Fourth Quarter 58% Increase in EPS Reported by Sonic Automotive, Inc.
23 February 2000
Fourth Quarter 58% Increase in EPS Reported by Sonic Automotive, Inc., Annual EPS up 72%
CHARLOTTE, N.C., Feb. 22 -- Sonic Automotive, Inc.
announced today that net income for the fourth quarter ended
December 31, 1999 increased 141% to $15.3 million, or $0.38 per diluted share,
from $6.3 million, or $0.24 per diluted share, for the fourth quarter ended
December 31, 1998. Net income before tax effected goodwill amortization
expense per diluted share was $0.44 in the fourth quarter of 1999 versus
$0.27 in the fourth quarter of 1998, an increase of 63%.
The fourth quarter of 1999 was Sonic's ninth consecutive quarter of
greater than 50% growth in earnings per share. The 58% increase in earnings
per share for the fourth quarter of 1999 was achieved despite a 53% increase
in shares outstanding versus the same quarter in 1998.
For the twelve months of 1999, net income increased 141% to $44.7 million,
or $1.27 per diluted share, from $18.6 million, or $0.74 per diluted share for
the twelve months of 1998. Net income grew 29% faster than revenues for the
year. Earnings per share increased 72% in the twelve months of 1999 when
compared to the prior year. Net income per diluted share before tax effected
goodwill amortization expense for the twelve months of 1999 was $1.44 versus
$0.84 in the twelve months of 1998.
O. Bruton Smith, the Company's Chairman and Chief Executive Officer
stated, "Rapid growth in earnings per share continues at Sonic Automotive.
We've consistently demonstrated one of the fastest earnings growth rates in
all of U.S. retailing. Sonic's average annual growth in earnings per share
since going public exceeds 117%."
"Sonic has successfully completed the largest acquisition in auto
retailing history. As expected, the cultures and organizational structures of
FirstAmerica Automotive and Sonic Automotive were complementary, which is
leading to a quick and effective integration. The brand and geographic
diversity and quality operations management provided by the FirstAmerica
acquisition will contribute to future earnings stability for Sonic," stated
Thomas A. Price, the Company's Vice Chairman.
Rapidly Growing Revenues and Margins
Total revenues for the fourth quarter of 1999 increased 159% to
$1.2 billion from $449.5 million in the fourth quarter of 1998. Revenues for
the fourth quarter reflect Sonic's successful completion, ahead of schedule,
of the acquisition of FirstAmerica.
Total revenues for the twelve months of 1999 rose 109% to $3.4 billion
versus $1.6 billion in the twelve months of 1998. The Company's revenue mix
also improved with new vehicle revenues declining from 60% of sales to
58.7% of sales. Finance and insurance revenues, Sonic's highest margin
revenue source, increased from 2.1% to 2.5%.
Gross profits increased 171% to $165.4 million in the fourth quarter of
1999, compared to $61.0 million in the fourth quarter of 1998, resulting
primarily from acquisitions and improvements in gross margins from 13.6% to
14.2%. Revenue mix for the quarter improved with the percentage of total
revenues from high margin service, parts, collision repair and finance and
insurance increasing from 12.1% to 14.1% of total sales. Gross profits for
the twelve months of 1999 increased 119% to $454.4 million, compared to
$207.4 million for the same period in the prior year.
"Despite the proliferation of internet-based marketing channels for
automobiles and the related availability of pricing information of new
vehicles, gross profits on new vehicles sales remained stable in the fourth
quarter. Gross profit percentages on new vehicle sales actually increased for
the year -- both for same stores and the total company," stated B. Scott
Smith, the Company's President and Chief Operating Officer.
Income before taxes for the fourth quarter of 1999 rose 157% to
$25.4 million from $9.9 million in the same quarter of the prior year.
Operating income during the fourth quarter of 1999 rose to $41.3 million from
$16.9 million in the same quarter of last year, representing an increase of
145%. Net operating cash flow (net income plus depreciation and amortization
plus tax benefits of goodwill amortization) was approximately $20.0 million
for the quarter ended December 31, 1999.
Continued Same Store Sales Growth
On a same store basis, revenues in the three months and twelve months
ended December 31, 1999 increased 7.2% and 13.1%, respectively. For the three
months ended December 31, 1999 same store sales for the high margin finance
and insurance increased 35%. Same store income before taxes increased 1.9%
for the fourth quarter of 1999 and 23.0% for the year ended December 31, 1999.
"The fourth quarter increase in same store sales was achieved despite
declines in same store sales at several large Sonic Chrysler brand
dealerships. Our fourth quarter performance demonstrates the value of brand
diversity with BMW and Ford dealerships delivering strong same store sales
growth. In the fourth quarter we also restructured our operations management
without negatively impacting our results of operations. With the addition of
Sonic's recently announced Division Vice Presidents, we now have a completed
infrastructure to support our operations and growth strategy," stated Jeffrey
C. Rachor, the Company's Executive Vice President of Retail Operations.
Stock Buyback Program
The Company's Board of Directors recently approved up to an additional
$25 million for buyback of Sonic shares. A total of up to $50 million has now
been authorized for stock buybacks. Sonic is continuing its stock buyback
program with purchase efforts primarily aimed at acquiring shares held by
former owners of dealerships acquired by Sonic.
Acquisition Closings and Pipeline
At December 31, 1999, $61 million was available under Sonic's $350 million
acquisition credit facility. This availability, combined with cash generated
from operations, provides capital to continue Sonic's disciplined acquisition
strategy. Current acquisition efforts are focused on high return acquisition
opportunities in markets where Sonic has existing operations.
During the fourth quarter, Sonic Automotive closed its acquisitions of
Altman Dodge in Charleston, South Carolina; Joe Camp Ford in LaPorte, Texas;
Integrity Dodge in Las Vegas, Nevada; FirstAmerica Automotive in California
and Nevada; Village Volvo in Bel Air, Maryland; Volvo of Las Vegas in Las
Vegas, Nevada; Freeland Automotive in Fort Myers, Florida; and Land Rover of
Marin and Lexus of Marin, a companion to Sonic's existing Serramonte Lexus
dealership in San Rafael, California.
The previously unannounced acquisition of the Marin dealerships will add
an estimated $65.4 million revenues for Sonic in the 2000 calendar year.
These dealerships expand Sonic's brand diversity and presence in the high
income, high growth San Francisco Bay area market and continue Sonic's
emphasis on luxury brands.
In 1999, the Company closed 73 dealership acquisitions totaling
approximately $2.9 billion in revenues.
Sonic Automotive, Inc. is one of the leading automotive retailers in the
United States, with operations in Alabama, California, Florida, Georgia,
Maryland, Nevada, North Carolina, Ohio, South Carolina, Tennessee, Texas and
Virginia. Sonic operates 165 franchises and 30 collision repair centers with
an estimated revenue run rate of approximately $6 billion.
Included herein are forward-looking statements, including statements with
respect to anticipated revenue and profit 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.
MANAGEMENT WILL BE HOLDING A CONFERENCE CALL TODAY AT 11:00 A.M. EASTERN TIME.
TO PARTICIPATE, PLEASE DIAL 888-318-6429, SECURITY CODE: SONIC - OR YOU CAN
ACCESS THE CALL AT http://WWW.STREETFUSION.COM .
Results of Operations (Unaudited)
(in thousands, except per share and unit data amounts)
Three Months Ended Year Ended
December 31, December 31,
1998 1999 1998 1999
New Units 11,344 26,785 41,592 79,294
Used Units 6,771 14,953 24,591 47,345
Total Units Retailed 18,115 41,738 66,183 126,639
Wholesale Units 5,824 12,539 21,886 39,834
Average price per unit:
New vehicles 24,014 25,859 23,152 24,826
Used vehicles 13,162 15,098 13,206 14,459
Wholesale vehicles 5,725 6,450 5,453 6,296
Revenues:
New Vehicles $272,414 $692,632 $962,939 $1,968,514
Used Vehicles 89,119 225,763 324,740 684,560
Wholesale Vehicles 33,344 80,871 119,351 250,794
Total Vehicles 394,877 999,266 1,407,030 2,903,868
Parts, Service,
and Collision Repair 43,546 133,935 162,660 364,184
Finance & Insurance 11,057 30,676 34,011 82,771
Total Revenues 449,480 1,163,877 1,603,701 3,350,823
Total Gross Profit 61,046 165,433 207,442 454,423
SG&A Expenses 42,945 119,621 150,130 326,914
Depreciation 186 1,181 1,384 3,138
Goodwill Amortization 1,061 3,375 3,223 8,561
Operating Income 16,854 41,256 52,705 115,810
Interest
Expense-Floorplan 3,549 7,418 14,096 22,536
Interest Expense-Other 3,847 9,409 9,395 21,586
Other Income 402 924 426 1,286
Income Before Taxes 9,860 25,353 29,640 72,974
Income Taxes 3,530 10,075 11,083 28,325
Net Income $6,330 $15,278 $18,557 $44,649
Diluted income per share $0.24 $0.38 $0.74 $1.27
Weighted average
shares outstanding 26,520 40,465 24,970 35,248
Other Data:
Gross margin 13.6% 14.2% 12.9% 13.6%
Operating margin 3.7% 3.5% 3.3% 3.5%
Pretax income margin 2.2% 2.2% 1.8% 2.2%
Interest (non-floorplan)
coverage ratio 3.9x 4.2x 4.6x 4.9x
Cash and Equivalents 51,834 76,251
Working Capital 79,155 175,304
Total Inventory 264,971 631,349
Floorplan Debt 228,158 518,357
Long Term Debt (incl. current portion) 136,037 419,401