Sonic Automotive, Inc. Operating Initiatives Continue Their Positive Impact on Results; Earnings up 9.4%
CHARLOTTE, N.C., Oct. 30 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that third quarter 2007 earnings from continuing operations were $31.8 million, or $0.70 per diluted share, compared to $29.0 million, or $0.66 per diluted share, in the prior year period.
"In a volatile new vehicle sales environment, we continue to demonstrate the validity and flexibility of our business model," said President and Chief Strategic Officer, B. Scott Smith. "Our focus on the higher-margin areas of our business continues to drive both revenue and gross profit growth. Our same store used vehicle revenues were up over 11% compared to the third quarter of last year along with continued growth in our parts, service and F&I departments. These strategic operating initiatives, coupled with further reductions in our SG&A expenses as a percentage of gross profit, resulted in a very strong quarter for us. We expect the benefits of these strategies to continue and, as a result, we are reaffirming our full year 2007 earnings per share from continuing operations target of $2.50 to $2.60."
Sonic's Board of Directors has authorized an additional $40 million to be used in the Company's ongoing share repurchase program. Scott Smith said, "We were able to take advantage of both the proceeds from the sale of our Cornerstone subsidiary and the relatively low stock price to significantly increase our share repurchase activity during the third quarter without materially impacting our overall leverage structure. We will continue to execute this program in conjunction with our stated objectives of profitable acquisition growth and managing the Company's capital structure."
Presentation materials for the Company's earnings conference call at 11:00 A.M. (Eastern) on October 30, 2007 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 left side of the screen.
To access the live broadcast of the conference call over the Internet go to: www.sonicautomotive.com.
A live audio of the conference 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 (domestic) or (706) 645-9291 (international), conference call ID # 20685101.
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 174 franchises and 36 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to anticipated benefits of our operating strategy, anticipated earnings per share from continuing operations and potential future share repurchases. 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 quarterly report on Form 10-Q for the quarter ended June 30, 2007. 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
9/30/2007 9/30/2006 9/30/2007 9/30/2006
Revenues
New retail vehicles $1,242,597 $1,190,843 $3,482,359 $3,396,784
Fleet vehicles 99,606 88,831 289,361 272,462
Used vehicles 376,373 325,182 1,073,000 980,882
Wholesale vehicles 108,787 127,324 331,400 391,204
Total vehicles 1,827,363 1,732,180 5,176,120 5,041,332
Parts, service and
collision repair 303,313 283,969 889,669 838,156
Finance, insurance and
other 55,199 51,681 157,880 142,331
Total revenues 2,185,875 2,067,830 6,223,669 6,021,819
Total gross profit 334,953 315,978 969,207 923,236
SG&A expenses 249,101 236,461 729,749 718,117
Depreciation 5,684 5,638 20,146 17,263
Operating income 80,168 73,879 219,312 187,856
Interest expense, floor
plan 17,271 15,435 50,928 43,682
Interest expense, other 10,877 10,067 28,429 30,635
Other (expense) / income (1) 20 94 (646)
Income from continuing
operations before taxes 52,019 48,397 140,049 112,893
Income taxes 20,263 19,367 54,619 44,977
Income from continuing
operations 31,756 29,030 85,430 67,916
Discontinued operations:
Loss from operations and
the sale of
discontinued franchises (8,070) (676) (18,520) (15,800)
Income tax benefit 2,421 254 5,556 5,762
Loss from discontinued
operations (5,649) (422) (12,964) (10,038)
Net income $26,107 $28,608 $72,466 $57,878
Diluted:
Weighted average common
shares outstanding 46,978 45,682 47,631 46,051
Earnings per share from
continuing operations $0.70 $0.66 $1.86 $1.54
Loss per share from
discontinued operations ($0.12) ($0.01) ($0.27) ($0.21)
Earnings per share $0.58 $0.65 $1.59 $1.33
Gross Margin Data
(Continuing Operations):
Retail new vehicles 7.4% 7.6% 7.4% 7.7%
Fleet vehicles 1.5% 2.4% 2.1% 2.7%
Total new vehicles 7.0% 7.3% 7.0% 7.3%
Used vehicles retail 8.8% 9.4% 9.3% 9.7%
Total vehicles retail 7.4% 7.7% 7.5% 7.8%
Wholesale vehicles (1.0%) (1.0%) (0.3%) (0.4%)
Parts, service and
collision repair 50.7% 50.0% 50.6% 50.0%
Finance, insurance and
other 100.0% 100.0% 100.0% 100.0%
Overall gross margin 15.3% 15.3% 15.6% 15.3%
SG&A Expenses (Continuing
Operations):
Personnel $138,823 $135,803 $414,032 $411,629
Advertising 17,757 16,760 49,925 47,576
Facility rent 25,967 24,898 77,839 74,454
Other 66,554 59,000 187,953 184,458
Total $249,101 $236,461 $729,749 $718,117
SG&A Expenses as % of
Gross Profit
Personnel 41.4% 43.0% 42.7% 44.6%
Advertising 5.3% 5.3% 5.2% 5.2%
Facility rent 7.8% 7.9% 8.0% 8.1%
Other 19.9% 18.6% 19.4% 19.9%
Total 74.4% 74.8% 75.3% 77.8%
Operating Margin % 3.7% 3.6% 3.5% 3.1%
Unit Data (Continuing Third Quarter Ended Nine Months Ended
Operations): 9/30/2007 9/30/2006 9/30/2007 9/30/2006
New retail units 37,156 37,653 104,317 106,270
Fleet units 4,312 3,974 12,724 12,388
Used units 18,778 17,334 54,040 51,281
Wholesale units 12,105 14,390 36,694 41,688
Average price per unit:
New retail vehicles $33,443 $31,627 $33,382 $31,964
Fleet vehicles 23,100 22,353 22,741 21,994
Used vehicles 20,043 18,760 19,856 19,128
Wholesale vehicles 8,987 8,848 9,031 9,384
Other Data:
Same store revenue percentage
changes:
New retail (1.8%) (0.5%)
Fleet 12.1% 5.2%
Total New Vehicles (0.8%) (0.1%)
Used 11.1% 6.8%
Parts, service and
collision repair 2.3% 3.3%
Finance, insurance and
other 3.4% 9.1%
Total 0.7% 0.8%
Balance Sheet Data:
9/30/2007 12/31/2006
ASSETS
Current Assets:
Cash and cash equivalents $15,687 $12,696
Receivables, net 326,444 385,849
Inventories 1,048,059 991,984
Assets held for sale 109,002 160,571
Construction in progress
expected to be sold 5,673 26,198
Other current assets 31,780 35,834
Total current assets 1,536,645 1,613,132
Property and Equipment, Net 280,017 220,551
Goodwill, Net 1,274,443 1,155,428
Other Intangibles, Net 112,279 94,136
Other Assets 26,747 41,517
TOTAL ASSETS $3,230,131 $3,124,764
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $1,059,133 $1,064,458
Other current liabilities 281,047 268,236
Liabilities associated with
assets held for sale 64,116 96,292
Current maturities of long-
term debt 3,169 2,707
Total current liabilities 1,407,465 1,431,693
LONG-TERM DEBT 687,493 598,627
OTHER LONG-TERM LIABILITIES 199,750 190,604
STOCKHOLDERS' EQUITY 935,423 903,840
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,230,131 $3,124,764
Balance Sheet Ratios:
Current Ratio 1.09 1.13
Debt to Total Capital, Net of
Cash 41.9% 39.4%
SOURCE Sonic Automotive, Inc.
Released October 30, 2007