Sonic Automotive, Inc. Posts All-Time Record Pre-Owned Unit Sales and Q1 Record Pre-Owned Gross Profits

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CHARLOTTE, N.C., April 22, 2014 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported 2014 first quarter earnings from continuing operations of $20.0 million compared to $21.7 million in the prior year quarter.  Continuing operations earnings per diluted share were $0.38 in the first quarter of 2014 compared to $0.41 in the prior year quarter.  Sonic estimates that first quarter 2014 weather events in the southeast negatively affected continuing operations earnings per diluted share by approximately $0.02.  Expenses attributable to Sonic's stand-alone pre-owned store initiative also reduced continuing operations earnings per diluted share by an additional $0.02 in the first quarter of 2014.

Q1 2014 Highlights:

  • All-time record pre-owned unit sales of 27,657 in Q1 2014
  • Record Q1 pre-owned gross profit of $40.7 million in 2014
  • Pre-owned unit sales per store per month reached 90 units in Q1 2014
  • Q1 2014 fixed operations revenue up $22.1 million, or 7.5% over the prior year quarter
  • Record Q1 fixed operations gross profit of $152.1 million, up $7.9 million over the prior year quarter

B. Scott Smith, the Company's President, noted, "We have been very busy in the first quarter.  I'm happy with the progress we have made in both pre-owned and in our customer experience initiatives.  We are very excited about the opening of our pre-owned stores in Denver expected in the fourth quarter 2014.  Our collection of highly skilled professionals, operational playbooks and state-of-the-art technology will provide us with a competitive advantage over others in this pre-owned space." 

"With our customer experience initiative (One-Sonic One-Experience), we intend on helping the retail automotive industry change toward the way current and future consumers want to shop for cars and trucks.  Our goal is to provide options to customers that are enjoyable, transparent and consistent with their lifestyles.  We plan on beginning the roll out this new shopping experience to our customers in the Charlotte, North Carolina market in the third quarter of 2014, and we will launch the customer experience initiative in other markets after the Charlotte roll out is complete."

"We would also like to reiterate our targeted range of diluted earnings per share from continuing operations for full year 2014 of $1.95 to $2.05.  This range includes an expected $0.14 per diluted share effect related to costs of our stand-alone pre-owned initiative.  Excluding the anticipated effects of this initiative, our targeted range of diluted earnings per share from continuing operations for full year 2014 is $2.09 to $2.19."

Jeff Dyke, Sonic's EVP of Operations, stated, "We continue to demonstrate our ability to operate and grow in the pre-owned space at record levels.  Compared to the prior year quarter, we were able to grow pre-owned unit sales by 4.5% and pre-owned gross profit by 7.0%.  In addition, our fixed operations teams were able to achieve record results despite the weather issues that plagued many of our southeastern stores during the quarter.  We achieved fixed operations revenue and gross profit growth over the prior year quarter of 7.5% and 5.5%, respectively.  While new retail unit volumes were relatively flat compared to the prior year quarter, we were able to increase our gross profit per unit to $2,191, up $58 per unit versus Q1 2013.  We continue to make progress on our One-Sonic One-Experience and stand-alone pre-owned store projects, which are all on track.  While the weather caused a slowdown in January and February, we still beat our internal forecast for Q1 2014, and we remain on track to achieve our EPS target for the full year."

"We continue testing our True Price® pricing methodology. This quarter we began to see two things happen – as the market grew stronger, our share stabilized, and we grew market share sequentially over the prior quarter and we were able to grow new car margin by $58 per retail unit.  This marks the first time in over a year of adjusting our model that both share and margin grew together in the quarter.  As we move toward our One-Sonic One-Experience launch, we expect to gain significant market share as customers benefit from the entire complement of our new shopping experience.  Bottom line, when we fully implement One-Sonic One-Experience, we will offer the automobile buying community a shopping experience that no other competitor in our industry can offer, or will be able to offer, for several years to come."

First Quarter Earnings Conference Call

Senior management will host a conference call today at 10:00 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: 1.877.450.3867
International: 1.706.643.0958
Conference ID: 76537421

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: 76537421

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 earnings per share from continuing operations, expected expense impacts of our company's stand-alone pre-owned store initiative, anticipated growth in new vehicle sales, and anticipated future success and impacts from the implementation of our planned customer experience and stand-alone pre-owned store 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, 2013.  The Company does not undertake any obligation to update forward-looking information.

Sonic Automotive, Inc.
Results of Operations (Unaudited)




First Quarter Ended
March 31, 2014

First Quarter Ended
March 31, 2013



(In thousands, except per share and unit data)

Revenues:




New retail vehicles


$             1,112,291

$             1,101,109

Fleet vehicles


34,329

41,947

Total new vehicles


1,146,620

1,143,056

Used vehicles


559,816

526,182

Wholesale vehicles


41,598

51,792

Total vehicles

1,748,034

1,721,030

Parts, service and collision repair


318,771

296,642

Finance, insurance and other, net


69,581

65,494

Total revenues


2,136,386

2,083,166

Gross profit


329,000

313,020

Selling, general and administrative expenses


(263,973)

(245,824)

Impairment charges


(3)

(15)

Depreciation and amortization


(14,381)

(12,134)

Operating income (loss)


50,643

55,047

Other income (expense):



Interest expense, floor plan


(4,689)

(5,213)

Interest expense, other, net


(13,818)

(14,359)

Other income (expense), net


97

95

Total other income (expense)


(18,410)

(19,477)

Income (loss) from continuing operations before taxes


32,233

35,570

Provision for income taxes - benefit (expense)


(12,249)

(13,873)

Income (loss) from continuing operations


19,984

21,697

Income (loss) from discontinued operations


(598)

(406)

Net income (loss)

$                  19,386

$                  21,291






Diluted earnings (loss) per common share:



Earnings (loss) per share from continuing operations


$                     0.38

$                     0.41

Earnings (loss) per share from discontinued operations


(0.02)

(0.01)

Earnings (loss) per common share


$                     0.36

$                     0.40

Weighted average common shares outstanding


52,946

52,931






Gross Margin Data (Continuing Operations):



New retail vehicles


5.9%

5.9%

Fleet vehicles


2.6%

3.0%

Total new vehicles


5.8%

5.8%

Used vehicles


7.3%

7.2%

Wholesale vehicles


(0.2%)

(2.3%)

Parts, service and collision repair


47.7%

48.6%

Finance, insurance and other


100.0%

100.0%

Overall gross margin


15.4%

15.0%






SG&A Expenses (Continuing Operations):



Compensation


$                157,154

$                148,580

Advertising


14,119

13,431

Rent 


18,535

19,022

Other


74,165

64,791

Total SG&A expenses


$                263,973

$                245,824

SG&A expenses as % of gross profit


80.2%

78.5%






Operating Margin %


2.4%

2.6%






Unit Data (Continuing Operations):



New retail units


30,029

30,590

Fleet units


1,102

1,493

Total new units


31,131

32,083

Used units


27,657

26,469

Wholesale units


7,380

8,393

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

Per Share Data
























First Quarter Ended March 31, 2014




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


(In thousands, except per share amounts)

Reported:













Earnings (loss) and shares


52,418

$   19,984


$      (598)


$    19,386

Effect of participating securities:













Non-vested restricted stock













and stock units




(63)


-


(63)

Basic earnings (loss) and shares


52,418

$   19,921

$    0.38

$      (598)

$   (0.01)

$    19,323

$    0.37

Effect of dilutive securities:













Stock compensation plans


528











Diluted earnings (loss) and shares


52,946

$   19,921

$    0.38

$      (598)

$   (0.02)

$    19,323

$    0.36
































First Quarter Ended March 31, 2013




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


(In thousands, except per share amounts)

Reported:













Earnings (loss) and shares


52,586

$   21,697


$      (406)


$    21,291

Effect of participating securities:













Non-vested restricted stock













and stock units




(170)


-


(170)

Basic earnings (loss) and shares


52,586

$   21,527

$    0.41

$      (406)

$   (0.01)

$    21,121

$    0.40

Effect of dilutive securities:













Stock compensation plans


345











Diluted earnings (loss) and shares


52,931

$   21,527

$    0.41

$      (406)

$   (0.01)

$    21,121

$    0.40

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

New Vehicles














First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except units and per unit data)

Reported:






Revenue


$          1,146,620

$          1,143,056

$        3,564

0.3%

Gross profit


$               66,673

$               66,470

$           203

0.3%

Unit sales


31,131

32,083

(952)

(3.0%)

Revenue per unit


$               36,832

$               35,628

$        1,204

3.4%

Gross profit per unit


$                 2,142

$                 2,072

$             70

3.4%

Gross profit as a % of revenue


5.8%

5.8%

0

bps










First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except units and per unit data)

Same Store:






Revenue


$          1,129,303

$          1,143,056

$    (13,753)

(1.2%)

Gross profit


$               65,372

$               66,341

$         (969)

(1.5%)

Unit sales


30,818

32,083

(1,265)

(3.9%)

Revenue per unit


$               36,644

$               35,628

$        1,016

2.9%

Gross profit per unit


$                 2,121

$                 2,068

$             53

2.6%

Gross profit as a % of revenue


5.8%

5.8%

0

bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

Used Vehicles














First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except units and per unit data)

Reported:






Revenue


$             559,816

$             526,182

$      33,634

6.4%

Gross profit


$               40,693

$               38,030

$        2,663

7.0%

Unit sales


27,657

26,469

1,188

4.5%

Revenue per unit


$               20,241

$               19,879

$           362

1.8%

Gross profit per unit


$                 1,471

$                 1,437

$             34

2.4%

Gross profit as a % of revenue


7.3%

7.2%

10

bps










First Quarter Ended March 31,

Better / (Worse)


2014

2013

 Change

% Change


(In thousands, except units and per unit data)

Same Store:






Revenue


$             546,937

$             526,182

$      20,755

3.9%

Gross profit


$               39,870

$               37,262

$        2,608

7.0%

Unit sales


27,126

26,469

657

2.5%

Revenue per unit


$               20,163

$               19,879

$           284

1.4%

Gross profit per unit


$                 1,470

$                 1,408

$             62

4.4%

Gross profit as a % of revenue


7.3%

7.1%

20

bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

Wholesale Vehicles














First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except units and per unit data)

Reported:







Revenue


$               41,598

$               51,792

$    (10,194)

(19.7%)

Gross profit (loss)


$                    (93)

$               (1,203)

$        1,110

92.3%

Unit sales


7,380

8,393

(1,013)

(12.1%)

Revenue per unit


$                 5,637

$                 6,171

$         (534)

(8.7%)

Gross profit (loss) per unit


$                    (13)

$                  (143)

$           130

90.9%

Gross profit (loss) as a % of revenue


(0.2%)

(2.3%)

210

bps











First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except units and per unit data)

Same Store:







Revenue


$               40,627

$               51,792

$    (11,165)

(21.6%)

Gross profit (loss)

$                      28

$               (1,203)

$        1,231

102.3%

Unit sales 

7,270

8,393

(1,123)

(13.4%)

Revenue per unit


$                 5,588

$                 6,171

$         (583)

(9.4%)

Gross profit (loss) per unit


$                        4

$                  (143)

$           147

102.8%

Gross profit (loss) as a % of revenue


0.1%

(2.3%)

240

bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

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











First Quarter Ended March 31,

Better / (Worse)


2014

2013

 Change

% Change

Reported:

(In thousands)

Revenue







Customer pay


$             141,121

$             133,803

$        7,318

5.5%

Warranty


46,591

44,813

1,778

4.0%

Wholesale parts


47,944

40,538

7,406

18.3%

Internal, sublet and other


83,115

77,488

5,627

7.3%

Total


$             318,771

$             296,642

$      22,129

7.5%

Gross profit







Customer pay


$               77,999

$               74,116

$        3,883

5.2%

Warranty


25,238

23,895

1,343

5.6%

Wholesale parts


8,161

7,619

542

7.1%

Internal, sublet and other


40,748

38,599

2,149

5.6%

Total


$             152,146

$             144,229

$        7,917

5.5%

Gross profit as a % of revenue







Customer pay


55.3%

55.4%

(10)

bps

Warranty


54.2%

53.3%

90

bps

Wholesale parts


17.0%

18.8%

(180)

bps

Internal, sublet and other


49.0%

49.8%

(80)

bps

Total


47.7%

48.6%

(90)

bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

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











First Quarter Ended March 31,

Better / (Worse)


2014

2013

 Change

% Change

Same Store:

(In thousands)

Revenue







Customer pay


$             136,121

$             133,803

$        2,318

1.7%

Warranty


45,237

44,813

424

0.9%

Wholesale parts


46,607

40,538

6,069

15.0%

Internal, sublet and other


81,538

77,489

4,049

5.2%

Total


$             309,503

$             296,643

$      12,860

4.3%

Gross profit







Customer pay


$               75,365

$               74,116

$        1,249

1.7%

Warranty


24,523

24,195

328

1.4%

Wholesale parts


7,820

7,619

201

2.6%

Internal, sublet and other


39,724

38,423

1,301

3.4%

Total


$             147,432

$             144,353

$        3,079

2.1%

Gross profit as a % of revenue







Customer pay


55.4%

55.4%

0

bps

Warranty


54.2%

54.0%

20

bps

Wholesale parts


16.8%

18.8%

(200)

bps

Internal, sublet and other


48.7%

49.6%

(90)

bps

Total


47.6%

48.7%

(110)

bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

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











First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except per unit data)

Reported:







Revenue


$               69,581

$               65,494

$        4,087

6.2%

Gross profit per retail unit (excludes fleet)


$                 1,206

$                 1,148

$             58

5.1%




















First Quarter Ended March 31,

Better / (Worse)


2014

2013

Change

% Change


(In thousands, except per unit data)

Same Store:







Revenue


$               68,408

$               65,507

$        2,901

4.4%

Gross profit per retail unit (excludes fleet)


$                 1,203

$                 1,148

$             55

4.8%

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

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











First Quarter Ended March 31,

Better / (Worse)


2014

2013

 Change

% Change


(In thousands)









Compensation


$             157,154

$             148,580

$      (8,574)

(5.8%)

Advertising


14,119

13,431

(688)

(5.1%)

Rent


18,535

19,022

487

2.6%

Other


74,165

64,791

(9,374)

(14.5%)

Total


$             263,973

$             245,824

$    (18,149)

(7.4%)

SG&A expenses as a % of gross profit







Compensation


47.8%

47.5%

(30)

bps

Advertising


4.3%

4.3%

0

bps

Rent


5.6%

6.1%

50

bps

Other


22.5%

20.6%

(190)

bps

Total


80.2%

78.5%

(170)

bps

 

SOURCE Sonic Automotive, Inc.

Released April 22, 2014