Dealer Group Sonic Automotive:Financial Report
CHARLOTTE, N.C., Feb. 26 -- Sonic Automotive, Inc.
the second largest automotive retailer, today reported record
results for both the fourth quarter and full year 2001 while at the same time
raising 2002 earnings per share estimates.
Operating results highlights:
* Revenue growth of 19% in the fourth quarter compared to prior year
* Gross margins remain strong at 14.5% for the quarter and 14.7% for the
year
* Operating income increased 10% for the fourth quarter
* Net income up 72% for the quarter
* Earnings per share increased 75% for the quarter and 13% for the year
Net income for the quarter ended December 31, 2001 was $21.2 million, or $0.51 per diluted share, compared to prior year results of $12.3 million or $0.29 per diluted share -- a 75% increase over the prior year. Net income before goodwill amortization expense for the quarter was $0.60 per diluted share versus $0.36 in the fourth quarter of 2000, an increase of 67%.
For the full year 2001, net income was $79.3 million, or $1.91 per diluted share compared to $74.2 million, or $1.69 per diluted share for the prior year. Net income before goodwill amortization expense was $2.24 per diluted share for 2001 compared with the prior year of $1.97 per diluted share.
Operating Model Demonstrates Strength
Commenting on the results, O. Bruton Smith, the Company's Chairman and Chief Executive Officer, said, ``We saw significant improvement across all of our product lines which helped us achieve record revenues and profitability. Aggressive manufacturer incentives, along with the attractive interest rates created a favorable operating environment for Sonic. Despite lower industry-wide new vehicle sales rates, preliminary results for January and February show improved profitability compared to 2001. Our earnings per share target for the first quarter of 2002 is $0.45 to $0.48. Because of better than originally expected results in January and February, we are also raising our full year 2002 earnings per share estimate from a range of $2.38 to $2.45 to a range of $2.45 to $2.50. These estimates also reflect the change in accounting treatment of goodwill and the effect of previously announced or completed acquisitions only.''
B. Scott Smith, the Company's President and Chief Operating Officer stated, ``Results for this quarter continue to show Sonic's commitment to our operating model. Our focus on aggressively managing our inventory levels and the related reduction in floorplan financing along with significant increases in the higher-margin, less cyclical segments of our business combined to produce record results this quarter. Even without considering the effect of lower interest rates, our reduction in floorplan balances compared to the prior year contributed $0.03 per share to our results of operations this quarter.''
Improving Same Store Sales Trends
On a same store basis total revenues increased 2.7% for the quarter. New vehicle same store sales were up 5.4% while used vehicle same store sales were down 1.4% for the quarter. Same store used vehicle unit sales were up 1.0%, reflecting the impact of lower used vehicle costs and new vehicle incentive programs on pricing. Same store parts, service and collision repair revenues increased 4.9% for the quarter. Same store parts, service and collision repair gross profits increased 8.6% for the quarter. Same store finance and insurance revenues were up 15.5% for the quarter. Same store contribution to profits after flooring interest costs increased 27.2% for the quarter.
Mr. Jeffrey C. Rachor, the Company's Executive Vice President of Retail Operations stated, ``Our same store performance improved dramatically from the prior quarter, with same store profits up 27%. Although the northern California market continued to post same store sales declines, these declines were markedly lower than in the last three quarters. January same store profits for northern California were actually up approximately 6%. As in all prior quarters, our service, parts and repair product lines demonstrated its non-cyclical nature with same store sales and gross margins up strongly.''
Excluding northern California, same store sales for new vehicles were up 12.6% for the quarter, used vehicle sales were up 1.4%, service, parts and collision repair sales were up 5.1%, and finance and insurance sales were up 18.9%. Same store sales for northern California were down 11.3% for the quarter which compares favorably to the 18.2% decline in the third quarter. Excluding northern California, same store unit sales of used vehicles increased 2.1%.
Brand and Geographic Diversity
Our top brands for the quarter based on new vehicle revenues continue to be Ford (17.8%), GM (15.5%), Honda (12.4%), Toyota (11.6%) and BMW (11.1%). Our top markets for the quarter based on total revenue were San Francisco (13.0%), Houston (14.0%), Dallas (7.6%), Charlotte (8.0%) and San Jose (5.2%).
Continued Growth Through Acquisitions
During the fourth quarter of 2001 we closed 7 acquisitions representing an estimated $535 million in annual revenues. For the full year we closed 12 acquisitions representing an estimated $1 billion in annual revenues. To date in 2002, the Company has already closed on two of the previously announced acquisitions -- Park Place Audi and Don Kott Ford -- with annual revenues of approximately $260 million and announced other acquisitions with annual revenues of approximately $1.0 billion. The Company currently has $288 million available under its acquisition facility and significant cash flow from operations to finance future acquisition activity.
Mr. O. Bruton Smith further stated, ``Our acquisition pipeline is in great shape and we continue to selectively pursue acquisition opportunities. Sonic's capital position will allow us to acquire well over $1 billion in additional revenues over the next twelve months. Acquisitions we have not yet announced are excluded from our earnings guidance. When announced, these future acquisitions are expected to result in positive revisions to our earnings estimates.''
Impact of Asset Impairments and Disposals
The Company recorded after-tax charges for losses on dealership dispositions and impairment of fixed asset items related to a dealership relocation in the amount of $0.02 per share in the fourth quarter. Sonic's planned disposition program is substantially complete; however, the Company will continue to evaluate our dealership portfolio and occasionally dispose of stores which do not meet our operating criteria.
About Sonic Automotive, Inc.
Sonic Automotive, Inc., a Fortune 300 company and member of the Russell 2000 Index, is the second largest automotive retailer in the United States operating 163 franchises and 29 collision repair centers in Alabama, California, Florida, Georgia, Maryland, Nevada, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia. Sonic Automotive can be reached on the Web at http://www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to anticipated revenues, profit and earnings per share growth. 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, automotive industry sales trends, risks associated with acquisitions and the risk factors described in Exhibit 99.1 to the Company's Quarterly Report on Form 10-Q for the quarter ending September 30, 2001. The Company does not undertake any obligation to update forward-looking information.
MANAGEMENT WILL BE HOLDING A CONFERENCE CALL ON TUESDAY, FEBRUARY 26, 2002 AT 11:00 A.M. EASTERN TIME. TO PARTICIPATE, PLEASE DIAL 888-318-6429, CODE: SONIC -- OR YOU CAN ACCESS THE CALL AT WWW.SONICAUTOMOTIVE.COM OR WWW.COMPANYBOARDROOM.COM.
- Sonic Automotive, Inc.
- Results of Operations (unaudited)
- (in thousands, except per share and unit data amounts)
Three Months Ended Twelve Months Ended
12/31/2000 12/31/2001 12/31/2000 12/31/2001
New units 31,126 38,026 135,919 142,720
Used units 17,964 20,542 79,749 81,122
Total units retailed 49,090 58,568 215,668 223,842
Wholesale units 16,241 18,150 67,835 70,200
Average price per unit:
New vehicles 26,754 27,088 25,747 26,430
Used vehicles 14,985 14,528 14,729 14,473
Wholesale vehicles 6,606 5,432 6,346 5,955
Revenues
New vehicles* $832,743 $1,030,061 $3,499,546 $3,772,133
Used vehicles* 269,188 298,435 1,174,660 1,174,064
Wholesale vehicles 107,282 98,590 430,513 418,006
Total vehicles 1,209,213 1,427,086 5,104,719 5,364,203
Parts, service, and
collision repair 174,055 202,676 687,975 783,829
Finance & insurance and
other 37,389 49,523 162,751 189,325
Total Revenues 1,420,657 1,679,285 5,955,445 6,337,357
Total Gross Profit* 215,095 255,507 890,940 974,734
SG&A expenses* 165,592 200,092 659,109 747,656
Depreciation 1,014 1,782 5,944 7,445
Goodwill amortization 4,356 4,624 16,770 18,345
Operating Income 44,133 49,009 209,117 201,288
Interest expense, floor
plan 13,096 5,313 47,108 35,501
Interest expense, other 11,046 8,878 42,246 35,867
Other income -- 4 109 124
Income Before Taxes 19,991 34,822 119,872 130,044
Income taxes 7,700 13,580 45,700 50,715
Net Income $12,291 $21,242 $74,172 $79,329
Diluted:
Weighted average common
shares outstanding 42,542 41,898 43,826 41,609
Earnings per share $0.29 $0.51 $1.69 $1.91
* Amounts reflect certain reclassifications in order to make Sonic's
presentation more consistent with peer group and revised accounting
standards regarding manufacturer incentives.
Gross Margin Data:
New vehicles retail 8.7% 7.9% 8.3% 7.8%
Used vehicles retail 11.2% 11.3% 11.6% 11.5%
Total vehicles retail 9.3% 8.7% 9.2% 8.8%
Parts, service and
collision repair 44.9% 46.4% 44.6% 46.1%
Finance and insurance 100.0% 100.0% 100.0% 100.0%
Overall gross margin 15.1% 15.2% 15.0% 15.4%
SG&A Expenses:
Personnel $100,145 $120,164 $410,807 $455,029
Advertising 15,645 15,259 58,761 58,695
Facility rent 14,988 16,632 54,724 64,404
Other 34,814 48,037 134,817 169,528
Other Data:
Net operating cash flow $17,864 $28,427 $97,021 $105,144
Interest (non-floor
plan) coverage ratio 3.3x 5.6x 4.4x 5.3x
EBITDA $36,404 $50,106 $184,829 $191,701
Average debt to EBITDA
ratio 2.6x 2.6x
Return on average equity 17.3% 16.6%
Current ratio 1.27x 1.31x
Balance Sheet:
Twelve Months Ended
12/31/2000 12/31/2001
ASSETS
Current Assets:
Cash and cash equivalents $109,325 $127,560
Receivables, net 127,865 134,968
Inventories 773,785 664,258
Other current assets 26,428 38,445
Total current assets 1,037,403 965,231
Property and Equipment, Net 72,966 98,972
Goodwill, Net 668,782 738,070
Other Assets 10,097 12,555
TOTAL ASSETS $1,789,248 $1,814,828
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable - floor plan $684,718 $587,914
Trade accounts payable 50,274 44,804
Accrued interest 10,279 9,676
Other accrued liabilities 70,453 92,290
Current maturities of long-term debt 2,597 2,586
Total current liabilities 818,321 737,270
LONG-TERM DEBT 485,212 511,494
OTHER LONG-TERM LIABILITIES 8,200 5,804
PAYABLE TO COMPANY'S CHAIRMAN 5,500 5,500
DEFERRED INCOME TAXES 21,093 37,501
STOCKHOLDERS' EQUITY
Class A convertible preferred stock 251 --
Class A common stock 333 348
Class B common stock 123 121
Paid-in capital 329,489 343,256
Retained Earnings 153,564 232,891
Treasury stock, at cost (32,838) (59,357)
Total stockholders' equity 450,922 517,259
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,789,248 $1,814,828