Sonic Automotive, Inc. Reports 3rd Quarter Earnings
5 November 1998
Sonic Automotive, Inc. Reports 3rd Quarter Earnings Of $0.42 Per Share, Net Income Increases 500%
CHARLOTTE, N.C., Nov. 4 -- Sonic Automotive, Inc.
announced today that net income for the quarter ended September 30, 1998
increased 500.0% to $5.4 million, or $0.42 per diluted share, from $0.9
million, or $0.15 per diluted share, for the third quarter of 1997. For the
first nine months of 1998, net income increased 388.0% to $12.2 million, or
$1.01 per diluted share, from $2.5 million, or $0.39 per diluted share for the
first nine months of 1997. Cash income per diluted share (net income plus
goodwill amortization) was $0.49 for the three months ended September 30, 1998
versus $0.15 for the three months ended September 30, 1997, an increase of
226.7%. Cash income per diluted share was $1.19 for the nine months ended
September 30, 1998 versus $0.42 for the nine months ended September 30, 1997,
an increase of 183.3%.
Total revenues for the third quarter of 1998 rose 300.1% to $509.7 million
from $127.4 million in the third quarter of 1997. Total revenues for the first
nine months of 1998 rose 240.5% to $1,158.5 million versus $340.2 million in
the first nine months of 1997. During the first nine months of 1998, Sonic
sold 29,262 new vehicles and 17,211 retail used vehicles, representing a
182.8% increase in new vehicles sold from 10,348 and a 305.4% increase in
retail used vehicles sold from 4,245.
"Sonic Automotive has demonstrated the ability to grow earnings through
effectively integrating acquisitions and Sonic has the capital available to
continue to execute this strategy. We believe Sonic is conclusively
demonstrating consolidation in automotive retailing has been and will continue
to be a successful strategy to create shareholder value," stated O. Bruton
Smith, the Company's Chairman and Chief Executive Officer.
Operating income during the quarter rose to $16.2 million from $3.5
million in the same quarter of the prior year, representing an increase of
362.9%. As a percentage of total revenues, operating income increased for the
third quarter of 1998 to 3.2% from 2.7% for the third quarter of 1997, despite
an increase of $0.9 million in goodwill amortization. As a percentage of total
revenue for the first nine months of 1998, operating income increased to 3.2%
from 2.7%.
On a same store basis, revenues in the third quarter of 1998 rose 7.9% to
$125.3 million from $116.1 million in the third quarter of 1997. In the first
nine months of 1998, revenues on a same store basis rose 5.4% to $338.5
million from $321.3 million in the first nine months of 1997.
"Because of our diversity in brand representation and geography, difficult
weather in Florida and product shortages at our General Motors franchises had
minimal impact on our earnings for the quarter. Economies of scale realized
in floorplan interest rates combined with disciplined inventory management
enabled Sonic to reduce floorplan interest expense to 0.9% of sales for the
three months ended September 30, 1998 from 1.6% of sales for the three months
ended September 30, 1997. Our inventory reduction programs did not impair
Sonic's robust growth in same store sales. Sonic is doing more than
consolidating, we are improving operations of our dealerships," stated B.
Scott Smith, the Company's President and Chief Operating Officer.
Gross profits increased 329.7% in the third quarter of 1998 to $63.6
million, compared to $14.8 million in the third quarter of 1997, resulting
primarily from additional acquisitions and improvements in gross margins to
12.5% from 11.6%. Gross profits for the first nine months of 1998 increased
280.5% to $146.1 million, compared to $38.4 million for the same period last
year. Gross margins improved to 12.6% in the first nine months of 1998
compared to 11.3% for the same period last year.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue growth. There are many factors which 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 set forth from time to time in the Company's filings with the
Securities and Exchange Commission.
Results of Operations (Unaudited)
(in thousands, except per share and unit data amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1998 1997 1998
New Units 3,795 12,661 10,348 29,262
Used Units 1,607 7,492 4,245 17,211
Total Units Retailed 5,402 20,153 14,593 46,473
Wholesale Units 1,935 6,684 4,685 15,695
Revenues:
New Vehicles $80,755 $310,723 $217,963 $698,189
Used Vehicles 20,079 99,552 52,745 232,060
Wholesale Vehicles 9,828 37,447 25,170 84,752
Total Vehicles 110,662 447,722 295,878 1,015,001
Parts, Service, and
Collision Repair 13,410 50,897 36,317 118,917
Finance & Insurance 3,283 11,046 8,046 24,587
Total Revenues 127,355 509,665 340,241 1,158,505
Total Gross Profit 14,754 63,625 38,386 146,073
SG&A Expenses 10,910 45,863 28,442 105,511
Depreciation &
Amortization 376 1,539 772 3,364
Operating Income 3,468 16,223 9,172 37,198
Interest Expense 2,099 7,356 5,435 17,442
Other income 157 9 292 24
Income Before Taxes 1,526 8,876 4,029 19,780
Income Taxes 615 3,450 1,531 7,550
Income Before
Minority Interest 911 5,426 2,498 12,230
Minority Interest -- -- 47 --
Net Income $ 911 $5,426 $2,451 $12,230
Diluted income
per share $0.15 $0.42 $0.39 $1.01
Weighted average
shares outstanding 6,250 13,063 6,250 12,140