Sonic Automotive, Inc. Announces First Quarter Net Income of $0.33 Per Share

Apr 24, 2001, 01:00 ET from Sonic Automotive, Inc.

    CHARLOTTE, N.C., April 24 /PRNewswire/ -- Sonic Automotive, Inc.
 (NYSE:   SAH) announced today net income of $13.5 million, or $0.33 per diluted
 share, for the first quarter ended March 31, 2001, exceeding consensus
 estimates of $0.23 per share.  This compares to net income of $17.4 million,
 or $0.39 per diluted share for the quarter ended March 31, 2000.  Net income
 before goodwill amortization expense for the quarter was $0.40 per diluted
 share.  Under proposed accounting guidance which is expected to be finalized
 in the second half of 2001, net income will no longer be reduced by goodwill
 amortization expense.
     B. Scott Smith, the Company's President and Chief Operating Officer
 stated, "Our Company has responded aggressively to the slow down in vehicle
 sales and outperformed expectations for the first quarter.  Our performance,
 as well as performance of other auto retailers during a quarter of cyclical
 declines in new vehicle sales, compares favorably to performance by auto
 manufacturers and auto parts manufacturers.  This performance conclusively
 demonstrates the value of our variable cost structure and non-cyclical
 consumer service and parts offerings.  We expect new vehicle unit volumes to
 continue at a rate below the prior year and we have adjusted our operations to
 reflect the lower expected demand.  Given the current quarter's results, we
 are now raising our expectations and targeting earnings per share for the year
 ending December 31, 2001 of $1.55 to $1.59 and earnings per share for the
 second quarter of 2001 of $0.42 to $0.45."
 
     Operations
     Total revenues for the quarter were $1.5 billion, a 5.2% increase from the
 first quarter of last year and a 6.6% increase from the fourth quarter of last
 year.  Parts, service, and collision repair revenues represented 12.3% of
 total revenue this quarter compared to 11.3% for the first quarter last year.
 Gross margin for those revenue lines was 45.3% in the current quarter compared
 to 44.1% for the first quarter last year, an increase of 2.7%.  Finance and
 insurance revenues increased 7.0% and finance and insurance revenues per unit
 increased 7.1%.
     Mr. Scott Smith also stated, "Despite a more challenging operating
 environment we were able to post solid operating results this quarter.  As
 expected, we saw slight declines in new vehicle gross margins as we reduced
 inventories; however, we were able to increase margins in the higher margin
 parts and service segments of our business.  We did exactly what we promised
 at the end of the fourth quarter -- we reduced our inventory levels and
 controlled our variable costs.  We believe the inventory correction stage of
 this vehicle sales cycle is behind us at Sonic."
     "There was a marked differentiation between the performance of domestic
 and import brands -- particularly Toyota, Lexus and BMW.  Our brand portfolio,
 with an emphasis on luxury brands, was a major factor in our ability to
 sustain well above industry average profit margins in the quarter.  Although
 our California markets were not as strong as some other regions, our emphasis
 on luxury and import brands in these markets was reflected in our performance.
 California market same store sales were down less than 1%," stated Jeffrey C.
 Rachor, the Company's Executive Vice President of Retail Operations.
 
     Same Store Sales
     On a same store basis, revenues for the quarter decreased 5.0%.  Same
 store new vehicle sales decreased 6.9% and same store retail used vehicle
 sales decreased 7.3%.  Despite cyclical declines in vehicle sales -- parts,
 service and collision repair revenues increased 5.4% on a same store basis.
 Same store gross margins in parts and service also expanded 3.4%.
     The continuing growth in our service and parts operations demonstrates the
 strength of the automotive retailing business model and the sustained benefit
 of strong vehicle sales rates the last several years to our service and parts
 operations.  Because of changes in revenue mix, overall same store margins
 increased from 14.0% to 14.6%.
 
     Acquisitions and Dispositions
     Sonic closed on six acquisitions late in the fourth quarter of 2000 and in
 the first quarter of 2001.  These acquisitions contributed $132.6 million in
 revenue and $3.2 million in operating income in the first quarter.  Even after
 considering associated borrowing costs, these acquisitions contributed $0.03
 per share to first quarter earnings, illustrating the highly accretive
 valuations of recent acquisitions.
     The Company continues to pursue a substantial pipeline of acquisition
 opportunities at attractive valuations.  Cyclical declines in sales have
 negatively effected many operators -- creating greater motivation to sell.
 Sonic has both cash generation from operations and $127.0 million in
 availability under our existing acquisition credit facility to support
 continuation of its disciplined acquisition strategy.  Currently, acquisition
 opportunities in markets with an established presence and management team are
 the Company's primary focus.
     Sonic completed dispositions of seven franchises in the first quarter of
 2001.  Agreements are in place for divestiture of an additional
 two dealerships in the second quarter of 2001.  We expect our disposition
 program to be largely completed in the third quarter of 2001 without
 significant gain or loss.  Completion of these dispositions will have a
 positive impact on earnings per share in second quarter of 2001 and subsequent
 periods.
 
     Stock Buyback Activity
     As of April 24, 2001, Sonic has expended $64.1 million to repurchase
 5,857,465 shares of its Class A common stock and 13,801 shares of its
 convertible preferred stock.  Sonic's Board of Directors has authorized a
 $75 million stock buyback program.  Sonic intends to continue to use the
 authorized stock buyback as market conditions warrant.
 
      About Sonic Automotive, Inc.
      Sonic Automotive, Inc., a Fortune 300 Company, is the second largest
 automotive retailer in the United States operating 165 franchises and
 30 collision repair centers.  Sonic can be reached on the Web at
 www.sonicautomotive.com .
 
     Included herein are forward-looking statements, including statements with
 respect to anticipated profit and earnings per share growth.  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, risks associated with
 acquisitions and the risk factors described in Exhibit 99.1 to the Company's
 Annual Report on Form 10-K for the year ending December 31, 2000.  The Company
 does not undertake any obligation to update forward-looking information.
 
     MANAGEMENT WILL BE HOLDING A CONFERENCE CALL ON TUESDAY, APRIL 24, 2001 AT
 11:00 A.M. EASTERN TIME.  TO PARTICIPATE, PLEASE DIAL 888-318-6429, SECURITY
 CODE: SONIC -- OR YOU CAN ACCESS THE CALL AT WWW.STREETFUSION.COM OR
 WWW.SONICAUTOMOTIVE.COM .
 
 
     SONIC AUTOMOTIVE, INC.
     Results of Operations (unaudited)
     (in thousands, except per share and unit data amounts)
 
                                                       Three Months Ended
                                                  03/31/2000        03/31/2001
 
     New units                                      33,390            33,241
     Used units                                     20,132            20,248
       Total units retailed                         53,522            53,489
     Wholesale units                                15,701            16,518
     Average price per unit:
       New vehicles                                 25,578            26,431
       Used vehicles                                15,171            15,525
       Wholesale vehicles                            6,433             7,074
 
     Revenues
       New vehicles                               $854,035          $878,608
       Used vehicles                               305,431           314,347
       Wholesale vehicles                          101,012           116,853
         Total vehicles                          1,260,478         1,309,808
       Parts, service, and collision repair        165,587           189,361
       Finance & insurance and other                38,337            41,036
         Total Revenues                          1,464,402         1,540,205
         Total Gross Profit                        208,034           221,939
       SG&A expenses                               153,466           171,467
       Depreciation                                  1,517             1,725
       Goodwill amortization                         4,050             4,451
     Operating Income                               49,001            44,296
     Interest expense, floor plan                   10,357            12,242
     Interest expense, other                        10,266            10,005
     Other income                                       38                59
     Income Before Taxes                            28,416            22,108
     Income taxes                                   11,045             8,625
           Net Income                             $ 17,371          $ 13,483
 
     Diluted:
       Weighted average common shares outstanding   44,877            41,473
       Earnings per share                            $0.39             $0.33
 
     Gross Margin Data:
       New vehicles retail                            8.1%              7.8%
       Used vehicles retail                          11.2%             10.9%
         Total vehicles retail                        8.9%              8.6%
       Parts, service and collision repair           44.1%             45.3%
       Finance and insurance                         83.7%             84.6%
         Overall gross margin                        14.2%             14.4%
 
     SG&A Expenses:
       Personnel                                  $ 94,659          $102,728
       Advertising                                  13,862            14,263
       Facility rent                                13,037            16,137
       Other                                        31,908            38,339
 
     Balance Sheet Data:
       Cash and equivalents                       $ 82,395          $103,699
       Working capital                            $192,150          $206,852
       New vehicle inventory                      $515,224          $551,130
       Used vehicle inventory                     $122,215          $127,554
       Parts inventory                            $ 48,048          $ 47,847
       Floorplan debt                             $576,540          $648,783
       Long term debt (including current portion) $473,123          $512,411
 
     Other Data:
       Net operating cash flow                    $ 22,976          $ 19,603
       Interest (non-floorplan) coverage ratio        4.3x              3.8x
       EBITDA                                     $ 44,249          $ 38,289
       Average debt to EBITDA ratio                   2.2x              2.7x
 
 

SOURCE Sonic Automotive, Inc.
    CHARLOTTE, N.C., April 24 /PRNewswire/ -- Sonic Automotive, Inc.
 (NYSE:   SAH) announced today net income of $13.5 million, or $0.33 per diluted
 share, for the first quarter ended March 31, 2001, exceeding consensus
 estimates of $0.23 per share.  This compares to net income of $17.4 million,
 or $0.39 per diluted share for the quarter ended March 31, 2000.  Net income
 before goodwill amortization expense for the quarter was $0.40 per diluted
 share.  Under proposed accounting guidance which is expected to be finalized
 in the second half of 2001, net income will no longer be reduced by goodwill
 amortization expense.
     B. Scott Smith, the Company's President and Chief Operating Officer
 stated, "Our Company has responded aggressively to the slow down in vehicle
 sales and outperformed expectations for the first quarter.  Our performance,
 as well as performance of other auto retailers during a quarter of cyclical
 declines in new vehicle sales, compares favorably to performance by auto
 manufacturers and auto parts manufacturers.  This performance conclusively
 demonstrates the value of our variable cost structure and non-cyclical
 consumer service and parts offerings.  We expect new vehicle unit volumes to
 continue at a rate below the prior year and we have adjusted our operations to
 reflect the lower expected demand.  Given the current quarter's results, we
 are now raising our expectations and targeting earnings per share for the year
 ending December 31, 2001 of $1.55 to $1.59 and earnings per share for the
 second quarter of 2001 of $0.42 to $0.45."
 
     Operations
     Total revenues for the quarter were $1.5 billion, a 5.2% increase from the
 first quarter of last year and a 6.6% increase from the fourth quarter of last
 year.  Parts, service, and collision repair revenues represented 12.3% of
 total revenue this quarter compared to 11.3% for the first quarter last year.
 Gross margin for those revenue lines was 45.3% in the current quarter compared
 to 44.1% for the first quarter last year, an increase of 2.7%.  Finance and
 insurance revenues increased 7.0% and finance and insurance revenues per unit
 increased 7.1%.
     Mr. Scott Smith also stated, "Despite a more challenging operating
 environment we were able to post solid operating results this quarter.  As
 expected, we saw slight declines in new vehicle gross margins as we reduced
 inventories; however, we were able to increase margins in the higher margin
 parts and service segments of our business.  We did exactly what we promised
 at the end of the fourth quarter -- we reduced our inventory levels and
 controlled our variable costs.  We believe the inventory correction stage of
 this vehicle sales cycle is behind us at Sonic."
     "There was a marked differentiation between the performance of domestic
 and import brands -- particularly Toyota, Lexus and BMW.  Our brand portfolio,
 with an emphasis on luxury brands, was a major factor in our ability to
 sustain well above industry average profit margins in the quarter.  Although
 our California markets were not as strong as some other regions, our emphasis
 on luxury and import brands in these markets was reflected in our performance.
 California market same store sales were down less than 1%," stated Jeffrey C.
 Rachor, the Company's Executive Vice President of Retail Operations.
 
     Same Store Sales
     On a same store basis, revenues for the quarter decreased 5.0%.  Same
 store new vehicle sales decreased 6.9% and same store retail used vehicle
 sales decreased 7.3%.  Despite cyclical declines in vehicle sales -- parts,
 service and collision repair revenues increased 5.4% on a same store basis.
 Same store gross margins in parts and service also expanded 3.4%.
     The continuing growth in our service and parts operations demonstrates the
 strength of the automotive retailing business model and the sustained benefit
 of strong vehicle sales rates the last several years to our service and parts
 operations.  Because of changes in revenue mix, overall same store margins
 increased from 14.0% to 14.6%.
 
     Acquisitions and Dispositions
     Sonic closed on six acquisitions late in the fourth quarter of 2000 and in
 the first quarter of 2001.  These acquisitions contributed $132.6 million in
 revenue and $3.2 million in operating income in the first quarter.  Even after
 considering associated borrowing costs, these acquisitions contributed $0.03
 per share to first quarter earnings, illustrating the highly accretive
 valuations of recent acquisitions.
     The Company continues to pursue a substantial pipeline of acquisition
 opportunities at attractive valuations.  Cyclical declines in sales have
 negatively effected many operators -- creating greater motivation to sell.
 Sonic has both cash generation from operations and $127.0 million in
 availability under our existing acquisition credit facility to support
 continuation of its disciplined acquisition strategy.  Currently, acquisition
 opportunities in markets with an established presence and management team are
 the Company's primary focus.
     Sonic completed dispositions of seven franchises in the first quarter of
 2001.  Agreements are in place for divestiture of an additional
 two dealerships in the second quarter of 2001.  We expect our disposition
 program to be largely completed in the third quarter of 2001 without
 significant gain or loss.  Completion of these dispositions will have a
 positive impact on earnings per share in second quarter of 2001 and subsequent
 periods.
 
     Stock Buyback Activity
     As of April 24, 2001, Sonic has expended $64.1 million to repurchase
 5,857,465 shares of its Class A common stock and 13,801 shares of its
 convertible preferred stock.  Sonic's Board of Directors has authorized a
 $75 million stock buyback program.  Sonic intends to continue to use the
 authorized stock buyback as market conditions warrant.
 
      About Sonic Automotive, Inc.
      Sonic Automotive, Inc., a Fortune 300 Company, is the second largest
 automotive retailer in the United States operating 165 franchises and
 30 collision repair centers.  Sonic can be reached on the Web at
 www.sonicautomotive.com .
 
     Included herein are forward-looking statements, including statements with
 respect to anticipated profit and earnings per share growth.  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, risks associated with
 acquisitions and the risk factors described in Exhibit 99.1 to the Company's
 Annual Report on Form 10-K for the year ending December 31, 2000.  The Company
 does not undertake any obligation to update forward-looking information.
 
     MANAGEMENT WILL BE HOLDING A CONFERENCE CALL ON TUESDAY, APRIL 24, 2001 AT
 11:00 A.M. EASTERN TIME.  TO PARTICIPATE, PLEASE DIAL 888-318-6429, SECURITY
 CODE: SONIC -- OR YOU CAN ACCESS THE CALL AT WWW.STREETFUSION.COM OR
 WWW.SONICAUTOMOTIVE.COM .
 
 
     SONIC AUTOMOTIVE, INC.
     Results of Operations (unaudited)
     (in thousands, except per share and unit data amounts)
 
                                                       Three Months Ended
                                                  03/31/2000        03/31/2001
 
     New units                                      33,390            33,241
     Used units                                     20,132            20,248
       Total units retailed                         53,522            53,489
     Wholesale units                                15,701            16,518
     Average price per unit:
       New vehicles                                 25,578            26,431
       Used vehicles                                15,171            15,525
       Wholesale vehicles                            6,433             7,074
 
     Revenues
       New vehicles                               $854,035          $878,608
       Used vehicles                               305,431           314,347
       Wholesale vehicles                          101,012           116,853
         Total vehicles                          1,260,478         1,309,808
       Parts, service, and collision repair        165,587           189,361
       Finance & insurance and other                38,337            41,036
         Total Revenues                          1,464,402         1,540,205
         Total Gross Profit                        208,034           221,939
       SG&A expenses                               153,466           171,467
       Depreciation                                  1,517             1,725
       Goodwill amortization                         4,050             4,451
     Operating Income                               49,001            44,296
     Interest expense, floor plan                   10,357            12,242
     Interest expense, other                        10,266            10,005
     Other income                                       38                59
     Income Before Taxes                            28,416            22,108
     Income taxes                                   11,045             8,625
           Net Income                             $ 17,371          $ 13,483
 
     Diluted:
       Weighted average common shares outstanding   44,877            41,473
       Earnings per share                            $0.39             $0.33
 
     Gross Margin Data:
       New vehicles retail                            8.1%              7.8%
       Used vehicles retail                          11.2%             10.9%
         Total vehicles retail                        8.9%              8.6%
       Parts, service and collision repair           44.1%             45.3%
       Finance and insurance                         83.7%             84.6%
         Overall gross margin                        14.2%             14.4%
 
     SG&A Expenses:
       Personnel                                  $ 94,659          $102,728
       Advertising                                  13,862            14,263
       Facility rent                                13,037            16,137
       Other                                        31,908            38,339
 
     Balance Sheet Data:
       Cash and equivalents                       $ 82,395          $103,699
       Working capital                            $192,150          $206,852
       New vehicle inventory                      $515,224          $551,130
       Used vehicle inventory                     $122,215          $127,554
       Parts inventory                            $ 48,048          $ 47,847
       Floorplan debt                             $576,540          $648,783
       Long term debt (including current portion) $473,123          $512,411
 
     Other Data:
       Net operating cash flow                    $ 22,976          $ 19,603
       Interest (non-floorplan) coverage ratio        4.3x              3.8x
       EBITDA                                     $ 44,249          $ 38,289
       Average debt to EBITDA ratio                   2.2x              2.7x
 
 SOURCE  Sonic Automotive, Inc.