Sonic Automotive, Inc. Reports Continued Earnings Strength for Third Quarter of 2009

CHARLOTTE, N.C., Oct. 27 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH), the nation's third-largest automotive retailer, today reported that 2009 third quarter earnings from continuing operations were $0.22 per diluted share which includes an after-tax gain of $0.01 per diluted share, related to the Company's repurchase of convertible notes. This compares to a loss from continuing operations of $0.38 per diluted share, in the prior year quarter. The results for the prior year quarter include the after-tax effect of impairment charges, lease exit accruals and hurricane damage of $0.53 per diluted share.

Business Overview - Strong operating results and improved capital structure

B. Scott Smith, the Company's President, said, "We are pleased with what we were able to accomplish this quarter at Sonic Automotive. In addition to continuing to post strong operating results we completed a very successful public refinancing of our 2010 debt obligations. The offering in late September allowed us to de-lever our balance sheet, remove some extremely dilutive convertible debt from our capital structure and mitigate future refinancing risk in the near term. This also paves the way for what we believe will be a successful refinancing of our upcoming syndicated credit facility. This offering would not have been possible without the strong fundamentals of our business model which is evident in our consistent operating performance and cash flow generation throughout this business cycle."

New Vehicles - Strongest year-over-year market share performance to date

Commenting on the Company's new car sales, Mr. Smith noted, "The combination of increased customer traffic from the CARS program and the continued execution of our e-Commerce strategies resulted in Sonic posting its strongest year-over-year new vehicle performance so far this year. We have now had eight consecutive months of new car market share gains. In addition to the improved unit volume, our new vehicle retail margins were up 70 basis points to 7.6% and our new vehicle days supply was at 39 days."

Used Vehicles - Used vehicle volume up 25%

Overall used vehicle unit volume was up 25% and total used vehicle revenue was up over 18% for the third quarter of 2009 compared to the third quarter of 2008. Jeff Dyke, the Company's EVP of Operations, stated, "Our used vehicle volume continued to grow throughout the quarter despite the heavy emphasis on new vehicle sales stemming from the CARS program. Our used-to-new ratio, which has continued to improve throughout the year, was at 80% for the third quarter. Our certified pre-owned business, which has been a consistent strength for Sonic, remains strong at 34% of our overall used vehicle volume. We are growing our used vehicle business by continuing to expand our presence across the entire spectrum of the used vehicle market."

Parts and Service - Margin expansion continues with stable revenues

Sonic's parts and service revenue for the third quarter was flat with the prior year quarter while the gross margin at 50.6% represents an improvement over the prior year third quarter margin of 49.6% and the second quarter 2009 margin of 50.3%.

Mr. Dyke stated, "Our parts and service business continues to add a substantial amount of stability to our results of operations. We have steadily grown our fixed operations margin every quarter this year as a result of the pricing, merchandising and other strategies being implemented with the rollout of our parts and service playbook. We have every reason to expect this trend will continue as the rollout progresses."

Presentation materials for the Company's October 27, 2009 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 "For Investors" tab and choosing "Webcasts & Presentations" on the right side of the monitor.

To access the live broadcast of the call over the Internet go to: www.ccbn.com or 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: 34082140

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation's third-largest automotive retailer, operating 153 franchises. Sonic can be reached on the web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements with respect to future debt refinancing. 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 current report on Form 8-K filed August 21, 2009. 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)

                            Third Quarter Ended        Nine Months Ended
                           9/30/2009   9/30/2008     9/30/2009   9/30/2008
                           ---------   ---------     ---------   ---------
    Revenues
      New retail vehicles   $776,578    $889,237    $2,005,486   $2,700,879
      Fleet vehicles          48,789      53,234       164,160      278,007
        Total new vehicles   825,367     942,471     2,169,646    2,978,886
      Used vehicles          365,501     308,158     1,034,444      994,906
      Wholesale vehicles      33,220      64,995        97,478      216,378
                              ------      ------        ------      -------
        Total vehicles     1,224,088   1,315,624     3,301,568    4,190,170
      Parts, service and
       collision repair      255,372     256,867       768,003      787,928
      Finance, insurance
       and other              41,302      43,259       110,663      139,355
                              ------      ------        ------      -------
        Total revenues     1,520,762   1,615,750     4,180,234    5,117,453
    Total gross profit       257,468     259,360       729,727      816,348
    SG&A expenses           (203,694)   (220,413)     (588,834)    (656,799)
    Impairment charges          (339)    (25,476)       (4,164)     (25,809)
    Depreciation and
     amortization             (8,080)     (8,286)      (24,523)     (23,562)
                              ------      ------        ------      -------
    Operating income          45,355       5,185       112,206      110,178
    Interest expense,
     floor plan               (4,324)     (8,987)      (14,368)     (31,591)
    Non-cash interest
     expense, convertible
     debt                      7,818      (2,696)        1,556       (7,991)
    Interest expense,
     other, net              (19,305)    (15,859)      (57,496)     (40,803)
    Other income
     (expense), net            2,442          (9)        2,504           88
                              ------      ------        ------      -------
    Income (Loss) from
     continuing operations
     before taxes             31,986     (22,366)       44,402       29,881
    Income tax (provision)
     benefit                 (13,506)      7,301       (19,093)     (13,598)
                              ------      ------        ------      -------
    Income (Loss) from
     continuing operations    18,480     (15,065)       25,309       16,283
    Discontinued
     operations:
      Loss from operations
       and the sale of
       discontinued
       franchises             (3,848)    (17,878)      (10,681)     (30,581)
      Income tax benefit         962       5,977         2,670        9,174
      Loss from
       discontinued
       operations             (2,886)    (11,901)       (8,011)     (21,407)
                              ------      ------        ------      -------
    Net income (loss)        $15,594    $(26,966)      $17,298      $(5,124)
                             =======    ========       =======      =======

    Basic:
      Weighted average
       common shares
       outstanding            42,305      40,138        41,130       40,447

      Earnings (Loss) per
       share from
       continuing
       operations              $0.43      ($0.38)        $0.61        $0.40
      Loss per share from
       discontinued
       operations             ($0.06)     ($0.29)       ($0.19)      ($0.53)
      Earnings (Loss) per
       share                   $0.37      ($0.67)        $0.42       ($0.13)
                               =====      ======         =====       ======

    Diluted:
      Weighted average
       common shares
       outstanding            63,195      40,138        52,529       40,626

      Earnings (Loss) per
       share from
       continuing
       operations              $0.22      ($0.38)        $0.42        $0.40
      Loss per share from
       discontinued
       operations             ($0.05)     ($0.29)       ($0.16)      ($0.53)
                              ------      ------        ------       -------
      Earnings (Loss) per
       share                   $0.17      ($0.67)        $0.26       ($0.13)
                               =====      ======         =====       ======


    Gross Margin Data
     (Continuing Operations):
    -------------------------

      Retail new vehicles      7.6%          6.9%          7.3%         7.2%
      Fleet vehicles           2.9%          4.8%          3.7%         2.3%
          Total new
           vehicles            7.3%          6.8%          7.0%         6.8%
      Used vehicles retail     7.8%          8.4%          8.3%         8.9%
        Total vehicles
         retail                7.5%          7.2%          7.4%         7.3%
      Wholesale vehicles      (5.4%)        (1.9%)        (3.3%)       (1.9%)
      Parts, service and
       collision repair       50.6%         49.6%         50.0%        49.6%
      Finance, insurance
       and other             100.0%        100.0%        100.0%       100.0%
        Overall gross
         margin               16.9%         16.1%         17.5%        16.0%


    SG&A Expenses
     (Continuing
      Operations):
    -------------

      Personnel            $118,345     $116,949      $337,737     $365,618
      Advertising            10,734       12,817        31,333       42,405
      Facility rent          22,560       27,257        67,225       68,736
      Other                  52,055       63,390       152,539      180,040
                             ------       ------       -------      -------
        Total              $203,694     $220,413      $588,834     $656,799


    SG&A Expenses as %
     of Gross Profit
    ----------------

      Personnel                45.9%        45.1%         46.3%        44.7%
      Advertising               4.2%         4.9%          4.3%         5.2%
      Facility rent             8.8%        10.5%          9.2%         8.4%
      Other                    20.2%        24.5%         20.9%        22.2%
                               -----        -----         -----        -----
        Total                  79.1%        85.0%         80.7%        80.5%

    Operating Margin %          3.0%         0.3%          2.7%         2.2%



    Unit Data (Continuing
     Operations):
    ---------------------

                            Third Quarter Ended        Nine Months Ended
                           9/30/2009   9/30/2008     9/30/2009   9/30/2008
                           ---------   ---------     ---------   ---------
      New retail units       24,305       26,025        60,998       80,405
      Fleet units             1,971        2,772         6,800       11,572
      Used units             19,360       15,444        55,062       49,617
      Wholesale units         6,612        8,636        17,414       27,559
      Average price per
       unit:
        New retail vehicles $31,951      $34,169       $32,878      $33,591
        Fleet vehicles       24,753       19,204        24,141       24,024
        Used vehicles        18,879       19,953        18,787       20,052
        Wholesale vehicles    5,024        7,526         5,598        7,851

    Other Data:
    -----------

      Same store revenue
       percentage changes:
        New retail            (12.7%)                    (25.9%)
        Fleet                  (8.4%)                    (41.0%)
          Total New
           Vehicles           (12.4%)                    (27.3%)
        Used                   18.6%                       3.9%
        Parts, service and
         collision repair      (0.7%)                     (2.7%)
        Finance, insurance
         and other             (3.8%)                    (20.2%)
          Total                (5.9%)                    (18.4%)
                               =====                     ======



    Balance Sheet Data:
    --------------------
                          9/30/2009   12/31/2008(1)
                          ---------   ------------
    ASSETS
    Current Assets:
      Cash and cash
       equivalents             $614       $6,971
      Restricted cash       106,913            -
      Receivables, net      163,161      247,025
      Inventories           657,475      916,837
      Assets held for sale  176,128      406,576
      Other current assets   16,900       16,822
        Total current
         assets           1,121,191    1,594,231
    Property and
     Equipment, Net         378,170      369,892
    Goodwill, Net           403,048      327,007
    Other Intangibles, Net   79,685       82,328
    Other Assets             22,674       32,087
                             ------       ------
    TOTAL ASSETS         $2,004,768   $2,405,545
                         ==========   ==========


    LIABILITIES AND
     STOCKHOLDERS' EQUITY
    ---------------------
    Current Liabilities:
      Floor plan notes
       payable             $605,059     $921,023
      Other current
       liabilities          224,377      277,938
      Liabilities
       associated with
       assets
       held for sale         53,123      199,482
      Current maturities
       of long-term debt    105,750      738,447
                            -------      -------
        Total current
         liabilities        988,309    2,136,890
    LONG-TERM DEBT          556,243            -
    OTHER LONG-TERM
     LIABILITIES            109,562       71,132
    STOCKHOLDERS' EQUITY    350,654      197,523
                            -------      -------
    TOTAL LIABILITIES
     AND STOCKHOLDERS'
     EQUITY              $2,004,768   $2,405,545
                         ==========   ==========


    (1) Restated for the adoption effects of ASC 470-20-65.

SOURCE Sonic Automotive, Inc.