Attached files
| file | filename |
|---|---|
| 8-K - 8-K - SONIC AUTOMOTIVE INC | q220188-k.htm |
| EX-99.2 - EXHIBIT 99.2 - SONIC AUTOMOTIVE INC | q22018earningscallslides.htm |
Exhibit 99.1
Sonic Automotive, Inc. Reports Second Quarter Results -
EchoPark Grows Revenue 267%
CHARLOTTE, N.C. – July 27, 2018 – Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported financial results for the second quarter of 2018.
• | Second quarter record revenue and gross profit of $2.5 billion and $362.4 million, respectively |
• | All-time record quarterly pre-owned retail unit sales of 35,779 units |
• | All-time record quarterly F&I gross profit per retail unit of $1,572 |
• | All-time record quarterly F&I gross of $104.1 million |
• | EchoPark stores retailed 7,459 units during the quarter, up 35.2% sequentially from first quarter 2018 |
Second Quarter 2018 Results
GAAP Basis
Net income from continuing operations for the second quarter of 2018 was $17.1 million, or $0.40 per diluted share. Comparatively, net income from continuing operations for the second quarter of 2017 was $12.3 million, or $0.27 per diluted share.
Adjusted Basis
Adjusted net income from continuing operations and related earnings per diluted share are non-GAAP financial measures. The schedules included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Adjusted net income from continuing operations for the second quarter of 2018 was $14.8 million, or $0.35 per diluted share. The adjustments in the second quarter of 2018 relate to impairment charges, legal and storm damage charges and long-term compensation related charges, offset partially by gains on the disposal of franchises and adjustments to lease exit accruals. Adjusted net income from continuing operations for the second quarter of 2017 was $17.9 million, or $0.40 per diluted share. The adjustments in the second quarter of 2017 relate to fixed asset impairments, weather-related physical damage costs, legal matters and lease exit charges.
Commentary
Heath Byrd, the Company’s Chief Financial Officer, noted, “The second quarter of 2018 fell short of our expectations as we experienced new vehicle gross compression in several of our more significant brands. We anticipate this compression to carry into the third quarter of 2018.”
“We remain committed to our pre-owned EchoPark brand and continue to see improvements in that segment’s operating performance. Based on current performance, we will continue to expand the EchoPark brand with new stores opening in Charlotte, North Carolina and Houston, Texas in the fourth quarter of this year.”
“As a result of our performance thus far during 2018 and the current operating environment, we expect full year 2018 GAAP diluted earnings per share from continuing operations to be between $1.65 and $1.75. On an adjusted basis, we expect full year earnings per share from continuing operations to be between $1.90 and $2.00. The full year adjusted earnings per share range exclude items such as impairment charges, legal and storm damage charges, long-term compensation-related charges and lease exit adjustments, offset partially by gains from the disposal of franchises.”
Dividend
Sonic’s Board of Directors approved a quarterly dividend of $0.06 per share payable in cash for our stockholders of record on September 14, 2018. The dividend will be payable on October 15, 2018.
Second Quarter Earnings Conference Call
Senior management will host a conference call today at 11:00 A.M. (Eastern) to discuss the quarter’s results. To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com, then click on “Our Company,” then “Investor Relations,” then “Earnings Conference Calls.”
Presentation materials for the conference call can be accessed on the Company’s website at www.sonicautomotive.com by clicking on the “Investor Relations” tab under “Our Company” and choosing “Webcasts & Presentations.”
The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:
Domestic: (877) 450-3867
International: (706) 643-0958
Conference ID: 2348946
A conference call replay will be available one hour following the call for seven days and can be accessed by calling:
Domestic: (855) 859-2056
International: (404) 537-3406
Conference ID: 2348946
Presentation materials for the Company’s earnings conference call will be accessible beginning the morning of the conference call on the Company’s website at www.sonicautomotive.com by clicking on “Our Company,” then “Investor Relations,” then “Webcasts & Presentations.”
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com. More information about EchoPark Automotive can be found at www.echopark.com.
Forward-Looking Statements
Included herein are forward-looking statements, including statements with respect to our 2018 earnings expectations, EchoPark brand expansion and new vehicle gross margin performance in the latter half of 2018. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management’s views, including without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Non-GAAP Financial Measures
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income from continuing operations and related earnings per diluted share, which exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company provides reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosure, provide a meaningful presentation of the Company’s results from its core business operations excluding the impact of items not related to the Company’s ongoing core business operations, and improve the period-to-period comparability of the Company’s results from its core business operations.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations
Three Months Ended June 30, | Six Months Ended June 30, 2018 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Dollars and shares in thousands, except per share amounts) | |||||||||||||||
Revenues: | |||||||||||||||
New vehicles | $ | 1,238,571 | $ | 1,275,069 | $ | 2,419,416 | $ | 2,447,001 | |||||||
Used vehicles | 762,572 | 641,891 | 1,471,618 | 1,276,364 | |||||||||||
Wholesale vehicles | 53,748 | 40,765 | 119,148 | 87,076 | |||||||||||
Total vehicles | 2,054,891 | 1,957,725 | 4,010,182 | 3,810,441 | |||||||||||
Parts, service and collision repair | 346,754 | 361,113 | 698,512 | 713,156 | |||||||||||
Finance, insurance and other, net | 104,104 | 86,908 | 197,829 | 169,971 | |||||||||||
Total revenues | 2,505,749 | 2,405,746 | 4,906,523 | 4,693,568 | |||||||||||
Cost of Sales: | |||||||||||||||
New vehicles | (1,181,303 | ) | (1,212,547 | ) | (2,305,349 | ) | (2,326,201 | ) | |||||||
Used vehicles | (725,263 | ) | (601,856 | ) | (1,397,538 | ) | (1,195,497 | ) | |||||||
Wholesale vehicles | (57,105 | ) | (42,682 | ) | (126,929 | ) | (90,163 | ) | |||||||
Total vehicles | (1,963,671 | ) | (1,857,085 | ) | (3,829,816 | ) | (3,611,861 | ) | |||||||
Parts, service and collision repair | (179,703 | ) | (188,043 | ) | (361,833 | ) | (370,742 | ) | |||||||
Total cost of sales | (2,143,374 | ) | (2,045,128 | ) | (4,191,649 | ) | (3,982,603 | ) | |||||||
Gross profit | 362,375 | 360,618 | 714,874 | 710,965 | |||||||||||
Selling, general and administrative expenses | (277,462 | ) | (293,931 | ) | (582,387 | ) | (586,165 | ) | |||||||
Impairment charges | (10,317 | ) | (2,605 | ) | (13,960 | ) | (3,115 | ) | |||||||
Depreciation and amortization | (23,949 | ) | (21,911 | ) | (47,692 | ) | (43,065 | ) | |||||||
Operating income (loss) | 50,647 | 42,171 | 70,835 | 78,620 | |||||||||||
Other income (expense): | |||||||||||||||
Interest expense, floor plan | (11,945 | ) | (9,144 | ) | (22,622 | ) | (17,531 | ) | |||||||
Interest expense, other, net | (13,375 | ) | (12,764 | ) | (26,831 | ) | (26,172 | ) | |||||||
Other income (expense), net | 17 | 7 | 106 | (14,495 | ) | ||||||||||
Total other income (expense) | (25,303 | ) | (21,901 | ) | (49,347 | ) | (58,198 | ) | |||||||
Income (loss) from continuing operations before taxes | 25,344 | 20,270 | 21,488 | 20,422 | |||||||||||
Provision for income taxes for continuing operations - benefit (expense) | (8,222 | ) | (7,956 | ) | (6,380 | ) | (8,128 | ) | |||||||
Income (loss) from continuing operations | 17,122 | 12,314 | 15,108 | 12,294 | |||||||||||
Discontinued operations: | |||||||||||||||
Income (loss) from discontinued operations before taxes | (297 | ) | (301 | ) | (545 | ) | (1,168 | ) | |||||||
Provision for income taxes for discontinued operations - benefit (expense) | 80 | 119 | 148 | 465 | |||||||||||
Income (loss) from discontinued operations | (217 | ) | (182 | ) | (397 | ) | (703 | ) | |||||||
Net income (loss) | $ | 16,905 | $ | 12,132 | $ | 14,711 | $ | 11,591 | |||||||
Basic earnings (loss) per common share: | |||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.40 | $ | 0.28 | $ | 0.35 | $ | 0.27 | |||||||
Earnings (loss) per share from discontinued operations | — | (0.01 | ) | (0.01 | ) | (0.01 | ) | ||||||||
Earnings (loss) per common share | $ | 0.40 | $ | 0.27 | $ | 0.34 | $ | 0.26 | |||||||
Weighted average common shares outstanding | 42,662 | 44,570 | 42,725 | 44,680 | |||||||||||
Diluted earnings (loss) per common share: | |||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.40 | $ | 0.27 | $ | 0.35 | $ | 0.27 | |||||||
Earnings (loss) per share from discontinued operations | (0.01 | ) | — | (0.01 | ) | (0.01 | ) | ||||||||
Earnings (loss) per common share | $ | 0.39 | $ | 0.27 | $ | 0.34 | $ | 0.26 | |||||||
Weighted average common shares outstanding | 42,920 | 44,810 | 42,948 | 44,976 | |||||||||||
Dividends declared per common share | $ | 0.06 | $ | 0.05 | $ | 0.12 | $ | 0.10 | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Per Share Data
Three Months Ended June 30, 2018 | ||||||||||||||||||||||||||
Income (Loss) | Income (Loss) | |||||||||||||||||||||||||
From Continuing Operations | From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||
Weighted Average Shares | Amount | Per Share Amount | Amount | Per Share Amount | Amount | Per Share Amount | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||
Reported: | ||||||||||||||||||||||||||
Earnings (loss) and shares | 42,662 | $ | 17,122 | $ | (217 | ) | $ | 16,905 | ||||||||||||||||||
Effect of participating securities: | ||||||||||||||||||||||||||
Non-vested restricted stock | (3 | ) | — | (3 | ) | |||||||||||||||||||||
Basic earnings (loss) and shares | 42,662 | $ | 17,119 | $ | 0.40 | $ | (217 | ) | $ | — | $ | 16,902 | $ | 0.40 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | 258 | |||||||||||||||||||||||||
Diluted earnings (loss) and shares | 42,920 | $ | 17,119 | $ | 0.40 | $ | (217 | ) | $ | (0.01 | ) | $ | 16,902 | $ | 0.39 | |||||||||||
Adjustments: | ||||||||||||||||||||||||||
Impairment charges | $ | 10,315 | $ | — | $ | 10,315 | ||||||||||||||||||||
Legal and storm damage charges | 3,064 | — | 3,064 | |||||||||||||||||||||||
Long-term compensation-related charges | 23,333 | — | 23,333 | |||||||||||||||||||||||
Lease exit adjustments | (2,579 | ) | — | (2,579 | ) | |||||||||||||||||||||
Gain on disposal of franchises | (38,048 | ) | — | (38,048 | ) | |||||||||||||||||||||
Total adjustments before taxes | (3,915 | ) | — | (3,915 | ) | |||||||||||||||||||||
Income tax effect of adjustments | 1,067 | — | 1,067 | |||||||||||||||||||||||
Non-recurring tax items | 550 | — | 550 | |||||||||||||||||||||||
Effect of adjustments, net of income taxes | $ | (2,298 | ) | (0.05 | ) | $ | — | $ | — | $ | (2,298 | ) | $ | (0.05 | ) | |||||||||||
Adjusted: | ||||||||||||||||||||||||||
Earnings (loss) and diluted earnings (loss) per share (1) | $ | 14,824 | $ | 0.35 | $ | (217 | ) | $ | (0.01 | ) | $ | 14,607 | $ | 0.34 | ||||||||||||
(1) | Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended June 30, 2018. |
Three Months Ended June 30, 2017 | ||||||||||||||||||||||||||
Income (Loss) | Income (Loss) | |||||||||||||||||||||||||
From Continuing Operations | From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||
Weighted Average Shares | Amount | Per Share Amount | Amount | Per Share Amount | Amount | Per Share Amount | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||
Reported: | ||||||||||||||||||||||||||
Earnings (loss) and shares | 44,570 | $ | 12,314 | $ | (182 | ) | $ | 12,132 | ||||||||||||||||||
Effect of participating securities: | ||||||||||||||||||||||||||
Non-vested restricted stock | (9 | ) | — | (9 | ) | |||||||||||||||||||||
Basic earnings (loss) and shares | 44,570 | $ | 12,305 | $ | 0.28 | $ | (182 | ) | $ | (0.01 | ) | $ | 12,123 | $ | 0.27 | |||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | 240 | |||||||||||||||||||||||||
Diluted earnings (loss) and shares | 44,810 | $ | 12,305 | $ | 0.27 | $ | (182 | ) | $ | — | $ | 12,123 | $ | 0.27 | ||||||||||||
Adjustments: | ||||||||||||||||||||||||||
Impairment charges | $ | 2,605 | $ | — | $ | 2,605 | ||||||||||||||||||||
Legal and storm damage charges | 5,618 | — | 5,618 | |||||||||||||||||||||||
Lease exit adjustments | 992 | — | 992 | |||||||||||||||||||||||
Total adjustments before taxes | 9,215 | — | 9,215 | |||||||||||||||||||||||
Income tax effect of adjustments | (2,982 | ) | $ | (2,982 | ) | |||||||||||||||||||||
Effect of adjustments, net of income taxes | $ | 6,233 | $ | 0.13 | $ | — | $ | — | $ | 6,233 | $ | 0.13 | ||||||||||||||
Adjusted: | ||||||||||||||||||||||||||
Earnings (loss) and diluted earnings (loss) per share (2) | $ | 18,547 | $ | 0.40 | $ | (182 | ) | $ | — | $ | 18,365 | $ | 0.40 | |||||||||||||
(2) | Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended June 30, 2017. |
Six Months Ended June 30, 2018 | ||||||||||||||||||||||||||
Income (Loss) | Income (Loss) | |||||||||||||||||||||||||
From Continuing Operations | From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||
Weighted Average Shares | Amount | Per Share Amount | Amount | Per Share Amount | Amount | Per Share Amount | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||
Reported: | ||||||||||||||||||||||||||
Earnings (loss) and shares | 42,725 | $ | 15,108 | $ | (397 | ) | $ | 14,711 | ||||||||||||||||||
Effect of participating securities: | ||||||||||||||||||||||||||
Non-vested restricted stock | (5 | ) | — | (5 | ) | |||||||||||||||||||||
Basic earnings (loss) and shares | 42,725 | $ | 15,103 | $ | 0.35 | $ | (397 | ) | $ | (0.01 | ) | $ | 14,706 | $ | 0.34 | |||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | 223 | |||||||||||||||||||||||||
Diluted earnings (loss) and shares | 42,948 | $ | 15,103 | $ | 0.35 | $ | (397 | ) | $ | (0.01 | ) | $ | 14,706 | $ | 0.34 | |||||||||||
Adjustments: | ||||||||||||||||||||||||||
Impairment charges | $ | 13,958 | $ | — | $ | 13,958 | ||||||||||||||||||||
Legal and storm damage charges | 4,564 | — | 4,564 | |||||||||||||||||||||||
Lease exit adjustments | 2,235 | — | 2,235 | |||||||||||||||||||||||
Gain on disposal of franchises | (39,239 | ) | — | (39,239 | ) | |||||||||||||||||||||
Long-term compensation-related charges | 32,522 | — | 32,522 | |||||||||||||||||||||||
Total adjustments before taxes | 14,040 | — | 14,040 | |||||||||||||||||||||||
Income tax effect of adjustments | (3,826 | ) | (3,826 | ) | ||||||||||||||||||||||
Non-recurring tax items | 550 | 550 | ||||||||||||||||||||||||
Effect of adjustments, net of income taxes | $ | 10,764 | $ | 0.25 | $ | — | $ | — | $ | 10,764 | $ | 0.25 | ||||||||||||||
Adjusted: | ||||||||||||||||||||||||||
Earnings (loss) and diluted earnings (loss) per share (1) | $ | 25,872 | $ | 0.60 | $ | (397 | ) | $ | (0.01 | ) | $ | 25,475 | $ | 0.59 | ||||||||||||
(1) | Net loss attributable to Pre-Owned Stores operations was $0.17 per fully diluted share in the six months ended June 30, 2018. |
Six Months Ended June 30, 2017 | ||||||||||||||||||||||||||
Income (Loss) | Income (Loss) | |||||||||||||||||||||||||
From Continuing Operations | From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||
Weighted Average Shares | Amount | Per Share Amount | Amount | Per Share Amount | Amount | Per Share Amount | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||
Reported: | ||||||||||||||||||||||||||
Earnings (loss) and shares | 44,680 | $ | 12,294 | $ | (703 | ) | $ | 11,591 | ||||||||||||||||||
Effect of participating securities: | ||||||||||||||||||||||||||
Non-vested restricted stock | (9 | ) | — | (9 | ) | |||||||||||||||||||||
Basic earnings (loss) and shares | 44,680 | $ | 12,285 | $ | 0.27 | $ | (703 | ) | $ | (0.01 | ) | $ | 11,582 | $ | 0.26 | |||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | 296 | |||||||||||||||||||||||||
Diluted earnings (loss) and shares | 44,976 | $ | 12,285 | $ | 0.27 | $ | (703 | ) | $ | (0.01 | ) | $ | 11,582 | $ | 0.26 | |||||||||||
Adjustments: | ||||||||||||||||||||||||||
Impairment charges | $ | 3,115 | $ | — | $ | 3,115 | ||||||||||||||||||||
Legal and storm damage charges | 6,851 | — | 6,851 | |||||||||||||||||||||||
Lease exit adjustments | 992 | — | 992 | |||||||||||||||||||||||
Loss on debt extinguishment | 15,268 | — | 15,268 | |||||||||||||||||||||||
Total adjustments before taxes | 26,226 | — | 26,226 | |||||||||||||||||||||||
Income tax effect of adjustments | (10,294 | ) | — | $ | (10,294 | ) | ||||||||||||||||||||
Effect of adjustments, net of income taxes | $ | 15,932 | $ | 0.36 | $ | — | $ | (0.01 | ) | $ | 15,932 | $ | 0.35 | |||||||||||||
Adjusted: | ||||||||||||||||||||||||||
Earnings (loss) and diluted earnings (loss) per share (2) | $ | 28,226 | $ | 0.63 | $ | (703 | ) | $ | (0.02 | ) | $ | 27,523 | $ | 0.61 | ||||||||||||
(2) Net loss attributable to Pre-Owned Stores operations was $0.15 per fully diluted share in the six months ended June 30, 2017.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
New Vehicles
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported new vehicle: | ||||||||||||||
Revenue | $ | 1,238,571 | $ | 1,275,069 | $ | (36,498 | ) | (2.9 | )% | |||||
Gross profit | $ | 57,268 | $ | 62,522 | $ | (5,254 | ) | (8.4 | )% | |||||
Unit sales | 30,877 | 33,148 | (2,271 | ) | (6.9 | )% | ||||||||
Revenue per unit | $ | 40,113 | $ | 38,466 | $ | 1,647 | 4.3 | % | ||||||
Gross profit per unit | $ | 1,855 | $ | 1,886 | $ | (31 | ) | (1.6 | )% | |||||
Gross profit as a % of revenue | 4.6 | % | 4.9 | % | (30 | ) | bps | |||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported new vehicle: | ||||||||||||||
Revenue | $ | 2,419,416 | $ | 2,447,001 | $ | (27,585 | ) | (1.1 | )% | |||||
Gross profit | $ | 114,067 | $ | 120,800 | $ | (6,733 | ) | (5.6 | )% | |||||
Unit sales | 60,377 | 63,643 | (3,266 | ) | (5.1 | )% | ||||||||
Revenue per unit | $ | 40,072 | $ | 38,449 | $ | 1,623 | 4.2 | % | ||||||
Gross profit per unit | $ | 1,889 | $ | 1,898 | $ | (9 | ) | (0.5 | )% | |||||
Gross profit as a % of revenue | 4.7 | % | 4.9 | % | (20 | ) | bps | |||||||
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store new vehicle: | ||||||||||||||
Revenue | $ | 1,218,895 | $ | 1,199,305 | $ | 19,590 | 1.6 | % | ||||||
Gross profit | $ | 56,911 | $ | 60,723 | $ | (3,812 | ) | (6.3 | )% | |||||
Unit sales | 30,314 | 30,749 | (435 | ) | (1.4 | )% | ||||||||
Revenue per unit | $ | 40,209 | $ | 39,003 | $ | 1,206 | 3.1 | % | ||||||
Gross profit per unit | $ | 1,877 | $ | 1,975 | $ | (98 | ) | (5.0 | )% | |||||
Gross profit as a % of revenue | 4.7 | % | 5.1 | % | (40 | ) | bps | |||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store new vehicle: | ||||||||||||||
Revenue | $ | 2,352,999 | $ | 2,301,260 | $ | 51,739 | 2.2 | % | ||||||
Gross profit | $ | 112,719 | $ | 117,299 | $ | (4,580 | ) | (3.9 | )% | |||||
Unit sales | 58,404 | 58,973 | (569 | ) | (1.0 | )% | ||||||||
Revenue per unit | $ | 40,288 | $ | 39,022 | $ | 1,266 | 3.2 | % | ||||||
Gross profit per unit | $ | 1,930 | $ | 1,989 | $ | (59 | ) | (3.0 | )% | |||||
Gross profit as a % of revenue | 4.8 | % | 5.1 | % | (30 | ) | bps | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Used Vehicles
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported used vehicle: | ||||||||||||||
Revenue | $ | 762,572 | $ | 641,891 | $ | 120,681 | 18.8 | % | ||||||
Gross profit | $ | 37,309 | $ | 40,035 | $ | (2,726 | ) | (6.8 | )% | |||||
Unit sales | 35,779 | 30,536 | 5,243 | 17.2 | % | |||||||||
Revenue per unit | $ | 21,313 | $ | 21,021 | $ | 292 | 1.4 | % | ||||||
Gross profit per unit | $ | 1,043 | $ | 1,311 | $ | (268 | ) | (20.4 | )% | |||||
Gross profit as a % of revenue | 4.9 | % | 6.2 | % | (130 | ) | bps | |||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported used vehicle: | ||||||||||||||
Revenue | $ | 1,471,618 | $ | 1,276,364 | $ | 195,254 | 15.3 | % | ||||||
Gross profit | $ | 74,080 | $ | 80,867 | $ | (6,787 | ) | (8.4 | )% | |||||
Unit sales | 69,518 | 60,908 | 8,610 | 14.1 | % | |||||||||
Revenue per unit | $ | 21,169 | $ | 20,956 | $ | 213 | 1.0 | % | ||||||
Gross profit per unit | $ | 1,066 | $ | 1,328 | $ | (262 | ) | (19.7 | )% | |||||
Gross profit as a % of revenue | 5.0 | % | 6.3 | % | (130 | ) | bps | |||||||
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store used vehicle: | ||||||||||||||
Revenue | $ | 653,646 | $ | 600,181 | $ | 53,465 | 8.9 | % | ||||||
Gross profit | $ | 36,396 | $ | 36,062 | $ | 334 | 0.9 | % | ||||||
Unit sales | 30,395 | 28,165 | 2,230 | 7.9 | % | |||||||||
Revenue per unit | $ | 21,505 | $ | 21,309 | $ | 196 | 0.9 | % | ||||||
Gross profit per unit | $ | 1,197 | $ | 1,280 | $ | (83 | ) | (6.5 | )% | |||||
Gross profit as a % of revenue | 5.6 | % | 6.0 | % | (40 | ) | bps | |||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store used vehicle: | ||||||||||||||
Revenue | $ | 1,266,307 | $ | 1,193,826 | $ | 72,481 | 6.1 | % | ||||||
Gross profit | $ | 69,588 | $ | 72,738 | $ | (3,150 | ) | (4.3 | )% | |||||
Unit sales | 59,064 | 56,111 | 2,953 | 5.3 | % | |||||||||
Revenue per unit | $ | 21,440 | $ | 21,276 | $ | 164 | 0.8 | % | ||||||
Gross profit per unit | $ | 1,178 | $ | 1,296 | $ | (118 | ) | (9.1 | )% | |||||
Gross profit as a % of revenue | 5.5 | % | 6.1 | % | (60 | ) | bps | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Wholesale Vehicles
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported used vehicle: | ||||||||||||||
Revenue | $ | 53,748 | $ | 40,765 | $ | 12,983 | 31.8 | % | ||||||
Gross profit | $ | (3,357 | ) | $ | (1,917 | ) | $ | (1,440 | ) | (75.1 | )% | |||
Unit sales | 8,442 | 7,783 | 659 | 8.5 | % | |||||||||
Revenue per unit | $ | 6,367 | $ | 5,238 | $ | 1,129 | 21.6 | % | ||||||
Gross profit per unit | $ | (398 | ) | $ | (246 | ) | $ | (152 | ) | (61.8 | )% | |||
Gross profit as a % of revenue | (6.2 | )% | (4.7 | )% | (150 | ) | bps | |||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported used vehicle: | ||||||||||||||
Revenue | $ | 119,148 | $ | 87,076 | $ | 32,072 | 36.8 | % | ||||||
Gross profit | $ | (7,781 | ) | $ | (3,087 | ) | $ | (4,694 | ) | (152.1 | )% | |||
Unit sales | 18,122 | 16,090 | 2,032 | 12.6 | % | |||||||||
Revenue per unit | $ | 6,575 | $ | 5,412 | $ | 1,163 | 21.5 | % | ||||||
Gross profit per unit | $ | (429 | ) | $ | (192 | ) | $ | (237 | ) | (123.4 | )% | |||
Gross profit as a % of revenue | (6.5 | )% | (3.5 | )% | (300 | ) | bps | |||||||
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store used vehicle: | ||||||||||||||
Revenue | $ | 49,160 | $ | 37,796 | $ | 11,364 | 30.1 | % | ||||||
Gross profit | $ | (3,455 | ) | $ | (1,692 | ) | $ | (1,763 | ) | (104.2 | )% | |||
Unit sales | 7,644 | 7,092 | 552 | 7.8 | % | |||||||||
Revenue per unit | $ | 6,431 | $ | 5,329 | $ | 1,102 | 20.7 | % | ||||||
Gross profit per unit | $ | (452 | ) | $ | (239 | ) | $ | (213 | ) | (89.1 | )% | |||
Gross profit as a % of revenue | (7.0 | )% | (4.5 | )% | (250 | ) | bps | |||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same store used vehicle: | ||||||||||||||
Revenue | $ | 109,225 | $ | 80,848 | $ | 28,377 | 35.1 | % | ||||||
Gross profit | $ | (7,906 | ) | $ | (2,627 | ) | $ | (5,279 | ) | (201.0 | )% | |||
Unit sales | 16,440 | 14,619 | 1,821 | 12.5 | % | |||||||||
Revenue per unit | $ | 6,644 | $ | 5,530 | $ | 1,114 | 20.1 | % | ||||||
Gross profit per unit | $ | (481 | ) | $ | (180 | ) | $ | (301 | ) | (167.2 | )% | |||
Gross profit as a % of revenue | (7.2 | )% | (3.2 | )% | (400 | ) | bps | |||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair (“Fixed Operations”)
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported: | ||||||||||||||
Revenue | ||||||||||||||
Customer pay | $ | 140,351 | $ | 139,194 | $ | 1,157 | 0.8 | % | ||||||
Warranty | 63,888 | 72,661 | (8,773 | ) | (12.1 | )% | ||||||||
Wholesale parts | 40,844 | 42,806 | (1,962 | ) | (4.6 | )% | ||||||||
Internal, sublet and other | 101,671 | 106,452 | (4,781 | ) | (4.5 | )% | ||||||||
Total | $ | 346,754 | $ | 361,113 | $ | (14,359 | ) | (4.0 | )% | |||||
Gross profit | ||||||||||||||
Customer pay | $ | 75,100 | $ | 74,344 | $ | 756 | 1.0 | % | ||||||
Warranty | 35,871 | 40,319 | (4,448 | ) | (11.0 | )% | ||||||||
Wholesale parts | 6,900 | 7,331 | (431 | ) | (5.9 | )% | ||||||||
Internal, sublet and other | 49,180 | 51,076 | (1,896 | ) | (3.7 | )% | ||||||||
Total | $ | 167,051 | $ | 173,070 | $ | (6,019 | ) | (3.5 | )% | |||||
Gross profit as a % of revenue | ||||||||||||||
Customer pay | 53.5 | % | 53.4 | % | 10 | bps | ||||||||
Warranty | 56.1 | % | 55.5 | % | 60 | bps | ||||||||
Wholesale parts | 16.9 | % | 17.1 | % | (20 | ) bps | ||||||||
Internal, sublet and other | 48.4 | % | 48.0 | % | 40 | bps | ||||||||
Total | 48.2 | % | 47.9 | % | 30 | bps | ||||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Reported: | ||||||||||||||
Revenue | ||||||||||||||
Customer pay | $ | 282,706 | $ | 277,328 | $ | 5,378 | 1.9 | % | ||||||
Warranty | 131,489 | 142,579 | (11,090 | ) | (7.8 | )% | ||||||||
Wholesale parts | 83,345 | 86,087 | (2,742 | ) | (3.2 | )% | ||||||||
Internal, sublet and other | 200,972 | 207,162 | (6,190 | ) | (3.0 | )% | ||||||||
Total | $ | 698,512 | $ | 713,156 | $ | (14,644 | ) | (2.1 | )% | |||||
Gross profit | ||||||||||||||
Customer pay | $ | 151,449 | $ | 147,784 | $ | 3,665 | 2.5 | % | ||||||
Warranty | 73,772 | 78,989 | (5,217 | ) | (6.6 | )% | ||||||||
Wholesale parts | 14,165 | 14,881 | (716 | ) | (4.8 | )% | ||||||||
Internal, sublet and other | 97,293 | 100,760 | (3,467 | ) | (3.4 | )% | ||||||||
Total | $ | 336,679 | $ | 342,414 | $ | (5,735 | ) | (1.7 | )% | |||||
Gross profit as a % of revenue | ||||||||||||||
Customer pay | 53.6 | % | 53.3 | % | 30 | bps | ||||||||
Warranty | 56.1 | % | 55.4 | % | 70 | bps | ||||||||
Wholesale parts | 17.0 | % | 17.3 | % | (30 | ) bps | ||||||||
Internal, sublet and other | 48.4 | % | 48.6 | % | (20 | ) bps | ||||||||
Total | 48.2 | % | 48.0 | % | 20 | bps | ||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair (“Fixed Operations”)
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same Store: | ||||||||||||||
Revenue | ||||||||||||||
Customer pay | $ | 139,871 | $ | 131,447 | $ | 8,424 | 6.4 | % | ||||||
Warranty | 63,709 | 69,369 | (5,660 | ) | (8.2 | )% | ||||||||
Wholesale parts | 40,288 | 40,779 | (491 | ) | (1.2 | )% | ||||||||
Internal, sublet and other | 97,287 | 100,114 | (2,827 | ) | (2.8 | )% | ||||||||
Total | $ | 341,155 | $ | 341,709 | $ | (554 | ) | (0.2 | )% | |||||
Gross profit | ||||||||||||||
Customer pay | $ | 74,910 | $ | 69,979 | $ | 4,931 | 7.0 | % | ||||||
Warranty | 35,667 | 38,582 | (2,915 | ) | (7.6 | )% | ||||||||
Wholesale parts | 6,837 | 6,996 | (159 | ) | (2.3 | )% | ||||||||
Internal, sublet and other | 47,674 | 47,705 | (31 | ) | (0.1 | )% | ||||||||
Total | $ | 165,088 | $ | 163,262 | $ | 1,826 | 1.1 | % | ||||||
Gross profit as a % of revenue | ||||||||||||||
Customer pay | 53.6 | % | 53.2 | % | 40 | bps | ||||||||
Warranty | 56.0 | % | 55.6 | % | 40 | bps | ||||||||
Wholesale parts | 17.0 | % | 17.2 | % | (20 | ) bps | ||||||||
Internal, sublet and other | 49.0 | % | 47.7 | % | 130 | bps | ||||||||
Total | 48.4 | % | 47.8 | % | 60 | bps | ||||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except unit and per unit data) | ||||||||||||||
Same Store: | ||||||||||||||
Revenue | ||||||||||||||
Customer pay | $ | 276,278 | $ | 262,639 | $ | 13,639 | 5.2 | % | ||||||
Warranty | 129,554 | 135,041 | (5,487 | ) | (4.1 | )% | ||||||||
Wholesale parts | 81,400 | 81,770 | (370 | ) | (0.5 | )% | ||||||||
Internal, sublet and other | 190,633 | 194,575 | (3,942 | ) | (2.0 | )% | ||||||||
Total | $ | 677,865 | $ | 674,025 | $ | 3,840 | 0.6 | % | ||||||
Gross profit | ||||||||||||||
Customer pay | $ | 148,092 | $ | 139,662 | $ | 8,430 | 6.0 | % | ||||||
Warranty | 72,502 | 74,764 | (2,262 | ) | (3.0 | )% | ||||||||
Wholesale parts | 13,872 | 14,173 | (301 | ) | (2.1 | )% | ||||||||
Internal, sublet and other | 93,124 | 93,773 | (649 | ) | (0.7 | )% | ||||||||
Total | $ | 327,590 | $ | 322,372 | $ | 5,218 | 1.6 | % | ||||||
Gross profit as a % of revenue | ||||||||||||||
Customer pay | 53.6 | % | 53.2 | % | 40 | bps | ||||||||
Warranty | 56.0 | % | 55.4 | % | 60 | bps | ||||||||
Wholesale parts | 17.0 | % | 17.3 | % | (30 | ) bps | ||||||||
Internal, sublet and other | 48.8 | % | 48.2 | % | 60 | bps | ||||||||
Total | 48.3 | % | 47.8 | % | 50 | bps | ||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Finance, Insurance and Other, Net (“F&I”)
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands, except per unit data) | ||||||||||||||
Reported: | ||||||||||||||
Revenue | $ | 104,104 | $ | 86,908 | $ | 17,196 | 19.8 | % | ||||||
Gross profit per retail unit (excludes fleet) | $ | 1,572 | $ | 1,379 | $ | 193 | 14.0 | % | ||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | ||||||||||||
(In thousands, except per unit data) | ||||||||||||||
Reported: | ||||||||||||||
Revenue | $ | 197,829 | $ | 169,971 | $ | 27,858 | 16.4 | % | ||||||
Gross profit per retail unit (excludes fleet) | $ | 1,532 | $ | 1,379 | $ | 153 | 11.1 | % | ||||||
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | ||||||||||||
(In thousands, except per unit data) | ||||||||||||||
Same Store: | ||||||||||||||
Revenue | $ | 89,344 | $ | 79,575 | $ | 9,769 | 12.3 | % | ||||||
Gross profit per retail unit (excludes fleet) | $ | 1,481 | $ | 1,366 | $ | 115 | 8.4 | % | ||||||
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | ||||||||||||
(In thousands, except per unit data) | ||||||||||||||
Same Store: | ||||||||||||||
Revenue | $ | 169,985 | $ | 155,646 | $ | 14,339 | 9.2 | % | ||||||
Gross profit per retail unit (excludes fleet) | $ | 1,456 | $ | 1,367 | $ | 89 | 6.5 | % | ||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Selling, General and Administrative (“SG&A”) Expenses
Three Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands) | ||||||||||||||
Reported: | ||||||||||||||
Compensation | $ | 197,641 | $ | 171,182 | $ | (26,459 | ) | (15.5 | )% | |||||
Advertising | 16,270 | 15,344 | (926 | ) | (6.0 | )% | ||||||||
Rent | 13,702 | 19,110 | 5,408 | 28.3 | % | |||||||||
Other | 49,849 | 88,295 | 38,446 | 43.5 | % | |||||||||
Total SG&A expenses | $ | 277,462 | $ | 293,931 | $ | 16,469 | 5.6 | % | ||||||
Adjustments: | ||||||||||||||
Legal and storm damage charges | $ | (3,064 | ) | $ | (5,618 | ) | ||||||||
Long-term compensation-related charges | (23,333 | ) | — | |||||||||||
Lease exit adjustments | 2,579 | (992 | ) | |||||||||||
Gain on disposal of franchises | 38,048 | — | ||||||||||||
Total SG&A adjustments | $ | 14,230 | $ | (6,610 | ) | |||||||||
Adjusted: | ||||||||||||||
Total adjusted SG&A expenses | $ | 291,692 | $ | 287,321 | $ | (4,371 | ) | (1.5 | )% | |||||
Reported: | ||||||||||||||
SG&A expenses as a % of gross profit: | ||||||||||||||
Compensation | 54.5 | % | 47.5 | % | (700 | ) bps | ||||||||
Advertising | 4.5 | % | 4.3 | % | (20 | ) bps | ||||||||
Rent | 3.8 | % | 5.3 | % | 150 | bps | ||||||||
Other | 13.8 | % | 24.4 | % | 1,060 | bps | ||||||||
Total SG&A expenses as a % of gross profit | 76.6 | % | 81.5 | % | 490 | bps | ||||||||
Adjustments: | ||||||||||||||
Legal and storm damage charges | (0.8 | )% | (1.5 | )% | ||||||||||
Long-term compensation-related charges | (6.5 | )% | — | % | ||||||||||
Lease exit adjustments | 0.7 | % | (0.3 | )% | ||||||||||
Gain on disposal of franchises | 10.5 | % | — | % | ||||||||||
Total effect of adjustments | 3.9 | % | (1.8 | )% | ||||||||||
Adjusted: | ||||||||||||||
Total adjusted SG&A expenses as a % of gross profit | 80.5 | % | 79.7 | % | (80 | ) bps | ||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Selling, General and Administrative (“SG&A”) Expenses
Six Months Ended June 30, | Better / (Worse) | |||||||||||||
2018 | 2017 | Change | % Change | |||||||||||
(In thousands) | ||||||||||||||
Reported: | ||||||||||||||
Compensation | $ | 382,678 | $ | 347,729 | $ | (34,949 | ) | (10.1 | )% | |||||
Advertising | 32,287 | 30,602 | (1,685 | ) | (5.5 | )% | ||||||||
Rent | 35,570 | 37,598 | 2,028 | 5.4 | % | |||||||||
Other | 131,852 | 170,236 | 38,384 | 22.5 | % | |||||||||
Total SG&A expenses | $ | 582,387 | $ | 586,165 | $ | 3,778 | 0.6 | % | ||||||
Adjustments: | ||||||||||||||
Legal and storm damage charges | $ | (4,564 | ) | $ | (6,851 | ) | ||||||||
Long-term compensation-related charges | (32,522 | ) | — | |||||||||||
Lease exit adjustments | (2,235 | ) | (992 | ) | ||||||||||
Gain on disposal of franchises | 39,239 | — | ||||||||||||
Total SG&A adjustments | $ | (82 | ) | $ | (7,843 | ) | ||||||||
Adjusted: | ||||||||||||||
Total adjusted SG&A expenses | $ | 582,305 | $ | 578,322 | $ | (3,983 | ) | (0.7 | )% | |||||
Reported: | ||||||||||||||
SG&A expenses as a % of gross profit: | ||||||||||||||
Compensation | 53.5 | % | 48.9 | % | (460 | ) bps | ||||||||
Advertising | 4.5 | % | 4.3 | % | (20 | ) bps | ||||||||
Rent | 5.0 | % | 5.3 | % | 30 | bps | ||||||||
Other | 18.5 | % | 23.9 | % | 540 | bps | ||||||||
Total SG&A expenses as a % of gross profit | 81.5 | % | 82.4 | % | 90 | bps | ||||||||
Adjustments: | ||||||||||||||
Legal and storm damage charges | (0.7 | )% | (1.0 | )% | ||||||||||
Long-term compensation-related charges | (4.5 | )% | — | % | ||||||||||
Lease exit adjustments | (0.3 | )% | (0.1 | )% | ||||||||||
Gain on disposal of franchises | 5.5 | % | — | % | ||||||||||
Total effect of adjustments | — | % | (1.1 | )% | ||||||||||
Adjusted: | ||||||||||||||
Total adjusted SG&A expenses as a % of gross profit | 81.5 | % | 81.3 | % | (20 | ) bps | ||||||||
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Reconciliation of Other Non-GAAP Financial Measures
Twelve Months Ending December 31, 2018 | ||||||||
Low | High | |||||||
Expected GAAP diluted earnings per share from continuing operations | $ | 1.65 | $ | 1.75 | ||||
Adjustments: | ||||||||
Impairment charges | $ | 0.24 | $ | 0.24 | ||||
Legal and storm damage charges | $ | 0.08 | $ | 0.08 | ||||
Long-term compensation-related charges | $ | 0.55 | $ | 0.55 | ||||
Lease exit adjustments | $ | 0.04 | $ | 0.04 | ||||
Gain on disposal of franchises | $ | (0.66 | ) | $ | (0.66 | ) | ||
Expected adjusted non-GAAP diluted earnings per share from continuing operations | $ | 1.90 | $ | 2.00 | ||||
Contact: | Heath Byrd, Chief Financial Officer (704) 566-2400 C.G. Saffer, Vice President and Chief Accounting Officer (704) 566-2439 |