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Sonic Automotive, Inc. First Quarter 2011 Earnings up $9.2 million or 140%; Strong Growth Trends Continue as Sonic's Volume Outperforms Industry


News provided by

Sonic Automotive, Inc.

Apr 26, 2011, 07:30 ET

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CHARLOTTE, N.C., April 26, 2011 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported that 2011 first quarter earnings from continuing operations were $0.27 per diluted share compared to $0.12 per diluted share in the prior year quarter. The prior year period included pretax charges of $0.9 million, or $0.01 per diluted share, related to various debt refinancing transactions completed during the first quarter of 2010.  

First Quarter 2011 Highlights

  • Continuing operations net profit up $9.2 million or 140%
  • Total revenues up 19% over prior year quarter
  • New vehicle volume up 27%
  • Used vehicle volume up 18%; Record used vehicle sales
  • Parts and Service revenue up 6%

Business Overview

  • Company growth trends continue across all business lines
  • Automotive retailing industry continues its steady rebound
  • SG&A metrics improved significantly from prior year quarter
  • Profits continue to benefit from debt reduction strategy

Company Strategy

  • Organic growth through focus on the base business
  • Converting leased properties to owned properties
  • Opportunistically reduce debt

Commenting on the first quarter results, B. Scott Smith, the Company's President, said, "We are pleased with this quarter's operating performance.  Our continuing operations profit was up significantly from the prior year quarter due to our strong revenue growth and the improvement in our SG&A to gross profit metrics. We saw no disruption to our first quarter business from the natural disaster in Japan.  We will provide a further business outlook on our conference call later this afternoon."

Mr. Smith further stated, "Sonic Automotive's new vehicle volume grew 27% over the first quarter of last year compared with new vehicle industry volume growth of 18% over the same period.  Our ability to outperform the industry trend is a direct result of our strategy to grow our base business through the implementation of predictable, repeatable and sustainable best practices at each of our dealerships.  We are seeing similar results in each of our business lines as we continue the rollout of our operational playbooks. We continued to see strong, steady growth in the automotive retailing sector this quarter and expect that to continue over the course of this year."

The Company's used vehicle retail volume was up 18% with used vehicle retail revenues up 15%.  Parts and service revenue was up 6% compared to the first quarter of last year. Commenting on the business, Jeff Dyke, the Company's EVP of Operations, stated, "The used vehicle business remains very robust and we continue to gain market share. Our playbook implementation is the most advanced in this segment of our business but we continue to see tremendous growth potential. In our parts and service business, the growth trends we saw in the second half of 2010 have continued into 2011. Growing this high margin area of our business remains a key focus of our operational playbook rollout."

Presentation materials for the Company's April 26, 2011 earnings conference call at 2:00 P.M. (Eastern) 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."

To access the live broadcast of the call over the Internet go to: 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, Conference ID: 56248512, International callers dial (706) 645-9291.

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 future industry growth trends and future impacts from the implementation of our various operational playbooks. 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 sales volume, the success of our operational strategies, the rate and timing of overall economic recovery and the risk factors described in the Company's annual report on Form 10-K for the year ending December 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)












First Quarter Ended March 31,





2011


2010

Revenues






New retail vehicles


$  917,105


$  734,592


Fleet vehicles


63,640


43,652


Total new vehicles


980,745


778,244


Used vehicles


482,031


418,849


Wholesale vehicles


35,362


30,806



Total vehicles


1,498,138


1,227,899


Parts, service and collision repair


291,770


275,172


Finance, insurance and other


49,468


40,595



Total revenues


1,839,376


1,543,666

Total gross profit


291,168


265,879

SG&A expenses


(232,514)


(220,653)

Impairment charges


(17)


(44)

Depreciation


(9,992)


(8,418)

Operating income


48,645


36,764

Interest expense, floor plan


(5,436)


(4,798)

Interest expense, other, net


(15,447)


(17,151)

Interest expense, non-cash, convertible debt


(1,694)


(1,677)

Interest expense / amortization, non-cash, cash flow swaps


178


(1,683)

Other income (expense), net


73


64

Income from continuing operations before taxes


26,319


11,519

Provision for income taxes


(10,528)


(4,953)

Income from continuing operations


15,791


6,566

Loss from discontinued operations


(827)


(2,412)

Net income


$    14,964


$      4,154








Diluted:






Weighted average common shares outstanding


65,950


52,579









Earnings per share from continuing operations


$        0.27


$        0.12


Loss per share from discontinued operations


(0.01)


(0.04)


Earnings per share


$        0.26


$        0.08








Gross Margin Data (Continuing Operations):













New retail vehicles


6.3%


6.9%


Fleet vehicles


3.1%


3.7%


Total new vehicles



6.1%


6.8%


Used vehicles


7.9%


8.3%



Total vehicles retail


6.7%


7.3%


Wholesale vehicles


(1.3%)


(2.1%)


Parts, service and collision repair


49.3%


50.4%


Finance, insurance and other


100.0%


100.0%



Overall gross margin


15.8%


17.2%








SG&A Expenses (Continuing Operations):













Personnel


$  136,565


$  128,890


Advertising


13,782


11,175


Rent and rent related


30,416


32,850


Other


51,751


47,738


Total


$  232,514


$  220,653








SG&A Expenses as % of Gross Profit


79.9%


83.0%








Operating Margin %


2.6%


2.4%








Unit Data (Continuing Operations):













New retail units


26,896


21,382


Fleet units


2,488


1,750


Total new units


29,384


23,132


Used units


25,245


21,492



Total units retailed


54,629


44,624


Wholesale units


5,644


5,128








Other Data:













Continuing Operations unit volume percentage changes:







New retail units


25.8%





Fleet units


42.2%





Total new units


27.0%





Used units


17.5%





Total units retailed


22.4%





Wholesale units


10.1%



Sonic Automotive, Inc.

Earnings Per Share Reconciliation (Unaudited)

(In thousands, except per share data)



















For the First Quarter Ended March 31, 2011





Income


Loss







From Continuing


From Discontinued







Operations


Operations


Net Income



Weighted




Per




Per




Per



Average




Share




Share




Share



Shares


Amount


Amount


Amount


Amount


Amount


Amount
















Earnings (Loss) and Shares


52,416


$        15,791




$           (827)




$      14,964



Effect of Participating Securities:















Unvested Restricted Stock
   and Stock Units


-


(206)




-




(206)



Basic Earnings (Loss) Per Share


52,416


$        15,585


$         0.30


$           (827)


$       (0.02)


$      14,758


$         0.28

Effect of Dilutive Securities:















Contingently Convertible
   Debt (5.0% Convertible Notes)


12,890


2,310




-




2,310



Stock Compensation Plans


644













Diluted Earnings (Loss) Per Share


65,950


$        17,895


$         0.27


$           (827)


$       (0.01)


$      17,068


$         0.26

















































For the First Quarter Ended March 31, 2010





Income


Loss







From Continuing


From Discontinued







Operations


Operations


Net Income



Weighted




Per




Per




Per



Average




Share




Share




Share



Shares


Amount


Amount


Amount


Amount


Amount


Amount
















Earnings (Loss) and Shares


51,889


$          6,566




$        (2,412)




$        4,154



Effect of Participating Securities:















Unvested Restricted Stock
   and Stock Units


-


(79)




-




(79)



Basic Earnings (Loss) Per Share


51,889


$          6,487


$         0.13


$        (2,412)


$       (0.05)


$        4,075


$         0.08

Effect of Dilutive Securities:















Stock Compensation Plans


690













Diluted Earnings (Loss) Per Share


52,579


$          6,487


$         0.12


$        (2,412)


$       (0.04)


$        4,075


$         0.08
















SOURCE Sonic Automotive, Inc.

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