8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):         July 23, 2012         

SONIC AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-13395	56-201079
(Commission File Number)	(IRS Employer Identification No.)

4401 Colwick Road Charlotte, North Carolina	28211
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (704) 566-2400

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 23, 2012, we issued a press release announcing results for our fiscal quarter and six month period ended June 30, 2012.

A copy of the press release is attached hereto as Exhibit 99.1. A copy of the earnings call presentation materials is attached hereto as Exhibit 99.2.

Item 7.01. Regulation FD Disclosure.

On July 23, 2012, we issued a press release announcing the approval of a quarterly cash dividend.

A copy of the press release is attached hereto as Exhibit 99.3.

Item 9.01. Financial Statements and Exhibits.

   (d)   Exhibits.

            99.1     Press release of Sonic Automotive, Inc. dated July 23, 2012

            99.2     Earnings call presentation materials

            99.3     Press release of Sonic Automotive, Inc. dated July 23, 2012

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SONIC AUTOMOTIVE, INC.
By:	/s/ Stephen K. Coss
	Stephen K. Coss
	Senior Vice President and General Counsel

Dated: July 23, 2012

2

INDEX TO EXHIBITS

ExhibitNo.	Description
99.1	Press release of Sonic Automotive, Inc. dated July 23, 2012
99.2	Earnings call presentation materials
99.3	Press release of Sonic Automotive, Inc. dated July 23, 2012

3

EX-99.1

Exhibit 99.1

Sonic Automotive, Inc. Diluted EPS Up 21%

Continuing Operations Net Income Improves 20%

CHARLOTTE, N.C. – July 23, 2012 – Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported 2012 second quarter earnings from continuing operations of $27.5 million for an 20% increase over the prior year results. Earnings from continuing operations per diluted share increased 21% to $0.46 compared to $0.38 in the prior year quarter.

Q2 2012 Highlights – Record Quarterly Used Unit Volume; Continued to Improve Same Store Revenue Through Investments in the Base Business; Improvements Realized Across All Revenue Streams

• Total Q2 revenues up 12.3% over prior year quarter

• New vehicle retail revenue up 21.3%

• Used vehicle revenue up 4.0%

• Parts and Service revenue up 3.2%

• SG&A to gross profit % up slightly to 77.8% from 77.5% in the prior year quarter

Second quarter 2012 results include 1) the unfavorable effect of approximately $0.03 per fully diluted share related to a loss recorded on the repurchase of $20.2 million principal amount of Sonic’s 5% Convertible Senior Notes and 2) the favorable effect of approximately $0.06 per fully diluted share related to the settlement of certain tax matters.

B. Scott Smith, the Company’s President, noted, “We continue to make progress improving all aspects of our business. During the second quarter, we have taken actions to improve our capital structure through the issuance of low-cost, long-term debt and the associated outstanding tender offer for our remaining 5% Convertible Senior Notes. We have also settled an outstanding tax matter on terms favorable and acceptable to us. All the while, we have continued to lay the foundation to become one of America’s best places to work and shop. Our dedication to customers we serve and our associates led to the results achieved this quarter.”

Following up on B. Scott Smith’s comments, Jeff Dyke, the Company’s EVP of Operations noted, “We are extremely pleased with our double-digit revenue growth driven partially by record used vehicle unit volume. New and used vehicle unit volume growth fueled our fixed operations and F&I business lines which were able to collectively increase gross profit by $13.2 million. We are continuing to see the benefits of our technology and training investments. We believe the consistent execution of our processes coupled with our dedication to highly qualified associates will allow us to drive profitability and provide an exceptional customer experience.”

Subsequent to the end of the second quarter, Sonic’s Board of Directors authorized an additional $100 million to be used in the Company’s share repurchase program. When combined with previously unused authorized amounts, Sonic has approximately $130 million of total authorization from its Board of Directors to repurchase shares of the Company’s Class A Common Stock.

Second Quarter Earnings Conference Call

Senior management will host a conference call today at 11:00 A.M. (Eastern) to discuss the quarter’s results. To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com, then click on “Our Company”, then “Investor Relations”, then “Earnings Conference Calls”.

Presentation materials for the conference call can be accessed on the Company’s website at www.sonicautomotive.com by clicking on the “Investor Relations” tab under “Our Company” and choosing “Webcasts & Presentations”.

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

Domestic: 1.877.791.3416

International: 1.706.643.0958

Conference ID: 94848488

A conference call replay will be available one hour following the call for seven days and can be accessed by calling:

Domestic: 1.855.859.2056

International: 1.404.537.3406

Conference ID: 94848488

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements with respect to anticipated growth in new vehicle sales, and future success and impacts from the implementation of our strategic initiatives. 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 in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company’s annual report on Form 10-K for the year ending December 31, 2011 and quarterly report on Form 10-Q for the period ended March 31, 2012. The Company does not undertake any obligation to update forward-looking information.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(Dollars in thousands, except per share data)

		Second Quarter Ended June 30,
		2012		2011
Revenues
New retail vehicles	$	1,176,781	$	969,828
Fleet vehicles		44,516		55,449
Total new vehicles		1,221,297		1,025,277
Used vehicles		550,040		529,107
Wholesale vehicles		43,984		41,136
Total vehicles		1,815,321		1,595,520
Parts, service and collision repair		304,570		295,094
Finance, insurance and other		65,338		55,369
Total revenues		2,185,229		1,945,983
Total gross profit		320,772		305,934
Selling, general and administrative expenses		(249,525)		(237,092)
Impairment charges		(33)		(41)
Depreciation and amortization		(11,390)		(9,699)
Operating income (loss)		59,824		59,102
Interest expense, floor plan		(5,053)		(4,914)
Interest expense, other, net		(12,712)		(15,339)
Interest expense, non-cash, convertible debt		(1,413)		(1,715)
Interest income (expense/amortization), non-cash, cash flow swaps		83		(464)
Other income (expense), net		(2,550)		15
Income (loss) from continuing operations before taxes		38,179		36,685
Provision for income taxes - benefit (expense)		(10,646)		(13,691)
Income (loss) from continuing operations		27,533		22,994
Income (loss) from discontinued operations		646		(1,643)
Net income (loss)	$	28,179	$	21,351
Diluted:
Weighted average common shares outstanding		63,506		65,936
Earnings (loss) per share from continuing operations	$	0.46	$	0.38
Earnings (loss) per share from discontinued operations		0.01		(0.03)
Earnings (loss) per share	$	0.47	$	0.35
Gross Margin Data (Continuing Operations):
New retail vehicles		6.0%		6.8%
Fleet vehicles		2.8%		3.3%
Total new vehicles		5.8%		6.6%
Used vehicles		6.7%		7.4%
Wholesale vehicles		(3.3%)		(4.5%)
Parts, service and collision repair		48.9%		49.3%
Finance, insurance and other		100.0%		100.0%
Overall gross margin		14.7%		15.7%
SG&A Expenses (Continuing Operations):
Compensation	$	148,569	$	137,888
Advertising		13,684		13,425
Rent and rent related		28,516		32,664
Other		58,756		53,115
Total	$	249,525	$	237,092
SG&A Expenses as % of Gross Profit		77.8%		77.5%
Operating Margin %		2.7 %		3.0%
Unit Data (Continuing Operations):
New retail units		34,396		28,125
Fleet units		1,630		2,151
Total new units		36,026		30,276
Used units		27,528		26,799
Wholesale units		7,939		6,310
Other Data:
Continuing Operations revenue percentage changes:
New retail vehicles		21.3%
Fleet vehicles		(19.7%)
Total new vehicles		19.1%
Used vehicles		4.0%
Parts, service and collision repair		3.2%
Finance, insurance and other		18.0%
Total revenues		12.3%

Sonic Automotive, Inc.

Results of Operations (Unaudited)

(Dollars in thousands, except per share data)

		Six Months Ended June 30,
		2012		2011
Revenues
New retail vehicles	$	2,195,317	$	1,878,682
Fleet vehicles		90,433		119,088
Total new vehicles		2,285,750		1,997,770
Used vehicles		1,067,092		1,003,662
Wholesale vehicles		89,325		76,182
Total vehicles		3,442,167		3,077,614
Parts, service and collision repair		606,318		582,195
Finance, insurance and other		124,587		104,471
Total revenues		4,173,072		3,764,280
Total gross profit		632,641		593,173
Selling, general and administrative expenses		(497,005)		(466,109)
Impairment charges		(34)		(58)
Depreciation and amortization		(22,461)		(19,595)
Operating income (loss)		113,141		107,411
Interest expense, floor plan		(9,527)		(10,280)
Interest expense, other, net		(27,791)		(30,698)
Interest expense, non-cash, convertible debt		(3,043)		(3,409)
Interest income (expense/amortization), non-cash, cash flow swaps		105		(286)
Other income (expense), net		(2,530)		88
Income (loss) from continuing operations before taxes		70,355		62,826
Provision for income taxes—benefit (expense)		(23,354)		(24,147)
Income (loss) from continuing operations		47,001		38,679
Income (loss) from discontinued operations		1,676		(2,364)
Net income (loss)	$	48,677	$	36,315
Diluted:
Weighted average common shares outstanding		63,963		65,943
Earnings (loss) per share from continuing operations	$	0.79	$	0.65
Earnings (loss) per share from discontinued operations		0.02		(0.04)
Earnings (loss) per share	$	0.81	$	0.61
Gross Margin Data (Continuing Operations):
New retail vehicles		6.1%		6.6%
Fleet vehicles		3.1%		3.2%
Total new vehicles		6.0%		6.4%
Used vehicles		7.2%		7.6%
Wholesale vehicles		(1.4%)		(3.0%)
Parts, service and collision repair		48.8%		49.3%
Finance, insurance and other		100.0%		100.0%
Overall gross margin		15.2%		15.8%
SG&A Expenses (Continuing Operations):
Compensation	$	296,102	$	272,689
Advertising		26,727		26,865
Rent and rent related		57,209		62,455
Other		116,967		104,100
Total	$	497,005		$466,109
SG&A Expenses as % of Gross Profit		78.6%		78.6%
Operating Margin %		2.7%		2.9%
Unit Data (Continuing Operations):
New retail units		64,081		54,828
Fleet units		3,335		4,639
Total new units		67,416		59,467
Used units		54,075		51,694
Wholesale units		15,465		11,893
Other Data:
Continuing Operations revenue percentage changes:
New retail vehicles		16.9%
Fleet vehicles		(24.1%)
Total new vehicles		14.4%
Used vehicles		6.3%
Parts, service and collision repair		4.1%
Finance, insurance and other		19.3%
Total revenues		10.9%

Sonic Automotive, Inc.

Earnings Per Share Reconciliation (Unaudited)

(Dollars in thousands, except per share data)

	Second Quarter Ended June 30, 2012
			Income (Loss) From Continuing Operations					Income (Loss) From Discontinued Operations				Net Income (Loss)
	Weighted Average Shares		Amount			Per Share Amount		Amount		Per Share Amount		Amount			Per Share Amount
Earnings (loss) and shares		52,593	$	27,533				$	646			$	28,179
Effect of participating securities:
Non-vested restricted stock and stock units				(429	)				–				(429	)
Basic earnings (loss) and shares		52,593	$	27,104		$	0.52	$	646	$	0.01	$	27,750		$	0.53
Effect of dilutive securities:
Contingently convertible debt (5.0% Convertible Notes)		10,535		1,889					–				1,889
Stock compensation plans		378
Diluted earnings (loss) and shares		63,506	$	28,993		$	0.46	$	646	$	0.01	$	29,639		$	0.47

	Second Quarter Ended June 30, 2011
			Income (Loss) From Continuing Operations					Income (Loss) From Discontinued Operations						Net Income (Loss)
	Weighted Average Shares		Amount			Per Share Amount		Amount			Per Share Amount			Amount			Per Share Amount
Earnings (loss) and shares		52,461	$	22,994				$	(1,643	)				$	21,351
Effect of participating securities:
Non-vested restricted stock and stock units				(302	)				–						(302	)
Basic earnings (loss) and shares		52,461	$	22,692		$	0.43	$	(1,643	)	$	(0.03	)	$	21,049		$	0.40
Effect of dilutive securities:
Contingently convertible debt (5.0% Convertible Notes)		12,890		2,280					14						2,294
Stock compensation plans		585
Diluted earnings (loss) and shares		65,936	$	24,972		$	0.38	$	(1,629	)	$	(0.03	)	$	23,343		$	0.35

	Six Months Ended June 30, 2012
			Income (Loss) From Continuing Operations					Income (Loss) From Discontinued Operations				Net Income (Loss)
	Weighted Average Shares		Amount			Per Share Amount		Amount		Per Share Amount		Amount			Per Share Amount
Earnings (loss) and shares		52,409	$	47,001				$	1,676			$	48,677
Effect of participating securities:
Non-vested restricted stock and stock units				(729	)				–				(729	)
Basic earnings (loss) and shares		52,409	$	46,272		$	0.88	$	1,676	$	0.03	$	47,948		$	0.91
Effect of dilutive securities:
Contingently convertible debt (5.0% Convertible Notes)		11,106		4,056					5				4,061
Stock compensation plans		448
Diluted earnings (loss) and shares		63,963	$	50,328		$	0.79	$	1,681	$	0.02	$	52,009		$	0.81

	Six Months Ended June 30, 2011
			Income (Loss) From Continuing Operations					Income (Loss) From Discontinued Operations						Net Income (Loss)
	Weighted Average Shares		Amount			Per Share Amount		Amount			Per Share Amount			Amount			Per Share Amount
Earnings (loss) and shares		52,438	$	38,679				$	(2,364	)				$	36,315
Effect of participating securities:
Non-vested restricted stock and stock units				(508	)				–						(508	)
Basic earnings (loss) and shares		52,438	$	38,171		$	0.73	$	(2,364	)	$	(0.05	)	$	35,807		$	0.68
Effect of dilutive securities:
Contingently convertible debt (5.0% Convertible Notes)		12,890		4,576					28						4,604
Stock compensation plans		615
Diluted earnings (loss) and shares		65,943	$	42,747		$	0.65	$	(2,336	)	$	(0.04	)	$	40,411		$	0.61

EX-99.2

Q2 2012 Earnings Review

July 23, 2012

Sonic Automotive, Inc.

1

Exhibit  99.2

Forward-Looking Statements

This

presentation

contains

“forward-looking

statements”

within

the

meaning

of

the

Private

Securities

Litigation Reform Act of 1995.  These statements relate to future events, are not historical facts and

are based on our current expectations and assumptions regarding our business, the economy and

other future conditions.  These statements can generally be identified by lead-in words such as

“believe”,

“expect”,

“anticipate”,

“intend”,

“plan”,

“foresee”,

“may”, “will”

and

other

similar words. 

Statements that describe our Company’s objectives, plans or goals are also forward-looking

statements.  Examples of such forward-looking information we may be discussing in this

presentation

include,

without limitation,

further

implementation

of

our

operational strategies and

playbooks, future debt retirement, capital expenditures, operating margins and revenues, inventory

levels and new vehicle industry sales volume. 

You are cautioned that these forward-looking statements are not guarantees of future performance,

involve risks and uncertainties and actual results may differ materially from those projected in the

forward-looking statements as a result of various factors.  These risks and uncertainties include,

among other things, (a) economic conditions in the markets in which we operate, (b) the success of

our operational strategies, (c) our relationships with the automobile manufacturers and (d) new and

pre-owned vehicle sales volume. These risks and uncertainties, as well as additional factors that

could affect our

forward-looking statements, are described in our Form 10-K for the year ending

December 31, 2011 and our Form 10-Q for the quarter ended March 31, 2012.

These forward-looking statements, risks, uncertainties and additional factors speak only as of the

date

of

this

presentation.

We

undertake no

obligation

to

update

any

such

statements.

Sonic Automotive, Inc.

2

Sonic Automotive, Inc.

Quarter in Review

Financial Results

Operations Recap

Summary and Outlook

o

o

o

o

Sonic Automotive Q2 2012

3

Sonic Automotive, Inc.

Overall Results

Revenue Growth –

up 12.3%

New

retail

vehicle

revenue

up

21.3%

-

volume

up

22.3%

-

exceeds industry retail volume growth

Pre-owned revenue up 4.0%

F&I revenue up 18.0%

Fixed Operations revenue up 3.2%

SG&A at 77.8% -

in line with full year projections

Income from continuing operations of $27.5 million up 19.7% 

Q2 2012 diluted EPS from continuing operations was $0.46 per

share vs. $0.38 in prior year period

Results include after-tax charges of approximately $1.6 million, or

$0.03 per diluted share, related to debt repurchases and income

4

tax benefits of $3.6 million, or $0.06 per diluted share, related to

the settlement of income tax related matters

Q2 2012 Results

Sonic Automotive, Inc.

B/(W)

than Q2

2011

(amounts in millions,

except per share data)

Q2

2012

$

%

Revenue

Gross Profit

Operating Profit

Continuing Ops:

Profit (after tax)

Diluted EPS

$

2,185

$ 239

12%

$ 321

$ 15

5%

$ 60

$

1

1%

$ 28

$ 5

20%

$ 0.46

$

0.08

21%

5

SG&A to Gross

160 bps Improvement from Q1

Target 78% for Full Year 2012

Sonic Automotive, Inc.

Sonic Automotive, Inc.

Capital Spending

(amounts in millions)

YTD Q2

2012

Estimated 

2012

Real Estate Acquisitions

$ 4.8

$ 14.5

All Other Cap Ex

29.7

128.9

Subtotal

$ 34.5

$ 143.4

Less: Mortgage Funding

(10.7)

(48.5)

Total Cash Used –

Cap Ex

$ 23.8

$ 94.9

7

Sonic Automotive, Inc.

Debt Covenants

Compliant with all Covenants

Covenant

Actual Q2

2012

Liquidity Ratio

>= 1.05

1.16

Fixed Charge Coverage Ratio

>= 1.20

1.56

Total Lease Adjusted Leverage

Ratio

<= 5.50

3.88

8

New Vehicles

Includes

Fleet

(1) Source: JD Power

Sonic Automotive, Inc.

Q2 2012

Q2 2011

B/(W)

Retail Revenue

Retail Volume

Selling Price

Gross Margin %

GPU

Retail Gross Profit

$1.2 billion

34,396

$ 34,213

6.0%

$ 2,039

$ 70 million

$1.0 billion

28,125

$ 34,483

6.8%

$ 2,347

$ 66 million

21.3%

22.3%

($270)

(80 bps)

($ 308)

6.2%

9

Pre-Owned Retail Vehicles

Q2 2012

Q2 2011

B/(W)

Retail Volume

27,528

26,799

2.7%

Revenue

$550 million

$529 million

4.0%

Pre-Owned Related Gross*

$

82 million

$

81 million

$

1 million

Pre-Owned to New Ratio

.80 to 1

.95 to 1

* -

Includes: pre-owned vehicle + reconditioning + F&I gross

Continue to make

progress toward

our goal of 100

per store per

month

Sonic Automotive, Inc.

10

B/(W) than Q2

2011

(amounts in millions)

Q2 2012

$

%

Revenue

$ 305

$ 9

3.2%

Gross Profit

$ 149

$ 3

Q2 YOY Gross Profit Change Breakdown:

Fixed Operations

Sonic Automotive, Inc.

2.2%

11

•

Customer Pay Up 3.0%

•

Whsl. Parts Up 3.1%

•

Internal & Sublet Up 12.9%

•

Warranty Down 9.4%

Sonic Automotive, Inc.

12

Summary and Outlook

Revenue continues to grow in all categories

Investments in technology and training are progressing as

planned

Automotive retail industry outlook remains positive

Raising 2012 continuing operations diluted earnings per

share guidance of $1.62 -

$1.70.

Sonic Automotive, Inc.

13

EX-99.3

Exhibit 99.3

SONIC AUTOMOTIVE, INC. DECLARES QUARTERLY CASH DIVIDEND

CHARLOTTE, N.C. – July 23, 2012 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that its Board of Directors approved a quarterly dividend of $0.025 per share payable in cash for stockholders of record on September 15, 2012. The dividend will be payable on October 15, 2012.

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.

Included herein is a forward-looking statement pertaining to an anticipated cash dividend to shareholders. 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 in the markets in which we operate, new and used vehicle sales volume, the success of our operational strategies, the rate and timing of overall economic recovery and the risk factors described in the Company’s annual report on Form 10-K for the year ending December 31, 2011 and in the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31. 2012. The Company does not undertake any obligation to update forward-looking information.