Sonic Automotive, Inc. Reports Strong First Quarter Earnings Driven by 15% Revenue Growth
CHARLOTTE, N.C., April 25 -- Sonic Automotive, Inc. , a leader in automotive retailing, today reported that its 2006 first quarter earnings from continuing operations were $21.8 million, or $0.50 per diluted share, compared to $20.1 million, or $0.47 per diluted share, in the prior year period. The results for the quarter ended March 31, 2006 include $0.02 per diluted share of stock option expense related to the Company's adoption of SFAS 123R.
"We are pleased to report strong earnings growth during a period of rising interest rates and a competitive industry environment," said Chairman and Chief Executive Officer O. Bruton Smith. "Our results reflect the combined effect of our improved brand mix and the successful execution of our key operating initiatives. Revenue from our luxury and import stores was 80% of total revenue for the quarter."
Revenue for the first quarter increased 15.0% from the same period last year to $1.8 billion. On a same store basis, total revenue in the quarter increased 6.5% from the prior year period with solid growth across the business.
President and Chief Operating Officer Jeffrey C. Rachor said, "We were able to maintain our margins and reduce SG&A expenses as a percentage of gross profit while driving top line growth. Our operating team continued their focus on growing the higher margin pieces of our business with 9.0% same store growth in used vehicles and 7.4% same store growth in parts and service. We remain comfortable with our 2006 continuing operations EPS target of $2.40 to $2.50 per diluted share excluding stock option expense and $2.32 to $2.42 per diluted share including stock option expense."
Presentation materials for the Company's April 25, 2006 earnings conference call 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 monitor.
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 176 franchises and 38 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 diluted earnings per share from continuing operations and anticipated stock option expense. 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 annual report on Form 10-K for the year ended December 31, 2005. 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)
For the Three Months Ended
3/31/2006 3/31/2005
Revenues
New vehicles $1,092,695 $958,124
Used vehicles 301,756 260,505
Wholesale vehicles 129,129 110,375
Total vehicles 1,523,580 1,329,004
Parts, service and collision repair 266,526 225,628
Finance, insurance and other 45,432 40,932
Total revenues 1,835,538 1,595,564
Total gross profit 290,839 250,591
SG&A expenses 226,307 197,143
Depreciation 4,826 3,401
Operating income 59,706 50,047
Interest expense, floor plan 12,125 7,448
Interest expense, other 11,718 10,573
Other (expense) / income (666) 12
Income from continuing operations
before taxes 35,197 32,038
Income taxes 13,374 11,972
Income from continuing operations 21,823 20,066
Discontinued operations:
Loss from operations and the sale
of discontinued franchises (7,480) (4,660)
Income tax benefit 2,739 1,706
Loss from discontinued operations (4,741) (2,954)
Net income $17,082 $17,112
Diluted:
Weighted average common shares
outstanding 46,205 45,460
Earnings per share from
continuing operations $0.50 $0.47
Loss per share from discontinued
operations ($0.11) ($0.07)
Earnings per share $0.39 $0.40
Gross Margin Data (Continuing
Operations):
Retail new vehicles 7.6% 7.6%
Fleet vehicles 3.3% 3.0%
Total new vehicles 7.3% 7.2%
Used vehicles retail 10.8% 10.7%
Total vehicles retail 8.0% 8.0%
Parts, service and collision repair 49.7% 49.4%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 15.8% 15.7%
SG&A Expenses
(Continuing Operations):
Personnel $133,470 $115,934
Advertising 13,902 12,936
Facility rent 22,833 18,726
Other 56,102 49,547
Total $226,307 $197,143
Unit Data (Continuing Operations):
New units 34,518 31,871
Used units 15,726 14,480
Total units retailed 50,244 46,351
Wholesale units 12,943 12,108
Average price per unit:
Total new vehicles 31,656 30,063
Used vehicles 19,188 17,991
Wholesale vehicles 9,977 9,116
Other Data:
Same store revenue percentage changes:
New (retail & fleet) 5.4%
Used 9.0%
Parts, service and collision repair 7.4%
Finance, insurance and other 6.4%
Total 6.5%
Balance Sheet Data:
3/31/2006 12/31/2005
ASSETS
Current Assets:
Cash and cash equivalents $6,911 $7,566
Receivables, net 347,245 396,225
Inventories 1,023,119 1,016,457
Assets held for sale 230,966 73,837
Construction in progress expected to be
sold in sale-leaseback transactions 101,033 95,131
Other current assets 31,231 27,484
Total current assets 1,740,505 1,616,700
Property and Equipment, Net 137,900 148,267
Goodwill, Net 1,143,844 1,122,538
Other Intangibles, Net 78,379 88,696
Other Assets 57,090 49,300
TOTAL ASSETS $3,157,718 $3,025,501
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable - floor plan - trade $429,190 $579,022
Notes payable - floor plan - non-trade 615,244 410,296
Trade accounts payable 82,045 91,101
Accrued interest 15,507 17,378
Other accrued liabilities 159,375 167,060
Liabilities associated with
assets held for sale - trade 73,969 45,953
Liabilities associated with
assets held for sale - non-trade 75,671 6,937
Current maturities of long-term debt 2,911 2,747
Total current liabilities 1,453,912 1,320,494
LONG-TERM DEBT 685,310 712,311
OTHER LONG-TERM LIABILITIES 32,977 29,479
DEFERRED INCOME TAXES 131,964 132,419
STOCKHOLDERS' EQUITY 853,555 830,798
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $3,157,718 $3,025,501
Balance Sheet Ratios:
Current Ratio 1.20 1.22
Debt to Total Capital, Net of Cash 44.4% 46.0%