EX-99.1 2 g20948exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
Sonic Automotive, Inc. Reports Continued Earnings Strength for Third Quarter of 2009
CHARLOTTE, N.C. — October 27, 2009 — Sonic Automotive, Inc. (NYSE: SAH), the nation’s third-largest automotive retailer, today reported that 2009 third quarter earnings from continuing operations were $0.22 per diluted share which includes an after-tax gain of $0.01 per diluted share, related to the Company’s repurchase of convertible notes. This compares to a loss from continuing operations of $0.38 per diluted share, in the prior year quarter. The results for the prior year quarter include the after-tax effect of impairment charges, lease exit accruals and hurricane damage of $0.53 per diluted share.
Business Overview – Strong operating results and improved capital structure
B. Scott Smith, the Company’s President, said, “We are pleased with what we were able to accomplish this quarter at Sonic Automotive. In addition to continuing to post strong operating results we completed a very successful public refinancing of our 2010 debt obligations. The offering in late September allowed us to de-lever our balance sheet, remove some extremely dilutive convertible debt from our capital structure and mitigate future refinancing risk in the near term. This also paves the way for what we believe will be a successful refinancing of our upcoming syndicated credit facility. This offering would not have been possible without the strong fundamentals of our business model which is evident in our consistent operating performance and cash flow generation throughout this business cycle.”
New Vehicles – Strongest year-over-year market share performance to date
Commenting on the Company’s new car sales, Mr. Smith noted, “The combination of increased customer traffic from the CARS program and the continued execution of our e-Commerce strategies resulted in Sonic posting its strongest year-over-year new vehicle performance so far this year. We have now had eight consecutive months of new car market share gains. In addition to the improved unit volume, our new vehicle retail margins were up 70 basis points to 7.6% and our new vehicle days supply was at 39 days.”
Used Vehicles – Used vehicle volume up 25%
Overall used vehicle unit volume was up 25% and total used vehicle revenue was up over 18% for the third quarter of 2009 compared to the third quarter of 2008. Jeff Dyke, the Company’s EVP of Operations, stated, “Our used vehicle volume continued to grow throughout the quarter despite the heavy emphasis on new vehicle sales stemming from the CARS program. Our used-to-new ratio, which has continued to improve throughout the year, was at 80% for the third quarter. Our certified pre-owned business, which has been a consistent strength for Sonic, remains strong at 34% of our overall used vehicle volume. We are growing our used vehicle business by continuing to expand our presence across the entire spectrum of the used vehicle market.”
Parts and Service – Margin expansion continues with stable revenues
Sonic’s parts and service revenue for the third quarter was flat with the prior year quarter while the gross margin at 50.6% represents an improvement over the prior year third quarter margin of 49.6% and the second quarter 2009 margin of 50.3%.
Mr. Dyke stated, “Our parts and service business continues to add a substantial amount of stability to our results of operations. We have steadily grown our fixed operations margin every quarter this year as a result of the pricing, merchandising and other strategies being implemented with the rollout of our parts and service playbook. We have every reason to expect this trend will continue as the rollout progresses.”

 

 

Presentation materials for the Company’s October 27, 2009 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.ccbn.com or 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: 34082140
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation’s third-largest automotive retailer, operating 153 franchises. Sonic can be reached on the web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to future debt refinancing. 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 current report on Form 8-K filed August 21, 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)
                                 
    Third Quarter Ended     Nine Months Ended  
    9/30/2009     9/30/2008     9/30/2009     9/30/2008  
Revenues
                                
New retail vehicles
   $ 776,578     $ 889,237     $ 2,005,486     $ 2,700,879  
Fleet vehicles
     48,789       53,234       164,160       278,007  
Total new vehicles
     825,367       942,471       2,169,646       2,978,886  
Used vehicles
     365,501       308,158       1,034,444       994,906  
Wholesale vehicles
     33,220       64,995       97,478       216,378  
 
                        
Total vehicles
     1,224,088       1,315,624       3,301,568       4,190,170  
Parts, service and collision repair
     255,372       256,867       768,003       787,928  
Finance, insurance and other
     41,302       43,259       110,663       139,355  
 
                        
Total revenues
     1,520,762       1,615,750       4,180,234       5,117,453  
Total gross profit
     257,468       259,360       729,727       816,348  
SG&A expenses
     (203,694 )     (220,413 )     (588,834 )     (656,799 )
Impairment charges
     (339 )     (25,476 )     (4,164 )     (25,809 )
Depreciation and amortization
     (8,080 )     (8,286 )     (24,523 )     (23,562 )
 
                        
Operating income
     45,355       5,185       112,206       110,178  
Interest expense, floor plan
     (4,324 )     (8,987 )     (14,368 )     (31,591 )
Non-cash interest expense, convertible debt
     7,818       (2,696 )     1,556       (7,991 )
Interest expense, other, net
     (19,305 )     (15,859 )     (57,496 )     (40,803 )
Other income (expense), net
     2,442       (9 )     2,504       88  
 
                        
Income (Loss) from continuing operations before taxes
     31,986       (22,366 )     44,402       29,881  
Income tax (provision) benefit
     (13,506 )     7,301       (19,093 )     (13,598 )
 
                        
Income (Loss) from continuing operations
     18,480       (15,065 )     25,309       16,283  
Discontinued operations:
                                
Loss from operations and the sale of discontinued franchises
     (3,848 )     (17,878 )     (10,681 )     (30,581 )
Income tax benefit
     962       5,977       2,670       9,174  
 
                        
Loss from discontinued operations
     (2,886 )     (11,901 )     (8,011 )     (21,407 )
 
                        
Net income (loss)
   $ 15,594     $ (26,966 )   $ 17,298     $ (5,124 )
 
                        
 
                                
Basic:
                                
Weighted average common shares outstanding
     42,305       40,138       41,130       40,447  
 
                                
Earnings (Loss) per share from continuing operations
   $ 0.43     $ (0.38 )   $ 0.61     $ 0.40  
Loss per share from discontinued operations
   $ (0.06 )   $ (0.29 )   $ (0.19 )   $ (0.53 )
 
                        
Earnings (Loss) per share
   $ 0.37     $ (0.67 )   $ 0.42     $ (0.13 )
 
                        
 
                                
Diluted:
                                
Weighted average common shares outstanding
     63,195       40,138       52,529       40,626  
 
                                
Earnings (Loss) per share from continuing operations
   $ 0.22     $ (0.38 )   $ 0.42     $ 0.40  
Loss per share from discontinued operations
   $ (0.05 )   $ (0.29 )   $ (0.16 )   $ (0.53 )
 
                        
Earnings (Loss) per share
   $ 0.17     $ (0.67 )   $ 0.26     $ (0.13 )
 
                        
 
                                
Gross Margin Data (Continuing Operations):
                                
 
Retail new vehicles
     7.6 %     6.9 %     7.3 %     7.2 %
Fleet vehicles
     2.9 %     4.8 %     3.7 %     2.3 %
Total new vehicles
     7.3 %     6.8 %     7.0 %     6.8 %
Used vehicles retail
     7.8 %     8.4 %     8.3 %     8.9 %
Total vehicles retail
     7.5 %     7.2 %     7.4 %     7.3 %
Wholesale vehicles
     (5.4 )%     (1.9 )%     (3.3 )%     (1.9 )%
Parts, service and collision repair
     50.6 %     49.6 %     50.0 %     49.6 %
Finance, insurance and other
     100.0 %     100.0 %     100.0 %     100.0 %
Overall gross margin
     16.9 %     16.1 %     17.5 %     16.0 %
 
                                
SG&A Expenses (Continuing Operations):
                                
 
Personnel
   $ 118,345     $ 116,949     $ 337,737     $ 365,618  
Advertising
     10,734       12,817       31,333       42,405  
Facility rent
     22,560       27,257       67,225       68,736  
Other
     52,055       63,390       152,539       180,040  
 
                        
Total
   $ 203,694     $ 220,413     $ 588,834     $ 656,799  
 
                                
SG&A Expenses as % of Gross Profit
                                
 
                                
Personnel
     45.9 %     45.1 %     46.3 %     44.7 %
Advertising
     4.2 %     4.9 %     4.3 %     5.2 %
Facility rent
     8.8 %     10.5 %     9.2 %     8.4 %
Other
     20.2 %     24.5 %     20.9 %     22.2 %
 
                        
Total
     79.1 %     85.0 %     80.7 %     80.5 %
 
Operating Margin %
     3.0 %     0.3 %     2.7 %     2.2 %

 

 

                                 
    Third Quarter Ended     Nine Months Ended  
    9/30/2009     9/30/2008     9/30/2009     9/30/2008  
Unit Data (Continuing Operations):
                                
 
                                
New retail units
     24,305       26,025       60,998       80,405  
Fleet units
     1,971       2,772       6,800       11,572  
Used units
     19,360       15,444       55,062       49,617  
Wholesale units
     6,612       8,636       17,414       27,559  
Average price per unit:
                                
New retail vehicles
   $ 31,951     $ 34,169     $ 32,878     $ 33,591  
Fleet vehicles
     24,753       19,204       24,141       24,024  
Used vehicles
     18,879       19,953       18,787       20,052  
Wholesale vehicles
     5,024       7,526       5,598       7,851  
 
                                
Other Data:
                                
 
                                
Same store revenue percentage changes:
                                
New retail
     (12.7 )%             (25.9 )%        
Fleet
     (8.4 )%             (41.0 )%        
Total New Vehicles
     (12.4 )%             (27.3 )%        
Used
     18.6 %             3.9 %        
Parts, service and collision repair
     (0.7 )%             (2.7 )%        
Finance, insurance and other
     (3.8 )%             (20.2 )%        
Total
     (5.9 )%             (18.4 )%        
 
                        
Balance Sheet Data:
                                 
    9/30/2009     12/31/2008 (1)                  
ASSETS
                                
Current Assets:
                                
Cash and cash equivalents
   $ 614     $ 6,971                  
Restricted cash
     106,913       —                  
Receivables, net
     163,161       247,025                  
Inventories
     657,475       916,837                  
Assets held for sale
     176,128       406,576                  
Other current assets
     16,900       16,822                  
 
                            
Total current assets
     1,121,191       1,594,231                  
Property and Equipment, Net
     378,170       369,892                  
Goodwill, Net
     403,048       327,007                  
Other Intangibles, Net
     79,685       82,328                  
Other Assets
     22,674       32,087                  
 
                            
TOTAL ASSETS
   $ 2,004,768     $ 2,405,545                  
 
                            
 
                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
Current Liabilities:
                                
Floor plan notes payable
   $ 605,059     $ 921,023                  
Other current liabilities
     224,377       277,938                  
Liabilities associated with assets held for sale
     53,123       199,482                  
Current maturities of long-term debt
     105,750       738,447                  
 
                            
Total current liabilities
     988,309       2,136,890                  
LONG-TERM DEBT
     556,243       —                  
OTHER LONG-TERM LIABILITIES
     109,562       71,132                  
STOCKHOLDERS’ EQUITY
     350,654       197,523                  
 
                            
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 2,004,768     $ 2,405,545                  
 
                            
 
(1)   Restated for the adoption effects of ASC 470-20-65.