Twelfth Consecutive Quarter Growth Reported by Sonic Automotive
31 October 2000
Twelfth Consecutive Quarter of Greater Than 50% EPS Growth Reported by Sonic Automotive, Inc.
CHARLOTTE, N.C., Oct. 30 Sonic Automotive, Inc. announced today that net income for the
third quarter ended September 30, 2000 increased 75% to $22.1 million, or
$0.51 per diluted share, from $12.6 million, or $0.33 per diluted share, for
the third quarter ended September 30, 1999. For the first nine months of
2000, net income increased 111% to $61.9 million, or $1.40 per diluted share,
from $29.4 million, or $0.88 per diluted share for the first nine months of
1999. The third quarter of 2000 was Sonic's twelfth consecutive quarter of
greater than 50% growth in earnings per share.
Net income before tax effected goodwill amortization expense per diluted
share was $0.57 in the third quarter of 2000 versus $0.37 in the third quarter
of 1999, an increase of 35%. For the first nine months of 2000, net income
before tax effected goodwill amortization expense per diluted share was
$1.60 versus $0.87 in the first nine months of 1999, an increase of 84%.
O. Bruton Smith, the Company's Chairman and Chief Executive Officer
stated, "Since going public Sonic has delivered an exceptional three-year
record of greater than 50% per share earnings growth. We continue to
demonstrate the ability to grow the company and earnings per share. We
believe our performance through the end of the third quarter will enable us to
report earnings per share of $1.84 to $1.87 for the year ended December 31,
2000. Given continuation of current industry trends and no additional
acquisitions, we are targeting earnings per share in the range of $2.08 to
$2.13 for 2001."
Delivering Growth in Revenues and Margins
Total revenues for the third quarter of 2000 increased 83% to $1.6 billion
from $870.0 million in the third quarter of 1999. Sonic's top five brands
for the quarter were Honda (15%), Ford (13%), Chrysler-Dodge-Jeep (13%), BMW
(10%), and Toyota (9%). Revenue mix for the quarter remained constant with
vehicle sales contributing 86% of total revenues and parts, service, collision
repair, finance and insurance and other contributing 14%. Finance and
insurance revenue increased from $686 per unit in the third quarter of 1999 to
$790 per unit in the third quarter of 2000.
Gross profits increased 96% to $228.7 million in the third quarter of
2000, compared to $116.7 million in the third quarter of 1999. Overall gross
margins increased to 14.3% in the third quarter of 2000 from 13.4% in the
third quarter of 1999. Total vehicle gross margins increased from 7.7% in the
third quarter 1999 to 8.1% in the third quarter of 2000. Gross margins for
parts, service and collision repair increased from 40.8% in the third quarter
of 1999 to 44.7% in the third quarter of 2000.
Total revenues for the first nine months of 2000 rose 111% to $4.6 billion
versus $2.2 billion in the first nine months of 1999. For the first nine
months of 2000 vehicle sales contributed 86% of total sales compared to 87% in
the same period in the prior year. Parts, service, collision repair, finance
and insurance and other contributed 14% of total sales for the first nine
months of 2000 compared to 13% of total sales in the same period in the prior
year. Finance and insurance revenue for the first nine months of 2000
increased $139 per unit or 23% from $614 per unit to $753 per unit.
Gross profits increased 127% to $656.1 million in the first nine months of
2000, compared to $289.0 million in the same period in the prior year.
Overall gross margins increased to 14.2% in the first nine months of 2000 from
13.2% in the same period in the prior year. Vehicle gross margins increased
for the first nine months of 2000 from 7.9% to 8.1%. Gross margins for parts,
service and collision repair, increased for the first nine months of 2000 from
41.6% to 44.5%.
Same Store Sales
On a same store basis, total revenues in the three months ended September
30, 2000 increased 2.4% compared to the same period last year. Same store new
vehicle sales declined 2.6% for the third quarter while same store used retail
vehicle sales increased 14.1% for the third quarter compared to the same
period last year. Combined vehicle sales on a same store basis increased 1.7%
for the third quarter compared to the same period last year. For the three
months ended September 30, 2000 same store sales for high margin finance and
insurance products increased 10.4% compared to the same period last year.
Same store operating income increased 4.3% for the third quarter of 2000
compared to the same period last year. Same store performance in the third
quarter continues to reflect aggressive actions to reduce unprofitable large
fleet sales. Fleet sales declined 39.9% in the same store base. Without
considering fleet sales, same store sales would have been up 3.5% in the
quarter.
Stock Buyback Program
As of October 30, 2000, Sonic has expended $42.8 million of a $50 million
authorized stock buyback program. This buyback represents over 9% of Sonic's
total common stock equivalents outstanding. The Company intends to continue
to use the authorized stock buyback as market conditions warrant.
Three Months Ended Nine Months Ended
September 30, September 30,
1999 2000 1999 2000
New units 20,778 36,071 52,509 104,793
Used units 12,098 21,096 32,392 61,785
Total units retailed 32,876 57,167 84,901 166,578
Wholesale units 11,027 19,395 27,295 51,594
Average price per unit:
New vehicles 24,452 25,617 24,298 25,600
Used vehicles 14,349 15,910 14,164 15,576
Wholesale vehicles 6,305 5,788 6,225 6,265
Revenues:
New vehicles $508,066 $924,040 $1,275,882 $2,682,696
Used vehicles 173,592 335,638 458,797 962,392
Wholesale vehicles 69,523 112,256 169,923 323,231
Total vehicles 751,181 1,371,934 1,904,602 3,968,319
Parts, service, and
collision repair 96,223 177,788 230,249 513,920
Finance & insurance
and other 22,560 45,139 52,095 125,362
Total Revenues 869,964 1,594,861 2,186,946 4,607,601
Total Gross Profit 116,654 228,741 288,990 656,073
SG&A expenses 82,650 165,460 207,293 473,745
Depreciation 776 1,769 1,957
4,930
Goodwill amortization 2,216 4,184 5,186 12,414
Operating Income 31,012 57,328 74,554 164,984
Interest expense,
floor plan 5,720 11,607 15,118 34,012
Interest expense, other 4,787 10,637 12,177 31,200
Other income 38 35 362 109
Income Before Taxes 20,543 35,119 47,621 99,881
Income taxes 7,960 13,060 18,250 38,000
Net Income $12,583 $22,059 $29,371 $61,881
Diluted income per share $0.33 $0.51 $0.88 $1.40
Diluted weighted average
shares outstanding 38,268 43,571 33,489 44,257
Other Data:
Gross margin 13.4% 14.3% 13.2% 14.2%
Operating margin 3.6% 3.6% 3.4% 3.6%
Pretax income margin 2.4% 2.2% 2.2% 2.2%
Interest (non-floorplan)
coverage ratio 5.9x 4.9x 5.5x 4.8x
Cash and equivalents $69,865 $89,813
Working capital $154,980 $236,392
Total inventory $362,645 $663,806
Floorplan debt $276,915 $547,273
Long term debt (incl. current portion) $215,411 $493,451