Exhibit 99.1
Sonic Automotive, Inc. Reports First Quarter Earnings
CHARLOTTE, N.C. – April 26 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today reported that its 2005 first quarter income from continuing operations was $19.4 million, or $0.45 per diluted share, compared to $22.3 million, or $0.51 per diluted share, in the prior year period. The results for the quarter include charges of $0.02 from hail damage in two Southeast markets.
“As previously indicated, first quarter challenges were expected. The shortfall, caused by excess inventory in the industry, sales pulled forward in December, and higher interest costs, occurred in January and February. Although these challenges continued, our performance in March improved over prior year,” said Chairman and Chief Executive Officer O. Bruton Smith. “While uncertainty exists around the second quarter retail environment and industry inventory levels, we continue to believe that notable year-over-year performance improvement will occur in the second half of the year.”
Revenue for the period increased 8.8% from the prior year first quarter to $1.8 billion. On a same store basis, total revenue in the quarter increased 1.7% from the same quarter last year and represents growth across the business.
“While we are disappointed by results in January and February, we continue to focus on operating process improvements,” said President and Chief Operating Officer Jeffrey C. Rachor. “Same store sales improved, new vehicle inventory was well managed to 55 days supply, work continues on operating processes and we selected a single dealer management system vendor as a platform to drive standardization. We remain confident and on course in our long-term strategy.”
Consistent with its portfolio enrichment strategy, the company completed the acquisition of Mercedes-Benz of Nashville, Tenn. The acquisition represents $55 million in annualized revenue. Two dealerships were sold in the quarter and five others are pending.
Debt-to-total capital, net of cash, at March 31, 2005 was 47.3%, with a continued long-term goal of 40%. At the end of the quarter, the company had $214 million available under its revolving credit facility. At quarter-end, the company had $31 million authorization available for stock repurchases. Moody’s Investors Service announced April 14 that it upgraded Sonic Automotive’s senior secured credit facility rating and confirmed other ratings. Additionally, Moody’s reported that the company’s overall rating outlook was improved to stable from negative.
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 187 franchises and 39 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements pertaining to anticipated disposition activity, anticipated improvements in operating performance, and anticipated industry conditions, including domestic inventory levels. 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 Exhibit 99.1 to the company’s annual report on Form 10-K for the year ended December 31, 2004. 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 |
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| 3/31/2004 |
3/31/2005 |
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| Revenues |
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| Retail new vehicles |
$ | 924,680 | $ | 996,725 | ||||
| Fleet vehicles |
70,443 | 82,658 | ||||||
| Total new vehicles |
995,123 | 1,079,383 | ||||||
| Used vehicles |
285,657 | 305,860 | ||||||
| Wholesale vehicles |
111,096 | 126,282 | ||||||
| Total vehicles |
1,391,876 | 1,511,525 | ||||||
| Parts, service and collision repair |
242,895 | 267,415 | ||||||
| Finance, insurance and other |
43,330 | 46,536 | ||||||
| Total revenues |
1,678,101 | 1,825,476 | ||||||
| Total gross profit |
265,064 | 287,341 | ||||||
| SG&A expenses |
210,529 | 232,125 | ||||||
| Depreciation |
3,572 | 4,082 | ||||||
| Operating income |
50,963 | 51,134 | ||||||
| Interest expense, floor plan |
5,865 | 9,028 | ||||||
| Interest expense, other |
9,702 | 11,130 | ||||||
| Other income |
28 | 17 | ||||||
| Income from continuing operations before taxes |
35,424 | 30,993 | ||||||
| Income taxes |
13,171 | 11,622 | ||||||
| Income from continuing operations |
22,253 | 19,371 | ||||||
| Discontinued operations: |
||||||||
| Loss from operations and the sale of discontinued franchises |
(248 | ) | (3,615 | ) | ||||
| Income tax benefit |
180 | 1,356 | ||||||
| Loss from discontinued operations |
(68 | ) | (2,259 | ) | ||||
| Net income |
$ | 22,185 | $ | 17,112 | ||||
| Diluted: |
||||||||
| Weighted average common shares outstanding |
45,375 | 45,460 | ||||||
| Income per share from continuing operations |
$ | 0.51 | $ | 0.45 | ||||
| Loss per share from discontinued operations |
$ | 0.00 | $ | (0.05 | ) | |||
| Net income per share |
$ | 0.51 | $ | 0.40 | ||||
| Gross Margin Data: |
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| Retail new vehicles |
7.6 | % | 7.5 | % | ||||
| Fleet vehicles |
3.0 | % | 2.9 | % | ||||
| Total new vehicles |
7.3 | % | 7.1 | % | ||||
| Used vehicles retail |
11.1 | % | 10.9 | % | ||||
| Total vehicles retail |
8.1 | % | 8.0 | % | ||||
| Parts, service and collision repair |
48.6 | % | 48.5 | % | ||||
| Finance and insurance |
100.0 | % | 100.0 | % | ||||
| Overall gross margin |
15.8 | % | 15.7 | % | ||||
| SG&A Expenses: |
||||||||
| Personnel |
126,373 | 134,367 | ||||||
| Advertising |
13,458 | 15,774 | ||||||
| Facility rent |
19,311 | 22,643 | ||||||
| Other |
51,387 | 59,341 | ||||||
| Total |
210,529 | 232,125 | ||||||
| Unit Data: |
||||||||
| New retail units |
31,115 | 32,481 | ||||||
| Fleet units |
3,081 | 3,649 | ||||||
| Total new units |
34,196 | 36,130 | ||||||
| Used units |
17,036 | 17,334 | ||||||
| Total units retailed |
51,232 | 53,464 | ||||||
| Wholesale units |
13,917 | 14,264 | ||||||
| Average price per unit: |
||||||||
| New retail vehicles |
29,718 | 30,686 | ||||||
| Fleet vehicles |
22,864 | 22,652 | ||||||
| Total new vehicles |
29,101 | 29,875 | ||||||
| Used vehicles |
16,768 | 17,645 | ||||||
| Wholesale vehicles |
7,983 | 8,853 | ||||||
| Other Data: |
||||||||
| Net cash used in operating activities |
$ | (2,234 | ) | $ | (15,515 | ) | ||
| Floorplan assistance (continuing operations) |
$ | 8,857 | $ | 8,809 | ||||
| Same store revenue percentage changes: |
||||||||
| New retail |
1.0 | % | ||||||
| Fleet |
18.0 | % | ||||||
| Total new |
2.2 | % | ||||||
| Used |
-0.5 | % | ||||||
| Parts, service and collision repair |
0.9 | % | ||||||
| Finance, insurance and other |
2.7 | % | ||||||
| Total |
1.7 | % | ||||||
Balance Sheets:
| 12/31/2004 |
3/31/2005 |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash |
$ | 9,991 | $ | 5,974 | ||||
| Receivables, net |
357,403 | 330,764 | ||||||
| Inventories |
1,095,057 | 1,132,568 | ||||||
| Assets held for sale |
105,100 | 110,210 | ||||||
| Other current assets |
23,992 | 27,591 | ||||||
| Total current assets |
1,591,543 | 1,607,107 | ||||||
| Property and Equipment, Net |
134,490 | 139,344 | ||||||
| Goodwill, Net |
1,056,924 | 1,065,003 | ||||||
| Other Intangibles, Net |
84,777 | 87,206 | ||||||
| Other Assets |
33,877 | 35,981 | ||||||
| TOTAL ASSETS |
$ | 2,901,611 | $ | 2,934,641 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Notes payable - floor plan |
$ | 1,050,858 | $ | 1,050,896 | ||||
| Trade accounts payable |
88,616 | 87,466 | ||||||
| Accrued interest |
15,421 | 12,067 | ||||||
| Other accrued liabilities |
175,510 | 157,383 | ||||||
| Current maturities of long-term debt |
2,970 | 3,016 | ||||||
| Total current liabilities |
1,333,375 | 1,310,828 | ||||||
| LONG-TERM DEBT |
668,826 | 707,556 | ||||||
| OTHER LONG-TERM LIABILITIES |
28,888 | 31,299 | ||||||
| DEFERRED INCOME TAXES |
100,835 | 101,256 | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Class A common stock |
397 | 398 | ||||||
| Class B common stock |
121 | 121 | ||||||
| Paid-in capital |
441,503 | 443,970 | ||||||
| Retained earnings |
470,663 | 482,736 | ||||||
| Accumulated other comprehensive loss |
(1,228 | ) | (569 | ) | ||||
| Deferred compensation related to restricted stock |
(3,408 | ) | (3,089 | ) | ||||
| Treasury stock, at cost |
(138,361 | ) | (139,865 | ) | ||||
| Total stockholders’ equity |
769,687 | 783,702 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 2,901,611 | $ | 2,934,641 | ||||
| Balance Sheet Data: |
||||||||
| Current Ratio |
1.19 | 1.23 | ||||||
| Debt to Total Capital, Net of Cash |
46.2 | % | 47.3 | % | ||||
| LTM Return on Stockholders’ Equity |
11.7 | % | 10.7 | % | ||||