Sonic Automotive, Inc. Reports Record 4th Quarter Earnings
17 February 1999
Sonic Automotive, Inc. Reports Record 4th Quarter Earnings Of $0.24 Per Share, Net Income Increases 400%
CHARLOTTE, N.C., Feb. 16 -- Sonic Automotive, Inc.
announced today that net income for the fourth quarter ended
December 31, 1998 increased 406% to $6.3 million, or $0.24 per diluted share,
from $1.3 million, or $0.07 per diluted share, for the fourth quarter ended
December 31, 1997. For the year ended December 31, 1998, net income increased
401% to $18.6 million, or $0.74 per diluted share, from $3.7 million, or $0.27
per diluted share for the year ended December 31, 1997. Despite an 80%
increase in share count, earnings per diluted share increased 174% for the
year ended December 31, 1998 over the prior year.
Cash income per diluted share (net income plus goodwill amortization) was
$0.28 in the fourth quarter of 1998 versus $0.09 in the fourth quarter of
1997, an increase of 211%. Cash income per diluted share was $0.87 for the
year ended December 31, 1998 compared to $0.31 for 1997.
Growth in Revenues and Margins
Total revenues for the fourth quarter of 1998 rose 130% to $449.5 million
from $195.8 million in the fourth quarter of 1997. Total revenues for the year
1998 rose 199% to $1.6 billion versus $536.0 million for the year 1997.
During 1998, Sonic sold 41,592 new vehicles and 24,591 retail used vehicles,
representing a 165% increase in new vehicles sold from 15,715 and a 266%
increase in retail used vehicles sold from 6,712.
"Sonic Automotive continues to improve its basic businesses and to
effectively integrate acquisitions. Our regional management structure coupled
with our 'hub and spoke' acquisition strategy has enabled Sonic to grow
rapidly while, at the same time, improve operations. We remain committed to
our disciplined acquisition growth strategy and believe more finely than ever
this strategy creates value for our shareholders," stated 0. Bruton Smith, the
Company's Chairman and Chief Executive Officer.
Operating income during the quarter rose to $16.9 million from $5.7
million in the same quarter of last year, representing an increase of 194%.
As a percentage of total revenues, operating income for the fourth quarter of
1998 increased to 3.8% from 2.9% for the fourth quarter of 1997, despite an
increase of $0.7 million in goodwill amortization. As a percentage of total
revenue for the year 1998, operating income increased to 3.3% from 2.8% last
year.
Gross profits increased 148% to $61.0 million in the fourth quarter of
1998, compared to $24.6 million in the fourth quarter of 1997, resulting
primarily from additional acquisitions and improvements in gross margins to
13.6% from 12.6%. Gross profits for the year 1998 increased 229% to $207.4
million, compared to $63.0 million for last year. Gross margins improved to
12.9% during the year 1998 compared to 11.8% last year.
B. Scott Smith, the Company's President and Chief Operating Officer,
stated, "The benefits of scale are reflected in Sonic's lower floorplan
interest costs as a percentage of revenues and improving operating income and
net income margins. These improvements were achieved despite the acquisition
of a number of underperforming dealerships and the issuance of high yield debt
in 1998."
Same Store Sales
On a same store basis, revenues in the fourth quarter of 1998 rose 26% to
$199.4 million from $158.2 million in the fourth quarter of 1997. For the
year 1998, revenues on a same store basis rose 11% to $461.7 million from
$414.6 million in 1997.
Mr. B. Scott Smith also stated, "We are particularly pleased with our
outstanding same store sales performance. Same store sales growth in higher
margin used vehicle retail sales and parts, service and collision repair sales
was also strong at 37% and 15%, respectively for the fourth quarter. Sonic's
operating focus, sharing of best practices and performance brand compensation
plans have led to robust sales for Sonic and the manufacturers we represent."
Sonic Automotive, Inc. is one of the leading automotive retailers in the
United States, with operations in Alabama, Florida, Georgia, North Carolina,
Ohio, South Carolina, Tennessee and Texas. Upon completion of all previously
announced acquisitions, Sonic will operate 94 franchises and 21 collision
repair centers.
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 recent filings with
the Securities and Exchange Commission.
Results of Operations (Unaudited)
(in thousands, except per share and unit data amounts)
Three Months Ended December 31, Year Ended December 31,
1997 1998 1997 1998
New Units 5,367 11,344 15,715 41,592
Used Units 2,467 6,771 6,712 24,591
Total Units
Retailed 7,834 18,115 22,427 66,183
Wholesale units 2,602 5,824 7,287 21,886
Revenues:
New Vehicles $125,978 $272,414 $343,941 $962,939
Used Vehicles 32,388 89,119 85,132 324,740
Wholesale Vehicles 13,614 33,344 38,785 119,351
Total Vehicles 171,980 394,877 467,858 1,407,030
Parts, Service, and
Collision Repair 21,220 43,546 57,537 162,660
Finance & Insurance 2,560 11,057 10,606 34,011
Total Revenues 195,760 449,480 536,001 1,603,701
Total Gross Profit 24,612 61,046 62,998 207,442
SG&A Expenses 18,328 42,945 46,770 150,130
Depreciation &
Amortization 650 1,247 1,322 4,607
Operating Income 5,734 16,854 14,906 52,705
Interest Expense 3,771 7,396 9,206 23,491
Other Income 6 402 298 426
Income Before Taxes 1,969 9,860 5,998 29,040
Income Taxes 718 3,530 2,249 11,083
Income Before Minority
Interest 1,251 6,330 3,749 18,557
Minority Interest -- -- 47 --
Net Income $ 1,251 $ 6,330 $ 3,702 $ 18,557
Diluted income
per share $ 0.07 $ 0.24 $ 0.27 $ 0.74
Diluted weighted average
shares outstanding 18,043 26,520 13,897 24,970