Sonic Automotive, Inc. Announces Third Quarter Results
CHARLOTTE, N.C., Oct. 28 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced a third quarter 2008 loss from continuing operations of $11.4 million, or $0.24 per diluted share, compared to earnings of $30.9 million, or $0.68 per diluted share, in the prior year period. Included in the current quarter's results from continuing operations is an after-tax charge of approximately $21.0 million, or $0.49 per diluted share, related primarily to franchise asset and property impairment costs. The Company also recorded an after-tax charge of approximately $11.5 million, or $0.27 per diluted share, also primarily related to franchise asset and property impairment costs in our loss from discontinued operations in the current quarter.
In addition to these charges, also included in the current quarter's results from continuing operations is an estimated approximately $0.08 per diluted share negative impact related to property damage and business disruption caused by hurricane activity in the greater Houston area.
Mr. David Cosper, the Company's Chief Financial Officer, stated, "In light of the current economic conditions and the expectation of lower profitability at a small number of our domestic dealerships, we have written down the value of the franchise assets assigned to these dealerships. In addition, we have eliminated various planned facility projects and revised our plans for several facilities that we had vacated. As a result, we have written off certain costs that had already been incurred on those projects. We are in compliance with all debt covenants at the end of the quarter and expect to remain in compliance going forward. We have also performed an interim test of the recoverability of our goodwill and have determined that there is no impairment of the goodwill assets recorded on our balance sheet."
Scott Smith, the Company's President and Chief Strategic Officer, stated, "The current softness in consumer demand is to be expected given the turmoil in the credit markets and the amount of economic uncertainty we are currently experiencing. We remain focused on those things we can control and that we believe add value for our shareholders. We continue to aggressively reduce costs and manage capital expenditures as we move forward with our used vehicle and parts and service initiatives. As a result of the current economic uncertainty, we are projecting diluted earnings per share from continuing operations for the fourth quarter of $0.10 to $0.20."
Presentation materials for the Company's earnings conference call at 11:00 A.M. (Eastern) on October 28, 2008 can be accessed on the Company's website at www.sonicautomotive.com by clicking on the "For Investors" tab and choosing "Webcasts & Presentations" on the right side of the screen.
To access the live broadcast of the conference call over the Internet go to: www.sonicautomotive.com.
A live audio of the conference 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 (domestic) or (706) 645-9291 (international), conference call ID #67717439.
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 169 franchises. Sonic can be reached on the Web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to expected diluted earnings per share from continuing operations, debt compliance expectations, profitability at certain dealerships, cost reduction plans and capital expenditure reduction plans. 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 the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008. 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)
Three Months Ended Nine Months Ended
9/30/2008 9/30/2007 9/30/2008 9/30/2007
Revenues
New retail vehicles $987,520 $1,204,343 $3,016,719 $3,360,848
Fleet vehicles 54,863 98,509 282,962 288,344
Total new vehicles 1,042,383 1,302,852 3,299,681 3,649,192
Used vehicles 339,498 363,785 1,088,808 1,034,375
Wholesale vehicles 72,316 100,201 239,118 304,173
Total vehicles 1,454,197 1,766,838 4,627,607 4,987,740
Parts, service and
collision repair 284,132 292,044 871,713 853,650
Finance, insurance and
other 46,512 53,600 150,148 152,729
Total revenues 1,784,841 2,112,482 5,649,468 5,994,119
Total gross profit 285,693 323,963 899,205 933,327
SG&A expenses (267,961) (240,243) (749,651) (701,621)
Depreciation (8,912) (5,338) (25,656) (19,163)
Operating income 8,820 78,382 123,898 212,543
Interest expense, floor
plan (9,744) (16,660) (34,467) (49,002)
Interest expense, other (16,661) (10,898) (43,439) (28,446)
Other (expense) / income (10) (5) 87 85
Income / (loss) from
continuing operations
before taxes (17,595) 50,819 46,079 135,180
Income taxes 6,214 (19,903) (19,256) (53,159)
Income / (loss) from
continuing operations (11,381) 30,916 26,823 82,021
Discontinued operations:
Loss from operations and
the sale of discontinued
franchises (19,954) (6,870) (38,790) (13,651)
Income tax benefit 5,986 2,061 11,637 4,096
Loss from discontinued
operations (13,968) (4,809) (27,153) (9,555)
Net income/ (loss) $(25,349) $26,107 $(330) $72,466
Diluted:
Weighted average common
shares outstanding 42,900 46,978 43,387 47,631
Earnings / (loss) per
share from continuing
operations ($0.24) $0.68 $0.68 $1.79
Loss per share from
discontinued operations ($0.33) ($0.10) ($0.63) ($0.20)
Earnings / (loss) per
share ($0.57) $0.58 $0.05 $1.59
Gross Margin Data
(Continuing Operations):
Retail new vehicles 7.0% 7.5% 7.3% 7.4%
Fleet vehicles 4.5% 1.5% 2.2% 2.1%
Total new vehicles 6.9% 7.0% 6.8% 7.0%
Used vehicles retail 8.0% 8.8% 8.5% 9.2%
Total vehicles retail 7.2% 7.4% 7.3% 7.5%
Wholesale vehicles (1.9%) (1.5%) (1.8%) (0.9%)
Parts, service and
collision repair 49.9% 50.7% 49.9% 50.6%
Finance, insurance and
other 100.0% 100.0% 100.0% 100.0%
Overall gross margin 16.0% 15.3% 15.9% 15.6%
SG&A Expenses (Continuing
Operations):
Personnel $128,167 $133,930 $400,115 $398,201
Advertising 14,489 17,294 48,018 48,416
Facility rent 28,655 24,890 75,073 74,730
Other 96,650 64,129 226,445 180,274
Total $267,961 $240,243 $749,651 $701,621
SG&A Expenses as % of
Gross Profit
Personnel 44.9% 41.3% 44.5% 42.7%
Advertising 5.1% 5.3% 5.3% 5.2%
Facility rent 10.0% 7.7% 8.3% 8.0%
Other 33.8% 19.9% 25.3% 19.3%
Total 93.8% 74.2% 83.4% 75.2%
Operating Margin % 0.5% 3.7% 2.2% 3.5%
Unit Data (Continuing Three Months Ended Nine Months Ended
Operations): 9/30/2008 9/30/2007 9/30/2008 9/30/2007
New retail units 29,076 35,686 90,104 99,707
Fleet units 2,816 4,272 11,729 12,685
Used units 16,994 18,056 54,260 51,758
Wholesale units 9,563 11,230 30,377 33,869
Average price per unit:
New retail vehicles $33,963 $33,748 $33,480 $33,707
Fleet vehicles 19,483 23,059 24,125 22,731
Used vehicles 19,978 20,148 20,066 19,985
Wholesale vehicles 7,562 8,923 7,872 8,981
Other Data:
Same store revenue
percentage changes:
New retail (18.9%) (14.2%)
Fleet (44.3%) (10.3%)
Total New Vehicles (20.8%) (13.9%)
Used (7.7%) 1.6%
Parts, service and
collision repair (3.8%) (1.3%)
Finance, insurance
and other (13.6%) (3.9%)
Total (16.4%) (9.7%)
Balance Sheet Data:
9/30/2008 12/31/2007
ASSETS
Current Assets:
Cash and cash
equivalents $7,340 $16,514
Receivables, net 214,625 347,309
Inventories 1,030,704 1,093,017
Assets held for sale 110,815 87,342
Other current assets 34,836 35,879
Total current assets 1,398,320 1,580,061
Property and Equipment,
Net 381,950 286,591
Goodwill, Net 1,254,403 1,276,074
Other Intangibles, Net 95,974 111,342
Other Assets 21,705 28,676
TOTAL ASSETS $3,152,352 $3,282,744
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $991,571 $1,125,670
Other current
liabilities 223,288 247,658
Liabilities associated
with assets held for
sale 42,928 48,592
Current maturities of
long-term debt 131,705 4,197
Total current
liabilities 1,389,492 1,426,117
LONG-TERM DEBT 638,970 697,800
OTHER LONG-TERM
LIABILITIES 222,154 227,999
STOCKHOLDERS' EQUITY 901,736 930,828
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,152,352 $3,282,744
Balance Sheet Ratios:
Current Ratio 1.01 1.11
Debt to Total Capital,
Net of Cash 45.8% 42.4%
SOURCE Sonic Automotive, Inc.
Released October 28, 2008