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EX-99.2 - EX-99.2 - SONIC AUTOMOTIVE INC | g24191exv99w2.htm |
8-K - FORM 8-K - SONIC AUTOMOTIVE INC | g24191e8vk.htm |
Exhibit 99.1
Sonic Automotive, Inc. Reports 21% Vehicle Revenue Growth;
Adjusted Continuing Ops Profit Up 41% Over Prior Year Quarter
Adjusted Continuing Ops Profit Up 41% Over Prior Year Quarter
CHARLOTTE, N.C. July 29, 2010 Sonic Automotive, Inc. (NYSE: SAH), the nations
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 Companys 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 Companys 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
Companys history.
Service, Parts & Body Shop Revenue and Gross Profit Both Increase
Sonics 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 Companys July 29, 2010 earnings conference call at 11:00 A.M.
(Eastern) can be accessed on the Companys 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 nations
third-largest automotive retailer, operating 140 franchises. Sonic can be reached on the web at
www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to economic
stabilization and business improvement, future success and impacts from the implementation of our
various operational playbooks, future cash flow generation, growth opportunities and future debt
retirement. There are many factors that affect managements views about future events and trends
of the Companys business. These factors involve risk and uncertainties that could cause actual
results or trends to differ materially from managements view, including without limitation,
economic conditions in the markets in which we operate, new and used vehicle sales volume, the
success of our operational strategies, the rate and timing of overall economic recovery or further
decline and the risk factors described in the Companys annual report on Form 10-K for the year
ending December 31, 2009 and the quarterly report on Form 10-Q for the quarter ending March 31,
2010. The Company does not undertake any obligation to update forward-looking information.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||||
6/30/2010 | Adjustments | 6/30/2010 | 6/30/2009 | Adjustments | 6/30/2009 | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
New retail vehicles |
$ | 848,610 | $ | | $ | 848,610 | $ | 711,083 | $ | | $ | 711,083 | ||||||||||||
Fleet vehicles |
53,843 | | 53,843 | 61,213 | | 61,213 | ||||||||||||||||||
Total new vehicles |
902,453 | | 902,453 | 772,296 | | 772,296 | ||||||||||||||||||
Used vehicles |
470,365 | | 470,365 | 382,091 | | 382,091 | ||||||||||||||||||
Wholesale vehicles |
30,111 | | 30,111 | 33,903 | | 33,903 | ||||||||||||||||||
Total vehicles |
1,402,929 | | 1,402,929 | 1,188,290 | | 1,188,290 | ||||||||||||||||||
Parts, service and collision repair |
287,095 | | 287,095 | 274,032 | | 274,032 | ||||||||||||||||||
Finance, insurance and other |
45,985 | | 45,985 | 38,847 | | 38,847 | ||||||||||||||||||
Total revenues |
1,736,009 | | 1,736,009 | 1,501,169 | | 1,501,169 | ||||||||||||||||||
Total gross profit |
285,019 | | 285,019 | 259,699 | | 259,699 | ||||||||||||||||||
SG&A expenses |
(228,372 | ) | 647 | (227,725 | ) | (205,767 | ) | | (205,767 | ) | ||||||||||||||
Impairment charges |
(1 | ) | (1 | ) | (5,030 | ) | 5,030 | | ||||||||||||||||
Depreciation |
(8,675 | ) | | (8,675 | ) | (8,183 | ) | | (8,183 | ) | ||||||||||||||
Operating income |
47,971 | 647 | 48,618 | 40,719 | 5,030 | 45,749 | ||||||||||||||||||
Interest expense, floor plan |
(5,507 | ) | | (5,507 | ) | (5,492 | ) | | (5,492 | ) | ||||||||||||||
Interest expense, other, net |
(15,683 | ) | 519 | (15,164 | ) | (23,216 | ) | 6,712 | (16,504 | ) | ||||||||||||||
Interest expense, non-cash, convertible debt |
(1,730 | ) | | (1,730 | ) | (3,643 | ) | | (3,643 | ) | ||||||||||||||
Interest expense, non-cash, cash flow swaps |
(2,235 | ) | 2,235 | | (1,908 | ) | 1,908 | | ||||||||||||||||
Other (expense) / income, net |
(7,235 | ) | 7,259 | 24 | 20 | | 20 | |||||||||||||||||
Income / (loss) from continuing operations before taxes |
15,581 | 10,660 | 26,241 | 6,480 | 13,650 | 20,130 | ||||||||||||||||||
Income tax (expense) / benefit |
(6,300 | ) | (4,310 | ) | (10,610 | ) | (2,916 | ) | (6,143 | ) | (9,059 | ) | ||||||||||||
Income / (loss) from continuing operations |
9,281 | 6,350 | 15,631 | 3,564 | 7,507 | 11,071 | ||||||||||||||||||
Income / (Loss) from discontinued operations |
(845 | ) | | (845 | ) | (3,538 | ) | 1,313 | (2,225 | ) | ||||||||||||||
Net income |
$ | 8,436 | $ | 6,350 | $ | 14,786 | $ | 26 | $ | 8,820 | $ | 8,846 | ||||||||||||
Diluted: |
||||||||||||||||||||||||
Weighted average common shares outstanding |
65,807 | | 65,807 | 41,604 | | 53,810 | ||||||||||||||||||
Earnings / (loss) per share from continuing operations |
$ | 0.17 | $ | 0.10 | $ | 0.27 | $ | 0.08 | $ | 0.15 | $ | 0.23 | ||||||||||||
Earnings / (loss) per share from discontinued operations |
(0.01 | ) | (0.01 | ) | (0.02 | ) | (0.08 | ) | 0.04 | (0.04 | ) | |||||||||||||
Cumulative effect of change in accounting principle |
||||||||||||||||||||||||
Earnings / (loss) per share |
$ | 0.16 | $ | 0.09 | $ | 0.25 | $ | 0.00 | $ | 0.19 | $ | 0.19 | ||||||||||||
Gross Margin Data (Continuing Operations): |
||||||||||||||||||||||||
Retail new vehicles |
7.1 | % | 7.1 | % | 7.0 | % | 7.0 | % | ||||||||||||||||
Fleet vehicles |
1.9 | % | 1.9 | % | 3.6 | % | 3.6 | % | ||||||||||||||||
Total new vehicles |
6.8 | % | 6.8 | % | 6.8 | % | 6.8 | % | ||||||||||||||||
Used vehicles retail |
7.7 | % | 7.7 | % | 8.1 | % | 8.1 | % | ||||||||||||||||
Total vehicles retail |
7.1 | % | 7.1 | % | 7.5 | % | 7.5 | % | ||||||||||||||||
Wholesale vehicles |
(6.1 | %) | (6.1 | %) | (3.7 | %) | (3.7 | %) | ||||||||||||||||
Parts, service and collision repair |
49.9 | % | 49.9 | % | 50.6 | % | 50.6 | % | ||||||||||||||||
Finance, insurance and other |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
Overall gross margin |
16.4 | % | 16.4 | % | 17.3 | % | 17.3 | % | ||||||||||||||||
SG&A Expenses (Continuing Operations): |
||||||||||||||||||||||||
Personnel |
$ | 135,845 | $ | | $ | 135,845 | $ | 117,740 | $ | | $ | 117,740 | ||||||||||||
Advertising |
12,964 | | 12,964 | 11,220 | | 11,220 | ||||||||||||||||||
Facility rent |
32,717 | | 32,717 | 32,132 | | 32,132 | ||||||||||||||||||
Other |
46,846 | (647 | ) | 46,199 | 44,675 | | 44,675 | |||||||||||||||||
Total |
$ | 228,372 | $ | (647 | ) | $ | 227,725 | $ | 205,767 | $ | | $ | 205,767 | |||||||||||
SG&A Expenses as % of Gross Profit |
80.1 | % | 79.9 | % | 79.2 | % | 79.2 | % | ||||||||||||||||
Operating Margin % |
2.8 | % | 2.8 | % | 2.7 | % | 3.0 | % | ||||||||||||||||
Unit Data (Continuing Operations): |
||||||||||||||||||||||||
New retail units |
24,854 | 21,574 | ||||||||||||||||||||||
Fleet units |
2,272 | 2,572 | ||||||||||||||||||||||
New units |
27,126 | 24,146 | ||||||||||||||||||||||
Used units |
24,624 | 20,568 | ||||||||||||||||||||||
Total units retailed |
51,750 | 44,714 | ||||||||||||||||||||||
Wholesale units |
5,266 | 5,313 | ||||||||||||||||||||||
Other Data: |
||||||||||||||||||||||||
Same store revenue percentage changes: |
||||||||||||||||||||||||
New retail |
19.3 | % | (31.8 | %) | ||||||||||||||||||||
Fleet |
(12.0 | %) | (47.7 | %) | ||||||||||||||||||||
Total New Vehicles |
16.9 | % | (33.4 | %) | ||||||||||||||||||||
Used |
23.1 | % | 3.5 | % | ||||||||||||||||||||
Parts, service and collision repair |
4.8 | % | (3.8 | %) | ||||||||||||||||||||
Finance, insurance and other |
18.4 | % | (25.7 | %) | ||||||||||||||||||||
Total |
15.6 | % | (22.9 | %) | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Description of Adjustments: |
||||||||||||||||||||||||
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 | ||||||||||||||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Six Months Ended | Six Months Ended | |||||||||||||||||||||||
As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||||
6/30/2010 | Adjustments | 6/30/2010 | 6/30/2009 | Adjustments | 6/30/2009 | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
New retail vehicles |
$ | 1,589,555 | $ | | $ | 1,589,555 | $ | 1,362,443 | $ | | $ | 1,362,443 | ||||||||||||
Fleet vehicles |
97,495 | | 97,495 | 115,376 | | 115,376 | ||||||||||||||||||
Total new vehicles |
1,687,050 | | 1,687,050 | 1,477,819 | | 1,477,819 | ||||||||||||||||||
Used vehicles |
892,656 | | 892,656 | 710,381 | | 710,381 | ||||||||||||||||||
Wholesale vehicles |
61,389 | | 61,389 | 71,359 | | 71,359 | ||||||||||||||||||
Total vehicles |
2,641,095 | | 2,641,095 | 2,259,559 | | 2,259,559 | ||||||||||||||||||
Parts, service and collision repair |
565,682 | | 565,682 | 544,701 | | 544,701 | ||||||||||||||||||
Finance, insurance and other |
86,959 | | 86,959 | 74,000 | | 74,000 | ||||||||||||||||||
Total revenues |
3,293,736 | | 3,293,736 | 2,878,260 | | 2,878,260 | ||||||||||||||||||
Total gross profit |
553,343 | | 553,343 | 506,672 | | 506,672 | ||||||||||||||||||
SG&A expenses |
(451,865 | ) | 647 | (451,218 | ) | (411,231 | ) | | (411,231 | ) | ||||||||||||||
Impairment charges |
(45 | ) | (45 | ) | (5,087 | ) | 5,087 | | ||||||||||||||||
Depreciation |
(17,000 | ) | | (17,000 | ) | (15,776 | ) | | (15,776 | ) | ||||||||||||||
Operating income |
84,433 | 647 | 85,080 | 74,578 | 5,087 | 79,665 | ||||||||||||||||||
Interest expense, floor plan |
(10,413 | ) | | (10,413 | ) | (10,660 | ) | | (10,660 | ) | ||||||||||||||
Interest expense, other, net |
(32,873 | ) | 1,464 | (31,409 | ) | (39,950 | ) | 8,760 | (31,190 | ) | ||||||||||||||
Interest expense, non-cash, convertible debt |
(3,406 | ) | | (3,406 | ) | (6,262 | ) | | (6,262 | ) | ||||||||||||||
Interest expense, non-cash, cash flow swaps |
(3,918 | ) | 3,918 | | (3,179 | ) | 3,179 | | ||||||||||||||||
Other (expense) / income, net |
(7,171 | ) | 7,259 | 88 | 70 | | 70 | |||||||||||||||||
Income / (loss) from continuing operations before taxes |
26,652 | 13,288 | 39,940 | 14,597 | 17,026 | 31,623 | ||||||||||||||||||
Income tax (expense) / benefit |
(11,061 | ) | (5,514 | ) | (16,575 | ) | (6,569 | ) | (7,662 | ) | (14,231 | ) | ||||||||||||
Income / (loss) from continuing operations |
15,591 | 7,774 | 23,365 | 8,028 | 9,364 | 17,392 | ||||||||||||||||||
Income / (Loss) from discontinued operations |
(3,001 | ) | | (3,001 | ) | (6,324 | ) | 2,392 | (3,932 | ) | ||||||||||||||
Net income |
$ | 12,590 | $ | 7,774 | $ | 20,364 | $ | 1,704 | $ | 11,756 | $ | 13,460 | ||||||||||||
Diluted: |
||||||||||||||||||||||||
Weighted average common shares outstanding |
52,749 | | 65,639 | 40,974 | | 47,111 | ||||||||||||||||||
Earnings / (loss) per share from continuing operations |
$ | 0.29 | $ | 0.13 | $ | 0.42 | $ | 0.19 | $ | 0.20 | $ | 0.39 | ||||||||||||
Earnings / (loss) per share from discontinued operations |
(0.05 | ) | | (0.05 | ) | (0.15 | ) | 0.07 | (0.08 | ) | ||||||||||||||
Cumulative effect of change in accounting principle |
||||||||||||||||||||||||
Earnings / (loss) per share |
$ | 0.24 | $ | 0.13 | $ | 0.37 | $ | 0.04 | $ | 0.27 | $ | 0.31 | ||||||||||||
Gross Margin Data (Continuing Operations): |
||||||||||||||||||||||||
Retail new vehicles |
7.1 | % | 7.1 | % | 6.9 | % | 6.9 | % | ||||||||||||||||
Fleet vehicles |
2.7 | % | 2.7 | % | 3.9 | % | 3.9 | % | ||||||||||||||||
Total new vehicles |
6.9 | % | 6.9 | % | 6.7 | % | 6.7 | % | ||||||||||||||||
Used vehicles retail |
7.8 | % | 7.8 | % | 8.7 | % | 8.7 | % | ||||||||||||||||
Total vehicles retail |
7.2 | % | 7.2 | % | 7.4 | % | 7.4 | % | ||||||||||||||||
Wholesale vehicles |
(4.1 | %) | (4.1 | %) | (1.8 | %) | (1.8 | %) | ||||||||||||||||
Parts, service and collision repair |
50.1 | % | 50.1 | % | 50.1 | % | 50.1 | % | ||||||||||||||||
Finance, insurance and other |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
Overall gross margin |
16.8 | % | 16.8 | % | 17.6 | % | 17.6 | % | ||||||||||||||||
SG&A Expenses (Continuing Operations): |
||||||||||||||||||||||||
Personnel |
$ | 266,821 | $ | | $ | 266,821 | $ | 232,858 | $ | | $ | 232,858 | ||||||||||||
Advertising |
24,294 | | 24,294 | 22,115 | | 22,115 | ||||||||||||||||||
Facility rent |
66,328 | | 66,328 | 65,111 | | 65,111 | ||||||||||||||||||
Other |
94,422 | (647 | ) | 93,775 | 91,147 | | 91,147 | |||||||||||||||||
Total |
$ | 451,865 | $ | (647 | ) | $ | 451,218 | $ | 411,231 | $ | | $ | 411,231 | |||||||||||
SG&A Expenses as % of Gross Profit |
81.7 | % | 81.5 | % | 81.2 | % | 81.2 | % | ||||||||||||||||
Operating Margin % |
2.6 | % | 2.6 | % | 2.6 | % | 2.8 | % | ||||||||||||||||
Unit Data (Continuing Operations): |
||||||||||||||||||||||||
New retail units |
46,440 | 41,168 | ||||||||||||||||||||||
Fleet units |
4,022 | 4,827 | ||||||||||||||||||||||
New units |
50,462 | 45,995 | ||||||||||||||||||||||
Used units |
46,326 | 37,924 | ||||||||||||||||||||||
Total units retailed |
96,788 | 83,919 | ||||||||||||||||||||||
Wholesale units |
10,459 | 11,826 | ||||||||||||||||||||||
Other Data: |
||||||||||||||||||||||||
Same store revenue percentage changes: |
||||||||||||||||||||||||
New retail |
16.7 | % | (32.5 | %) | ||||||||||||||||||||
Fleet |
(15.5 | %) | (47.9 | %) | ||||||||||||||||||||
Total New Vehicles |
14.2 | % | (34.0 | %) | ||||||||||||||||||||
Used |
25.7 | % | (2.2 | %) | ||||||||||||||||||||
Parts, service and collision repair |
3.9 | % | (4.2 | %) | ||||||||||||||||||||
Finance, insurance and other |
17.5 | % | (27.6 | %) | ||||||||||||||||||||
Total |
14.4 | % | (24.3 | %) | ||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Description of Adjustments: |
||||||||||||||||||||||||
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 | ||||||||||||||||||||