Sonic Automotive, Inc. First Quarter 2011 Earnings up $9.2 million or 140%; Strong Growth Trends Continue as Sonic's Volume Outperforms Industry
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.
Released April 26, 2011