Sonic Automotive, Inc. Second Quarter 2011 Earnings of $0.37 with Double Digit Revenue Growth
CHARLOTTE, N.C., July 26, 2011 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported that 2011 second quarter earnings from continuing operations were $0.37 per diluted share compared to $0.18 per diluted share in the prior year quarter. The prior year period included pretax charges of $7.3 million, or $0.06 per diluted share, related to various debt refinancing transactions completed during the second quarter of 2010.
Second Quarter 2011 Highlights
-- Continuing operations net profit up $13 million or 131%.
-- Total revenues up 14% over prior year quarter.
-- New vehicle revenue up 16%; Non-luxury import volume up 14%.
-- 9th consecutive quarter of year-over-year double digit used vehicle
revenue growth.
-- Parts and Service revenue up 6%.
Business Overview
-- Focus on base business driving unit volume and profit growth.
-- Strong performance despite lower Japanese brand inventory.
-- SG&A metrics continue strong improvement trend at 77.6% of gross profit.
Company Strategy
-- Organic growth through focus on the base business.
-- Converting leased properties to owned properties.
-- Opportunistically reduce debt.
Commenting on the second quarter results, Jeff Dyke, the Company’s EVP of Operations, stated, “The higher margin segments of our business continue to benefit as our new and used vehicle business continues to gain market share. The Company’s new vehicle revenue was up 16% over the same period last year. Used vehicle revenue was up 15%. Parts and service revenue was up 6% compared to the second quarter of last year. We look forward to introducing more advanced stages of some of our core operating playbooks in the near future to further capitalize on the work we've done to roll out Predictable, Repeatable and Sustainable processes to our dealerships."
Commenting on the business, B. Scott Smith, the Company’s President, said, "Our focus on creating Predictable, Repeatable and Sustainable processes is proving to be a sound model. Growing our base business continues to produce strong results. Our new and used volume both grew by double digits despite the challenge of lower Japanese brand inventory levels. We are seeing the benefit of our operating playbooks in every area of our business as we continue to outperform the industry. We will continue to focus on organic growth in our base business, converting leased properties to owned properties and opportunistically reducing our debt.
"We expect growth in the automotive retailing sector to continue over the second half of the year and we remain comfortable with our full year continuing operations earnings target of $1.18 - $1.28 per share."
Presentation materials for the Company’s July 26, 2011 earnings conference call at 11:00 A.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, International callers dial (706) 645-9291, Conference ID: 80358348.
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, EPS targets 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 and quarterly report on Form 10-Q for the quarter ending March 31, 2011. 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)
Second Quarter Ended June 30,
2011 2010
Revenues
New retail vehicles $ 979,824 $ 842,192
Fleet vehicles 55,448 53,842
Total new vehicles 1,035,272 896,034
Used vehicles 536,196 466,659
Wholesale vehicles 41,480 29,934
Total vehicles 1,612,948 1,392,627
Parts, service and collision repair 299,523 283,785
Finance, insurance and other 55,781 45,614
Total revenues 1,968,252 1,722,026
Total gross profit 309,732 282,476
SG&A expenses (240,439) (225,558)
Impairment charges (41) (1)
Depreciation (9,767) (8,581)
Operating income 59,485 48,336
Interest expense, floor plan (4,983) (5,387)
Interest expense, other, net (15,422) (15,647)
Interest expense, non-cash, convertible debt (1,715) (1,730)
Interest expense / amortization, non-cash, cash
flow swaps (464) (2,235)
Other income (expense), net 17 (7,235)
Income from continuing operations before taxes 36,918 16,102
Provision for income taxes (14,767) (6,510)
Income from continuing operations 22,151 9,592
Loss from discontinued operations (800) (1,156)
Net income $ 21,351 $ 8,436
Diluted:
Weighted average common shares outstanding 65,936 65,807
Earnings per share from continuing operations $ 0.37 $ 0.18
Loss per share from discontinued operations (0.02) (0.02)
Earnings per share $ 0.35 $ 0.16
Gross Margin Data (Continuing Operations):
New retail vehicles 6.8% 6.9%
Fleet vehicles 3.3% 1.9%
Total new vehicles 6.6% 6.6%
Used vehicles 7.4% 8.1%
Total vehicles retail 6.9% 7.1%
Wholesale vehicles (4.6%) (6.1%)
Parts, service and collision repair 49.3% 50.0%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 15.7% 16.4%
SG&A Expenses (Continuing Operations):
Personnel $ 139,502 $ 133,836
Advertising 13,645 12,689
Rent and rent related 33,261 31,936
Other 54,031 47,097
Total $ 240,439 $ 225,558
SG&A Expenses as % of Gross Profit 77.6% 79.9%
Operating Margin % 3.0% 2.8%
Unit Data (Continuing Operations):
New retail units 28,367 24,647
Fleet units 2,151 2,272
Total new units 30,518 26,919
Used units 27,141 24,382
Total units retailed 57,659 51,301
Wholesale units 6,356 5,227
Other Data:
Continuing Operations unit volume percentage
changes:
New retail units 15.1%
Fleet units (5.3%)
Total new units 13.4%
Used units 11.3%
Total units retailed 12.4%
Wholesale units 21.6%
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(In thousands, except per share, unit data and percentage amounts)
Six Months Ended June 30,
2011 2010
Revenues
New retail vehicles $ 1,896,929 $ 1,576,784
Fleet vehicles 119,089 97,495
Total new vehicles 2,016,018 1,674,279
Used vehicles 1,018,228 885,508
Wholesale vehicles 76,839 60,739
Total vehicles 3,111,085 2,620,526
Parts, service and collision repair 591,293 558,957
Finance, insurance and other 105,249 86,208
Total revenues 3,807,627 3,265,691
Total gross profit 600,901 548,354
SG&A expenses (472,953) (446,211)
Impairment charges (58) (45)
Depreciation (19,760) (16,998)
Operating income 108,130 85,100
Interest expense, floor plan (10,418) (10,185)
Interest expense, other, net (30,869) (32,798)
Interest expense, non-cash, convertible debt (3,409) (3,406)
Interest expense / amortization, non-cash, cash
flow swaps (286) (3,918)
Other income (expense), net 89 (7,173)
Income from continuing operations before taxes 63,237 27,620
Provision for income taxes (25,295) (11,462)
Income from continuing operations 37,942 16,158
Loss from discontinued operations (1,627) (3,568)
Net income $ 36,315 $ 12,590
Diluted:
Weighted average common shares outstanding 65,943 52,749
Earnings per share from continuing operations $ 0.64 $ 0.30
Loss per share from discontinued operations (0.03) (0.06)
Earnings per share $ 0.61 $ 0.24
Gross Margin Data (Continuing Operations):
New retail vehicles 6.6% 6.9%
Fleet vehicles 3.2% 2.7%
Total new vehicles 6.4% 6.7%
Used vehicles 7.6% 8.2%
Total vehicles retail 6.8% 7.2%
Wholesale vehicles (3.1%) (4.1%)
Parts, service and collision repair 49.3% 50.2%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 15.8% 16.8%
SG&A Expenses (Continuing Operations):
Personnel $ 276,061 $ 262,700
Advertising 27,313 23,804
Rent and rent related 63,678 64,785
Other 105,901 94,922
Total $ 472,953 $ 446,211
SG&A Expenses as % of Gross Profit 78.7% 81.4%
Operating Margin % 2.8% 2.6%
Unit Data (Continuing Operations):
New retail units 55,263 46,029
Fleet units 4,639 4,022
Total new units 59,902 50,051
Used units 52,386 45,874
Total units retailed 112,288 95,925
Wholesale units 12,000 10,355
Other Data:
Continuing Operations unit volume percentage
changes:
New retail units 20.1%
Fleet units 15.3%
Total new units 19.7%
Used units 14.2%
Total units retailed 17.1%
Wholesale units 15.9%
Sonic Automotive, Inc.
Earnings Per Share Reconciliation (Unaudited)
(In thousands, except per share data)
For the Second Quarter Ended June 30, 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 52,461 $ 22,151 $ (800) $ 21,351
Effect of
Participating
Securities:
Non-vested
Restricted
Stock
and Stock
Units - (291) - (291)
Basic
Earnings
(Loss) Per
Share 52,461 $ 21,860 $ 0.42 $ (800) $ (0.02) $ 21,060 $ 0.40
Effect of
Dilutive
Securities:
Contingently
Convertible
Debt (5.0%
Convertible
Notes) 12,890 2,294 - 2,294
Stock
Compensation
Plans 585
Diluted
Earnings
(Loss) Per
Share 65,936 $ 24,154 $ 0.37 $ (800) $ (0.02) $ 23,354 $ 0.35
For the Second Quarter Ended June 30, 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 52,249 $ 9,592 (1,156) $ 8,436
Effect of
Participating
Securities:
Non-vested
Restricted
Stock
and Stock
Units - (94) - (94)
Basic
Earnings
(Loss) Per $
Share 52,249 $ 9,498 $ 0.18 (1,156) $ (0.02) $ 8,342 $ 0.16
Effect of
Dilutive
Securities:
Contingently
Convertible
Debt (5.0%
Convertible
Notes) 12,890 $ 2,128 2,128
Stock
Compensation
Plans 668
Diluted
Earnings
(Loss) Per $
Share 65,807 $ 11,626 $ 0.18 (1,156) $ (0.02) $ 10,470 $ 0.16
For the Six Months Ended June 30, 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 52,438 $ 37,942 (1,627) $ 36,315
Effect of
Participating
Securities:
Non-vested
Restricted
Stock
and Stock
Units - (499) - (499)
Basic
Earnings
(Loss) Per $
Share 52,438 $ 37,443 $ 0.71 (1,627) $ (0.03) $ 35,816 $ 0.68
Effect of
Dilutive
Securities:
Contingently
Convertible
Debt (5.0%
Convertible
Notes) 12,890 4,604 - 4,604
Stock
Compensation
Plans 615
Diluted
Earnings
(Loss) Per $
Share 65,943 $ 42,047 $ 0.64 (1,627) $ (0.03) $ 40,420 $ 0.61
For the Six Months Ended June 30, 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 52,070 $ 16,158 (3,568) $ 12,590
Effect of
Participating
Securities:
Non-vested
Restricted
Stock
and Stock
Units - (160) - (160)
Basic
Earnings
(Loss) Per $
Share 52,070 $ 15,998 $ 0.31 (3,568) $ (0.07) $ 12,430 $ 0.24
Effect of
Dilutive
Securities:
Stock
Compensation
Plans 679
Diluted
Earnings
(Loss) Per $
Share 52,749 $ 15,998 $ 0.30 (3,568) $ (0.06) $ 12,430 $ 0.24
SOURCE Sonic Automotive, Inc.
Released July 26, 2011