Sonic Automotive, Inc. Reports Fourth Quarter 2009 Earnings
CHARLOTTE, N.C., Feb. 23, 2010 -- Sonic Automotive, Inc. , the nation's third-largest automotive retailer, today reported that 2009 fourth quarter adjusted earnings from continuing operations were $0.18 per diluted share compared to an adjusted loss from continuing operations of $0.21 per diluted share in the prior year quarter. The adjustments for both periods are detailed further in the attached tables.
Business Overview - Strong operating results and improved capital structure
B. Scott Smith, the Company's President, said, "The operating initiatives that our stores have been refining over the course of this year continued to drive value for us in the fourth quarter. Vehicle volume for both our new and used business was up nicely as a result of our e-Commerce, advertising and other strategies. Our strong luxury brand mix contributed to our performance as pre-tax profits at our luxury-branded stores were up significantly compared to the prior year quarter. As we progressed through the fourth quarter and the industry-wide new vehicle sales volume rose, we saw dealership profits rise substantially due to our ability to leverage the cost reductions we've made throughout the year."
Mr. Smith continued, "We were pleased to make our announcement in early January that we had completed the refinancing of our syndicated credit facility. That marks the completion of another step we have taken over the course of 2009 and early 2010 to improve our capital structure."
New Vehicles - Volume and margin both show strong improvements
Commenting on the Company's new car sales, Mr. Smith noted, "Our new vehicle retail revenue was up approximately 11% compared to the fourth quarter last year as our dealerships continue to gain share in their local markets. In addition, our new vehicle retail margin for the quarter at 7.3% was up 60 basis points compared to the same period last year."
Used Vehicles - Used vehicle volume and gross profit set Q4 and annual record
Overall used vehicle unit volume was up 18% and total used vehicle revenue was up almost 23% for the fourth quarter of 2009 compared to the same quarter last year. Jeff Dyke, the Company's EVP of Operations, stated, "The operating playbooks we have been steadily implementing in our used vehicle business continue to drive improvements. This is not just trimming margins to gain volume. We have rolled out a comprehensive strategy that involves getting the right vehicles at the right stores at the right price. When we offer our customers the vehicle they want at a fair price everybody wins - our customers are satisfied and our business grows. The gross profit dollars generated by our used vehicle business in the fourth quarter increased $4.7 million, or 21.1%, compared to the prior year period. This is without considering the incremental F&I and service business we gained with every additional used vehicle we sold."
Parts and Service - A steady contributor to the bottom line
Sonic's parts and service revenue for the fourth quarter was flat with the prior year quarter while the gross margin was up 20 basis points at 50.3%. Mr. Dyke stated, "Our parts and service business remains a very profitable and stable piece of our business with the potential for future upside as we continue to roll out our comprehensive operational playbook for this area."
Scott Smith concluded his comments by noting, "The hard work of our associates and the stability of our business model has been tested and proven once again in the fourth quarter. As a result of many actions taken over the course of this year - expense reductions, strengthening the balance sheet, optimizing cash flow - we believe we have set the stage for an even better 2010. We will provide more color on our 2010 outlook on our earnings call later today."
Presentation materials for the Company's February 23, 2010 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 right side of the monitor.
To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com
A live audio of the 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, International callers dial (706) 645-9291 Conference ID: 54761428
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation's third-largest automotive retailer, operating 145 franchises. Sonic can be reached on the web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to future parts and service business potential and general operating performance. 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 ending September 30, 2009. 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)
Twelve Months Ended
As Reported As Adjusted
12/31/2009 Adjustments 12/31/2009
----------- ----------- -----------
Revenues
New retail vehicles $3,045,098 $- $3,045,098
Fleet vehicles 214,988 - 214,988
Total new vehicles 3,260,086 - 3,260,086
Used vehicles 1,475,395 - 1,475,395
Wholesale vehicles 150,695 - 150,695
Total vehicles 4,886,176 - 4,886,176
Parts, service and collision repair 1,088,722 - 1,088,722
Finance, insurance and other 156,811 - 156,811
Total revenues 6,131,709 - 6,131,709
Total gross profit 1,044,368 - 1,044,368
SG&A expenses (843,794) 4,015 (839,779)
Impairment charges (24,514) 24,514 -
Depreciation (35,576) - (35,576)
Operating income 140,484 28,529 169,013
Interest expense, floor plan (20,415) - (20,415)
Interest expense, other (85,586) 11,992 (73,594)
Interest expense, non-cash,
convertible debt (679) (11,300) (11,979)
Interest expense, non-cash, cash
flow swaps (4,775) 4,775 -
Other (expense) / income (6,670) 7,103 433
Income / (loss) from continuing
operations before taxes 22,359 41,099 63,458
Income tax (expense) / benefit 33,251 (61,822) (28,571)
Income / (loss) from continuing
operations 55,610 (20,723) 34,887
Income / (Loss) from discontinued
operations (24,062) 16,732 (7,330)
Net income / (loss) $31,548 (3,991) $27,557
Diluted:
Weighted average common shares
outstanding 55,832 - 55,832
Earnings / (loss) per share from
continuing operations $1.05 ($0.37) $0.68
Earnings / (loss) per share from
discontinued operations (0.43) 0.30 (0.13)
Earnings / (loss) per share $0.62 ($0.07) $0.55
Gross Margin Data (Continuing Operations):
Retail new vehicles 7.2% 7.2%
Fleet vehicles 3.5% 3.5%
Total new vehicles 6.9% 6.9%
Used vehicles retail 8.2% 8.2%
Total vehicles retail 7.3% 7.3%
Wholesale vehicles (4.0%) (4.0%)
Parts, service and collision repair 50.3% 50.3%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 17.0% 17.0%
SG&A Expenses (Continuing Operations):
Personnel $480,106 $- $480,106
Advertising 46,318 - 46,318
Facility rent 141,241 (1,091) 140,150
Other 176,129 (2,924) 173,205
Total $843,794 $(4,015) $839,779
SG&A Expenses as % of Gross Profit 80.7% (0.4%) 80.4%
Operating Margin % 2.3% 0.5% 2.8%
Unit Data (Continuing Operations):
New retail units 91,405
Fleet units 8,697
New units 100,102
Used units 77,323
Total units retailed 177,425
Wholesale units 25,866
Other Data:
Same store revenue percentage changes:
New retail (18.6%)
Fleet (34.0%)
Total New Vehicles (19.9%)
Used 7.7%
Parts, service and collision repair (2.4%)
Finance, insurance and other (14.3%)
Total (12.6%)
Twelve Months Ended
As Reported As Adjusted
12/31/2008 Adjustments 12/31/2008
----------- ----------- -----------
Revenues
New retail vehicles $3,738,587 $- $3,738,587
Fleet vehicles 325,580 - 325,580
Total new vehicles 4,064,167 - 4,064,167
Used vehicles 1,368,596 - 1,368,596
Wholesale vehicles 277,559 - 277,559
Total vehicles 5,710,322 - 5,710,322
Parts, service and collision repair 1,114,077 - 1,114,077
Finance, insurance and other 183,709 - 183,709
Total revenues 7,008,108 - 7,008,108
Total gross profit 1,122,068 1,122,068
SG&A expenses (921,367) 20,342 (901,025)
Impairment charges (822,952) 822,952 -
Depreciation (33,554) - (33,554)
Operating income (655,805) 843,294 187,489
Interest expense, floor plan (44,923) - (44,923)
Interest expense, other (60,276) 1,174 (59,102)
Interest expense, non-cash,
convertible debt (10,704) - (10,704)
Interest expense, non-cash, cash
flow swaps - - -
Other (expense) / income 742 - 742
Income / (loss) from continuing
operations before taxes (770,966) 844,468 73,502
Income tax (expense) / benefit 125,399 (147,805) (22,406)
Income / (loss) from continuing
operations (645,567) 696,663 51,096
Income / (Loss) from discontinued
operations (46,782) 37,523 (9,259)
Net income / (loss) $(692,349) $734,186 $41,837
Diluted:
Weighted average common shares
outstanding 40,356 200 40,556
Earnings / (loss) per share from
continuing operations ($16.00) $17.25 $1.25
Earnings / (loss) per share from
discontinued operations (1.16) 0.93 (0.23)
Earnings / (loss) per share ($17.16) $18.18 $1.02
Gross Margin Data (Continuing
Operations):
Retail new vehicles 7.0% 7.0%
Fleet vehicles 2.6% 2.6%
Total new vehicles 6.6% 6.6%
Used vehicles retail 8.7% 8.7%
Total vehicles retail 7.2% 7.2%
Wholesale vehicles (2.5%) (2.5%)
Parts, service and collision repair 49.9% 49.9%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 16.0% 16.0%
SG&A Expenses (Continuing Operations):
Personnel $503,122 $- $503,122
Advertising 58,378 - 58,378
Facility rent 142,044 (4,131) 137,913
Other 217,823 (16,211) 201,612
Total $921,367 $(20,342) $901,025
SG&A Expenses as % of Gross Profit 82.1% (1.8%) 80.3%
Operating Margin % (9.4%) 12.0% 2.7%
Unit Data (Continuing Operations):
New retail units 111,675
Fleet units 13,430
New units 125,105
Used units 68,808
Total units retailed 193,913
Wholesale units 36,674
Other Data:
Same store revenue percentage changes:
New retail (19.7%)
Fleet (16.9%)
Total New Vehicles (19.4%)
Used (3.0%)
Parts, service and collision repair (2.1%)
Finance, insurance and other (11.1%)
Total (14.5%)
Description of Adjustments: 2009 2008
--------- ---------
Continuing Operations:
Lease exit and other (hurricane & hail) $4,015 $20,342
Impairment Charges 24,514 822,952
Debt restructuring and other costs 11,992 1,174
Derivative mark-to-market gain (11,300) -
Ineffectiveness- cash flow swaps 4,775 -
Debt restructuring costs 7,103 -
Valuation allowance changes and tax
effect of adjustments (61,822) (147,805)
--------- ---------
Total Continuing Operations $(20,723) $696,663
========= =========
Discontinued Operations:
Lease exit and other accruals $27,563 $12,750
Impairment Charges 5,524 28,393
Valuation allowance changes and tax
effect of adjustments (16,355) (3,620)
--------- ---------
Total Continuing Operations $16,732 $37,523
========= =========
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Three Months Ended
As Reported As Adjusted
12/31/2009 Adjustments 12/31/2009
----------- ----------- -----------
Revenues
New retail vehicles $818,344 $- $818,344
Fleet vehicles 50,798 - 50,798
Total new vehicles 869,142 - 869,142
Used vehicles 376,032 - 376,032
Wholesale vehicles 42,711 - 42,711
Total vehicles 1,287,885 - 1,287,885
Parts, service and collision repair 268,698 - 268,698
Finance, insurance and other 38,610 - 38,610
Total revenues 1,595,193 - 1,595,193
Total gross profit 259,060 - 259,060
SG&A expenses (213,280) 5,165 (208,115)
Impairment charges (18,807) 18,807 -
Depreciation (11,188) 2,536 (8,652)
Operating income 15,785 26,508 42,293
Interest expense, floor plan (5,022) - (5,022)
Interest expense, other (21,679) 2,560 (19,119)
Interest expense, non-cash,
convertible debt (2,236) - (2,236)
Interest expense, non-cash, cash flow
swaps (4,775) 4,775 -
Other (expense) / income (9,189) 9,198 9
Income / (loss) from continuing
operations before taxes (27,116) 43,041 15,925
Income tax (expense) / benefit 54,525 (61,107) (6,582)
Income / (loss) from continuing
operations 27,409 (18,066) 9,343
Income / (Loss) from discontinued
operations (13,159) 10,993 (2,166)
Net income / (loss) $14,250 $(7,073) $7,177
Diluted:
Weighted average common shares
outstanding 65,634 - 65,634
Earnings / (loss) per share from
continuing operations $0.45 ($0.27) $0.18
Earnings / (loss) per share from
discontinued operations (0.20) 0.16 (0.04)
Earnings / (loss) per share $0.25 ($0.11) $0.14
Gross Margin Data (Continuing Operations):
Retail new vehicles 7.3% 7.3%
Fleet vehicles 3.1% 3.1%
Total new vehicles 7.0% 7.0%
Used vehicles retail 7.2% 7.2%
Total vehicles retail 7.1% 7.1%
Wholesale vehicles (6.8%) (6.8%)
Parts, service and collision repair 50.3% 50.3%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 16.2% 16.2%
SG&A Expenses (Continuing Operations):
Personnel $118,693 $- $118,693
Advertising 12,206 - 12,206
Facility rent 35,530 (1,091) 34,439
Other 46,851 (4,074) 42,777
Total $213,280 $(5,165) $208,115
SG&A Expenses as % of Gross Profit 82.3% (2.0%) 80.3%
Operating Margin % 1.0% 1.7% 2.7%
Unit Data (Continuing Operations):
New retail units 23,007
Fleet units 1,895
New units 24,902
Used units 18,711
Total units retailed 43,613
Wholesale units 6,868
Other Data:
Same store revenue percentage changes:
New retail 10.8%
Fleet (11.3%)
Total New Vehicles 9.2%
Used 22.7%
Parts, service and collision repair 0.1%
Finance, insurance and other 11.8%
Total 10.1%
Three Months Ended
As Reported As Adjusted
12/31/2008 Adjustments 12/31/2008
---------- ----------- -----------
Revenues
New retail vehicles $738,483 $- $738,483
Fleet vehicles 57,286 - 57,286
Total new vehicles 795,769 - 795,769
Used vehicles 306,498 - 306,498
Wholesale vehicles 43,781 - 43,781
Total vehicles 1,146,048 - 1,146,048
Parts, service and collision repair 268,395 - 268,395
Finance, insurance and other 34,655 - 34,655
Total revenues 1,449,098 - 1,449,098
Total gross profit 240,613 - 240,613
SG&A expenses (217,993) 4,191 (213,802)
Impairment charges (807,896) 807,896 -
Depreciation (9,497) - (9,497)
Operating income (794,773) 812,087 17,314
Interest expense, floor plan (11,143) - (11,143)
Interest expense, other (16,457) - (16,457)
Interest expense, non-cash,
convertible debt (2,713) - (2,713)
Interest expense, non-cash, cash
flow swaps - - -
Other (expense) / income 653 - 653
Income / (loss) from continuing
operations before taxes (824,433) 812,087 (12,346)
Income tax (expense) / benefit 147,051 (143,207) 3,844
Income / (loss) from continuing
operations (677,382) 668,880 (8,502)
Income / (Loss) from discontinued
operations (9,843) 8,107 (1,736)
Net income / (loss) $(687,225) $676,987 $(10,238)
Diluted:
Weighted average common shares
outstanding 40,087 - 40,087
Earnings / (loss) per share from
continuing operations ($16.90) $16.69 ($0.21)
Earnings / (loss) per share from
discontinued operations (0.24) 0.19 (0.05)
Earnings / (loss) per share ($17.14) $16.88 ($0.26)
Gross Margin Data (Continuing Operations):
Retail new vehicles 6.7% 6.7%
Fleet vehicles 3.9% 3.9%
Total new vehicles 6.5% 6.5%
Used vehicles retail 7.3% 7.3%
Total vehicles retail 6.7% 6.7%
Wholesale vehicles (6.6%) (6.6%)
Parts, service and collision repair 50.1% 50.1%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 16.6% 16.6%
SG&A Expenses (Continuing Operations):
Personnel $110,850 $- $110,850
Advertising 11,910 - 11,910
Facility rent 35,184 (291) 34,893
Other 60,049 (3,900) 56,149
Total $217,993 $(4,191) $213,802
SG&A Expenses as % of Gross Profit 90.6% (1.7%) 88.9%
Operating Margin % (54.8%) 56.0% 1.2%
Unit Data (Continuing Operations):
New retail units 21,643
Fleet units 2,382
New units 24,025
Used units 15,817
Total units retailed 39,842
Wholesale units 6,798
Other Data:
Same store revenue percentage changes:
New retail (36.0%)
Fleet (35.3%)
Total New Vehicles (36.0%)
Used (14.5%)
Parts, service and collision repair (5.1%)
Finance, insurance and other (32.3%)
Total (28.4%)
Description of Adjustments: 2009 2008
--------- ---------
Continuing Operations:
Lease exit and other (hurricane & hail) $5,165 $4,191
Impairment Charges 18,807 807,896
Depreciation adjustments 2,536 -
Debt restructuring and other costs 2,560 -
Ineffectiveness- cash flow swaps 4,775 -
Debt restructuring costs 9,198 -
Valuation allowance changes and tax
effect of adjustments (61,107) (143,207)
--------- ---------
Total Continuing Operations $(18,066) $668,880
========= =========
Discontinued Operations:
Lease exit and other accruals $23,213 $1,305
Impairment Charges 2,116 2,038
Valuation allowance changes and tax
effect of adjustments (14,336) 4,764
--------- ---------
Total Continuing Operations $10,993 $8,107
========= =========