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Sonic Automotive, Inc. Reports Fourth Quarter and Full Year Results

EchoPark Grows Retail Unit Volume 95%

CHARLOTTE, N.C., Feb. 20, 2019 /PRNewswire/ -- Sonic Automotive, Inc. (SAH), one of the nation's largest automotive retailers, today reported financial results for the fourth quarter and full year ended December 31, 2018.

  • Fourth quarter revenue and gross profit of $2.6 billion and $370.7 million, respectively
  • Record fourth quarter pre-owned retail unit sales of 35,135 units
  • Record quarterly F&I gross profit per retail unit of $1,659
  • Record quarterly F&I gross of $109.6 million
  • EchoPark stores retailed 8,762 units during the fourth quarter, up 94.9% from the fourth quarter of 2017
  • GAAP continuing operations earnings per diluted share of $0.51 per diluted share in the fourth quarter of 2018
  • GAAP continuing operations earnings per diluted share of $1.22 per diluted share for the full year 2018
  • Adjusted continuing operations earnings per diluted share of $0.76 per diluted share in the fourth quarter of 2018
  • Adjusted continuing operations earnings per diluted share of $1.79 per diluted share for the full year 2018
  • Increased quarterly cash dividend 67%, to $0.10 per share

Fourth Quarter and Full Year 2018 Results

GAAP Basis

Net income from continuing operations for the fourth quarter of 2018 was $22.0 million, or $0.51 per diluted share. Comparatively, net income from continuing operations for the fourth quarter of 2017 was $62.1 million, or $1.42 per diluted share.

Net income from continuing operations for the full year 2018 was $52.4 million, or $1.22 per diluted share. Comparatively, net income from continuing operations for the full year 2017 was $94.2 million, or $2.12 per diluted share.

Adjusted Basis

Adjusted net income from continuing operations and related earnings per diluted share are non-GAAP financial measures. The schedules included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Adjusted net income from continuing operations for the fourth quarter of 2018 was $32.7 million, or $0.76 per diluted share. The adjustments in the fourth quarter of 2018 relate to lease-related matters and fixed asset and franchise asset impairments. Adjusted net income from continuing operations for the fourth quarter of 2017 was $36.6 million, or $0.84 per diluted share. The adjustments in the 2017 quarterly period relate to the benefit of the change in the federal income tax rate in future periods, a gain related to the disposal of franchises, adjustments to physical damage accruals and charges related to fixed asset and franchise asset impairments and legal matters.

Adjusted net income from continuing operations for the full year 2018 was $76.9 million, or $1.79 per diluted share. The adjustments in the 2018 annual period relate to fixed asset and franchise asset impairments, legal, storm damage and lease exit charges, long-term compensation related charges and executive transition costs, offset partially by gains related to the disposal of franchises. Adjusted net income from continuing operations for the full year 2017 was $82.2 million, or $1.85 per diluted share. The adjustments in the 2017 annual period relate to the benefit of the change in the federal income tax rate in future periods, gains related to the disposal of franchises and charges related to fixed asset and franchise asset impairments, debt refinance costs and legal matters.

Commentary

David Smith, Sonic's and EchoPark's Chief Executive Officer, commented, "We saw new car volume erode in the fourth quarter of 2018 versus the prior year quarter, driven by difficult year-over-year comparisons in Texas given Hurricane Harvey in 2017. We continue to outperform our internal targets on used vehicles and F&I which both posted records in the fourth quarter of 2018. Our EchoPark platform continues to grow at a rapid pace, up 95% in unit volume in the fourth quarter of 2018, compared to the prior year quarter. We expect to see new car volatility continue over the long term and believe EchoPark growth will add more stability to our future operations. We believe EchoPark will provide Sonic with diversification that will hedge the risk of new vehicle manufacturer driven swings in volume and incentives that can negatively affect the profitability of our franchise operations. We expect 2019 to be a challenging year, given new car volatility, but believe our used vehicle, fixed operations and F&I performance will more than offset this volatility. In addition, our EchoPark platform should significantly improve its profit performance in 2019."

Jeff Dyke, Sonic's and EchoPark's President, commented, "I agree with David Smith's comments, and would add that our exposure to BMW and Honda, which make up on average 40% of our profits, makes it difficult when these brands have challenging years. I am also enthusiastic about our EchoPark performance and look forward to announcing even better results as we move into the next couple of quarters. We expect 2019 to be a very big year for the EchoPark brand. We successfully launched our Charlotte store in the fourth quarter of 2018, which was profitable in the month of December, its second full month of operation, and performed even better in January. Our Houston store opened on December 7, 2018 and was our best EchoPark store opening to date, selling 266 vehicles in the last three weeks of December and selling 373 vehicles in January. We expect Houston volume to continue climbing and ultimately operate in the volume range of our Dallas location, which sells nearly 1,200 vehicles a month. We expect the interest rate environment to remain challenging in 2019, anticipating several rate hikes. Given our luxury mix with higher than average inventory values, rising interest rates considerably erode our profitability. Accordingly, we are actively managing our inventory balances. Our days' supply numbers in both new and used vehicles were 59 days and 31 days, respectively, at the end of 2018. Given this challenging environment, we completed headcount reductions in the first quarter of 2019, reducing our corporate and regional staff by over 6%, and have identified additional savings opportunities to reduce costs in 2019 and will continue to search for additional cost savings measures throughout 2019."

Heath Byrd, Sonic's and EchoPark's Executive Vice President and Chief Financial Officer, added, "Given the volatility in the new car market, coupled with our expansion options for EchoPark, we will discontinue our historical practice of providing annual earnings per share guidance. In addition, starting in the first quarter of 2019, we will report our results on a GAAP basis only."

Fourth Quarter 2018 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 the "Earnings Conference Calls" link at the bottom of the page.

Presentation materials for the conference call will be accessible beginning the morning of the conference call on the Company's website at www.sonicautomotive.com by clicking on "Our Company," then "Investor Relations," then the "Webcasts & Presentations" link at the bottom of the page.

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

Domestic: (877) 450-3867
International: (706) 643-0958
Conference ID: 5294515

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

Domestic: (855) 859-2056
International: (404) 537-3406
Conference ID: 5294515

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. More information about EchoPark Automotive can be found at www.echopark.com.

Forward-Looking Statements

Included herein are forward-looking statements. There are many factors that affect management's views about future events and trends of the Company's business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management's views, 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 ended December 31, 2017 and the Company's other periodic reports and information filed with the Securities and Exchange Commission (the "SEC"). The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the SEC.

Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income from continuing operations and related earnings per diluted share, which exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company provides reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure, provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations.

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Results of Operations



Three Months Ended December 31,


Twelve Months Ended December 31,


2018


2017


2018


2017


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

Revenues:








New vehicles

$

1,319,587


$

1,485,749


$

4,974,097


$

5,295,051

Used vehicles

755,882


685,965


2,973,498


2,622,053

Wholesale vehicles

49,899


40,890


217,625


171,064

Total vehicles

2,125,368


2,212,604


8,165,220


8,088,168

Parts, service and collision repair

339,257


355,137


1,380,887


1,416,010

Finance, insurance and other, net

109,633


100,198


405,523


363,030

Total revenues

2,574,258


2,667,939


9,951,630


9,867,208

Cost of Sales:








New vehicles

(1,253,792)


(1,407,861)


(4,732,595)


(5,030,125)

Used vehicles

(722,291)


(651,074)


(2,830,510)


(2,467,150)

Wholesale vehicles

(52,069)


(43,224)


(228,874)


(179,778)

Total vehicles

(2,028,152)


(2,102,160)


(7,791,979)


(7,677,053)

Parts, service and collision repair

(175,391)


(181,690)


(713,526)


(732,479)

Total cost of sales

(2,203,543)


(2,283,850)


(8,505,505)


(8,409,532)

Gross profit

370,715


384,089


1,446,125


1,457,676

Selling, general and administrative expenses

(273,915)


(277,634)


(1,145,325)


(1,147,773)

Impairment charges

(15,553)


(6,079)


(29,514)


(9,394)

Depreciation and amortization

(22,556)


(23,192)


(93,623)


(88,944)

Operating income (loss)

58,691


77,184


177,663


211,565

Other income (expense):








Interest expense, floor plan

(13,585)


(9,982)


(48,398)


(36,395)

Interest expense, other, net

(13,914)


(13,324)


(54,059)


(52,524)

Other income (expense), net


(32)


106


(14,522)

Total other income (expense)

(27,499)


(23,338)


(102,351)


(103,441)

Income (loss) from continuing operations before taxes

31,192


53,846


75,312


108,124

Provision for income taxes for continuing operations - benefit (expense)

(9,212)


8,282


(22,922)


(13,971)

Income (loss) from continuing operations

21,981


62,128


52,390


94,153

Discontinued operations:








Income (loss) from discontinued operations before taxes

(221)


(293)


(1,017)


(1,942)

Provision for income taxes for discontinued operations - benefit (expense)

60


117


277


772

Income (loss) from discontinued operations

(161)


(176)


(740)


(1,170)

Net income (loss)

$

21,820


$

61,952


$

51,650


$

92,983

Basic earnings (loss) per common share:








Earnings (loss) per share from continuing operations

$

0.51


$

1.44


$

1.23


$

2.14

Earnings (loss) per share from discontinued operations


(0.01)


(0.02)


(0.03)

Earnings (loss) per common share

$

0.51


$

1.43


$

1.21


$

2.11

Weighted average common shares outstanding

42,710


43,156


42,708


43,997

Diluted earnings (loss) per common share:








Earnings (loss) per share from continuing operations

$

0.51


$

1.42


$

1.22


$

2.12

Earnings (loss) per share from discontinued operations



(0.02)


(0.03)

Earnings (loss) per common share

$

0.51


$

1.42


$

1.20


$

2.09

Weighted average common shares outstanding

42,911


43,682


42,950


44,358

Dividends declared per common share

$

0.06


$

0.05


$

0.24


$

0.20

 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Per Share Data



Three Months Ended December 31, 2018




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


(In thousands, except per share amounts)

Reported:














Earnings (loss) and shares

42,710


$

21,981




$

(161)




$

21,820



Effect of participating securities:














Non-vested restricted stock



(21)







(21)



Basic earnings (loss) and shares

42,710


$

21,960


$

0.51


$

(161)


$


$

21,799


$

0.51

Effect of dilutive securities:














Stock compensation plans

201













Diluted earnings (loss) and shares

42,911


$

21,960


$

0.51


$

(161)


$


$

21,799


$

0.51















Adjustments:














Impairment charges



$

15,553




$




$

15,553



Lease exit adjustments



(800)







(800)



Total adjustments before taxes



14,753







14,753



Income tax effect of adjustments



(4,020)







(4,020)



Effect of adjustments, net of income taxes



$

10,733


$

0.25


$


$


$

10,733


$

0.25















Adjusted:














Earnings (loss) and diluted earnings (loss) per share (1)



$

32,714


$

0.76


$

(161)


$


$

32,553


$

0.76



(1)

Net loss attributable to EchoPark was $0.08 per fully diluted share in the three months ended December 31, 2018.

 

 


Three Months Ended December 31, 2017




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


(In thousands, except per share amounts)

Reported:














Earnings (loss) and shares

43,156


$

62,128




$

(176)




$

61,952



Effect of participating securities:














Non-vested restricted stock



(57)







(57)



Basic earnings (loss) and shares

43,156


$

62,071


$

1.44


$

(176)


$

(0.01)


$

61,895


$

1.43

Effect of dilutive securities:














Stock compensation plans

526













Diluted earnings (loss) and shares

43,682


$

62,071


$

1.42


$

(176)


$


$

61,895


$

1.42















Adjustments:














Impairment charges



$

6,080




$




$

6,080



Legal and storm damage adjustments



(1,153)







(1,153)



Long-term compensation-related charges

 



1,271







1,271



Gain on disposal of franchises



(1,507)







(1,507)



Total adjustments before taxes



4,691







4,691



Income tax effect of adjustments



(1,841)







(1,841)



Non-recurring tax items



(28,409)







(28,409)



Effect of adjustments, net of income taxes



$

(25,559)


$

(0.58)


$


$

(0.01)


$

(25,559)


$

(0.59)















Adjusted:














Earnings (loss) and diluted earnings (loss) per share (2)



$

36,569


$

0.84


$

(176)


$

(0.01)


$

36,393


$

0.83















(2)

Net loss attributable to EchoPark was $0.04 per fully diluted share in the three months ended December 31, 2017.


 

 


Twelve Months Ended December 31, 2018




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


(In thousands, except per share amounts)

Reported:














Earnings (loss) and shares

42,708


$

52,390




$

(740)




$

51,650



Effect of participating securities:














Non-vested restricted stock



(50)







(50)



Basic earnings (loss) and shares

42,708


$

52,340


$

1.23


$

(740)


$

(0.02)


$

51,600


$

1.21

Effect of dilutive securities:














Stock compensation plans

242













Diluted earnings (loss) and shares

42,950


$

52,340


$

1.22


$

(740)


$

(0.02)


$

51,600


$

1.20















Adjustments:














Impairment charges



$

29,512




$




$

29,512



Legal and storm damage charges



5,749







5,749



Lease exit adjustments



1,435







1,435



Gain on disposal of franchises



(38,893)







(38,893)



Long-term compensation-related charges



32,522







32,522



Executive transition costs



1,581







1,581



Total adjustments before taxes



31,906







31,906



Income tax effect of adjustments



(8,694)







(8,694)



Non-recurring tax items



1,313







1,313



Effect of adjustments, net of income taxes



$

24,524


$

0.57


$


$


$

24,524


$

0.57















Adjusted:














Earnings (loss) and diluted earnings (loss) per share (3)



$

76,914


$

1.79


$

(740)


$

(0.02)


$

76,174


$

1.77



(3)

Net loss attributable to EchoPark was $0.34 per fully diluted share in the twelve months ended December 31, 2018.

 

 


Twelve Months Ended December 31, 2017




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


(In thousands, except per share amounts)

Reported:














Earnings (loss) and shares

43,997


$

94,153




$

(1,170)




$

92,983



Effect of participating securities:














Non-vested restricted stock



(85)







(85)



Basic earnings (loss) and shares

43,997


$

94,068


$

2.14


$

(1,170)


$

(0.03)


$

92,898


$

2.11

Effect of dilutive securities:














Stock compensation plans

361













Diluted earnings (loss) and shares

44,358


$

94,068


$

2.12


$

(1,170)


$

(0.03)


$

92,898


$

2.09















Adjustments:














Impairment charges



$

9,393




$




$

9,393



Legal and storm damage charges



9,628







9,628



Long-term compensation-related charges

 



1,271







1,271



Lease exit adjustments



992







992



Gain on disposal of franchises

 



(9,997)







(9,997)



Loss on debt extinguishment and double-carry interest



15,268







15,268



Total adjustments before taxes



26,555







26,555



Income tax effect of adjustments



(10,423)







(10,423)



Non-recurring tax items



(28,055)







(28,055)



Effect of adjustments, net of income taxes



$

(11,923)


$

(0.27)


$


$

0.01


$

(11,923)


$

(0.26)















Adjusted:














Earnings (loss) and diluted earnings (loss) per share (4)



$

82,230


$

1.85


$

(1,170)


$

(0.02)


$

81,060


$

1.83



(4)

Net loss attributable to EchoPark was $0.26 per fully diluted share in the twelve months ended December 31, 2017.

 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


New Vehicles



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Reported new vehicle:








Revenue

$

1,319,587


$

1,485,749


$

(166,162)


(11.2)

%

Gross profit

$

65,795


$

77,888


$

(12,093)


(15.5)

%

Unit sales

31,331


36,531


(5,200)


(14.2)

%

Revenue per unit

$

42,118


$

40,671


$

1,447


3.6

%

Gross profit per unit

$

2,100


$

2,132


$

(32)


(1.5)

%

Gross profit as a % of revenue

5.0

%


5.2

%


(20)

 

bps











Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Reported new vehicle:








Revenue

$

4,974,097


$

5,295,051


$

(320,954)


(6.1)

%

Gross profit

$

241,502


$

264,926


$

(23,424)


(8.8)

%

Unit sales

122,717


135,663


(12,946)


(9.5)

%

Revenue per unit

$

40,533


$

39,031


$

1,502


3.8

%

Gross profit per unit

$

1,968


$

1,953


$

15


0.8

%

Gross profit as a % of revenue

4.9

%


5.0

%


(10)

bps











Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Same store new vehicle:








Revenue

$

1,318,755


$

1,414,121


$

(95,366)


(6.7)

%

Gross profit

$

65,215


$

75,428


$

(10,213)


(13.5)

%

Unit sales

31,314


34,402


(3,088)


(9.0)

%

Revenue per unit

$

42,114


$

41,106


$

1,008


2.5

%

Gross profit per unit

$

2,083


$

2,193


$

(110)


(5.0)

%

Gross profit as a % of revenue

4.9

%


5.3

%


(40)

bps











Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Same store new vehicle:








Revenue

$

4,897,389


$

4,992,552


$

(95,163)


(1.9)

%

Gross profit

$

238,648


$

255,795


$

(17,147)


(6.7)

%

Unit sales

120,400


126,101


(5,701)


(4.5)

%

Revenue per unit

$

40,676


$

39,592


$

1,084


2.7

%

Gross profit per unit

$

1,982


$

2,028


$

(46)


(2.3)

%

Gross profit as a % of revenue

4.9

%


5.1

%


(20)

bps
















 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Used Vehicles



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Reported used vehicle:








Revenue

$

755,882


$

685,965


$

69,917


10.2

%

Gross profit

$

33,591


$

34,891


$

(1,300)


(3.7)

%

Unit sales

35,135


31,740


3,395


10.7

%

Revenue per unit

$

21,514


$

21,612


$

(98)


(0.5)

%

Gross profit per unit

$

956


$

1,099


$

(143)


(13.0)

%

Gross profit as a % of revenue

4.4

%


5.1

%


(70)

bps











Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Reported used vehicle:








Revenue

$

2,973,498


$

2,622,053


$

351,445


13.4

%

Gross profit

$

142,988


$

154,903


$

(11,915)


(7.7)

%

Unit sales

139,605


123,489


16,116


13.1

%

Revenue per unit

$

21,299


$

21,233


$

66


0.3

%

Gross profit per unit

$

1,024


$

1,254


$

(230)


(18.3)

%

Gross profit as a % of revenue

4.8

%


5.9

%


(110)

bps











Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Same store used vehicle:








Revenue

$

711,830


$

647,963


$

63,867


9.9

%

Gross profit

$

30,837


$

32,079


$

(1,242)


(3.9)

%

Unit sales

32,880


29,619


3,261


11.0

%

Revenue per unit

$

21,649


$

21,877


$

(228)


(1.0)

%

Gross profit per unit

$

938


$

1,083


$

(145)


(13.4)

%

Gross profit as a % of revenue

4.3

%


5.0

%


(70)

bps











Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Same store used vehicle:








Revenue

$

2,593,725


$

2,427,306


$

166,419


6.9

%

Gross profit

$

136,200


$

138,677


$

(2,477)


(1.8)

%

Unit sales

120,339


112,605


7,734


6.9

%

Revenue per unit

$

21,553


$

21,556


$

(3)


%

Gross profit per unit

$

1,132


$

1,232


$

(100)


(8.1)

%

Gross profit as a % of revenue

5.3

%


5.7

%


(40)

bps
















 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Wholesale Vehicles



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Reported wholesale vehicle:








Revenue

$

49,899


$

40,890


$

9,009


22.0

%

Gross profit

$

(2,170)


$

(2,334)


$

164


7.0

%

Unit sales

8,214


7,463


751


10.1

%

Revenue per unit

$

6,075


$

5,479


$

596


10.9

%

Gross profit per unit

$

(264)


$

(313)


$

49


15.7

%

Gross profit as a % of revenue

(4.3)

%


(5.7)

%


140

bps











Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Reported wholesale vehicle:








Revenue

$

217,625


$

171,064


$

46,561


27.2

%

Gross profit

$

(11,249)


$

(8,714)


$

(2,535)


(29.1)

%

Unit sales

34,167


31,385


2,782


8.9

%

Revenue per unit

$

6,369


$

5,451


$

918


16.8

%

Gross profit per unit

$

(329)


$

(278)


$

(51)


(18.3)

%

Gross profit as a % of revenue

(5.2)

%


(5.1)

%


(10)

bps











Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Same store wholesale vehicle:








Revenue

$

49,821


$

37,964


$

11,857


31.2

%

Gross profit

$

(2,118)


$

(1,992)


$

(126)


(6.3)

%

Unit sales

8,205


6,860


1,345


19.6

%

Revenue per unit

$

6,072


$

5,534


$

538


9.7

%

Gross profit per unit

$

(258)


$

(290)


$

32


11.0

%

Gross profit as a % of revenue

(4.3)

%


(5.2)

%


90

bps











Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except unit and per unit data)

Same store wholesale vehicle:








Revenue

$

200,574


$

158,787


$

41,787


26.3

%

Gross profit

$

(11,215)


$

(7,455)


$

(3,760)


(50.4)

%

Unit sales

31,080


28,547


2,533


8.9

%

Revenue per unit

$

6,453


$

5,562


$

891


16.0

%

Gross profit per unit

$

(361)


$

(261)


$

(100)


(38.3)

%

Gross profit as a % of revenue

(5.6)

%


(4.7)

%


(90)

bps
















 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Parts, Service and Collision Repair ("Fixed Operations")



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands)

Reported Fixed Operations:








Revenue








Customer pay

$

137,690


$

140,285


$

(2,595)


(1.8)

%

Warranty

68,425


69,771


(1,346)


(1.9)

%

Wholesale parts

38,302


41,445


(3,143)


(7.6)

%

Internal, sublet and other

94,840


103,636


(8,796)


(8.5)

%

Total

$

339,257


$

355,137


$

(15,880)


(4.5)

%









Gross profit








Customer pay

$

73,173


$

74,748


$

(1,575)


(2.1)

%

Warranty

38,411


38,273


138


0.4

%

Wholesale parts

6,797


7,149


(352)


(4.9)

%

Internal, sublet and other

45,485


53,277


(7,792)


(14.6)

%

Total

$

163,866


$

173,447


$

(9,581)


(5.5)

%









Gross profit as a % of revenue








Customer pay

53.1

%


53.3

%


(20)

bps

Warranty

56.1

%


54.9

%


120

bps

Wholesale parts

17.7

%


17.2

%


50

bps

Internal, sublet and other

48.0

%


51.4

%


(340)

bps

Total

48.3

%


48.8

%


(50)

bps










Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands)

Reported Fixed Operations:








Revenue








Customer pay

$

560,037


$

555,463


$

4,574


0.8

%

Warranty

266,644


282,926


(16,282)


(5.8)

%

Wholesale parts

161,066


168,459


(7,393)


(4.4)

%

Internal, sublet and other

393,140


409,162


(16,022)


(3.9)

%

Total

$

1,380,887


$

1,416,010


$

(35,123)


(2.5)

%









Gross profit








Customer pay

$

299,616


$

296,834


$

2,782


0.9

%

Warranty

150,746


156,082


(5,336)


(3.4)

%

Wholesale parts

27,746


28,989


(1,243)


(4.3)

%

Internal, sublet and other

189,253


201,626


(12,373)


(6.1)

%

Total

$

667,361


$

683,531


$

(16,170)


(2.4)

%









Gross profit as a % of revenue








Customer pay

53.5

%


53.4

%


10

bps

Warranty

56.5

%


55.2

%


130

bps

Wholesale parts

17.2

%


17.2

%


bps

Internal, sublet and other

48.1

%


49.3

%


(120)

bps

Total

48.3

%


48.3

%


bps















 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Parts, Service and Collision Repair ("Fixed Operations")



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands)

Same Store Fixed Operations:








Revenue








Customer pay

$

137,166


$

134,686


$

2,480


1.8

%

Warranty

68,607


66,823


1,784


2.7

%

Wholesale parts

38,295


40,015


(1,720)


(4.3)

%

Internal, sublet and other

94,026


98,065


(4,039)


(4.1)

%

Total

$

338,094


$

339,589


$

(1,495)


(0.4)

%









Gross profit








Customer pay

$

72,970


$

71,740


$

1,230


1.7

%

Warranty

38,526


36,647


1,879


5.1

%

Wholesale parts

6,797


6,906


(109)


(1.6)

%

Internal, sublet and other

45,483


50,458


(4,975)


(9.9)

%

Total

$

163,776


$

165,751


$

(1,975)


(1.2)

%









Gross profit as a % of revenue








Customer pay

53.2

%


53.3

%


(10)

bps

Warranty

56.2

%


54.8

%


140

bps

Wholesale parts

17.7

%


17.3

%


40

bps

Internal, sublet and other

48.4

%


51.5

%


(310)

bps

Total

48.4

%


48.8

%


(40)

bps










Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands)

Same Store Fixed Operations:








Revenue








Customer pay

$

550,371


$

528,163


$

22,208


4.2

%

Warranty

263,814


268,800


(4,986)


(1.9)

%

Wholesale parts

159,004


160,691


(1,687)


(1.0)

%

Internal, sublet and other

377,480


383,326


(5,846)


(1.5)

%

Total

$

1,350,669


$

1,340,980


$

9,689


0.7

%









Gross profit








Customer pay

$

294,660


$

281,891


$

12,769


4.5

%

Warranty

147,507


148,237


(730)


(0.5)

%

Wholesale parts

27,429


27,702


(273)


(1.0)

%

Internal, sublet and other

183,927


187,709


(3,782)


(2.0)

%

Total

$

653,523


$

645,539


$

7,984


1.2

%









Gross profit as a % of revenue








Customer pay

53.5

%


53.4

%


10

bps

Warranty

55.9

%


55.1

%


80

bps

Wholesale parts

17.3

%


17.2

%


10

bps

Internal, sublet and other

48.7

%


49.0

%


(30)

bps

Total

48.4

%


48.1

%


30

bps















 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Finance, Insurance and Other, Net ("F&I") 



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except per unit data)

Reported F&I:








Revenue

$

109,633


$

100,198


$

9,435


9.4

%

      Unit Sales

66,102


68,015


(1,913)


(2.8)

%

Gross profit per retail unit (excludes fleet)

$

1,659


$

1,473


$

186


12.6

%










Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except per unit data)

Reported F&I:








Revenue

$

405,523


$

363,030


$

42,493


11.7

%

      Unit Sales

260,424


257,217


3,207


1.2

%

Gross profit per retail unit (excludes fleet)

$

1,557


$

1,411


$

146


10.3

%










Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except per unit data)

Same Store F&I:








Revenue

$

101,966


$

91,981


$

9,985


10.9

%

      Unit Sales

63,830


63,805


25


%

Gross profit per retail unit (excludes fleet)

$

1,597


$

1,442


$

156


10.8

%










Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands, except per unit data)

Same Store F&I:








Revenue

$

356,589


$

331,288


$

25,301


7.6

%

      Unit Sales

238,886


236,961


1,925


0.8

%

Gross profit per retail unit (excludes fleet)

$

1,493


$

1,398


$

95


6.8

%

 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Selling, General and Administrative ("SG&A") Expenses



Three Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands)

Reported:








Compensation

$

166,950


$

172,515


$

5,565


3.2

%

Advertising

16,196


15,116


(1,080)


(7.1)

%

Rent

13,753


17,713


3,960


22.4

%

Other

77,016


72,290


(4,726)


(6.5)

%

Total SG&A expenses

$

273,915


$

277,634


$

3,719


1.3

%

Adjustments:








Legal and storm damage adjustments

$


$

1,153





Long-term compensation-related charges


(1,271)





Lease exit adjustments

800






Gain on disposal of franchises


1,507





Total SG&A adjustments

$

800


$

1,389





Adjusted:








Total adjusted SG&A expenses

$

274,715


$

279,023


$

4,308


1.5

%

Reported:








SG&A expenses as a % of gross profit:








Compensation

45.0

%


44.9

%


(10)

bps

Advertising

4.4

%


3.9

%


(50)

bps

Rent

3.7

%


4.6

%


90

bps

Other

20.8

%


18.9

%


(190)

bps

Total SG&A expenses as a % of gross profit

73.9

%


72.3

%


(160)

bps

Adjustments:







Legal and storm damage adjustments

%


0.2

%




Long-term compensation-related charges

%


(0.3)

%





Lease exit adjustments

0.2

%


%




Gain on disposal of franchises

%


0.3

%




Total effect of adjustments

0.2

%


0.3

%




Adjusted:







Total adjusted SG&A expenses as a % of gross profit

74.1

%


72.6

%


(150)

bps















 

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)


Selling, General and Administrative ("SG&A") Expenses



Twelve Months Ended December 31,


Better / (Worse)


2018


2017


Change


% Change


(In thousands)

Reported:








Compensation

$

725,022


$

692,935


$

(32,087)


(4.6)

%

Advertising

63,134


61,563


(1,571)


(2.6)

%

Rent

64,204


73,022


8,818


12.1

%

Other

292,965


320,253


27,288


8.5

%

Total SG&A expenses

$

1,145,325


$

1,147,773


$

2,448


0.2

%

Adjustments:








Legal and storm damage charges

$

(5,749)


$

(9,628)





Long-term compensation-related charges

(32,522)


(1,271)





Executive transition costs

(1,581)






Lease exit adjustments

(1,435)


(992)





Gain on disposal of franchises

38,893


9,997





Total SG&A adjustments

$

(2,394)


$

(1,894)





Adjusted:








Total adjusted SG&A expenses

$

1,142,931


$

1,145,879


$

2,948


0.3

%

Reported:








SG&A expenses as a % of gross profit:








Compensation

50.1

%


47.5

%


(260)

bps

Advertising

4.4

%


4.2

%


(20)

bps

Rent

4.4

%


5.0

%


60

bps

Other

20.3

%


22.0

%


170

bps

Total SG&A expenses as a % of gross profit

79.2

%


78.7

%


(50)

bps

Adjustments:







Legal and storm damage charges

(0.5)

%


(0.5)

%




Long-term compensation-related charges

(2.7)

%


(0.1)

%




Executive transition costs

(0.1)

%


%





Lease exit adjustments

(0.1)

%


(0.1)

%




Gain on disposal of franchises

3.2

%


0.5

%




Total effect of adjustments

(0.2)

%


(0.1)

%




Adjusted:







Total adjusted SG&A expenses as a % of gross profit

79.0

%


78.6

%


(40)

bps























 

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