Exhibit 99.1
Sonic Automotive, Inc. Announces Third Quarter Results
CHARLOTTE, N.C. – October 28, 2008 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced a third quarter 2008 loss from continuing operations of $11.4 million, or $0.28 per diluted share, compared to earnings of $30.9 million, or $0.68 per diluted share, in the prior year period. Included in the current quarter’s results from continuing operations is an after-tax charge of approximately $21.0 million, or $0.53 per diluted share, related primarily to franchise asset and property impairment costs. The Company also recorded an after-tax charge of approximately $11.5 million, or $0.29 per diluted share, also primarily related to franchise asset and property impairment costs in our loss from discontinued operations in the current quarter.
In addition to these charges, also included in the current quarter’s results from continuing operations is an estimated approximately $0.08 per diluted share negative impact related to property damage and business disruption caused by hurricane activity in the greater Houston area.
Mr. David Cosper, the Company’s Chief Financial Officer, stated, “In light of the current economic conditions and the expectation of lower profitability at a small number of our domestic dealerships, we have written down the value of the franchise assets assigned to these dealerships. In addition, we have eliminated various planned facility projects and revised our plans for several facilities that we had vacated. As a result, we have written off certain costs that had already been incurred on those projects. We are in compliance with all debt covenants at the end of the quarter and expect to remain in compliance going forward. We have also performed an interim test of the recoverability of our goodwill and have determined that there is no impairment of the goodwill assets recorded on our balance sheet.”
Scott Smith, the Company’s President and Chief Strategic Officer, stated, “The current softness in consumer demand is to be expected given the turmoil in the credit markets and the amount of economic uncertainty we are currently experiencing. We remain focused on those things we can control and that we believe add value for our shareholders. We continue to aggressively reduce costs and manage capital expenditures as we move forward with our used vehicle and parts and service initiatives. As a result of the current economic uncertainty, we are projecting diluted earnings per share from continuing operations for the fourth quarter of $0.10 to $0.20.”
Presentation materials for the Company’s earnings conference call at 11:00 A.M. (Eastern) on October 28, 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 right 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 #67717439.
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. Sonic can be reached on the Web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to expected diluted earnings per share from continuing operations, debt compliance expectations, profitability at certain dealerships, cost reduction plans and capital expenditure reduction plans. 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, 2008. 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 | Nine Months Ended | |||||||||||||||
| 9/30/2008 | 9/30/2007 | 9/30/2008 | 9/30/2007 | |||||||||||||
| Revenues |
||||||||||||||||
| New retail vehicles |
$ | 987,520 | $ | 1,204,343 | $ | 3,016,719 | $ | 3,360,848 | ||||||||
| Fleet vehicles |
54,863 | 98,509 | 282,962 | 288,344 | ||||||||||||
| Total new vehicles |
1,042,383 | 1,302,852 | 3,299,681 | 3,649,192 | ||||||||||||
| Used vehicles |
339,498 | 363,785 | 1,088,808 | 1,034,375 | ||||||||||||
| Wholesale vehicles |
72,316 | 100,201 | 239,118 | 304,173 | ||||||||||||
| Total vehicles |
1,454,197 | 1,766,838 | 4,627,607 | 4,987,740 | ||||||||||||
| Parts, service and collision repair |
284,132 | 292,044 | 871,713 | 853,650 | ||||||||||||
| Finance, insurance and other |
46,512 | 53,600 | 150,148 | 152,729 | ||||||||||||
| Total revenues |
1,784,841 | 2,112,482 | 5,649,468 | 5,994,119 | ||||||||||||
| Total gross profit |
285,693 | 323,963 | 899,205 | 933,327 | ||||||||||||
| SG&A expenses |
(267,961 | ) | (240,243 | ) | (749,651 | ) | (701,621 | ) | ||||||||
| Depreciation |
(8,912 | ) | (5,338 | ) | (25,656 | ) | (19,163 | ) | ||||||||
| Operating income |
8,820 | 78,382 | 123,898 | 212,543 | ||||||||||||
| Interest expense, floor plan |
(9,744 | ) | (16,660 | ) | (34,467 | ) | (49,002 | ) | ||||||||
| Interest expense, other |
(16,661 | ) | (10,898 | ) | (43,439 | ) | (28,446 | ) | ||||||||
| Other (expense) / income |
(10 | ) | (5 | ) | 87 | 85 | ||||||||||
| Income / (loss) from continuing operations before taxes |
(17,595 | ) | 50,819 | 46,079 | 135,180 | |||||||||||
| Income taxes |
6,214 | (19,903 | ) | (19,256 | ) | (53,159 | ) | |||||||||
| Income / (loss) from continuing operations |
(11,381 | ) | 30,916 | 26,823 | 82,021 | |||||||||||
| Discontinued operations: |
||||||||||||||||
| Loss from operations and the sale of discontinued franchises |
(19,954 | ) | (6,870 | ) | (38,790 | ) | (13,651 | ) | ||||||||
| Income tax benefit |
5,986 | 2,061 | 11,637 | 4,096 | ||||||||||||
| Loss from discontinued operations |
(13,968 | ) | (4,809 | ) | (27,153 | ) | (9,555 | ) | ||||||||
| Net income/ (loss) |
$ | (25,349 | ) | $ | 26,107 | $ | (330 | ) | $ | 72,466 | ||||||
| Diluted: |
||||||||||||||||
| Weighted average common shares outstanding |
40,170 | 46,978 | 40,626 | 47,631 | ||||||||||||
| Earnings / (loss) per share from continuing operations |
($0.28 | ) | $ | 0.68 | $ | 0.65 | $ | 1.79 | ||||||||
| Loss per share from discontinued operations |
($0.35 | ) | ($0.10 | ) | ($0.67 | ) | ($0.20 | ) | ||||||||
| Earnings / (loss) per share |
($0.63 | ) | $ | 0.58 | ($0.02 | ) | $ | 1.59 | ||||||||
| Gross Margin Data (Continuing Operations): |
||||||||||||||||
| Retail new vehicles |
7.0 | % | 7.5 | % | 7.3 | % | 7.4 | % | ||||||||
| Fleet vehicles |
4.5 | % | 1.5 | % | 2.2 | % | 2.1 | % | ||||||||
| Total new vehicles |
6.9 | % | 7.0 | % | 6.8 | % | 7.0 | % | ||||||||
| Used vehicles retail |
8.0 | % | 8.8 | % | 8.5 | % | 9.2 | % | ||||||||
| Total vehicles retail |
7.2 | % | 7.4 | % | 7.3 | % | 7.5 | % | ||||||||
| Wholesale vehicles |
(1.9 | %) | (1.5 | %) | (1.8 | %) | (0.9 | %) | ||||||||
| Parts, service and collision repair |
49.9 | % | 50.7 | % | 49.9 | % | 50.6 | % | ||||||||
| Finance, insurance and other |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Overall gross margin |
16.0 | % | 15.3 | % | 15.9 | % | 15.6 | % | ||||||||
| SG&A Expenses (Continuing Operations): |
||||||||||||||||
| Personnel |
$ | 128,167 | $ | 133,930 | $ | 400,115 | $ | 398,201 | ||||||||
| Advertising |
14,489 | 17,294 | 48,018 | 48,416 | ||||||||||||
| Facility rent |
28,655 | 24,890 | 75,073 | 74,730 | ||||||||||||
| Other |
96,650 | 64,129 | 226,445 | 180,274 | ||||||||||||
| Total |
$ | 267,961 | $ | 240,243 | $ | 749,651 | $ | 701,621 | ||||||||
| SG&A Expenses as % of Gross Profit |
||||||||||||||||
| Personnel |
44.9 | % | 41.3 | % | 44.5 | % | 42.7 | % | ||||||||
| Advertising |
5.1 | % | 5.3 | % | 5.3 | % | 5.2 | % | ||||||||
| Facility rent |
10.0 | % | 7.7 | % | 8.3 | % | 8.0 | % | ||||||||
| Other |
33.8 | % | 19.9 | % | 25.3 | % | 19.3 | % | ||||||||
| Total |
93.8 | % | 74.2 | % | 83.4 | % | 75.2 | % | ||||||||
| Operating Margin % |
0.5 | % | 3.7 | % | 2.2 | % | 3.5 | % | ||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| 9/30/2008 | 9/30/2007 | 9/30/2008 | 9/30/2007 | ||||||||||||
| Unit Data (Continuing Operations): |
|||||||||||||||
| New retail units |
29,076 | 35,686 | 90,104 | 99,707 | |||||||||||
| Fleet units |
2,816 | 4,272 | 11,729 | 12,685 | |||||||||||
| Used units |
16,994 | 18,056 | 54,260 | 51,758 | |||||||||||
| Wholesale units |
9,563 | 11,230 | 30,377 | 33,869 | |||||||||||
| Average price per unit: |
|||||||||||||||
| New retail vehicles |
$ | 33,963 | $ | 33,748 | $ | 33,480 | $ | 33,707 | |||||||
| Fleet vehicles |
19,483 | 23,059 | 24,125 | 22,731 | |||||||||||
| Used vehicles |
19,978 | 20,148 | 20,066 | 19,985 | |||||||||||
| Wholesale vehicles |
7,562 | 8,923 | 7,872 | 8,981 | |||||||||||
| Other Data: |
|||||||||||||||
| Same store revenue percentage changes: |
|||||||||||||||
| New retail |
(18.9 | %) | (14.2 | %) | |||||||||||
| Fleet |
(44.3 | %) | (10.3 | %) | |||||||||||
| Total New Vehicles |
(20.8 | %) | (13.9 | %) | |||||||||||
| Used |
(7.7 | %) | 1.6 | % | |||||||||||
| Parts, service and collision repair |
(3.8 | %) | (1.3 | %) | |||||||||||
| Finance, insurance and other |
(13.6 | %) | (3.9 | %) | |||||||||||
| Total |
(16.4 | %) | (9.7 | %) | |||||||||||
| Balance Sheet Data: |
|||||||||||||||
| 9/30/2008 | 12/31/2007 | ||||||||||||||
| ASSETS |
|||||||||||||||
| Current Assets: |
|||||||||||||||
| Cash and cash equivalents |
$ | 7,340 | $ | 16,514 | |||||||||||
| Receivables, net |
214,625 | 347,309 | |||||||||||||
| Inventories |
1,030,704 | 1,093,017 | |||||||||||||
| Assets held for sale |
110,815 | 87,342 | |||||||||||||
| Other current assets |
34,836 | 35,879 | |||||||||||||
| Total current assets |
1,398,320 | 1,580,061 | |||||||||||||
| Property and Equipment, Net |
381,950 | 286,591 | |||||||||||||
| Goodwill, Net |
1,254,403 | 1,276,074 | |||||||||||||
| Other Intangibles, Net |
95,974 | 111,342 | |||||||||||||
| Other Assets |
21,705 | 28,676 | |||||||||||||
| TOTAL ASSETS |
$ | 3,152,352 | $ | 3,282,744 | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||||||
| Current Liabilities: |
|||||||||||||||
| Floor plan notes payable |
$ | 991,571 | $ | 1,125,670 | |||||||||||
| Other current liabilities |
223,288 | 247,658 | |||||||||||||
| Liabilities associated with assets held for sale |
42,928 | 48,592 | |||||||||||||
| Current maturities of long-term debt |
131,705 | 4,197 | |||||||||||||
| Total current liabilities |
1,389,492 | 1,426,117 | |||||||||||||
| LONG-TERM DEBT |
638,970 | 697,800 | |||||||||||||
| OTHER LONG-TERM LIABILITIES |
222,154 | 227,999 | |||||||||||||
| STOCKHOLDERS’ EQUITY |
901,736 | 930,828 | |||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 3,152,352 | $ | 3,282,744 | |||||||||||
| Balance Sheet Ratios: |
|||||||||||||||
| Current Ratio |
1.01 | 1.11 | |||||||||||||
| Debt to Total Capital, Net of Cash |
45.8 | % | 42.4 | % | |||||||||||