Sonic Automotive, Inc. Reports Record Gross Profit

Retailed Record Number of New and Pre-Owned Units

News provided by

Sonic Automotive, Inc.

Apr 21, 2015, 07:30 ET

CHARLOTTE, N.C., April 21, 2015 /PRNewswire/ -- 

First Quarter 2015 Results

  • Record Q1 new retail units of 31,334, up 4.3%, over the prior year quarter
  • Record Q1 pre-owned units and gross profit of 28,135 and $40.8 million, respectively
  • Record Q1 fixed operations gross profit of $156.4 million, up 2.8% over the prior year quarter
  • Record Q1 total gross profit of $335.0 million, up 1.8% over the prior year quarter
  • EchoPark® stores retail 660 units

Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported adjusted net income from continuing operations for the first quarter of 2015 of $18.8 million, or $0.37 per diluted share.  Included in these adjusted amounts are pre-tax expenses of $4.9 million, or $0.06 per diluted share, related to the Company's EchoPark® initiative and $3.8 million, or $0.05 per diluted share, related to its One Sonic-One Experience initiative.

Net income from continuing operations for the first quarter of 2014 was $20.0 million, or $0.38 per diluted share. Included in these amounts are pre-tax expenses of $1.7 million, or $0.02 per diluted share, related to the Company's EchoPark® initiative and $2.1 million, or $0.02 per diluted share, related to its One Sonic-One Experience initiative.

On a GAAP basis, net income from continuing operations and related diluted earnings per share for the first quarter 2015 were $14.4 million and $0.28 per share, respectively.  There were no adjustments in the first quarter of 2014.  See the accompanying tables for details of quarterly adjustments.

Jeff Dyke, Sonic's EVP of Operations, stated, "We had another solid record setting quarter!  Our One Sonic-One Experience stores are making great progress.  Our first store that adopted the process, Town & Country Toyota, has gained more than 600 basis points of market share in each of the last two months year-over-year, is tracking to do the same again in April, and has experienced steady growth in profitability.  More exciting is the remaining Charlotte stores are following in the same path giving us great confidence that we are on the right track.  While the change has been significant, the results from a share and guest satisfaction perspective are adding to our resolve that the decisions we have made to enhance our guest experience are right on target. We are also equally excited about EchoPark®!  We sold 660 units for the quarter, just under 300 units in the month of March, and have grown the business rapidly.  These results are a direct reflection of our business plan, our team's depth of experience, our unmatched guest experience and a response from our customer base that confirms what we were trying to accomplish.  As these two strategies come to life, we look for the Sonic Brand to become a household name in the retail world beyond automotive driven by an unmatched customer experience.  None of this would be possible without the extraordinary effort of our remarkable team – many thanks to them! We look forward to continued success in the coming years."

B. Scott Smith, Sonic's President, remarked, "We have made a lot of progress in the first quarter of the year.  Our Charlotte stores have migrated to our One Sonic-One Experience platform and we now have three EchoPark® retail operating locations in Denver, with progress made to open an additional location by the end of 2015.  We are very pleased with how our associates and customers are embracing the technologies and improved transaction processes.  Although there is still a lot of work to be done to ensure the long-term sustainability of these initiatives, the cornerstones have been set and we look forward to building upon these in the future."

First 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 "Webcasts & Presentations."

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: 1.877.450.3867
International: 1.706.643.0958
Conference ID: 20767539

A conference call replay will be available one hour following the call for seven days and can be accessed by calling:

Domestic: 1.855.859.2056
International: 1.404.537.3406
Conference ID: 20767539

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.

Included herein are forward-looking statements, including statements with respect to anticipated future success and impacts from the implementation of our planned customer experience and stand-alone pre-owned store initiatives. There are many factors that affect management's views about future events and trends of the Company's business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management's view, 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 ending December 31, 2014. The Company does not undertake any obligation to update forward-looking information.

Sonic Automotive, Inc.

Results of Operations (Unaudited)


This release contains certain non-GAAP financial measures as defined under SEC rules, such as, but not limited to, adjusted income from continuing operations and related earnings per share data. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure by providing period-to-period comparability of the Company's results from operations.

Three Months Ended March 31,

2015

2014

(In thousands, except per share and unit data)

Revenues:



New retail vehicles

$               1,190,215

$               1,112,291

Fleet vehicles


12,108

34,329

Total new vehicles


1,202,323

1,146,620

Used vehicles

593,742

559,816

Wholesale vehicles


41,656

41,598

Total vehicles

1,837,721

1,748,034

Parts, service and collision repair


323,194

318,771

Finance, insurance and other, net

74,600

69,581

Total revenues


2,235,515

2,136,386

Gross profit

334,959

329,000

Selling, general and administrative expenses

(270,862)

(263,973)

Impairment charges

(6,192)

(3)

Depreciation and amortization

(16,409)

(14,381)

Operating income (loss)


41,496

50,643

Other income (expense):


Interest expense, floor plan

(4,778)

(4,689)

Interest expense, other, net

(13,219)

(13,818)

Other income (expense), net


90

97

Total other income (expense)

(17,907)

(18,410)

Income (loss) from continuing operations before taxes


23,589

32,233

Provision for income taxes - benefit (expense)

(9,200)

(12,249)

Income (loss) from continuing operations


14,389

19,984

Income (loss) from discontinued operations


(422)

(598)

Net income (loss)


$                    13,967

$                    19,386


Diluted earnings (loss) per common share:


Earnings (loss) per share from continuing operations

$                        0.28

$                        0.38

Earnings (loss) per share from discontinued operations

(0.01)

(0.02)

Earnings (loss) per common share


$                        0.27

$                        0.36

Weighted average common shares outstanding


51,403

52,946


Gross Margin Data (Continuing Operations):


New retail vehicles


5.3%

5.9%

Fleet vehicles

(0.6%)

2.6%

Total new vehicles

5.3%

5.8%

Used vehicles

6.9%

7.3%

Wholesale vehicles

(0.5%)

(0.2%)

Parts, service and collision repair

48.4%

47.7%

Finance, insurance and other

100.0%

100.0%

Overall gross margin

15.0%

15.4%


SG&A Expenses (Continuing Operations):


Compensation

$                  161,858

$                  157,154

Advertising

15,332

14,119

Rent


18,254

18,535

Other

75,418

74,165

Total SG&A expenses


$                  270,862

$                  263,973

SG&A expenses as % of gross profit

80.9%

80.2%


Operating Margin %

1.9%

2.4%


Unit Data (Continuing Operations):


New retail units


31,334

30,029

Fleet units

355

1,102

Total new units

31,689

31,131

Used units

28,135

27,657

Wholesale units


7,777

7,380

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Per Share Data






























Three Months Ended March 31, 2015


Income (Loss)

Income (Loss)







From Continuing

From Discontinued







Operations

Average

Net Income (Loss)

Weighted


Per


Per


Per

Average


Share


Share


Share

Shares

Amount

Amount

Amount

Amount

Amount

Amount

(In thousands, except per share amounts)

Reported:













Earnings (loss) and shares


50,854

$     14,389


$       (422)


$     13,967

Effect of participating securities:













Non-vested restricted stock













and stock units




(5)


-


(5)

Basic earnings (loss) and shares


50,854

$     14,384

$       0.28

$       (422)

$      (0.01)

$     13,962

$       0.27

Effect of dilutive securities:













Stock compensation plans

549











Diluted earnings (loss) and shares

51,403

$     14,384

$       0.28

$       (422)

$      (0.01)

$     13,962

$       0.27













Adjustments (net of tax):













Impairment charges


$       3,777

$       0.07

-

$           -

$       3,777

$       0.07

Other


634

0.02

-

-

634

0.02

Total adjustments


$       4,411

$       0.09

$             -

$           -

$       4,411

$       0.09













Adjusted:













Earnings (loss) and













Diluted earnings (loss) per share (1)




$     18,800

$       0.37

$       (422)

$      (0.01)

$     18,378

$       0.36













(1) Expenses attributable to the EchoPark® initiative were $0.06 per fully diluted share in the three months ended March 31, 2015

































Three Months Ended March 31, 2014


Income (Loss)

Income (Loss)







From Continuing

From Discontinued







Operations

Operations

Net Income (Loss)

Weighted


Per


Per


Per

Average


Share


Share


Share

Shares

Amount

Amount

Amount

Amount

Amount

Amount

(In thousands, except per share amounts)

Reported:













Earnings (loss) and shares

52,418

$     19,984


$       (598)


$     19,386

Effect of participating securities:













Non-vested restricted stock













and stock units




(63)


-


(63)

Basic earnings (loss) and shares

52,418

$     19,921

$       0.38

$       (598)

$      (0.01)

$     19,323

$       0.37

Effect of dilutive securities:













Stock compensation plans

528











Diluted earnings (loss) and shares  (2)

52,946

$     19,921

$       0.38

$       (598)

$      (0.02)

$     19,323

$       0.36




























(2) Expenses attributable to the EchoPark® initiative were $0.02 per fully diluted share in the three months ended March 31, 2014

Sonic Automotive, Inc.

Results of Operations (Unaudited)


New Vehicles


















Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except units and per unit data)

Reported:






Revenue

$          1,202,323

$          1,146,620

$               55,703

4.9%

Gross profit


$               63,350

$               66,673

$               (3,323)

(5.0%)

Unit sales


31,689

31,131

558

1.8%

Revenue per unit

$               37,941

$               36,832

$                 1,109

3.0%

Gross profit per unit


$                 1,999

$                 2,142

$                  (143)

(6.7%)

Gross profit as a % of revenue


5.3%

5.8%

(50)

bps










Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except units and per unit data)

Same Store:






Revenue

$          1,190,252

$          1,110,066

$               80,186

7.2%

Gross profit


$               62,438

$               64,632

$               (2,194)

(3.4%)

Unit sales

31,336

30,082

1,254

4.2%

Revenue per unit

$               37,984

$               36,901

$                 1,083

2.9%

Gross profit per unit

$                 1,993

$                 2,149

$                  (156)

(7.3%)

Gross profit as a % of revenue


5.2%

5.8%

(60)

bps

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Used Vehicles


















Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except units and per unit data)

Reported:






Revenue

$             593,742

$             559,816

$               33,926

6.1%

Gross profit


$               40,844

$               40,693

$                    151

0.4%

Unit sales


28,135

27,657

478

1.7%

Revenue per unit

$               21,103

$               20,241

$                    862

4.3%

Gross profit per unit

$                 1,452

$                 1,471

$                    (19)

(1.3%)

Gross profit as a % of revenue

6.9%

7.3%

(40)

bps










Three Months Ended March 31,

Better / (Worse)

2015

2014

 Change

% Change

(In thousands, except units and per unit data)

Same Store:






Revenue

$             572,759

$             537,639

$               35,120

6.5%

Gross profit

$               40,013

$               39,286

$                    727

1.9%

Unit sales


27,079

26,601

478

1.8%

Revenue per unit

$               21,151

$               20,211

$                    940

4.7%

Gross profit per unit


$                 1,478

$                 1,477

$                        1

0.1%

Gross profit as a % of revenue

7.0%

7.3%

(30)

bps

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Wholesale Vehicles


















Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except units and per unit data)

Reported:







Revenue

$               41,656

$               41,598

$                      58

0.1%

Gross profit (loss)

$                  (210)

$                    (93)

$                  (117)

(125.8%)

Unit sales

7,777

7,380

397

5.4%

Revenue per unit

$                 5,356

$                 5,637

$                  (281)

(5.0%)

Gross profit (loss) per unit

$                    (27)

$                    (13)

$                    (14)

(107.7%)

Gross profit (loss) as a % of revenue


(0.5%)

(0.2%)

(30)

bps











Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except units and per unit data)

Same Store:







Revenue


$               40,773

$               40,246

$                    527

1.3%

Gross profit (loss)

$                  (186)

$                    (23)

$                  (163)

(708.7%)

Unit sales

7,523

7,145

378

5.3%

Revenue per unit


$                 5,420

$                 5,633

$                  (213)

(3.8%)

Gross profit (loss) per unit


$                    (25)

$                      (3)

$                    (22)

(733.3%)

Gross profit (loss) as a % of revenue

(0.5%)

(0.1%)

(40)

bps

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Parts, Service and Collision Repair ("Fixed Operations")













Three Months Ended March 31,

Better / (Worse)

2015

2014

 Change

% Change

Reported:

(In thousands)

Revenue







Customer pay

$             137,623

$             141,121

$               (3,498)

(2.5%)

Warranty

53,498

46,591

6,907

14.8%

Wholesale parts


45,012

47,944

(2,932)

(6.1%)

Internal, sublet and other


87,061

83,115

3,946

4.7%

Total


$             323,194

$             318,771

$                 4,423

1.4%

Gross profit







Customer pay

$               75,678

$               77,999

$               (2,321)

(3.0%)

Warranty

29,760

25,238

4,522

17.9%

Wholesale parts

8,138

8,161

(23)

(0.3%)

Internal, sublet and other

42,799

40,748

2,051

5.0%

Total

$             156,375

$             152,146

$                 4,229

2.8%

Gross profit as a % of revenue







Customer pay

55.0%

55.3%

(30)

bps

Warranty

55.6%

54.2%

140

bps

Wholesale parts

18.1%

17.0%

110

bps

Internal, sublet and other

49.2%

49.0%

20

bps

Total

48.4%

47.7%

70

bps

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Parts, Service and Collision Repair ("Fixed Operations")














Three Months Ended March 31,

Better / (Worse)

2015

2014

 Change

% Change

Same Store:

(In thousands)

Revenue







Customer pay


$             135,768

$             136,486

$                  (718)

(0.5%)

Warranty

52,971

44,774

8,197

18.3%

Wholesale parts

44,580

46,667

(2,087)

(4.5%)

Internal, sublet and other

84,956

80,559

4,397

5.5%

Total

$             318,275

$             308,486

$                 9,789

3.2%

Gross profit







Customer pay

$               74,689

$               75,558

$                  (869)

(1.2%)

Warranty

29,457

24,269

5,188

21.4%

Wholesale parts


8,052

7,907

145

1.8%

Internal, sublet and other

41,809

39,145

2,664

6.8%

Total


$             154,007

$             146,879

$                 7,128

4.9%

Gross profit as a % of revenue







Customer pay

55.0%

55.4%

(40)

bps

Warranty

55.6%

54.2%

140

bps

Wholesale parts

18.1%

16.9%

120

bps

Internal, sublet and other

49.2%

48.6%

60

bps

Total

48.4%

47.6%

80

bps

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Finance, Insurance and Other, Net ("F&I")















Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except per unit data)

Reported:







Revenue


$               74,600

$               69,581

$                 5,019

7.2%

Gross profit per retail unit (excludes fleet)

$                 1,254

$                 1,206

$                      48

4.0%


















Three Months Ended March 31,

Better / (Worse)

2015

2014

Change

% Change

(In thousands, except per unit data)

Same Store:







Revenue

$               73,129

$               67,182

$                 5,947

8.9%

Gross profit per retail unit (excludes fleet)


$                 1,260

$                 1,209

$                      51

4.2%

Sonic Automotive, Inc.

Results of Operations (Unaudited)


Selling, General and Administrative ("SG&A") Expenses














Three Months Ended March 31,

Better / (Worse)

2015

2014

 Change

% Change

(In thousands)

Reported:







Compensation

$             161,858

$             157,154

$               (4,704)

(3.0%)

Advertising

15,332

14,119

(1,213)

(8.6%)

Rent

18,254

18,535

281

1.5%

Other

75,418

74,165

(1,253)

(1.7%)

Total


$             270,862

$             263,973

$               (6,889)

(2.6%)

SG&A expenses as a % of gross profit






Compensation

48.3%

47.8%

(50)

bps

Advertising

4.6%

4.3%

(30)

bps

Rent


5.4%

5.6%

20

bps

Other


22.6%

22.5%

(10)

bps

Total


80.9%

80.2%

(70)

bps

SOURCE Sonic Automotive, Inc.