Exhibit 99.1
Sonic Automotive, Inc. Operating Initiatives Continue Their Positive Impact on Results;
Earnings up 9.4%
CHARLOTTE, N.C. – October 30, 2007 – 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 | % | ||||||||
| Third Quarter Ended | Nine Months Ended | ||||||||||||||
| 9/30/2007 | 9/30/2006 | 9/30/2007 | 9/30/2006 | ||||||||||||
| Unit Data (Continuing Operations): |
|||||||||||||||
| 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 | % | |||||||||||