Sonic Automotive, Inc. Adjusted Diluted EPS Up 11%

Reaffirms Full Year Guidance

PR Newswire

CHARLOTTE, N.C., July 23, 2013 /PRNewswire/ -- Sonic Automotive, Inc. (SAH), one of the nation's largest automotive retailers, today reported 2013 second quarter adjusted earnings from continuing operations of $26.4 million. Adjusted earnings from continuing operations per diluted share increased 11.1% to $0.50 compared to an adjusted $0.45 in the prior year quarter.  Adjusted results in the second quarter of 2013 exclude a pre-tax charge of approximately $29.0 million, or $0.34 per diluted share, related to costs associated with retiring its outstanding 9.0% Senior Subordinated Notes due 2018 (the "9% Notes").  Adjusted results in the second quarter of 2012 exclude a pre-tax charge of approximately $2.6 million, or $0.03 per diluted share, related to a loss recorded on the repurchase of $20.2 million principal amount of Sonic's 5% Convertible Senior Notes and the favorable effect of approximately $0.06 per fully diluted share related to the settlement of certain tax matters.

Q2 2013 Highlights

  • New retail revenue up 5.1% over prior year quarter
  • Pre-owned volume per store per month at 89 units, revenue up 0.8%
  • Total revenue up 3.8% compared to the prior year quarter
  • Fixed operations gross profit up $6.5 million, or 4.5%, compared to the prior year quarter
  • Finance and insurance gross profit up 8.6% and profit per retail unit of $1,148
  • SG&A to gross profit % was flat at 76.6% compared to prior year quarter
  • Completed the retirement of 9% Notes through the issuance of 5%, 10-year notes

B. Scott Smith, the Company's President, noted, "I'm pleased that we grew our earnings per share by more than 11% in the quarter despite our margin challenges associated with our True Price process execution.  Our investment strategy remains the same.  We continue to focus on investing in our base business, owning our real estate and strengthening our balance sheet."

"In May, we announced the acquisition of Murray Mercedes Benz of Denver and Murray BMW of Denver which we expect to close in the third quarter. Both operations are brands that we operate very well and are in one of the best markets in the country."

"In addition, during June we also executed the most successful bond offering in the Company's history securing 5% financing on $300.0 million, moving our nearest maturity out to 2022."

"I'm pleased to reiterate our earnings guidance that was originally given at the beginning of the year.  We are targeting fully diluted earnings per share from continuing operations at $1.93-$2.03 for the full year 2013."

The Company's EVP of Operations, Jeff Dyke, commented, "Training on True Price and the development of our Customer Experience model and related technologies continued in the second quarter.  We are learning a great deal. It's been an amazing first six months of the year as we continue to evolve.  We have stores within brand lines that are showing substantial growth over the prior year as the stores gain the experience needed to execute our True Price process.  We are very excited about the progress and potential that we see in our stores and the feedback we are receiving from our customers as we work toward using technology, process and transparency to enhance trust and eliminate the wasteful time and energy it takes to buy a vehicle."

"We are confident that over the next 18 months the rollout of these processes and the commitment we are making to a seamless, paperless transaction that includes our sales associates handling the entire Customer Experience transaction will provide us with infinite opportunities for growth and a significant competitive advantage.  An example of the technologies we are developing for use on Apple's iPhone and iPad products can be found on Apple's website at either: http://www.apple.com/iphone/business/profiles/sonic-automotive/ or http://www.apple.com/ipad/business/profiles/sonic-automotive/ ."

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: 14097096

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: 14097096

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 used 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, 2012 and quarterly report on Form 10-Q for the period ended March 31, 2013.  The Company does not undertake any obligation to update forward-looking information.

 

Sonic Automotive, Inc. Results of Operations (Unaudited)

(Dollars and shares in thousands, except per share amounts)



This release contains certain non-GAAP financial measures (the "Adjusted" columns) as defined under SEC rules, such as, but not limited to, adjusted income from continuing operations and related earnings per share data.  The Company has reconciled these measures to the most directly comparable GAAP measures (the "Reported" columns) in the release.  The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure by providing period-to-period comparability of the Company's results from operations.
















Second Quarter Ended June 30, 2013


Second Quarter Ended June 30, 2012



Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted


Revenues:













   New retail vehicles

$   1,199,709


$                -


$   1,199,709


$   1,141,729


$                -


$   1,141,729


   Fleet vehicles

47,452


-


47,452


43,925


-


43,925


      Total new vehicles

1,247,161


-


1,247,161


1,185,654


-


1,185,654


   Used vehicles

538,977


-


538,977


534,637


-


534,637


   Wholesale vehicles

40,032


-


40,032


42,552


-


42,552


      Total vehicles

1,826,170


-


1,826,170


1,762,843


-


1,762,843


   Parts, service and collision repair

307,046


-


307,046


295,340


-


295,340


   Finance, insurance and other

69,220


-


69,220


63,763


-


63,763


      Total revenues

2,202,436


-


2,202,436


2,121,946


-


2,121,946


Gross profit

323,806


-


323,806


312,852


-


312,852


Selling, general and administrative expenses

(248,090)


-


(248,090)


(239,751)


-


(239,751)


Impairment charges

(36)


-


(36)


(33)


-


(33)


Depreciation and amortization

(13,144)


-


(13,144)


(11,210)


-


(11,210)


Operating income (loss)

62,536


-


62,536


61,858


-


61,858


Other income (expense):













   Interest expense, floor plan

(5,591)


-


(5,591)


(4,857)


-


(4,857)


   Interest expense, other, net

(14,390)


788

(1)

(13,602)


(13,835)


-


(13,835)


   Other income (expense), net

(28,265)


28,235

(2)

(30)


(2,553)


2,578

(3)

25


      Total other income (expense)

(48,246)


29,023


(19,223)


(21,245)


2,578


(18,667)


Income (loss) from continuing operations before taxes

14,290


29,023


43,313


40,613


2,578


43,191


Provision for income taxes - benefit (expense)

(5,573)


(11,319)


(16,892)


(11,615)


(4,574)

(4)

(16,189)


Income (loss) from continuing operations

8,717


17,704


26,421


28,998


(1,996)


27,002


Income (loss) from discontinued operations

199


-


199


(819)




(819)


Net income (loss)

$          8,916


$        17,704


$        26,620


$        28,179


$        (1,996)


$        26,183















Diluted earnings (loss) per common share:













      Earnings (loss) per share from continuing operations

$            0.16


$            0.34


$            0.50


$            0.48


$          (0.03)


$            0.45


      Earnings (loss) per share from discontinued operations

0.01


(0.01)


-


(0.01)


-


(0.01)


      Earnings (loss) per common share

$            0.17


$            0.33


$            0.50


$            0.47


$          (0.03)


$            0.44


      Weighted average common shares outstanding

52,942




52,942


63,506




63,506















Gross Margin Data (Continuing Operations):













   New retail vehicles

5.5%




5.5%


6.0%




6.0%


   Fleet vehicles

2.6%




2.6%


2.8%




2.8%


      Total new vehicles

5.4%




5.4%


5.9%




5.9%


   Used vehicles

7.0%




7.0%


6.7%




6.7%


   Wholesale vehicles

(4.9%)




(4.9%)


(2.9%)




(2.9%)


   Parts, service and collision repair

49.2%




49.2%


49.0%




49.0%


   Finance, insurance and other

100.0%




100.0%


100.0%




100.0%


      Overall gross margin

14.7%




14.7%


14.7%




14.7%















SG&A Expenses (Continuing Operations):













   Compensation

$      149,528






$      143,508






   Advertising

13,718






12,554






   Rent and rent related

25,927






26,707






   Other

58,917






56,982






      Total SG&A expenses

$      248,090


$                -


$      248,090


$      239,751


$                -


$      239,751


   SG&A expenses as % of gross profit

76.6%




76.6%


76.6%




76.6%















Operating Margin %

2.8%




2.8%


2.9%




2.9%















Unit Data (Continuing Operations):













   New retail units

33,685






33,115






   Fleet units

1,717






1,608






      Total new units

35,402






34,723






   Used units

26,599






26,525






   Wholesale units

7,257






7,630



















(1) Represents double-carry interest on 9.0% Notes.













(2) Represents loss on extinguishment of 9.0% Notes.













(3) Represents loss on repurchase of a portion of the 5.0% Convertible Notes.












(4) Includes tax adjustments related to the settlement of certain tax matters.











 


Sonic Automotive, Inc. Results of Operations (Unaudited)

(Dollars and shares in thousands, except per share amounts)
















Six Months Ended June 30, 2013


Six Months Ended June 30, 2012



Reported


Adjustments


Adjusted


Reported


Adjustments


Adjusted


Revenues:













   New retail vehicles

$   2,300,818


$                -


$   2,300,818


$   2,127,761


$                -


$   2,127,761


   Fleet vehicles

89,399


-


89,399


89,283


-


89,283


      Total new vehicles

2,390,217


-


2,390,217


2,217,044


-


2,217,044


   Used vehicles

1,065,158


-


1,065,158


1,036,501


-


1,036,501


   Wholesale vehicles

91,825


-


91,825


86,225


-


86,225


      Total vehicles

3,547,200


-


3,547,200


3,339,770


-


3,339,770


   Parts, service and collision repair

603,689


-


603,689


587,895


-


587,895


   Finance, insurance and other

134,714


-


134,714


121,347


-


121,347


      Total revenues

4,285,603


-


4,285,603


4,049,012


-


4,049,012


Gross profit

636,826


-


636,826


616,606


-


616,606


Selling, general and administrative expenses

(493,914)


-


(493,914)


(476,900)


-


(476,900)


Impairment charges

(51)


-


(51)


(34)


-


(34)


Depreciation and amortization

(25,278)


-


(25,278)


(22,105)


-


(22,105)


Operating income (loss)

117,583


-


117,583


117,567


-


117,567


Other income (expense):













   Interest expense, floor plan

(10,804)


-


(10,804)


(9,120)


-


(9,120)


   Interest expense, other, net

(28,749)


788

(1)

(27,961)


(30,244)


-


(30,244)


   Other income (expense), net

(28,170)


28,235

(2)

65


(2,533)


2,578

(3)

45


      Total other income (expense)

(67,723)


29,023


(38,700)


(41,897)


2,578


(39,319)


Income (loss) from continuing operations before taxes

49,860


29,023


78,883


75,670


2,578


78,248


Provision for income taxes - benefit (expense)

(19,445)


(11,319)


(30,764)


(25,527)


(4,574)

(4)

(30,101)


Income (loss) from continuing operations

30,415


17,704


48,119


50,143


(1,996)


48,147


Income (loss) from discontinued operations

(208)


-


(208)


(1,466)


-


(1,466)


Net income (loss)

$        30,207


$        17,704


$        47,911


$        48,677


$        (1,996)


$        46,681















Diluted earnings (loss) per common share:













      Earnings (loss) per share from continuing operations

$            0.57


$            0.33


$            0.90


$            0.83


$          (0.03)


$            0.80


      Earnings (loss) per share from discontinued operations

-


-


-


(0.02)


-


(0.02)


      Earnings (loss) per common share

$            0.57


$            0.33


$            0.90


$            0.81


$          (0.03)


$            0.78


      Weighted average common shares outstanding

52,937




52,937


63,963




63,963















Gross Margin Data (Continuing Operations):













   New retail vehicles

5.7%




5.7%


6.2%




6.2%


   Fleet vehicles

2.8%




2.8%


3.1%




3.1%


      Total new vehicles

5.6%




5.6%


6.0%




6.0%


   Used vehicles

7.1%




7.1%


7.2%




7.2%


   Wholesale vehicles

(3.4%)




(3.4%)


(1.2%)




(1.2%)


   Parts, service and collision repair

48.9%




48.9%


48.9%




48.9%


   Finance, insurance and other

100.0%




100.0%


100.0%




100.0%


      Overall gross margin

14.9%




14.9%


15.2%




15.2%















SG&A Expenses (Continuing Operations):













   Compensation

$      298,108






$      285,692






   Advertising

27,150






24,609






   Rent and rent related

52,324






53,493






   Other

116,332






113,106






      Total SG&A expenses

$      493,914


$                -


$      493,914


$      476,900


$                -


$      476,900


   SG&A expenses as % of gross profit

77.6%




77.6%


77.3%




77.3%















Operating Margin %

2.7%




2.7%


2.9%




2.9%















Unit Data (Continuing Operations):













   New retail units

64,275






61,605






   Fleet units

3,210






3,291






      Total new units

67,485






64,896






   Used units

53,068






52,003






   Wholesale units

15,650






14,805



















(1) Represents double-carry interest on 9.0% Notes.













(2) Represents loss on extinguishment of 9.0% Notes.













(3) Represents loss on repurchase of a portion of the 5.0% Convertible Notes.












(4) Includes tax adjustments related to the settlement of certain tax matters.











 

Sonic Automotive, Inc. Results of Operations (Unaudited)

(Dollars and shares in thousands, except per share amounts)


















Second Quarter Ended June 30, 2013





Income (Loss)


Income (Loss)









From Continuing


From Discontinued









Operations


Operations


Net Income (Loss)



Weighted




Per




Per




Per



Average




Share




Share




Share



Shares


Amount


Amount


Amount


Amount


Amount


Amount
















Reported:















   Earnings (loss) and shares                                   


52,597


$      8,717




$         199




$       8,916



   Effect of participating securities:















      Non-vested restricted stock















         and stock units                                   




(71)




-




(71)



   Basic earnings (loss) and shares


52,597


$      8,646


$    0.16


$         199


$      0.01


$       8,845


$    0.17

   Effect of dilutive securities:















      Stock compensation plans                                   


345













   Diluted earnings (loss) and shares


52,942


$      8,646


$    0.16


$         199


$      0.01


$       8,845


$    0.17
















Adjustments (net of tax):















   Double-carry Interest




$         481


$    0.01


$             -


$          -


$          481


$    0.01

   Debt Extinguishment Charges




17,223


0.33


-


-


17,223


0.33

   Effect of Two-class Method & Rounding




-


-


-


(0.01)


-


(0.01)

      Total adjustments




$    17,704


$    0.34


$             -


$    (0.01)


$     17,704


$    0.33
















Adjusted:















   Diluted earnings (loss) per share






$    0.50




$          -




$    0.50

































Second Quarter Ended June 30, 2012





Income (Loss)


Income (Loss)









From Continuing


From Discontinued









Operations


Operations


Net Income (Loss)



Weighted




Per




Per




Per



Average




Share




Share




Share



Shares


Amount


Amount


Amount


Amount


Amount


Amount
















Reported:















   Earnings (loss) and shares                                   


52,593


$    28,998




$       (819)




$     28,179



   Effect of participating securities:















      Non-vested restricted stock















         and stock units                                   




(452)




-




(452)



   Basic earnings (loss) and shares


52,593


$    28,546


$    0.54


$       (819)


$    (0.01)


$     27,727


$    0.53

   Effect of dilutive securities:















      Contingently convertible















         debt (5.0% Convertible Notes)


10,535


1,856




33




1,889



      Stock compensation plans                                   


378













   Diluted earnings (loss) and shares


63,506


$    30,402


$    0.48


$       (786)


$    (0.01)


$     29,616


$    0.47
















Adjustments (net of tax):















   Debt Extinguishment Charges




$      1,572


$    0.03


$           -


$          -


$       1,572


$    0.03

   Settlement of Tax Matters




(3,568)


(0.06)


-


-


(3,568)


(0.06)

      Total adjustments




$    (1,996)


$   (0.03)


$             -


$          -


$      (1,996)


$   (0.03)
















Adjusted:















   Diluted earnings (loss) per share






$    0.45




$    (0.01)




$    0.44

































Six Months Ended June 30, 2013





Income (Loss)


Income (Loss)









From Continuing


From Discontinued









Operations


Operations


Net Income (Loss)



Weighted




Per




Per




Per



Average




Share




Share




Share



Shares


Amount


Amount


Amount


Amount


Amount


Amount
















Reported:















   Earnings (loss) and shares                                   


52,591


$    30,415




$       (208)




$     30,207



   Effect of participating securities:















      Non-vested restricted stock















         and stock units                                   




(237)




-




(237)



   Basic earnings (loss) and shares


52,591


$    30,178


$    0.57


$       (208)


$          -


$     29,970


$    0.57

   Effect of dilutive securities:















      Stock compensation plans                                   


346













   Diluted earnings (loss) and shares


52,937


$    30,178


$    0.57


$       (208)


$          -


$     29,970


$    0.57
















Adjustments (net of tax):















   Double-carry Interest




$         481


$    0.01


$             -


$          -


$          481


$    0.01

   Debt Extinguishment Charges




17,223


0.33


-


-


17,223


0.33

   Effect of Two-class Method & Rounding




-


(0.01)


-


-


-


(0.01)

      Total adjustments




$    17,704


$    0.33


$             -


$          -


$     17,704


$    0.33
















Adjusted:















   Diluted earnings (loss) per share






$    0.90




$          -




$    0.90

































Six Months Ended June 30, 2012





Income (Loss)


Income (Loss)









From Continuing


From Discontinued









Operations


Operations


Net Income (Loss)



Weighted




Per




Per




Per



Average




Share




Share




Share



Shares


Amount


Amount


Amount


Amount


Amount


Amount
















Reported:















   Earnings (loss) and shares                                   


52,409


$    50,143




$    (1,466)




$     48,677



   Effect of participating securities:















      Non-vested restricted stock















         and stock units                                   




(777)




-




(777)



   Basic earnings (loss) and shares


52,409


$    49,366


$    0.94


$    (1,466)


$    (0.03)


$     47,900


$    0.91

   Effect of dilutive securities:















      Contingently convertible















         debt (5.0% Convertible Notes)                                   


11,106


3,981




80




4,061



      Stock compensation plans                                   


448













   Diluted earnings (loss) and shares                                   


63,963


$    53,347


$    0.83


$    (1,386)


$    (0.02)


$     51,961


$    0.81
















Adjustments (net of tax):















   Debt Extinguishment Charges




$      1,572


$    0.03


$           -


$          -


$       1,572


$    0.03

   Settlement of Tax Matters




(3,568)


(0.06)


-


-


(3,568)


(0.06)

      Total adjustments




$    (1,996)


$   (0.03)


$             -


$          -


$      (1,996)


$   (0.03)
















Adjusted:















   Diluted earnings (loss) per share






$    0.80




$    (0.02)




$    0.78

 

 

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