Sonic Automotive, Inc. Posts Record Fourth Quarter Profits and Full Year Retail Unit Sales

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CHARLOTTE, N.C., Feb. 20, 2013 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported preliminary diluted earnings per share from continuing operations of $0.52, an increase of 44.4% compared to $0.36 in the prior year quarter.  2012 fourth quarter net income from continuing operations were $28.8 million, a 35.5% increase over prior year results of $21.2 million.  When adjusting for charges recorded in the prior year period related to legal and lease charges, 2012 fourth quarter net income from continuing operations improved $3.4 million, or 13.2%, from an adjusted fourth quarter 2011 result of $25.4 million. 

For the full year 2012, the Company grew adjusted net income from continuing operations by 19.6% to $1.71 per diluted share compared to $1.43 per diluted share in the prior year.  The adjustments for both periods are detailed further in the attached tables.

During the quarter, the Company repurchased 3.5 million shares of its Class A common stock at an average price of $19.27 per share.  For the year, the Company repurchased 4.4 million shares of its Class A common stock at an average price of $19.00 per share.  The fully diluted share count was reduced from 65.5 million shares for the full year of 2011 to 54.0 million shares going into 2013, a reduction of 17.6%.

Subsequent to the end of the fourth quarter, Sonic's Board of Directors authorized an additional $100 million to be used in the Company's share repurchase program.  When combined with previously unused authorized amounts, Sonic has approximately $144.2 million of total authorization from its Board of Directors to repurchase shares of the Company's Class A Common Stock.

Q4 2012 Highlights – New Retail Volume Outpaces Industry; Annual Cost Lower than Target

  • Record retail unit sales in full year 2012 of 231,192 units
  • Record Q4 Continuing Operations Net Income of $28.8 million (1)
  • Total Q4 revenues up 10.4% over prior year quarter, up 11.2% for full year
  • New vehicle retail revenue up 15.7% in Q4, up 17.5% for full year
  • Used vehicle retail units up 6.3% in Q4, up 6.4% for the full year
  • Parts, Service & Collision gross profit up $3.7 million in Q4 to $140.9 million, a fourth quarter record, up $15.4 million for the full year to $568.9 million, an annual record
  • Full year SG&A to gross profit of 76.8%, better than annual target of 78.0%

(1)     – Excluding unusual tax adjustments in the comparative prior year periods

The Company's EVP of Operations, Jeff Dyke, commented, "We are very pleased with our performance in the fourth quarter.  Our continued execution of our playbook processes enabled us to achieve record breaking full year total vehicle unit sales of 231,192 units.  The new vehicle retail unit sales increase of 14.5% in the fourth quarter 2012 over the prior year quarter outpaced the industry growth of 11.1%.  Coupled with growth in all other areas of our business, we generated over $20 million more gross profit in Q4 2012 than in Q4 2011.  As a result of this increase and cost reductions in other areas, we were able to increase our net income from continuing operations 13.2% from the prior year quarter adjusted total.  We would like to thank our customers, our manufacturer partners, and our associates for working together to help us achieve this performance."

2013 Outlook

Commenting on the fourth quarter and the 2013 outlook, B. Scott Smith, the Company's President, noted, "Our work continued in the fourth quarter to improve our operations, our capital structure, and increase shareholder value through a combination of operational execution and share repurchases.  Looking into 2013, we believe we can continue to build on the momentum generated last year to offer our customers an exceptional and unique buying experience and build customer loyalty.  Although we still hold fast to our guiding strategic initiative to improve our base business, we believe we are now positioned to take advantage of open point and acquisition opportunities and will explore these avenues in 2013.  We expect the automotive retailing sector to continue to grow in 2013 and are anticipating 2013 new vehicle industry volume of between 15.0 million units and 15.5 million units.  We currently expect earnings per share from continuing operations of between $1.93 and $2.03 for the full year 2013.  We will have additional comments on our 2013 outlook in our earnings call later today."

Fourth 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: 1.877.791.3416
International: 1.706.643.0958
Conference ID: 93141081

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: 93141081

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. 

The results reported in this press release, the accompanying summary tables and the presentation materials for the conference call today at 11:00 AM (Eastern) are preliminary and unaudited and are subject to change upon completion of the audit for our financial statements for the period ended December 31, 2012.

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 accompanying tables.  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.

Included herein are forward-looking statements, including statements with respect to anticipated 2013 industry new vehicle sales volume, anticipated 2013 earnings per share from continuing operations, anticipated acquisition and growth activity, and anticipated future success and impacts from the implementation of our strategic 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, 2011 and quarterly report on Form 10-Q for the period ended September 30, 2012.  The Company does not undertake any obligation to update forward-looking information.

 

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(Dollars and shares in thousands, except per share amounts)

This release contains certain non-GAAP financial measures (the "Adjusted" columns) 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 (the "Reported" columns) 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.

Fourth Quarter Ended

Fourth Quarter Ended

December 31, 2012

December 31, 2011

Reported

Adjustments

Adjusted

Reported

Adjustments

Adjusted












Revenues:










   New retail vehicles

$   1,259,924

$                -

$   1,259,924

$   1,089,251

$                -

$   1,089,251

   Fleet vehicles

43,130

-

43,130

49,782

-

49,782

   Total new vehicles

1,303,054

-

1,303,054

1,139,033

-

1,139,033

   Used vehicles

489,063

-

489,063

465,386

-

465,386

   Wholesale vehicles

44,820

-

44,820

45,946

-

45,946

   Total vehicles

1,836,937

-

1,836,937

1,650,365

-

1,650,365

   Parts, service and collision repair

287,113

-

287,113

278,721

-

278,721

   Finance, insurance and other

64,685

-

64,685

54,360

-

54,360

   Total revenues

2,188,735

-

2,188,735

1,983,446

-

1,983,446

Gross profit

314,119

-

314,119

293,694

-

293,694

Selling, general and administrative expenses

(236,798)

-

(236,798)

(227,946)

6,816

(1)

(221,130)

Impairment charges

(383)

-

(383)

(40)

-

(40)

Depreciation and amortization

(11,886)

-

(11,886)

(10,252)

-

(10,252)

Operating income (loss)

65,052

-

65,052

55,456

6,816

62,272

Other income (expense):










   Interest expense, floor plan

(5,534)

-

(5,534)

(4,589)

-

(4,589)

   Interest expense, other, net

(14,215)

-

(14,215)

(16,329)

-

(16,329)

   Other income (expense), net

183

-

183

(265)

-

(265)

   Total other income (expense)

(19,566)

-

(19,566)

(21,183)

-

(21,183)

Income (loss) from continuing operations before taxes

45,486

-

45,486

34,273

6,816

41,089

Provision for income taxes - benefit (expense)

(16,694)

-

(16,694)

(13,032)

(2,617)

(2)

(15,649)

Income (loss) from continuing operations

28,792

-

28,792

21,241

4,199

25,440

Income (loss) from discontinued operations

1,590

-

1,590

(703)

(387)

(3)

(1,090)

Net income (loss)

$        30,382

$                -

$        30,382

$        20,538

$          3,812

$        24,350












Diluted earnings (loss) per common share:










   Earnings (loss) per share from continuing operations

$            0.52

$                -

$            0.52

$            0.36

$            0.07

$            0.43

   Earnings (loss) per share from discontinued operations

0.03

-

0.03

(0.01)

(0.01)

(0.02)

   Earnings (loss) per common share

$            0.55

$                -

$            0.55

$            0.35

$            0.06

$            0.41

   Weighted average common shares outstanding

54,763


54,763

64,467


64,467












Gross Margin Data (Continuing Operations):










   New retail vehicles

6.1%


6.1%

6.3%


6.3%

   Fleet vehicles

2.4%


2.4%

3.3%


3.3%

   Total new vehicles

5.9%


5.9%

6.2%


6.2%

   Used vehicles

6.7%


6.7%

7.1%


7.1%

   Wholesale vehicles

(3.5%)


(3.5%)

(2.1%)


(2.1%)

   Parts, service and collision repair

49.1%


49.1%

49.2%


49.2%

   Finance, insurance and other

100.0%


100.0%

100.0%


100.0%

   Overall gross margin

14.4%


14.4%

14.8%


14.8%












SG&A Expenses (Continuing Operations):










   Compensation

$      140,423




$      132,641



   Advertising

13,243




11,120



   Rent and rent related

26,653




28,240



   Other

56,479




55,945



   Total SG&A expenses

$      236,798

$                -

$      236,798

$      227,946

$        (6,816)

$      221,130

   SG&A expenses as % of gross profit

75.4%


75.4%

77.6%


75.3%












Operating Margin %

3.0%


3.0%

2.8%


3.1%












Unit Data (Continuing Operations):










   New retail units

33,767




29,482



   Fleet units

1,312




1,878



   Total new units

35,079




31,360



   Used units

23,943




22,520



   Wholesale units

7,452




6,879















(1) Represents lease exit adjustments and legal settlement charges.









(2) Represents tax-effect of pre-tax adjustments above.










(3) Represents tax-effected amounts related to lease exit adjustments.









 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(Dollars and shares in thousands, except per share amounts)













Year Ended December 31, 2012

Year Ended December 31, 2011

Reported

Adjustments

Adjusted

Reported

Adjustments

Adjusted












Revenues:










   New retail vehicles

$   4,546,209

$                -

$   4,546,209

$   3,867,978

$                -

$   3,867,978

   Fleet vehicles

169,715

-

169,715

220,120

-

220,120

   Total new vehicles

4,715,924

-

4,715,924

4,088,098

-

4,088,098

   Used vehicles

2,053,477

-

2,053,477

1,930,852

-

1,930,852

   Wholesale vehicles

183,326

-

183,326

167,075

-

167,075

   Total vehicles

6,952,727

-

6,952,727

6,186,025

-

6,186,025

   Parts, service and collision repair

1,162,319

-

1,162,319

1,125,672

-

1,125,672

   Finance, insurance and other

250,422

-

250,422

209,109

-

209,109

   Total revenues

8,365,468

-

8,365,468

7,520,806

-

7,520,806

Gross profit

1,235,153

-

1,235,153

1,158,611

-

1,158,611

Selling, general and administrative expenses

(949,026)

-

(949,026)

(899,424)

6,816

(4)

(892,608)

Impairment charges

(440)

-

(440)

(200)

-

(200)

Depreciation and amortization

(45,285)

-

(45,285)

(39,446)

-

(39,446)

Operating income (loss)

240,402

-

240,402

219,541

6,816

226,357

Other income (expense):










   Interest expense, floor plan

(19,454)

-

(19,454)

(18,405)

-

(18,405)

   Interest expense, other, net

(60,090)

1,167

(1)

(58,923)

(66,857)

-

(66,857)

   Other income (expense), net

(19,625)

19,713

(2)

88

(1,017)

-

(1,017)

   Total other income (expense)

(99,169)

20,880

(78,289)

(86,279)

-

(86,279)

Income (loss) from continuing operations before taxes

141,233

20,880

162,113

133,262

6,816

140,078

Provision for income taxes - benefit (expense)

(49,972)

(11,711)

(3)

(61,683)

(51,731)

(2,617)

(5)

(54,348)

Income (loss) from continuing operations

91,261

9,169

100,430

81,531

4,199

85,730

Income (loss) from discontinued operations

(2,160)

-

(2,160)

(5,277)

(387)

(6)

(5,664)

Net income (loss)

$        89,101

$          9,169

$        98,270

$        76,254

$          3,812

$        80,066












Diluted earnings (loss) per common share:










   Earnings (loss) per share from continuing operations

$            1.56

$            0.15

$            1.71

$            1.37

$            0.06

$            1.43

   Earnings (loss) per share from discontinued operations

(0.03)

-

(0.03)

(0.08)

-

(0.08)

   Earnings (loss) per common share

$            1.53

$            0.15

$            1.68

$            1.29

$            0.06

$            1.35

   Weighted average common shares outstanding

60,406


60,406

65,464


65,464












Gross Margin Data (Continuing Operations):










   New retail vehicles

6.0%


6.0%

6.6%


6.6%

   Fleet vehicles

2.8%


2.8%

3.2%


3.2%

   Total new vehicles

5.9%


5.9%

6.4%


6.4%

   Used vehicles

7.0%


7.0%

7.2%


7.2%

   Wholesale vehicles

(3.3%)


(3.3%)

(3.1%)


(3.1%)

   Parts, service and collision repair

(48.9%)


(48.9%)

49.2%


49.2%

   Finance, insurance and other

100.0%


100.0%

100.0%


100.0%

   Overall gross margin

14.8%


14.8%

15.4%


15.4%












SG&A Expenses (Continuing Operations):










   Compensation

$      566,886




$      527,146



   Advertising

50,349




49,128



   Rent and rent related

106,628




115,080



   Other

225,163




208,070



   Total SG&A expenses

$      949,026

$                -

$      949,026

$      899,424

$        (6,816)

$      892,608

   SG&A expenses as % of gross profit

76.8%


76.8%

77.6%


77.0%












Operating Margin %

2.9%


2.9%

2.9%


3.0%












Unit Data (Continuing Operations):










   New retail units

128,636




108,564



   Fleet units

5,928




8,508



   Total new units

134,564




117,072



   Used units

102,556




96,355



   Wholesale units

31,188




25,180















(1) Represents double-carry interest in July 2012.










(2) Represents debt extinguishment charges related to the 5.0% Convertible Notes.







(3) Represents the tax effect of pre-tax adjustments above and the effect of the settlement of a state tax examination.





(4) Represents lease exit adjustments and legal settlement charges.









(5) Represents the tax effect of pre-tax adjustments above.






(6) Represents tax-effected amounts related to lease exit adjustments.









 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except per share amounts)

















Fourth Quarter Ended December 31, 2012




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















Reported:













   Earnings (loss) and shares                                   

54,289

$    28,792


$      1,590


$     30,382

   Effect of participating securities:













   Non-vested restricted stock













   and stock units                                   


(433)


-


(433)

   Basic earnings (loss) and shares                                   

54,289

$    28,359

$    0.52

$      1,590

$      0.03

$     29,949

$    0.55

   Effect of dilutive securities:













   Contingently convertible













   debt (5.0% Convertible Notes)                                   

-

-


-


-

   Stock compensation plans                                   

474











   Diluted earnings (loss) and shares                                   

54,763

$    28,359

$    0.52

$      1,590

$      0.03

$     29,949

$    0.55
































Fourth Quarter Ended December 31, 2011




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















Reported:













   Earnings (loss) and shares                                   

52,194

$    21,241


$       (703)


$     20,538

   Effect of participating securities:













   Non-vested restricted stock













   and stock units                                   


(277)


-


(277)

   Basic earnings (loss) and shares                                   

52,194

$    20,964

$    0.40

$       (703)

$    (0.01)

$     20,261

$    0.39

   Effect of dilutive securities:













   Contingently convertible













   debt (5.0% Convertible Notes)                                   

11,713

2,314


16


2,330

   Stock compensation plans                                   

560











   Diluted earnings (loss) and shares                                   

64,467

$    23,278

$    0.36

$       (687)

$    (0.01)

$     22,591

$    0.35















Adjustments (net of tax):













   Lease exit adjustments


$         749

$    0.01

(387)

$    (0.01)

$          362

$        -

   Legal settlement charges


3,450

0.06

-

-

3,450

0.06

   Total adjustments


$      4,199

$    0.07

$       (387)

$    (0.01)

$       3,812

$    0.06















Adjusted:













   Diluted earnings (loss) per share




$    0.43


$    (0.02)


$    0.41































Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except per share amounts)

















Year Ended December 31, 2012




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















Reported:













   Earnings (loss) and shares                                   

53,550

$    91,261


$    (2,160)


$     89,101

   Effect of participating securities:













   Non-vested restricted stock













   and stock units                                   


(1,381)


-


(1,381)

   Basic earnings (loss) and shares                                   

53,550

$    89,880

$    1.68

$    (2,160)

$    (0.04)

$     87,720

$    1.64

   Effect of dilutive securities:













   Contingently convertible













   debt (5.0% Convertible Notes)                                   

6,411

4,617


64


4,681

   Stock compensation plans                                   

445











   Diluted earnings (loss) and shares                                   

60,406

$    94,497

$    1.56

$    (2,096)

$    (0.03)

$     92,401

$    1.53















Adjustments (net of tax):













   Double-carry interest


$         712

$    0.01

$             -

$          -

$          712

$    0.01

   Debt extinguishment charges


12,025

0.20

-

-

12,025

0.20

   Settlement of state tax examination


(3,568)

(0.06)

-

-

(3,568)

(0.06)

   Total adjustments


$      9,169

$    0.15

$             -

$          -

$       9,169

$    0.15















Adjusted:













   Diluted earnings (loss) per share




$    1.71


$    (0.03)


$    1.68
































Year Ended December 31, 2011




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















Reported:













   Earnings (loss) and shares                                   

52,358

$    81,531


$    (5,277)


$     76,254

   Effect of participating securities:













   Non-vested restricted stock













   and stock units                                   


(1,056)


-


(1,056)

   Basic earnings (loss) and shares                                   

52,358

$    80,475

$    1.54

$    (5,277)

$    (0.10)

$     75,198

$    1.44

   Effect of dilutive securities:













   Contingently convertible













   debt (5.0% Convertible Notes)                                   

12,517

9,093


207


9,300

   Stock compensation plans                                   

589











   Diluted earnings (loss) and shares                                   

65,464

$    89,568

$    1.37

$    (5,070)

$    (0.08)

$     84,498

$    1.29















Adjustments (net of tax):













   Lease exit adjustments


$         749

$    0.01

(387)

$          -

$          362

$    0.01

   Legal settlement charges


3,450

0.05

-

-

3,450

0.05

   Total adjustments


$      4,199

$    0.06

$       (387)

$          -

$       3,812

$    0.06















Adjusted:













   Diluted earnings (loss) per share




$    1.43


$    (0.08)


$    1.35

 

 

SOURCE Sonic Automotive, Inc.

Released February 20, 2013