 per share, in the prior year period.
Same store first quarter 2020 revenue was $4.7 billion, a decrease of 5 percent compared to the same period a year ago.
“The COVID-19 pandemic has adversely impacted and is expected to continue to adversely impact AutoNation’s operations,” the company said in a statement.
AutoNation joins a handful of companies who have returned PPP loans. On Friday, Allbirds, a California footwear company, was the latest large company to return its PPP loan. Other companies that have returned PPP loans include the Los Angeles Lakers (returning $4.4 million), Taco Cabana and Pollo Tropical parent company Fiesta Restaurant Group ($15 million) and Shake Shack ($10 million), among others.