Sonic Automotive, Inc. Continues Earnings Improvement Trend With Strong Fourth Quarter Results
CHARLOTTE, N.C., Feb. 26 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that fourth quarter 2007 earnings from continuing operations were $29.4 million, or $0.68 per diluted share, compared to $28.9 million, or $0.64 per diluted share, in the prior year period.
"Our key operating initiatives continue to drive our results even in a challenging new vehicle sales environment," said President and Chief Strategic Officer, B. Scott Smith. "Continued implementation of our used vehicle merchandising strategy drove same store used vehicle revenue up 19.3% compared to the fourth quarter of last year. Our brand and geographic diversity along with our initiatives in the higher margin segments of our business continue to provide us with the flexibility to respond to changing market conditions."
Commenting on 2008, Mr. Smith said, "We expect to see continued softness in new vehicle sales during 2008 which will be largely offset by growth in our used vehicle and parts and service revenue. In addition, as part of our ongoing portfolio enrichment and capital allocation strategies, we are considering changes to our group of stores held for sale, including the potential sale of a number of profitable, well-managed stores that no longer fit our business model or which require capital expenditures that do not make sense for us. This change, when enacted, will reduce earnings from continuing operations in 2008 by approximately $0.09 as some profitable stores may now be included in our discontinued operations group. This potential impact has been included in our 2008 earnings per share from continuing operations target of $2.35 - $2.50. A full update on our business and our 2008 earnings target will be provided on our scheduled conference call."
Presentation materials for the Company's earnings conference call at 11:00 A.M. (Eastern) on February 26, 2008 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 # 35931851.
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 169 franchises and 34 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, new vehicle market conditions, used vehicle revenue growth, parts and service revenue growth, dealership disposition activity and earnings per share from continuing operations. 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 September 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)
Three Months Ended Twelve Months Ended
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Revenues
New retail vehicles $1,193,897 $1,154,984 $4,676,256 $4,551,768
Fleet vehicles 90,863 74,277 380,224 346,739
Used vehicles 376,537 301,005 1,449,537 1,281,887
Wholesale vehicles 96,729 105,327 428,129 496,531
Total vehicles 1,758,026 1,635,593 6,934,146 6,676,925
Parts, service and
collision repair 301,678 280,210 1,191,347 1,118,366
Finance, insurance and
other 53,560 47,457 211,440 189,788
Total revenues 2,113,264 1,963,260 8,336,933 7,985,079
Total gross profit 322,378 305,055 1,291,585 1,228,291
SG&A expenses 237,957 224,773 967,706 942,890
Depreciation 7,160 5,985 27,306 23,248
Operating income 77,261 74,297 296,573 262,153
Interest expense, floor
plan 16,710 15,898 67,638 59,580
Interest expense, other 11,366 9,027 39,795 39,662
Other (expense) / income (21) 57 73 (589)
Income from continuing
operations before taxes 49,164 49,429 189,213 162,322
Income taxes 19,758 20,513 74,377 65,490
Income from continuing
operations 29,406 28,916 114,836 96,832
Discontinued operations:
Loss from operations and
the sale of
discontinued franchises (8,065) (7,254) (26,585) (23,054)
Income tax benefit 1,695 1,577 7,251 7,339
Loss from discontinued
operations (6,370) (5,677) (19,334) (15,715)
Net income $23,036 $23,239 $95,502 $81,117
Diluted:
Weighted average common
shares outstanding 44,894 46,902 46,941 46,265
Earnings per share from
continuing operations $0.68 $0.64 $2.54 $2.18
Loss per share from
discontinued operations ($0.14) ($0.12) ($0.41) ($0.33)
Earnings per share $0.54 $0.52 $2.13 $1.85
Gross Margin Data
(Continuing Operations):
Retail new vehicles 7.2% 7.6% 7.3% 7.7%
Fleet vehicles 2.1% 2.1% 2.1% 2.6%
Total new vehicles 6.8% 7.3% 6.9% 7.3%
Used vehicles retail 8.2% 9.1% 9.0% 9.6%
Total vehicles retail 7.2% 7.7% 7.4% 7.8%
Wholesale vehicles (1.8%) (1.0%) (0.7%) (0.6%)
Parts, service and
collision repair 50.3% 50.5% 50.5% 50.1%
Finance, insurance and
other 100.0% 100.0% 100.0% 100.0%
Overall gross margin 15.3% 15.5% 15.5% 15.4%
SG&A Expenses (Continuing
Operations):
Personnel $131,530 $128,505 $545,562 $540,134
Advertising 18,054 15,990 67,979 63,566
Facility rent 26,599 24,413 104,438 98,867
Other 61,774 55,865 249,727 240,323
Total $237,957 $224,773 $967,706 $942,890
SG&A Expenses as % of
Gross Profit
Personnel 40.8% 42.1% 42.2% 44.0%
Advertising 5.6% 5.2% 5.3% 5.2%
Facility rent 8.3% 8.0% 8.1% 8.0%
Other 19.2% 18.2% 19.3% 19.5%
Total 73.8% 73.7% 74.9% 76.8%
Operating Margin % 3.7% 3.8% 3.6% 3.3%
Three Months Ended Twelve Months Ended
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Unit Data (Continuing Operations):
New retail units 34,054 33,633 138,371 139,903
Fleet units 3,509 3,264 16,233 15,652
Used units 18,103 15,446 72,143 66,727
Wholesale units 10,851 12,070 47,545 53,758
Average price per unit:
New retail vehicles $35,059 $34,341 $33,795 $32,535
Fleet vehicles 25,894 22,756 23,423 22,153
Used vehicles 20,800 19,488 20,093 19,211
Wholesale vehicles 8,914 8,726 9,005 9,236
Other Data:
Same store revenue percentage
changes:
New retail (3.0%) (1.1%)
Fleet 3.8% 4.9%
Total New Vehicles (2.6%) (0.7%)
Used 19.3% 9.8%
Parts, service and collision
repair 2.3% 3.0%
Finance, insurance and other 8.9% 9.1%
Total 1.3% 0.9%
Balance Sheet Data:
12/31/2007 12/31/2006
ASSETS
Current Assets:
Cash and cash equivalents $16,514 $12,696
Receivables, net 347,309 385,849
Inventories 1,093,017 991,984
Assets held for sale 87,342 160,571
Construction in progress
expected to be sold 6,421 26,198
Other current assets 29,458 35,834
Total current assets 1,580,061 1,613,132
Property and Equipment, Net 286,591 220,551
Goodwill, Net 1,276,074 1,155,428
Other Intangibles, Net 111,342 94,136
Other Assets 28,676 41,517
TOTAL ASSETS $3,282,744 $3,124,764
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Floor plan notes payable $1,125,670 $1,064,458
Other current liabilities 247,658 268,236
Liabilities associated with
assets held for sale 48,592 96,292
Current maturities of long-term
debt 4,197 2,707
Total current liabilities 1,426,117 1,431,693
LONG-TERM DEBT 697,800 598,627
OTHER LONG-TERM LIABILITIES 83,829 39,570
DEFERRED INCOME TAXES 144,170 151,034
STOCKHOLDERS' EQUITY 930,828 903,840
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,282,744 $3,124,764
Balance Sheet Ratios:
Current Ratio 1.11 1.13
Debt to Total Capital,
Net of Cash 42.4% 39.4%
SOURCE Sonic Automotive, Inc.
Released February 26, 2008