Sonic Automotive, Inc. Reports 39% Increase in Third Quarter Continuing Operations Earnings; Raises Full Year Guidance

Download as PDF

Related Documents

CHARLOTTE, N.C., Oct. 25, 2011 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported that 2011 third quarter earnings from continuing operations were $0.33 per diluted share compared to $0.25 per diluted share in the prior year quarter.    

Third Quarter 2011 Highlights

  • Continuing operations profits up 39%; EPS up 32%
  • Total revenues up 13% over prior year quarter. Volume exceeds industry growth.
  • New vehicle revenue up 13%; New vehicle volume up 8%
  • Used vehicle revenue up 17%; Used volume up 16%; 10th consecutive quarter of double-digit growth
  • Parts and Service revenue up 5%.

Business Overview – Strong Top Line Growth Continues

Commenting on the third quarter results, Jeff Dyke, the Company's EVP of Operations, stated, "We saw continued growth both in the overall industry trends and in Sonic's third quarter results.  New and used vehicle revenue saw double digit growth, which translated into a 39% increase in continuing operations profit compared to the same period last year.  Our higher-margin parts and service business continues to increase as we grow our customer base and continue the implementation of operating playbooks in this area."

Current Outlook – Increasing Full-Year Guidance

Commenting on the business, B. Scott Smith, the Company's President, said, "The automotive retail industry continued its steady rebound throughout the third quarter.  We saw sales volume increase as we progressed through the quarter as a result of the recovery in the Japanese production capability. We expect this momentum to continue into the fourth quarter as these brands return to a normal production cycle."

Mr. Smith continued, "We continue to target a 2011 industry volume of 12.5 million vehicles.  As a result of the growth we've seen in our base business through the successful integration of our various operating playbooks and our favorable brand mix, we are increasing our expected 2011 earnings from continuing operations to $1.33 to $1.37 per share."

Presentation materials for the Company's October 25, 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: (855) 859-2056, International callers dial (404) 537-3406, Conference ID: #16406078.

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, recovery of Japanese brands production capacity, 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 June 30, 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)







Third Quarter Ended September 30,


2011

2010

Revenues 




New retail vehicles

$           1,005,800

$               886,355

Fleet vehicles

52,780

51,354


Total new vehicles

1,058,580

937,709

Used vehicles

530,969

453,815

Wholesale vehicles

48,588

47,597


Total vehicles

1,638,137

1,439,121

Parts, service and collision repair

297,951

283,741

Finance, insurance and other

56,761

47,398


Total revenues 

1,992,849

1,770,260

Total gross profit

302,924

281,799

SG&A expenses

(238,704)

(226,331)

Impairment charges

(102)

(87)

Depreciation  

(10,340)

(8,731)

Operating income

53,778

46,650

Interest expense, floor plan

(4,348)

(5,430)

Interest expense, other, net

(15,116)

(15,226)

Interest expense, non-cash, convertible debt

(1,742)

(1,768)

Interest expense / amortization, non-cash, cash flow swaps

(313)

(1,484)

Other expense, net

(826)

(351)

Income from continuing operations before taxes

31,433

22,391

Provision for income taxes

(12,100)

(8,442)

Income from continuing operations

19,333

13,949

Income (loss) from discontinued operations

68

(964)

Net income 

$                19,401

$                 12,985






Diluted: 




Weighted average common shares outstanding

65,517

65,851







Earnings per share from continuing operations


$                    0.33

$                     0.25

Loss per share from discontinued operations

-

(0.02)

Earnings per common share

$                    0.33

$                     0.23






Gross Margin Data (Continuing Operations):










New retail vehicles

6.6%

6.6%

Fleet vehicles

3.2%

3.1%


Total new vehicles 

6.5%

6.4%

Used vehicles

6.6%

7.8%


Total vehicles retailed

6.5%

6.8%

Wholesale vehicles

(4.8%)

(3.1%)

Parts, service and collision repair

48.7%

49.6%

Finance, insurance and other

100.0%

100.0%


Overall gross margin

15.2%

15.9%






SG&A Expenses (Continuing Operations):










Personnel

$              139,100

$               131,805

Advertising

13,884

12,642

Rent and rent related

30,591

32,365

Other 

55,129

49,519


Total 

$              238,704

$               226,331






SG&A Expenses as % of Gross Profit

78.8%

80.3%






Operating Margin %

2.7%

2.6%






Unit Data (Continuing Operations):










Retail new units

27,941

25,780

Fleet units

2,047

2,020


Total new units

29,988

27,800

Used units

26,608

22,987


Total units retailed

56,596

50,787

Wholesale units

7,326

7,272






Other Data:










Continuing Operations unit volume percentage changes:





Retail new units

8.4%



Fleet units

1.3%



Total new units

7.9%



Used units

15.8%



Total units retailed

11.4%



Wholesale units

0.7%



Sonic Automotive, Inc.

Results of Operations (Unaudited)

(In thousands, except per share, unit data and percentage amounts)







Nine Months Ended September 30,


2011

2010

Revenues




New retail vehicles

$               2,902,729

$              2,463,139

Fleet vehicles

171,869

148,849


Total new vehicles

3,074,598

2,611,988

Used vehicles

1,549,197

1,339,323

Wholesale vehicles

125,428

108,336


Total vehicles

4,749,223

4,059,647

Parts, service and collision repair

889,243

842,697

Finance, insurance and other

162,010

133,607


Total revenues

5,800,476

5,035,951

Total gross profit

903,824

830,153

SG&A expenses

(711,657)

(672,542)

Impairment charges

(160)

(132)

Depreciation


(30,099)

(25,729)

Operating income

161,908

131,750

Interest expense, floor plan

(14,766)

(15,615)

Interest expense, other, net

(45,986)

(48,024)

Interest expense, non-cash, convertible debt

(5,151)

(5,175)

Interest expense / amortization, non-cash, cash flow swaps

(599)

(5,402)

Other expense, net

(736)

(7,522)

Income from continuing operations before taxes

94,670

50,012

Provision for income taxes

(37,395)

(19,905)

Income from continuing operations

57,275

30,107

Loss from discontinued operations

(1,559)

(4,532)

Net income

$                    55,716

$                   25,575





Diluted:




Weighted average common shares outstanding

65,800

65,711






Earnings per share from continuing operations


$                        0.97

$                       0.56

Loss per share from discontinued operations

(0.03)

(0.07)

Earnings per common share

$                        0.94

$                       0.49





Gross Margin Data (Continuing Operations):









New retail vehicles

6.6%

6.8%

Fleet vehicles

3.2%

2.8%


Total new vehicles 

6.4%

6.6%

Used vehicles

7.3%

8.0%


Total vehicles retailed

6.7%

7.1%

Wholesale vehicles

(3.8%)

(3.6%)

Parts, service and collision repair

49.1%

50.0%

Finance, insurance and other

100.0%

100.0%


Overall gross margin

15.6%

16.5%






SG&A Expenses (Continuing Operations):










Personnel

$                  415,161

$                 394,505

Advertising

41,197

36,445

Rent and rent related

94,269

97,151

Other 

161,030

144,441


Total 

$                  711,657

$                 672,542






SG&A Expenses as % of Gross Profit

78.7%

81.0%






Operating Margin %

2.8%

2.6%






Unit Data (Continuing Operations):










New retail units

83,204

71,809

Fleet units

6,686

6,042


Total new units

89,890

77,851

Used units

78,994

68,861


Total units retailed

168,884

146,712

Wholesale units

19,326

17,627






Other Data:  










Continuing Operations unit volume percentage changes:





New retail units

15.9%



Fleet units

10.7%



Total new units

15.5%



Used units

14.7%



Total units retailed

15.1%



Wholesale units

9.6%



Sonic Automotive, Inc.

Earnings Per Share Reconciliation (Unaudited)

(In thousands, except per share data)


















For the Third Quarter Ended September 30, 2011



Income

Income




From Continuing

From Discontinued




Operations

Operations

Net Income


Weighted


Per


Per


Per


Average


Share


Share


Share


Shares

Amount

Amount

Amount

Amount

Amount

Amount



Earnings and shares

52,366

$        19,333


$               68


$      19,401

Effect of participating securities:













Non-vested restricted stock
   and stock units

-

(253)


-


(253)

Basic earnings and shares

52,366

$        19,080

$         0.36

$               68

$         0.01

$      19,148

$         0.37

Effect of dilutive securities:













Contingently convertible
   debt (5.0% Convertible Notes)

12,590

2,366


-


2,366

Stock compensation plans

561











Diluted earnings and shares

65,517

$        21,446

$         0.33

$               68

$            -

$      21,514

$         0.33















































For the Third Quarter Ended September 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

52,311

$        13,949


$           (964)


$      12,985

Effect of participating securities:













Non-vested restricted stock
   and stock units

-

(137)


-


(137)

Basic earnings (loss) and shares

52,311

$        13,812

$         0.26

$           (964)

$       (0.01)

$      12,848

$         0.25

Effect of dilutive securities:













Contingently convertible
   debt (5.0% Convertible Notes)

12,890

2,498


16


2,514

Stock compensation plans

650











Diluted earnings (loss) and shares

65,851

$        16,310

$         0.25

$           (948)

$       (0.02)

$      15,362

$         0.23















































For the Nine Months Ended September 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

52,414

$        57,275


$        (1,559)


$      55,716

Effect of participating securities:













Non-vested restricted stock
   and stock units

-

(744)


-


(744)

Basic earnings (loss) and shares

52,414

$        56,531

$         1.08

$        (1,559)

$       (0.03)

$      54,972

$         1.05

Effect of dilutive securities:













Contingently convertible
   debt (5.0% Convertible Notes)

12,789

6,970


-


6,970

Stock compensation plans

597











Diluted earnings (loss) and shares

65,800

$        63,501

$         0.97

$        (1,559)

$       (0.03)

$      61,942

$         0.94















































For the Nine Months Ended September 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

52,151

$        30,107


$        (4,532)


$      25,575

Effect of participating securities:













Non-vested restricted stock
   and stock units

-

(295)


-


(295)

Basic earnings (loss) and shares

52,151

$        29,812

$         0.57

$        (4,532)

$       (0.09)

$      25,280

$         0.48

Effect of dilutive securities:













Contingently convertible
   debt (5.0% Convertible Notes)

12,890

6,709


28


6,737

Stock compensation plans

670











Diluted earnings (loss) and shares

65,711

$        36,521

$         0.56

$        (4,504)

$       (0.07)

$      32,017

$         0.49

















SOURCE Sonic Automotive, Inc.

Released October 25, 2011