Sonic Automotive, Inc. Reports Record Breaking 3rd Quarter Across All Operating Sectors As The "True Price" Strategy Takes Hold

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CHARLOTTE, N.C., Oct. 21, 2013 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported the highlights in the list below related to its performance in the quarter ended September 30, 2013.  During this quarter, Sonic identified a tax gain related to the extinguishment of its 5% Convertible Senior Notes in 2011 and 2012.  Sonic is evaluating the effects this gain may have over prior periods. Once this evaluation is completed, Sonic will issue an additional release reporting net income and earnings per share amounts for the quarter.

Q3 2013 Highlights

  • Total revenue up 5.4% compared to the prior year quarter
  • New revenue increased $65.4 million, or 5.5%, over prior year quarter
  • Pre-owned revenue increased $31.9 million, or 6.0%, over prior year quarter
  • All-time 3rd quarter record retailing 34,087 new units (excludes fleet)
  • All-time record retailing 27,632 pre-owned units
  • Pre-owned average quarterly volume per store per month at a record level - 91 units
  • Q3 record fixed operations gross profit of $149.1 million, up $8.6 million, or 6.1%, compared to the prior year quarter
  • Q3 record finance and insurance gross profit of $68.7 million, up 6.8%, and profit per retail unit of $1,114
  • SG&A to gross profit % was 78.1%; adjusted for customer experience, pre-owned and SOX remediation costs discussed below amount was 76.7%
  • Acquired two luxury dealerships in Denver, CO

B. Scott Smith, the Company's President, noted, "I'm very proud of our team's record-setting performance during the quarter and despite the additional costs experienced as we continue our growth initiatives, we were able to deliver growth in our operating metrics compared to the third quarter last year.  In addition, we closed on the acquisition of Murray Mercedes Benz of Denver and Murray BMW of Denver, which we expect will generate combined annual revenues of approximately $200.0 million.  These stores will augment our existing platform in Denver, and our acquisition of these stores, along with our plans to open stand-alone pre-owned sales operations, demonstrates our commitment to the Denver market."

"Based on our year-to-date performance and internal forecasts, we are updating our targeted guidance range for adjusted earnings per share from previously announced amounts.  We are targeting adjusted fully diluted earnings per share from continuing operations at $1.96-$2.03 for the full year 2013. This update reflects a tightening of our guidance range as we feel comfortable that we will be at the upper end of our original guidance of $1.93 to $2.03."

The Company's EVP of Operations, Jeff Dyke, commented, "It's exciting to see the progress we made this quarter.  As announced today under separate cover, we will begin our One Sonic-One Experience launch in mid-2014. True Price is an important part of this launch.  We have noted in the past that it would take some time for the True Price process to settle into our culture and we are finally beginning to see margins improving along with record breaking unit volumes.  While we still have a long way to go, I am encouraged by this quarter's results as we work toward improving even more in Q4.  Overall, we had record breaking performances across New, Pre Owned, Fixed and F&I so I could not be more pleased with our results and the efforts of this team as we work toward our One Sonic-One Experience launch."

For further discussion of our pre-owned and One Sonic-One Experience initiatives, see our separate release dated today.

Third Quarter Operations Review Conference Call

Senior management will host a conference call today at 10:00 A.M. (Eastern) to discuss the quarter's operations.  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: 1.877.441.0824
International: 1.706.643.0958

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

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 anticipated growth in used vehicle sales, targeted adjusted earnings per share for the year ended December 31, 2013, an anticipated tax benefit 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, 2012 and quarterly report on Form 10-Q for the period ended June 30, 2013.  The Company does not undertake any obligation to update forward-looking information.

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(dollars in thousands)


Third Quarter

Ended

September 30,

2013

Third Quarter

Ended

September 30,

2012

Revenues:


New retail vehicles

$   1,219,525

$   1,158,524

Fleet vehicles

41,745

37,302

Total new vehicles

1,261,270

1,195,826

Used vehicles

559,848

527,914

Wholesale vehicles

42,731

52,280

Total vehicles

1,863,849

1,776,020

Parts, service and collision repair

309,600

287,311

Finance, insurance and other

68,747

64,390

Total revenues

2,242,196

2,127,721

Gross profit

326,081

304,428

Selling, general and administrative expenses

(254,564)

(235,328)

Impairment charges

(18)

(23)

Depreciation and amortization

(13,744)

(11,295)

Operating income (loss)

$        57,755

$        57,782




Gross Margin Data (Continuing Operations):


New retail vehicles

5.9%

5.7%

Fleet vehicles

2.5%

2.5%

Total new vehicles

5.7%

5.6%

Used vehicles

7.0%

6.7%

Wholesale vehicles

(7.5%)

(6.5%)

Parts, service and collision repair

48.2%

48.9%

Finance, insurance and other

100.0%

100.0%

Overall gross margin

14.5%

14.3%




SG&A Expenses (Continuing Operations):


Compensation

$      151,683

$      140,771

Advertising

14,132

12,498

Rent 

18,901

18,619

Other

69,848

63,440

Total SG&A expenses

$      254,564

$      235,328

SG&A expenses as % of gross profit

78.1%

77.3%




Operating Margin %

2.6%

2.7%




Unit Data (Continuing Operations):


New retail units

34,087

33,264

Fleet units

1,451

1,325

Total new units

35,538

34,589

Used units

27,632

26,610

Wholesale units

7,641

8,931

 

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(dollars in thousands)





Nine Months Ended

September 30, 2013

Nine Months Ended

September 30, 2012

Revenues:


New retail vehicles

$            3,520,343

$                 3,286,285

Fleet vehicles

131,143

126,585

Total new vehicles

3,651,486

3,412,870

Used vehicles

1,625,006

1,564,414

Wholesale vehicles

134,556

138,506

Total vehicles

5,411,048

5,115,790

Parts, service and collision repair

913,290

875,206

Finance, insurance and other

203,461

185,737

Total revenues

6,527,799

6,176,733

Gross profit

962,907

921,034

Selling, general and administrative expenses

(748,479)

(712,228)

Impairment charges

(69)

(57)

Depreciation and amortization

(39,020)

(33,399)

Operating income (loss)

$               175,339

$                    175,350




Gross Margin Data (Continuing Operations):


New retail vehicles

5.8%

6.0%

Fleet vehicles

2.7%

2.9%

Total new vehicles

5.7%

5.9%

Used vehicles

7.1%

7.1%

Wholesale vehicles

(4.7%)

(3.2%)

Parts, service and collision repair

48.7%

48.9%

Finance, insurance and other

100.0%

100.0%

Overall gross margin

14.8%

14.9%




SG&A Expenses (Continuing Operations):


Compensation

$               449,791

$                    426,463

Advertising

41,282

37,107

Rent

56,344

57,198

Other

201,062

191,460

Total SG&A expenses

$               748,479

$                    712,228

SG&A expenses as % of gross profit

77.7%

77.3%




Operating Margin %

2.7%

2.8%




Unit Data (Continuing Operations):


New retail units

98,362

94,869

Fleet units

4,661

4,616

Total new units

103,023

99,485

Used units

80,700

78,613

Wholesale units

23,291

23,736

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except units and per unit data)

New Vehicles


















Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue                                                     

$            1,261,270

$            1,195,826

$       65,444

5.5%

Gross profit

$                 72,408

$                 67,312

$         5,096

7.6%

Unit sales         

35,538

34,589

949

2.7%

Revenue per unit                   

$                 35,491

$                 34,572

$            919

2.7%

Gross profit per unit

$                   2,037

$                   1,946

$              91

4.7%

Gross profit as a % of revenue

5.7%

5.6%

10

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue                                                     

$            3,651,486

$            3,412,870

$     238,616

7.0%

Gross profit                        

$               206,668

$               200,968

$         5,700

2.8%

Unit sales

103,023

99,485

3,538

3.6%

Revenue per unit

$                 35,443

$                 34,305

$         1,138

3.3%

Gross profit per unit

$                   2,006

$                   2,020

$            (14)

(0.7%)

Gross profit as a % of revenue

5.7%

5.9%

(20)

bps











Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Same Store:







Revenue                                                     

$            1,251,683

$            1,195,826

$       55,857

4.7%

Gross profit

$                 71,605

$                 67,443

$         4,162

6.2%

Unit sales           

35,364

34,589

775

2.2%

Revenue per unit                     

$                 35,394

$                 34,572

$            822

2.4%

Gross profit per unit

$                   2,025

$                   1,950

$              75

3.8%

Gross profit as a % of revenue

5.7%

5.6%

10

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Same Store:







Revenue                                                     

$            3,641,900

$            3,412,870

$     229,030

6.7%

Gross profit                        

$               205,894

$               201,687

$         4,207

2.1%

Unit sales                                   

102,849

99,485

3,364

3.4%

Revenue per unit        

$                 35,410

$                 34,305

$         1,105

3.2%

Gross profit per unit                      

$                   2,002

$                   2,027

$            (25)

(1.2%)

Gross profit as a % of revenue

5.7%

5.9%

(20)

bps

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except units and per unit data)

Used Vehicles


















Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue                                                            

$               559,848

$               527,914

$       31,934

6.0%

Gross profit       

$                 38,976

$                 35,562

$         3,414

9.6%

Unit sales              

27,632

26,610

1,022

3.8%

Revenue per unit                           

$                 20,261

$                 19,839

$            422

2.1%

Gross profit per unit

$                   1,411

$                   1,336

$              75

5.6%

Gross profit as a % of revenue

7.0%

6.7%

30

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change









Reported:







Revenue                                                            

$            1,625,006

$            1,564,414

$       60,592

3.9%

Gross profit      

$               114,615

$               110,679

$         3,936

3.6%

Unit sales

80,700

78,613

2,087

2.7%

Revenue per unit          

$                 20,136

$                 19,900

$            236

1.2%

Gross profit per unit                                

$                   1,420

$                   1,408

$              12

0.9%

Gross profit as a % of revenue          

7.1%

7.1%

0

bps











Third Quarter Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change









Same Store:







Revenue                                                            

$               554,361

$               527,914

$       26,447

5.0%

Gross profit       

$                 38,587

$                 34,074

$         4,513

13.2%

Unit sales             

27,444

26,610

834

3.1%

Revenue per unit                            

$                 20,200

$                 19,839

$            361

1.8%

Gross profit per unit 

$                   1,406

$                   1,280

$            126

9.8%

Gross profit as a % of revenue

7.0%

6.5%

50

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change









Same Store:







Revenue                                                            

$            1,619,519

$            1,564,414

$       55,105

3.5%

Gross profit       

$               114,104

$               109,984

$         4,120

3.7%

Unit sales              

80,512

78,613

1,899

2.4%

Revenue per unit                           

$                 20,115

$                 19,900

$            215

1.1%

Gross profit per unit               

$                   1,417

$                   1,399

$              18

1.3%

Gross profit as a % of revenue

7.0%

7.0%

0

bps

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except units and per unit data)

Wholesale Vehicles


















Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue               

$                 42,731

$                 52,280

$       (9,549)

(18.3%)

Gross profit (loss)     

$                  (3,197)

$                  (3,394)

$            197

5.8%

Unit sales                     

7,641

8,931

(1,290)

(14.4%)

Revenue per unit             

$                   5,592

$                   5,854

$          (262)

(4.5%)

Gross profit (loss) per unit

$                     (418)

$                     (380)

$            (38)

(10.0%)

Gross profit (loss) as a % of revenue

(7.5%)

(6.5%)

(100)

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue                                                  

$               134,556

$               138,506

$       (3,950)

(2.9%)

Gross profit (loss)                                

$                  (6,343)

$                  (4,399)

$       (1,944)

(44.2%)

Unit sales                     

23,291

23,736

(445)

(1.9%)

Revenue per unit                               

$                   5,777

$                   5,835

$            (58)

(1.0%)

Gross profit (loss) per unit 

$                     (272)

$                     (185)

$            (87)

(47.0%)

Gross profit (loss) as a % of revenue

(4.7%)

(3.2%)

(150)

bps











Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Same Store:







Revenue                                                  

$                 42,433

$                 52,280

$       (9,847)

(18.8%)

Gross loss  

$                  (3,191)

$                  (3,394)

$            203

6.0%

Unit sales           

7,612

8,931

(1,319)

(14.8%)

Revenue per unit                     

$                   5,574

$                   5,854

$          (280)

(4.8%)

Gross loss per unit         

$                     (419)

$                     (380)

$            (39)

(10.3%)

Gross loss as a % of revenue

(7.5%)

(6.5%)

(100)

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Same Store:







Revenue                                                  

$               134,257

$               138,506

$       (4,249)

(3.1%)

Gross loss                            

$                  (6,336)

$                  (4,399)

$       (1,937)

(44.0%)

Unit sales                   

23,262

23,736

(474)

(2.0%)

Revenue per unit                         

$                   5,772

$                   5,835

$            (63)

(1.1%)

Gross loss per unit       

$                     (272)

$                     (185)

$            (87)

(47.0%)

Gross loss as a % of revenue               

(4.7%)

(3.2%)

(150)

bps

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands)

Parts, Service and Collision Repair ("Fixed Operations") 















Third Quarter Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change

Reported:







Revenue







Customer Pay

$               137,106

$               131,126

$         5,980

4.6%

Warranty

45,405

40,632

4,773

11.7%

Wholesale Parts

43,349

37,720

5,629

14.9%

Internal, Sublet & Other

83,740

77,833

5,907

7.6%

Total                           

$               309,600

$               287,311

$       22,289

7.8%

Gross profit






Customer Pay

$                 75,203

$                 71,939

$         3,264

4.5%

Warranty

24,374

21,225

3,149

14.8%

Wholesale Parts

7,881

7,249

632

8.7%

Internal, Sublet & Other

41,689

40,145

1,544

3.8%

Total                           

$               149,147

$               140,558

$         8,589

6.1%

Gross profit as a % of revenue






Customer Pay

54.9%

54.9%

0

bps

Warranty

53.7%

52.2%

150

bps

Wholesale Parts

18.2%

19.2%

(100)

bps

Internal, Sublet & Other

49.8%

51.6%

(180)

bps

Total                           

48.2%

48.9%

(70)

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change

Reported:







Revenue







Customer Pay

$               407,252

$               395,080

$       12,172

3.1%

Warranty

137,489

126,343

11,146

8.8%

Wholesale Parts

124,870

115,545

9,325

8.1%

Internal, Sublet & Other

243,679

238,238

5,441

2.3%

Total                           

$               913,290

$               875,206

$       38,084

4.4%

Gross profit






Customer Pay

$               224,485

$               217,840

$         6,645

3.1%

Warranty

74,657

66,315

8,342

12.6%

Wholesale Parts

23,158

22,250

908

4.1%

Internal, Sublet & Other

122,206

121,644

562

0.5%

Total                           

$               444,506

$               428,049

$       16,457

3.8%

Gross profit as a % of revenue






Customer Pay

55.1%

55.1%

0

bps

Warranty

54.3%

52.5%

180

bps

Wholesale Parts

18.5%

19.3%

(80)

bps

Internal, Sublet & Other

50.2%

51.1%

(90)

bps

Total                           

48.7%

48.9%

(20)

bps

 

 Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands)

Parts, Service and Collision Repair ("Fixed Operations") 















Third Quarter Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change

Same Store:







Revenue







Customer Pay

$               134,642

$               131,126

$         3,516

2.7%

Warranty

44,571

40,632

3,939

9.7%

Wholesale Parts

42,695

37,720

4,975

13.2%

Internal, Sublet & Other

82,898

77,833

5,065

6.5%

Total                           

$               304,806

$               287,311

$       17,495

6.1%

Gross profit






Customer Pay

$                 73,885

$                 71,939

$         1,946

2.7%

Warranty

23,918

21,225

2,693

12.7%

Wholesale Parts

7,717

7,249

468

6.5%

Internal, Sublet & Other

41,037

39,836

1,201

3.0%

Total                           

$               146,557

$               140,249

$         6,308

4.5%

Gross profit as a % of revenue






Customer Pay

54.9%

54.9%

0

bps

Warranty

53.7%

52.2%

150

bps

Wholesale Parts

18.1%

19.2%

(110)

bps

Internal, Sublet & Other

49.5%

51.2%

(170)

bps

Total                           

48.1%

48.8%

(70)

bps











Nine Months Ended September 30,

Better / (Worse)


2013

2012

 Change

% Change

Same Store:







Revenue







Customer Pay

$               404,788

$               395,080

$         9,708

2.5%

Warranty

136,655

126,343

10,312

8.2%

Wholesale Parts

124,216

115,545

8,671

7.5%

Internal, Sublet & Other

242,836

238,238

4,598

1.9%

Total                           

$               908,495

$               875,206

$       33,289

3.8%

Gross profit






Customer Pay

$               223,166

$               217,840

$         5,326

2.4%

Warranty

74,511

66,315

8,196

12.4%

Wholesale Parts

22,995

22,250

745

3.3%

Internal, Sublet & Other

121,261

120,986

275

0.2%

Total                           

$               441,933

$               427,391

$       14,542

3.4%

Gross profit as a % of revenue






Customer Pay

55.1%

55.1%

0

bps

Warranty

54.5%

52.5%

200

bps

Wholesale Parts

18.5%

19.3%

(80)

bps

Internal, Sublet & Other

49.9%

50.8%

(90)

bps

Total                           

48.6%

48.8%

(20)

bps

 

 Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except per unit data)

Finance, Insurance and Other ("F&I")


















Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue                                          

$                 68,747

$                 64,390

$         4,357

6.8%

Gross profit per retail unit (excludes fleet)

$                   1,114

$                   1,075

$              39

3.6%




















Nine Months Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Reported:







Revenue                                          

$               203,461

$               185,737

$       17,724

9.5%

Gross profit per retail unit (excludes fleet)

$                   1,136

$                   1,071

$              65

6.1%











Third Quarter Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Same Store:







Revenue                                          

$                 68,267

$                 64,240

$         4,027

6.3%

Gross profit per retail unit (excluding fleet)

$                   1,113

$                   1,073

$              40

3.7%




















Nine Months Ended September 30,

Better / (Worse)


2013

2012

Change

% Change









Same Store:







Revenue                                          

$               202,996

$               185,081

$       17,915

9.7%

Gross profit per retail unit (excluding fleet)

$                   1,136

$                   1,067

$              69

6.5%

 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands)

Selling, General and Administrative ("SG&A") Expenses














Third Quarter Ended
September 30,

Better / (Worse)


2013

2012

 Change

% Change


















Compensation                      

$               151,683

$               140,771

$     (10,912)

(7.8%)

Advertising                      

14,132

12,498

(1,634)

(13.1%)

Rent 

18,901

18,619

(282)

(1.5%)

Other                      

69,848

63,440

(6,408)

(10.1%)

Total                      

$               254,564

$               235,328

$     (19,236)

(8.2%)

SG&A as a % of gross profit






Compensation                      

46.5%

46.2%

(30)

bps

Advertising                      

4.3%

4.1%

(20)

bps

Rent 

5.8%

6.1%

30

bps

Other                      

21.5%

20.9%

(60)

bps

Total                      

78.1%

77.3%

(80)

bps











Nine Months Ended
September 30,

Better / (Worse)


2013

2012

 Change

% Change


















Compensation                      

$               449,791

$               426,463

$     (23,328)

(5.5%)

Advertising                      

41,282

37,107

(4,175)

(11.3%)

Rent

56,344

57,198

854

1.5%

Other                      

201,062

191,460

(9,602)

(5.0%)

Total                      

$               748,479

$               712,228

$     (36,251)

(5.1%)

SG&A as a % of gross profit






Compensation                      

46.7%

46.3%

(40)

bps

Advertising                      

4.3%

4.0%

(30)

Rent

5.9%

6.2%

30

bps

Other                      

20.8%

20.8%

(0)

bps

Total                      

77.7%

77.3%

(40)

bps

 

SOURCE Sonic Automotive, Inc.

Released October 21, 2013