Sonic Automotive, Inc. Reports 21% Vehicle Revenue Growth; Adjusted Continuing Ops Profit Up 41% Over Prior Year Quarter
 |
CHARLOTTE, N.C., July 29, 2010: Sonic Automotive, Inc. , the nation's third-largest automotive retailer, today reported that 2010 second quarter adjusted earnings from continuing operations were $15.6 million, up 41% from adjusted earnings from continuing operations in the same prior year period. On a per share basis, the Company earned an adjusted $0.27 per diluted share from continuing operations, compared to an adjusted $0.23 per diluted share from continuing operations in the same prior year quarter. The adjustments, which are related primarily to debt refinancing activities and mark-to-market adjustments on interest rate swaps, are detailed further in the attached tables. During the second quarter, the Company completed the retirement of $200 million of our 8.625% senior subordinated notes using proceeds from a debt offering that was completed in March 2010.
Business Overview - Revenue Growth In Every Business Line Over Q2 of Last Year
Commenting on the quarter, B. Scott Smith, the Company's President, said, "We are pleased with the growth in both revenues and profits over the second quarter of last year. Our new vehicle business is up both sequentially and over the same period last year as we continue to see economic stabilization in certain segments of our geographic footprint. The growth in our used vehicle business continues to drive incremental revenue in our fixed operations and F&I departments. Our strategy for some time has been focused on standardizing our operating procedures through the rollout of our operational playbooks. Results this quarter demonstrate one of the primary benefits of our operational playbooks - they create growth opportunities not just in their specific area of the business but across all of our business lines."
New and Used Vehicles - Revenue Increases 19% and 23%, Respectively
New vehicle retail revenue increased 19% and used vehicle retail revenue increased 23% for the second quarter of 2010 compared to the same quarter last year. Jeff Dyke, the Company's EVP of Operations, stated, "We are pleased with our new vehicle growth, particularly given that our volume declines in 2009 were not as severe as what the overall industry experienced due to our favorable brand and geographic mix. Our dealerships continue to take market share and outperform the competition in their local markets. We are excited to announce that our New Car Playbook will be introduced to our stores later this year. We expect it to provide us many of the same successes that we have already received from our proven Used Vehicle Playbook. We also continue to be very pleased with our used vehicle volume growth especially when we consider the 20% growth comes on top of 12% growth in 2009. We continue to show that the used car business has tremendous upside potential as the second quarter was our largest used vehicle volume and gross profit quarter in our Company's history."
Service, Parts & Body Shop - Revenue and Gross Profit Both Increase
Sonic's Service, Parts & Body Shop revenue for the second quarter was up approximately 5% compared to the prior year quarter, while gross profit dollars were up over 3%. Mr. Dyke stated, "Our operational strategies in parts and service are specifically designed to increase the non-warranty pieces of our business to respond to improved vehicle quality, fewer units in operation and changing warranty programs. We have seen consistent growth in both our customer pay business and in the revenues we earn for reconditioning work done on pre-owned vehicles."
Presentation materials for the Company's July 29, 2010 earnings conference call at 11:00 A.M. (Eastern) can be accessed on the Company's website at www.sonicautomotive.com by clicking on the "For Investors" tab and choosing "Webcasts & Presentations" on the right side of the monitor.
To access the live broadcast of the call over the Internet go to: www.ccbn.com or www.sonicautomotive.com
A live audio of the call will be accessible to the public by calling (877) 791-3416. International callers dial (706) 643-0958. Callers should dial in approximately 10 minutes before the call begins.
A conference call replay will be available one hour following the call for seven days and can be accessed by calling: 800-642-1687, International callers dial (706) 645-9291 Conference ID: 86991682
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C.,
is the nation's third-largest automotive retailer, operating 140
franchises. Sonic can be reached on the web at
www.sonicautomotive.com.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Three Months Ended
As As
Reported Adjusted
6/30/2010 Adjustments 6/30/2010
--------- ----------- ---------
Revenues
--------
New retail vehicles $848,610 $- $848,610
------------------- -------- --- --------
Fleet vehicles 53,843 - 53,843
-------------- ------ --- ------
Total new vehicles 902,453 - 902,453
------------------ ------- --- -------
Used vehicles 470,365 - 470,365
------------- ------- --- -------
Wholesale vehicles 30,111 - 30,111
------------------ ------ --- ------
Total vehicles 1,402,929 - 1,402,929
-------------- --------- --- ---------
Parts, service and collision
repair 287,095 - 287,095
---------------------------- ------- --- -------
Finance, insurance and other 45,985 - 45,985
---------------------------- ------ --- ------
Total revenues 1,736,009 - 1,736,009
-------------- --------- --- ---------
Total gross profit 285,019 - 285,019
------------------ ------- --- -------
SG&A expenses (228,372) 647 (227,725)
------------- -------- --- --------
Impairment charges (1) (1)
------------------ --- ---
Depreciation (8,675) - (8,675)
------------ ------ --- ------
Operating income 47,971 647 48,618
---------------- ------ --- ------
Interest expense, floor plan (5,507) - (5,507)
---------------------------- ------ --- ------
Interest expense, other, net (15,683) 519 (15,164)
---------------------------- ------- --- -------
Interest expense, non-cash,
convertible debt (1,730) - (1,730)
--------------------------- ------ --- ------
Interest expense, non-cash,
cash flow swaps (2,235) 2,235 -
-----
Other (expense) / income, net (7,235) 7,259 24
----------------------------- ------ ----- ---
Income /(loss) from
continuing operations before
taxes 15,581 10,660 26,241
Income tax (expense) /
benefit (6,300) (4,310) (10,610)
---------------------- ------ ------ -------
Income /(loss) from
continuing operations 9,281 6,350 15,631
Income /(Loss) from
discontinued operations (845) - (845)
------------------------ ---- --- ----
Net income $8,436 $6,350 $14,786
---------- ------ ------ -------
Diluted:
--------
Weighted average common
shares outstanding 65,807 - 65,807
----------------------- ------ --- ------
Earnings /(loss) per share
from continuing operations $0.17 $0.10 $0.27
--------------------------- ----- ----- -----
Earnings /(loss) per share
from discontinued operations (0.01) (0.01) (0.02)
----------------------------- ----- ----- -----
Cumulative effect of change
in accounting principle
---------------------------
Earnings / (loss) per share $0.16 $0.09 $0.25
--------------------------- ----- ----- -----
Gross Margin Data (Continuing
Operations):
-----------------------------
Retail new vehicles 7.1% 7.1%
------------------- --- ---
Fleet vehicles 1.9% 1.9%
-------------- --- ---
Total new vehicles 6.8% 6.8%
------------------ --- ---
Used vehicles retail 7.7% 7.7%
-------------------- --- ---
Total vehicles retail 7.1% 7.1%
--------------------- --- ---
Wholesale vehicles (6.1%) (6.1%)
------------------ ------ ------
Parts, service and collision
repair 49.9% 49.9%
---------------------------- ---- ----
Finance, insurance and other 100.0% 100.0%
---------------------------- ----- -----
Overall gross margin 16.4% 16.4%
-------------------- ---- ----
SG&A Expenses (Continuing
Operations):
-------------------------
Personnel $135,845 $- $135,845
--------- -------- --- --------
Advertising 12,964 - 12,964
----------- ------ --- ------
Facility rent 32,717 - 32,717
------------- ------ --- ------
Other 46,846 (647) 46,199
----- ------ ---- ------
Total $228,372 $(647) $227,725
----- -------- ----- --------
SG&A Expenses as % of Gross
Profit 80.1% 79.9%
--------------------------- ---- ----
Operating Margin % 2.8% 2.8%
------------------ --- ---
Unit Data (Continuing
Operations):
---------------------
New retail units 24,854
---------------- ------
Fleet units 2,272
----------- -----
New units 27,126
--------- ------
Used units 24,624
---------- ------
Total units retailed 51,750
-------------------- ------
Wholesale units 5,266
--------------- -----
Other Data:
-----------
Same store revenue percentage
changes:
-----------------------------
New retail 19.3%
---------- ----
Fleet (12.0%)
----- -------
Total New Vehicles 16.9%
------------------ ----
Used 23.1%
---- ----
Parts, service and collision
repair 4.8%
---------------------------- ---
Finance, insurance and other 18.4%
---------------------------- ----
Total 15.6%
----- ----
Description of Adjustments: 2010 2009
---- ----
Continuing Operations:
Hail damage $647 $-
Debt restructuring 7,259 6,712
Cash flow swaps 2,235 1,908
Impairment charges - 5,030
Double-carry interest 519 -
Total pretax $10,660 $13,650
Tax effect (4,310) (6,143)
Total $6,350 $7,507
====== ======
Discontinued Operations:
Impairment charges $- $1,880
Tax effect - (567)
--- ----
Total $- $1,313
=== ======
Three Months Ended
As As
Reported Adjusted
6/30/2009 Adjustments 6/30/2009
--------- ----------- ---------
Revenues
--------
New retail vehicles $711,083 $- $711,083
------------------- -------- --- --------
Fleet vehicles 61,213 - 61,213
-------------- ------ --- ------
Total new vehicles 772,296 - 772,296
------------------ ------- --- -------
Used vehicles 382,091 - 382,091
------------- ------- --- -------
Wholesale vehicles 33,903 - 33,903
------------------ ------ --- ------
Total vehicles 1,188,290 - 1,188,290
-------------- --------- --- ---------
Parts, service and collision
repair 274,032 - 274,032
---------------------------- ------- --- -------
Finance, insurance and other 38,847 - 38,847
---------------------------- ------ --- ------
Total revenues 1,501,169 - 1,501,169
-------------- --------- --- ---------
Total gross profit 259,699 - 259,699
------------------ ------- --- -------
SG&A expenses (205,767) - (205,767)
------------- -------- --- --------
Impairment charges (5,030) 5,030 -
------------------ ------ ----- ---
Depreciation (8,183) - (8,183)
------------ ------ --- ------
Operating income 40,719 5,030 45,749
---------------- ------ ----- ------
Interest expense, floor plan (5,492) - (5,492)
---------------------------- ------ --- ------
Interest expense, other, net (23,216) 6,712 (16,504)
---------------------------- ------- ----- -------
Interest expense, non-cash,
convertible debt (3,643) - (3,643)
--------------------------- ------ --- ------
Interest expense, non-cash,
cash flow swaps (1,908) 1,908 -
-----
Other (expense) / income, net 20 - 20
----------------------------- --- --- ---
Income /(loss) from
continuing operations before
taxes 6,480 13,650 20,130
Income tax (expense) /
benefit (2,916) (6,143) (9,059)
---------------------- ------ ------ ------
Income /(loss) from
continuing operations 3,564 7,507 11,071
Income /(Loss) from
discontinued operations (3,538) 1,313 (2,225)
------------------------ ------ ----- ------
Net income $26 $8,820 $8,846
---------- --- ------ ------
Diluted:
--------
Weighted average common
shares outstanding 41,604 - 53,810
----------------------- ------ --- ------
Earnings /(loss) per share
from continuing operations $0.08 $0.15 $0.23
--------------------------- ----- ----- -----
Earnings /(loss) per share
from discontinued operations (0.08) 0.04 (0.04)
----------------------------- ----- ---- -----
Cumulative effect of change
in accounting principle
---------------------------
Earnings / (loss) per share $0.00 $0.19 $0.19
--------------------------- ----- ----- -----
Gross Margin Data (Continuing
Operations):
-----------------------------
Retail new vehicles 7.0% 7.0%
------------------- --- ---
Fleet vehicles 3.6% 3.6%
-------------- --- ---
Total new vehicles 6.8% 6.8%
------------------ --- ---
Used vehicles retail 8.1% 8.1%
-------------------- --- ---
Total vehicles retail 7.5% 7.5%
--------------------- --- ---
Wholesale vehicles (3.7%) (3.7%)
------------------ ------ ------
Parts, service and collision
repair 50.6% 50.6%
---------------------------- ---- ----
Finance, insurance and other 100.0% 100.0%
---------------------------- ----- -----
Overall gross margin 17.3% 17.3%
-------------------- ---- ----
SG&A Expenses (Continuing
Operations):
-------------------------
Personnel $117,740 $- $117,740
--------- -------- --- --------
Advertising 11,220 - 11,220
----------- ------ --- ------
Facility rent 32,132 - 32,132
------------- ------ --- ------
Other 44,675 - 44,675
----- ------ --- ------
Total $205,767 $- $205,767
----- -------- --- --------
SG&A Expenses as % of Gross
Profit 79.2% 79.2%
--------------------------- ---- ----
Operating Margin % 2.7% 3.0%
------------------ --- ---
Unit Data (Continuing
Operations):
---------------------
New retail units 21,574
---------------- ------
Fleet units 2,572
----------- -----
New units 24,146
--------- ------
Used units 20,568
---------- ------
Total units retailed 44,714
-------------------- ------
Wholesale units 5,313
--------------- -----
Other Data:
-----------
Same store revenue percentage
changes:
-----------------------------
New retail (31.8%)
---------- -------
Fleet (47.7%)
----- -------
Total New Vehicles (33.4%)
------------------ -------
Used 3.5%
---- ---
Parts, service and collision
repair (3.8%)
---------------------------- ------
Finance, insurance and other (25.7%)
---------------------------- -------
Total (22.9%)
----- -------
Description of Adjustments:
Continuing Operations:
Hail damage
Debt restructuring
Cash flow swaps
Impairment charges
Double-carry interest
Total pretax
Tax effect
Total
Discontinued Operations:
Impairment charges
Tax effect
Total
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Six Months Ended
As As
Reported Adjusted
6/30/2010 Adjustments 6/30/2010
--------- ----------- ---------
Revenues
--------
New retail vehicles $1,589,555 $- $1,589,555
------------------- ---------- --- ----------
Fleet vehicles 97,495 - 97,495
-------------- ------ --- ------
Total new vehicles 1,687,050 - 1,687,050
------------------ --------- --- ---------
Used vehicles 892,656 - 892,656
------------- ------- --- -------
Wholesale vehicles 61,389 - 61,389
------------------ ------ --- ------
Total vehicles 2,641,095 - 2,641,095
-------------- --------- --- ---------
Parts, service and collision
repair 565,682 - 565,682
---------------------------- ------- --- -------
Finance, insurance and other 86,959 - 86,959
---------------------------- ------ --- ------
Total revenues 3,293,736 - 3,293,736
-------------- --------- --- ---------
Total gross profit 553,343 - 553,343
------------------ ------- --- -------
SG&A expenses (451,865) 647 (451,218)
------------- -------- --- --------
Impairment charges (45) (45)
------------------ --- ---
Depreciation (17,000) - (17,000)
------------ ------- --- -------
Operating income 84,433 647 85,080
---------------- ------ --- ------
Interest expense, floor plan (10,413) - (10,413)
---------------------------- ------- --- -------
Interest expense, other, net (32,873) 1,464 (31,409)
---------------------------- ------- ----- -------
Interest expense, non-cash,
convertible debt (3,406) - (3,406)
--------------------------- ------ --- ------
Interest expense, non-cash,
cash flow swaps (3,918) 3,918 -
-----
Other (expense) / income, net (7,171) 7,259 88
----------------------------- ------ ----- ---
Income /(loss) from
continuing operations before
taxes 26,652 13,288 39,940
Income tax (expense) /
benefit (11,061) (5,514) (16,575)
---------------------- ------- ------ -------
Income /(loss) from
continuing operations 15,591 7,774 23,365
Income /(Loss) from
discontinued operations (3,001) - (3,001)
------------------------ ------ --- ------
Net income $12,590 $7,774 $20,364
---------- ------- ------ -------
Diluted:
--------
Weighted average common
shares outstanding 52,749 - 65,639
----------------------- ------ --- ------
Earnings /(loss) per share
from continuing operations $0.29 $0.13 $0.42
--------------------------- ----- ----- -----
Earnings /(loss) per share
from discontinued operations (0.05) - (0.05)
----------------------------- ----- --- -----
Cumulative effect of change
in accounting principle
---------------------------
Earnings / (loss) per share $0.24 $0.13 $0.37
--------------------------- ----- ----- -----
Gross Margin Data (Continuing
Operations):
-----------------------------
Retail new vehicles 7.1% 7.1%
------------------- --- ---
Fleet vehicles 2.7% 2.7%
-------------- --- ---
Total new vehicles 6.9% 6.9%
------------------ --- ---
Used vehicles retail 7.8% 7.8%
-------------------- --- ---
Total vehicles retail 7.2% 7.2%
--------------------- --- ---
Wholesale vehicles (4.1%) (4.1%)
------------------ ------ ------
Parts, service and collision
repair 50.1% 50.1%
---------------------------- ---- ----
Finance, insurance and other 100.0% 100.0%
---------------------------- ----- -----
Overall gross margin 16.8% 16.8%
-------------------- ---- ----
SG&A Expenses (Continuing
Operations):
-------------------------
Personnel $266,821 $- $266,821
--------- -------- --- --------
Advertising 24,294 - 24,294
----------- ------ --- ------
Facility rent 66,328 - 66,328
------------- ------ --- ------
Other 94,422 (647) 93,775
----- ------ ---- ------
Total $451,865 $(647) $451,218
----- -------- ----- --------
SG&A Expenses as % of Gross
Profit 81.7% 81.5%
--------------------------- ---- ----
Operating Margin % 2.6% 2.6%
------------------ --- ---
Unit Data (Continuing
Operations):
---------------------
New retail units 46,440
---------------- ------
Fleet units 4,022
----------- -----
New units 50,462
--------- ------
Used units 46,326
---------- ------
Total units retailed 96,788
-------------------- ------
Wholesale units 10,459
--------------- ------
Other Data:
-----------
Same store revenue percentage
changes:
-----------------------------
New retail 16.7%
---------- ----
Fleet (15.5%)
----- -------
Total New Vehicles 14.2%
------------------ ----
Used 25.7%
---- ----
Parts, service and collision
repair 3.9%
---------------------------- ---
Finance, insurance and other 17.5%
---------------------------- ----
Total 14.4%
----- ----
Description of Adjustments: 2010 2009
---- ----
Continuing Operations:
Hail damage $647 $-
Debt restructuring 7,259 8,760
Cash flow swaps 3,918 3,179
Impairment charges - 5,087
Double-carry interest 1,464 -
Total pretax $13,288 $17,026
Tax effect (5,514) (7,662)
Total $7,774 $9,364
====== ======
Discontinued Operations:
Impairment charges $- $3,408
Tax effect - (1,016)
--- ------
Total $- $2,392
=== ======
Six Months Ended
As As
Reported Adjusted
6/30/2009 Adjustments 6/30/2009
--------- ----------- ---------
Revenues
--------
New retail vehicles $1,362,443 $- $1,362,443
------------------- ---------- --- ----------
Fleet vehicles 115,376 - 115,376
-------------- ------- --- -------
Total new vehicles 1,477,819 - 1,477,819
------------------ --------- --- ---------
Used vehicles 710,381 - 710,381
------------- ------- --- -------
Wholesale vehicles 71,359 - 71,359
------------------ ------ --- ------
Total vehicles 2,259,559 - 2,259,559
-------------- --------- --- ---------
Parts, service and collision
repair 544,701 - 544,701
---------------------------- ------- --- -------
Finance, insurance and other 74,000 - 74,000
---------------------------- ------ --- ------
Total revenues 2,878,260 - 2,878,260
-------------- --------- --- ---------
Total gross profit 506,672 - 506,672
------------------ ------- --- -------
SG&A expenses (411,231) - (411,231)
------------- -------- --- --------
Impairment charges (5,087) 5,087 -
------------------ ------ ----- ---
Depreciation (15,776) - (15,776)
------------ ------- --- -------
Operating income 74,578 5,087 79,665
---------------- ------ ----- ------
Interest expense, floor plan (10,660) - (10,660)
---------------------------- ------- --- -------
Interest expense, other, net (39,950) 8,760 (31,190)
---------------------------- ------- ----- -------
Interest expense, non-cash,
convertible debt (6,262) - (6,262)
--------------------------- ------ --- ------
Interest expense, non-cash,
cash flow swaps (3,179) 3,179 -
-----
Other (expense) / income, net 70 - 70
----------------------------- --- --- ---
Income /(loss) from
continuing operations before
taxes 14,597 17,026 31,623
Income tax (expense) /
benefit (6,569) (7,662) (14,231)
---------------------- ------ ------ -------
Income /(loss) from
continuing operations 8,028 9,364 17,392
Income /(Loss) from
discontinued operations (6,324) 2,392 (3,932)
------------------------ ------ ----- ------
Net income $1,704 $11,756 $13,460
---------- ------ ------- -------
Diluted:
--------
Weighted average common
shares outstanding 40,974 - 47,111
----------------------- ------ --- ------
Earnings /(loss) per share
from continuing operations $0.19 $0.20 $0.39
--------------------------- ----- ----- -----
Earnings /(loss) per share
from discontinued operations (0.15) 0.07 (0.08)
----------------------------- ----- ---- -----
Cumulative effect of change
in accounting principle
---------------------------
Earnings / (loss) per share $0.04 $0.27 $0.31
--------------------------- ----- ----- -----
Gross Margin Data (Continuing
Operations):
-----------------------------
Retail new vehicles 6.9% 6.9%
------------------- --- ---
Fleet vehicles 3.9% 3.9%
-------------- --- ---
Total new vehicles 6.7% 6.7%
------------------ --- ---
Used vehicles retail 8.7% 8.7%
-------------------- --- ---
Total vehicles retail 7.4% 7.4%
--------------------- --- ---
Wholesale vehicles (1.8%) (1.8%)
------------------ ------ ------
Parts, service and collision
repair 50.1% 50.1%
---------------------------- ---- ----
Finance, insurance and other 100.0% 100.0%
---------------------------- ----- -----
Overall gross margin 17.6% 17.6%
-------------------- ---- ----
SG&A Expenses (Continuing
Operations):
-------------------------
Personnel $232,858 $- $232,858
--------- -------- --- --------
Advertising 22,115 - 22,115
----------- ------ --- ------
Facility rent 65,111 - 65,111
------------- ------ --- ------
Other 91,147 - 91,147
----- ------ --- ------
Total $411,231 $- $411,231
----- -------- --- --------
SG&A Expenses as % of Gross
Profit 81.2% 81.2%
--------------------------- ---- ----
Operating Margin % 2.6% 2.8%
------------------ --- ---
Unit Data (Continuing
Operations):
---------------------
New retail units 41,168
---------------- ------
Fleet units 4,827
----------- -----
New units 45,995
--------- ------
Used units 37,924
---------- ------
Total units retailed 83,919
-------------------- ------
Wholesale units 11,826
--------------- ------
Other Data:
-----------
Same store revenue percentage
changes:
-----------------------------
New retail (32.5%)
---------- -------
Fleet (47.9%)
----- -------
Total New Vehicles (34.0%)
------------------ -------
Used (2.2%)
---- ------
Parts, service and collision
repair (4.2%)
---------------------------- ------
Finance, insurance and other (27.6%)
---------------------------- -------
Total (24.3%)
----- -------
Description of Adjustments:
Continuing Operations:
Hail damage
Debt restructuring
Cash flow swaps
Impairment charges
Double-carry interest
Total pretax
Tax effect
Total
Discontinued Operations:
Impairment charges
Tax effect
Total
