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Sonic Automotive Reports Record First Quarter Revenues and Earnings Per Share

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First Quarter Results Reflect All-Time Record EchoPark Revenues and Retail Unit Sales Volume and Strong Franchised Dealership Performance

Sonic Automotive, Inc. ("Sonic" or the "Company") (NYSE:SAH), one of the nation’s largest automotive retailers, today reported financial results for the first quarter ended March 31, 2021. The financial measures discussed below are results for the first quarter of 2021 with comparisons made to the first quarter of 2020, unless otherwise noted. Certain metrics are also compared to the first quarter of 2019 to exclude the effects of the onset of the COVID-19 pandemic on comparative results.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210429005158/en/

Sonic Automotive Financial Snapshot Infographic. (Graphic: Business Wire)

First Quarter Highlights

  • Record first quarter revenues of $2.8 billion, up 20.7%, and record first quarter income from continuing operations before taxes of $72.6 million, compared to a loss before taxes of $243.2 million in the first quarter of 2020, which included a $268.0 million non-cash goodwill impairment charge (excluding the effect of this prior year goodwill impairment charge, pre-tax earnings increased 193.1%)

  • Record first quarter reported earnings from continuing operations of $53.7 million ($1.23 per diluted share), compared to a loss of $199.1 million (loss of $4.67 per diluted share) and adjusted earnings from continuing operations* of $17.6 million ($0.40 per diluted share) in the first quarter of 2020

  • Record first quarter selling, general and administrative ("SG&A") expenses as a percentage of gross profit of 72.2%, a decrease of 830 basis points from 80.5% in the first quarter of 2020

  • All-time record quarterly total Finance & Insurance ("F&I") gross profit per retail unit of $2,045, up 8.5%

  • Reported EchoPark results include:

    • All-time record quarterly EchoPark revenues of $507.1 million, up 52.9%

    • All-time record quarterly EchoPark retail sales volume of 19,670, up 40.6%

    • EchoPark pre-tax earnings of $2.0 million and Adjusted EBITDA* of $6.2 million

  • Same store Franchised Dealerships Segment operating results include:

    • Revenues up 16.4%, gross profit up 11.1% (up 13.9% and 12.3%, respectively, compared to the first quarter of 2019)

    • New vehicle unit sales volume up 13.8% (up 7.5% compared to the first quarter of 2019); new vehicle gross profit per unit up 34.3%, to $2,831 (up 25.4% compared to the first quarter of 2019)

    • Retail used vehicle unit sales volume up 6.2% (up 8.6% compared to the first quarter of 2019); retail used vehicle gross profit per unit down 11.3%, to $1,111 (down 13.0% compared to the first quarter of 2019)

    • Parts, service and collision repair gross profit down 1.8% (up 0.1% compared to the first quarter of 2019); customer pay gross profit up 1.6% (up 6.8% compared to the first quarter of 2019); gross margin up 150 basis points, to 50.2% (up 180 basis points compared to the first quarter of 2019)

    • F&I gross profit up 18.7% (up 27.4% compared to the first quarter of 2019); reported Franchised Dealerships Segment F&I gross profit per retail unit of $1,910, up 8.5% (up 24.1% compared to the first quarter of 2019)

  • Sonic’s Board of Directors approved a 20% increase to the Company’s quarterly cash dividend, to $0.12 per share, payable on July 15, 2021 to all stockholders of record on June 15, 2021

  • Sonic’s Board of Directors increased the Company’s share repurchase authorization by $250.0 million, to a total of $277.3 million of available authorization

Commentary

David Smith, Sonic’s and EchoPark’s Chief Executive Officer, commented, "Fiscal 2020 was a record-setting year from an adjusted earnings perspective, and this momentum has continued into 2021, where we generated record first quarter revenues and earnings driven by strong performance in both our franchised dealerships and EchoPark segments. EchoPark continues to set new records, achieving better than projected all-time record quarterly revenues and retail sales volume. The first quarter results at both our franchised dealerships and EchoPark stores reflect a strong demand environment which has persisted into the second quarter of 2021 to date. We remain confident in our goal of more than doubling total revenues to $25.0 billion by 2025, while also substantially improving our expected profitability as we continue to apply the efficiencies we have realized over the past year."

Jeff Dyke, Sonic’s and EchoPark’s President, commented, "We believe EchoPark’s swift growth demonstrates the long-term value proposition of this unique, pre-owned vehicle shopping concept, as a growing number of guests visit us in-store and online at EchoPark.com for the exceptional pricing, diverse inventory selection and guest-centric buying experience we offer. At the same time, we continue to develop our digital retail and delivery model, enabling consumers to purchase their next vehicle in an efficient way best tailored to their needs. With recent store openings in Phoenix, Arizona and Birmingham, Alabama, in addition to opening our latest delivery center in Charleston, South Carolina just last week, we remain committed to reaching a 140-point nationwide distribution network by 2025, which we expect to retail over half a million pre-owned vehicles annually by that time. With our progress to date, we believe we are well on track to reach $14.0 billion in EchoPark revenues by 2025."

Heath Byrd, Sonic’s and EchoPark’s Chief Financial Officer, commented, "During the first quarter, we continued our commitment to fundamentally improving operating efficiencies and managing expenses throughout our entire organization, reducing SG&A expenses as a percentage of gross profit by 830 basis points compared to the first quarter of 2020. At the same time, we took steps to further strengthen our balance sheet position by replacing our existing revolving and floor plan facilities with a new four-year, $1.8 billion revolving and floor plan credit facility. The credit facility was substantially oversubscribed, with strong support from both new and incumbent financial institutions. We are very pleased with this transaction, which has extended our debt maturities, improved our borrowing costs and increased our total available liquidity and floor plan capacity to facilitate our growth plans."

*Adjusted earnings from continuing operations, adjusted earnings per diluted share from continuing operations and Adjusted EBITDA are non-GAAP financial measures. The tables included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Dividend

Sonic’s Board of Directors approved a quarterly cash dividend of $0.12 per share payable on July 15, 2021 to all stockholders of record on June 15, 2021.

First Quarter 2021 Earnings Conference Call

Senior management will hold a conference call on Thursday, April 29, 2021 at 11:00 A.M. (Eastern). Investor presentation and earnings press release materials will be accessible beginning the morning of the conference call on the Company’s website at ir.sonicautomotive.com.

To access the live webcast, please go to ir.sonicautomotive.com. For telephone access to this conference call, please register in advance using this link: http://www.directeventreg.com/registration/event/1090549. After registering, you will receive a confirmation email that includes dial-in numbers and unique conference call and registrant passcodes for entry. Registration remains available through the live call, however, to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call.

A conference call replay will be available one hour following the call for 14 days at ir.sonicautomotive.com.

About Sonic Automotive

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

About EchoPark Automotive

EchoPark Automotive is a growing operating segment within the Company that specializes in pre-owned vehicle sales and provides a unique guest experience unlike traditional used car stores. More information about EchoPark Automotive can be found at www.echopark.com.

Forward-Looking Statements

Included herein are forward-looking statements, including statements regarding anticipated future revenue levels, future profitability, projected SG&A expense levels, pre-owned vehicle sales projections and the opening of additional EchoPark points. 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, anticipated future growth in our EchoPark Segment, the success of our operational strategies, the rate and timing of overall economic expansion or contraction, the effect of the COVID-19 pandemic and related government-imposed restrictions on operations, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other 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 earnings from continuing operations, adjusted earnings per diluted share from continuing operations, and Adjusted EBITDA. As required by SEC rules, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the schedules included in this press release. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosures and provide a meaningful presentation of the Company’s results.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

Results of Operations - Consolidated

Three Months Ended March 31,

Better / (Worse)

2021

2020

% Change

(In thousands, except per share amounts)

Revenues:

New vehicles

$

1,156,317

$

959,489

20.5

%

Used vehicles

1,090,097

850,052

28.2

%

Wholesale vehicles

74,809

48,543

54.1

%

Total vehicles

2,321,223

1,858,084

24.9

%

Parts, service and collision repair

320,914

334,680

(4.1)

%

Finance, insurance and other, net

144,661

115,292

25.5

%

Total revenues

2,786,798

2,308,056

20.7

%

Cost of sales:

New vehicles

(1,086,852)

(914,074)

(18.9)

%

Used vehicles

(1,059,229)

(817,922)

(29.5)

%

Wholesale vehicles

(73,960)

(48,700)

(51.9)

%

Total vehicles

(2,220,041)

(1,780,696)

(24.7)

%

Parts, service and collision repair

(165,864)

(176,782)

6.2

%

Total cost of sales

(2,385,905)

(1,957,478)

(21.9)

%

Gross profit

400,893

350,578

14.4

%

Selling, general and administrative expenses

(289,356)

(282,156)

(2.6)

%

Impairment charges

(268,000)

100.0

%

Depreciation and amortization

(23,687)

(22,297)

(6.2)

%

Operating income (loss)

87,850

(221,875)

139.6

%

Other income (expense):

Interest expense, floor plan

(5,113)

(10,508)

51.3

%

Interest expense, other, net

(10,285)

(10,965)

6.2

%

Other income (expense), net

101

100

1.0

%

Total other income (expense)

(15,297)

(21,373)

28.4

%

Income (loss) from continuing operations before taxes

72,553

(243,248)

129.8

%

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

(18,864)

44,117

(142.8)

%

Income (loss) from continuing operations

53,689

(199,131)

127.0

%

Discontinued operations:

Income (loss) from discontinued operations before taxes

720

(285)

352.6

%

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

(187)

83

(325.3)

%

Income (loss) from discontinued operations

533

(202)

363.9

%

Net income (loss)

$

54,222

$

(199,333)

127.2

%

Basic earnings (loss) per common share:

Earnings (loss) per share from continuing operations

$

1.29

$

(4.67)

127.6

%

Earnings (loss) per share from discontinued operations

0.02

(0.01)

300.0

%

Earnings (loss) per common share

$

1.31

$

(4.68)

128.0

%

Weighted-average common shares outstanding

41,541

42,615

2.5

%

Diluted earnings (loss) per common share:

Earnings (loss) per share from continuing operations

$

1.23

$

(4.67)

126.3

%

Earnings (loss) per share from discontinued operations

0.02

(0.01)

300.0

%

Earnings (loss) per common share

$

1.25

$

(4.68)

126.7

%

Weighted-average common shares outstanding

43,542

42,615

(2.2)

%

Dividends declared per common share

$

0.10

$

0.10

%

Franchised Dealerships Segment - Reported

Three Months Ended March 31,

Better / (Worse)

2021

2020

% Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles

$

1,156,317

$

959,489

20.5

%

Used vehicles

661,534

566,888

16.7

%

Wholesale vehicles

56,204

42,440

32.4

%

Total vehicles

1,874,055

1,568,817

19.5

%

Parts, service and collision repair

308,077

324,501

(5.1)

%

Finance, insurance and other, net

97,525

83,029

17.5

%

Total revenues

2,279,657

1,976,347

15.3

%

Gross Profit:

New vehicles

69,465

45,415

53.0

%

Used vehicles

31,996

32,314

(1.0)

%

Wholesale vehicles

736

(83)

986.7

%

Total vehicles

102,197

77,646

31.6

%

Parts, service and collision repair

155,265

158,096

(1.8)

%

Finance, insurance and other, net

97,525

83,029

17.5

%

Total gross profit

354,987

318,771

11.4

%

Selling, general and administrative expenses

(250,076)

(256,418)

2.5

%

Impairment charges

(268,000)

NM

Depreciation and amortization

(20,376)

(19,589)

(4.0)

%

Operating income (loss)

84,535

(225,236)

137.5

%

Other income (expense):

Interest expense, floor plan

(4,117)

(9,608)

57.2

%

Interest expense, other, net

(9,958)

(10,599)

6.0

%

Other income (expense), net

83

99

(16.2)

%

Total other income (expense)

(13,992)

(20,108)

30.4

%

Income (loss) before taxes

70,543

(245,344)

128.8

%

Add: impairment charges

268,000

NM

Segment income (loss)

$

70,543

$

22,656

211.4

%

Unit Sales Volume:

New vehicles

24,358

21,724

12.1

%

Used vehicles

27,236

26,038

4.6

%

Wholesale vehicles

6,832

6,910

(1.1)

%

Retail new & used vehicles

51,594

47,762

8.0

%

Used-to-New Ratio

1.12

1.20

(6.7)

%

Gross Profit Per Unit:

New vehicles

$

2,852

$

2,091

36.4

%

Used vehicles

$

1,175

$

1,241

(5.3)

%

Finance, insurance and other, net

$

1,910

$

1,760

8.5

%

NM = Not Meaningful

Franchised Dealerships Segment - Same Store

Three Months Ended March 31,

Better / (Worse)

2021

2020

% Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles

$

1,156,317

$

950,589

21.6

%

Used vehicles

661,534

560,796

18.0

%

Wholesale vehicles

56,204

42,103

33.5

%

Total vehicles

1,874,055

1,553,488

20.6

%

Parts, service and collision repair

306,190

321,295

(4.7)

%

Finance, insurance and other, net

92,246

77,692

18.7

%

Total revenues

$

2,272,491

$

1,952,475

16.4

%

Gross Profit:

New vehicles

$

68,956

$

45,115

52.8

%

Used vehicles

30,273

32,141

(5.8)

%

Wholesale vehicles

736

(49)

1,602.0

%

Total vehicles

99,965

77,207

29.5

%

Parts, service and collision repair

153,682

156,465

(1.8)

%

Finance, insurance and other, net

92,246

77,692

18.7

%

Total gross profit

$

345,893

$

311,364

11.1

%

Unit Sales Volume:

New vehicles

24,358

21,410

13.8

%

Used vehicles

27,236

25,635

6.2

%

Wholesale vehicles

6,832

6,838

(0.1)

%

Retail new & used vehicles

51,594

47,045

9.7

%

Used-to-New Ratio

1.12

1.20

(6.6)

%

Gross Profit Per Unit:

New vehicles

$

2,831

$

2,107

34.4

%

Used vehicles

$

1,112

$

1,254

(11.3)

%

Finance, insurance and other, net

$

1,807

$

1,672

8.1

%

Note: All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

EchoPark Segment - Reported

Three Months Ended March 31,

Better / (Worse)

2021

2020

% Change

(In thousands, except unit and per unit data)

Revenues:

Used vehicles

$

428,563

$

283,164

51.3

%

Wholesale vehicles

18,605

6,103

204.9

%

Total vehicles

447,168

289,267

54.6

%

Parts, service and collision repair

12,837

10,179

26.1

%

Finance, insurance and other, net

47,136

32,263

46.1

%

Total revenues

507,141

331,709

52.9

%

Gross Profit:

Used vehicles

(1,128)

(184)

(513.0)

%

Wholesale vehicles

113

(74)

252.7

%

Total vehicles

(1,015)

(258)

(293.4)

%

Parts, service and collision repair

(215)

(198)

(8.6)

%

Finance, insurance and other, net

47,136

32,263

46.1

%

Total gross profit

45,906

31,807

44.3

%

Selling, general and administrative expenses

(39,280)

(25,738)

(52.6)

%

Impairment charges

%

Depreciation and amortization

(3,311)

(2,708)

(22.3)

%

Operating income (loss)

3,315

3,361

(1.4)

%

Other income (expense):

Interest expense, floor plan

(996)

(900)

(10.7)

%

Interest expense, other, net

(327)

(366)

10.7

%

Other income (expense), net

18

1

1,700.0

%

Total other income (expense)

(1,305)

(1,265)

(3.2)

%

Income (loss) before taxes

2,010

2,096

(4.1)

%

Add: impairment charges

NM

Segment income (loss)

$

2,010

$

2,096

(4.1)

%

Unit Sales Volume:

Used vehicles

19,670

13,986

40.6

%

Wholesale vehicles

2,861

1,765

62.1

%

Gross Profit Per Unit:

Total used vehicle and F&I

$

2,339

$

2,294

2.0

%

NM = Not Meaningful

EchoPark Segment - Same Market

Three Months Ended March 31,

Better / (Worse)

2021

2020

% Change

(In thousands, except unit and per unit data)

Revenues:

Used vehicles

$

333,577

$

283,164

17.8

%

Wholesale vehicles

15,555

6,103

154.9

%

Total vehicles

349,132

289,267

20.7

%

Parts, service and collision repair

10,103

10,145

(0.4)

%

Finance, insurance and other, net

36,823

32,263

14.1

%

Total revenues

$

396,058

$

331,675

19.4

%

Gross Profit:

Used vehicles

$

(1,485)

$

(184)

(707.1)

%

Wholesale vehicles

122

(74)

264.9

%

Total vehicles

(1,363)

(258)

(428.3)

%

Parts, service and collision repair

7

(197)

103.6

%

Finance, insurance and other, net

36,823

32,263

14.1

%

Total gross profit

$

35,467

$

31,808

11.5

%

Unit Sales Volume:

Used vehicles

15,128

13,986

8.2

%

Wholesale vehicles

2,230

1,765

26.3

%

Gross Profit Per Unit:

Total used vehicle and F&I

$

2,336

$

2,294

1.8

%

Note: All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market's opening.

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

Three Months Ended March 31,

Better / (Worse)

2021

2020

Change

% Change

(In thousands)

Reported:

Compensation

$

188,492

$

174,422

$

(14,070)

(8.1)

%

Advertising

12,169

14,135

1,966

13.9

%

Rent

13,744

13,865

121

0.9

%

Other

74,951

79,734

4,783

6.0

%

Total SG&A expenses

$

289,356

$

282,156

$

(7,200)

(2.6)

%

Adjusted:

Total adjusted SG&A expenses

$

289,356

$

282,156

$

(7,200)

(2.6)

%

Reported:

SG&A expenses as a % of gross profit:

Compensation

47.0

%

49.8

%

280

bps

Advertising

3.0

%

4.0

%

100

bps

Rent

3.4

%

4.0

%

60

bps

Other

18.8

%

22.7

%

390

bps

Total SG&A expenses as a % of gross profit

72.2

%

80.5

%

830

bps

Adjusted:

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

72.2

%

80.5

%

830

bps

Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

Weighted-

Average

Shares

Amount

Per

Share

Amount

Weighted-

Average

Shares

Amount

Per

Share

Amount

(In thousands, except per share amounts)

Diluted earnings (loss) and shares from continuing operations (1)

43,542

$

53,689

$

1.23

42,615

$

(199,131)

$

(4.67)

Pre-tax items of interest:

Impairment charges

$

$

268,000

Total pre-tax items of interest

$

$

268,000

Tax effect of above items

$

$

(51,295)

Adjusted diluted earnings (loss) and shares from continuing

operations

43,542

$

53,689

$

1.23

43,432

$

17,574

$

0.40

(1) Basic Weighted-Average Shares Used For Three Months Ended March 31, 2020 Due To Net Loss On GAAP Basis

Adjusted EBITDA - Non-GAAP Reconciliation

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

Franchised Dealerships Segment

EchoPark Segment

Discontinued Operations

Total

Franchised Dealerships Segment

EchoPark Segment

Discontinued Operations

Total

(In thousands)

Net income (loss)

$

54,222

$

(199,333)

Provision for income taxes

19,051

(44,200)

Income (loss) before taxes

$

70,543

$

2,010

$

720

$

73,273

$

(245,344)

$

2,096

$

(285)

$

(243,533)

Non-floor plan interest

9,127

334

9,461

10,043

365

10,408

Depreciation and amortization

21,206

3,304

24,510

20,144

2,708

22,852

Stock-based compensation expense

3,485

3,485

2,427

2,427

Asset impairment charges

268,000

268,000

Long-term compensation charges

500

500

Loss (gain) on franchise and real

estate disposals

(21)

14

(7)

Adjusted EBITDA

$

104,340

$

6,162

$

720

$

111,222

$

55,270

$

5,169

$

(285)

$

60,154

View source version on businesswire.com: https://www.businesswire.com/news/home/20210429005158/en/

Contacts

Company Contacts
Investor Inquiries:
Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400
Danny Wieland, Vice President, Investor Relations & Financial Reporting (704) 927-3462
ir@sonicautomotive.com

Press Inquiries:
Danielle DeVoren / Anthony Feldman
212-896-1272 / 347-487-6194
ddevoren@kcsa.com/afeldman@kcsa.com