Sonic Automotive, Inc. Reports Strong Operating Performance and Earnings Growth; Hits Leverage Target
CHARLOTTE, N.C., Oct. 31, 2006 -- Sonic Automotive, Inc. , a leader in automotive retailing, today announced that its 2006 third quarter earnings from continuing operations were $29.1 million, or $0.66 per diluted share, compared to $28.6 million, or $0.65 per diluted share, in the prior year period. The results for the quarter ended September 30, 2006 include $0.01 per diluted share of stock option expense related to the Company's adoption of SFAS 123R.
Total revenue for the third quarter of 2006 increased 7.5% with same store revenue up 2.8%. Selling, general and administrative expenses as a percentage of gross profit improved to 74.7% for the quarter compared to 75.6% a year ago. The Company's debt-to-capital ratio was 40% at September 30, 2006, compared to 46.0% at December 31, 2005.
"We continued our consistent trend of improved operating performance and increased profits in a challenging market environment as a result of our favorable brand mix and the ongoing implementation of our operating initiatives," said President and COO Jeffrey C. Rachor. "Our used vehicle sales outperformed the industry and our fixed operations growth and margin reflect successful execution of our strategy. I am particularly pleased that we achieved our debt-to-capital target of 40%."
Presentation materials for the Company's October 31, 2006 earnings conference call at 11:00 A.M. (Eastern) 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.ccbn.com or www.sonicautomotive.com
A Live audio of the conference call will be accessible to the public at 11:00 A.M. (Eastern) 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 # 8080861.
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 173 franchises and 37 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.
Sonic Automotive, Inc.
Results of Operations (unaudited)
(in thousands, except per share, unit data and percentage amounts)
Three Months Ended Nine Months Ended
09/30/2006 09/30/2005 09/30/2006 09/30/2005
Revenues
Retail new vehicles $1,194,944 $1,123,393 $3,401,632 $3,107,640
Fleet vehicles 87,405 71,569 268,723 241,148
New vehicles 1,282,349 1,194,962 3,670,355 3,348,788
Used vehicles 324,482 296,073 977,487 847,542
Wholesale vehicles 126,438 131,409 388,759 375,266
Total vehicles 1,733,269 1,622,444 5,036,601 4,571,596
Parts, service and
collision repair 281,328 251,654 829,891 727,694
Finance, insurance and
other 53,064 49,570 146,228 138,434
Total revenues 2,067,661 1,923,668 6,012,720 5,437,724
Total gross profit 316,966 290,954 926,776 830,866
SG&A expenses 236,766 220,039 714,979 636,750
Depreciation 5,688 4,243 17,399 11,455
Operating income 74,512 66,672 194,398 182,661
Interest expense, floor plan 15,523 8,600 43,709 25,119
Interest expense, other 10,481 11,787 33,415 33,593
Other (expense) / income 19 (10) (647) 15
Income from continuing
operations before taxes 48,527 46,275 116,627 123,964
Income taxes 19,420 17,676 46,642 46,731
Income from continuing
operations 29,107 28,599 69,985 77,233
Discontinued operations:
Loss from operations and
the sale of
discontinued franchises (806) (2,842) (19,534) (9,945)
Income tax benefit 307 1,047 7,427 3,632
Loss from discontinued
operations (499) (1,795) (12,107) (6,313)
Net income $28,608 $26,804 $57,878 $70,920
Diluted:
Weighted average common
shares outstanding 45,682 45,671 46,051 45,518
Earnings per share from
continuing operations $0.66 $0.65 $1.59 $1.77
Loss per share from
discontinued operations ($0.01) ($0.04) ($0.26) ($0.14)
Earnings per share $0.65 $0.61 $1.33 $1.63
Gross Margin Data
(Continuing Operations):
Retail new vehicles 7.6% 7.4% 7.6% 7.6%
Fleet vehicles 2.4% 3.0% 2.7% 2.9%
Total new vehicles 7.2% 7.1% 7.3% 7.2%
Used vehicles retail 9.8% 10.8% 10.3% 10.6%
Total vehicles retail 7.8% 7.9% 7.9% 7.9%
Parts, service and
collision repair 50.0% 49.7% 49.9% 49.5%
Finance, insurance and
other 100.0% 100.0% 100.0% 100.0%
Overall gross margin 15.3% 15.1% 15.4% 15.3%
SG&A Expenses (Continuing
Operations):
Personnel $136,902 $129,591 $414,291 $374,759
Advertising 17,019 15,367 48,122 44,235
Facility rent 25,153 20,346 73,864 59,472
Other 57,692 54,735 178,702 158,284
Total $236,766 $220,039 $714,979 $636,750
Unit Data (Continuing
Operations):
New retail units 37,967 36,736 106,945 100,846
Fleet units 3,931 3,127 12,267 10,934
New units 41,898 39,863 119,212 111,780
Used units 17,439 16,409 51,491 46,678
Total units retailed 59,337 56,272 170,703 158,458
Wholesale units 14,396 15,239 41,621 42,382
Average price per unit:
New retail vehicles 31,473 30,580 31,807 30,816
Fleet vehicles 22,235 22,887 21,906 22,055
Total new vehicles 30,606 29,977 30,788 29,959
Used vehicles 18,607 18,043 18,984 18,157
Wholesale vehicles 8,783 8,623 9,340 8,854
Other Data:
Same store revenue
percentage changes:
New retail 1.8% 3.0%
Fleet 20.2% 9.8%
New total 2.9% 3.5%
Used 4.7% 9.6%
Parts, service and
collision repair 5.1% 5.7%
Finance, insurance and
other 4.4% 2.8%
Total 2.8% 4.3%
Balance Sheet Data:
09/30/2006 12/31/2005
ASSETS
Current Assets:
Cash and cash equivalents $22,664 $7,566
Receivables, net 323,212 396,225
Inventories 921,299 1,016,457
Assets held for sale 145,706 73,837
Construction in progress and land expected to
be sold in sale-leaseback transactions 48,039 95,131
Other current assets 27,170 27,484
Total current assets 1,488,090 1,616,700
Property and Equipment, Net 217,224 148,267
Goodwill, Net 1,154,653 1,122,538
Other Intangibles, Net 95,791 88,696
Other Assets 40,006 49,300
TOTAL ASSETS $2,995,764 $3,025,501
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable - trade $426,005 $579,022
Floor plan notes payable - non-trade 533,433 410,296
Trade accounts payable 69,978 91,101
Accrued interest 15,321 17,378
Other accrued liabilities 197,329 167,060
Liabilities associated with assets held for
sale - trade 56,582 45,953
Liabilities associated with assets held for
sale - non-trade 37,522 6,937
Current maturities of long-term debt 3,013 2,747
Total current liabilities 1,339,183 1,320,494
LONG-TERM DEBT 607,427 712,311
OTHER LONG-TERM LIABILITIES 35,549 29,479
DEFERRED INCOME TAXES 130,600 132,419
STOCKHOLDERS' EQUITY 883,005 830,798
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,995,764 $3,025,501
Balance Sheet Ratios:
Current Ratio 1.11 1.22
Debt to Total Capital, Net of Cash 40.0% 46.0%
Company News On-Call: http://www.prnewswire.com/comp/125546.html