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Sonic Automotive Reports Third Quarter 2019 EPS of $0.66, Up 83%

CHARLOTTE, N.C.--(BUSINESS WIRE)--

EchoPark Revenues Up 67.9% and Tracking $1.2 Billion for Full Year 2019

EchoPark Pre-Tax Income Up 138.9%

Sonic Automotive, Inc. (SAH), one of the nation’s largest automotive retailers, today reported financial results for the third quarter of 2019.

  • EchoPark revenues of $312.2 million during the third quarter of 2019, up 67.9% from the third quarter of 2018.
  • EchoPark pre-tax profit improved $7.6 million, or 138.9%, to $2.1 million in the third quarter of 2019, compared to a pre-tax loss of $5.5 million in the third quarter of 2018.
  • EchoPark generated Adjusted EBITDA* of $6.4 million in the third quarter of 2019, improving by $9.4 million from the third quarter of 2018.
  • EchoPark retailed 13,206 pre-owned units during the third quarter of 2019, up 71.6% from the third quarter of 2018.
  • Total Sonic consolidated continuing operations earnings per diluted share of $0.66 in the third quarter of 2019, compared to $0.36 in the third quarter of 2018, an 83.3% increase from the third quarter of 2018.
  • Total Sonic consolidated all-time quarterly record pre-owned retail unit sales of 42,453 units in the third quarter of 2019.
  • Total Sonic same store Fixed Operations gross profit increased $11.4 million in the third quarter of 2019, up 7.3% from the third quarter of 2018.
  • Total Sonic consolidated all-time quarterly record F&I gross profit per retail unit of $1,771 in the third quarter of 2019, an increase of $266 per unit from the third quarter of 2018.
  • Total Sonic consolidated all-time quarterly record F&I gross profit of $126.8 million in the third quarter of 2019, an increase of 29.3% from the third quarter of 2018.
  • SG&A to gross profit ratio of 76.7% in the third quarter of 2019, an improvement of 350 basis points compared to the third quarter of 2018.

* Adjusted EBITDA is a non-GAAP financial measure. The schedules included in this press release reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure.

Third Quarter 2019 Results

Net income from continuing operations for the third quarter of 2019 was $29.2 million, or $0.66 per diluted share. Comparatively, net income from continuing operations for the third quarter of 2018 was $15.3 million, or $0.36 per diluted share. Results reported for the third quarter of 2018 include pre-tax charges totaling $3.1 million related to storm damage, executive transition costs and charges related to the disposal of franchises.

Commentary

David Smith, Sonic’s and EchoPark’s Chief Executive Officer, commented, “Our franchised stores and our EchoPark stores grew pre-tax income in the double and triple digits, respectively. The franchised stores segment increased pre-tax income in the third quarter of 2019 over the prior year quarter by $10.3 million, or 36.8%, while the EchoPark segment increased pre-tax income in the third quarter of 2019 over the prior year quarter by $7.6 million, or 138.9%.”

Mr. Smith continued, “Our operations teams delivered yet another outstanding quarter that resulted in an 83% improvement in earnings per diluted share from continuing operations compared to the third quarter of 2018. Our teams delivered a solid combination of gross profit growth and cost control. Consolidated gross profit grew 7.3% while our SG&A to gross profit ratio improved by 350 basis points. These results were achieved in spite of a challenging new vehicle sales environment where our new vehicle unit sales and related gross profit decreased by 2.8% and $6.3 million, respectively. Our pre-owned, Fixed Operations and F&I results during the quarter exceeded our expectations. We believe these favorable operating trends will continue into the fourth quarter.”

Jeff Dyke, Sonic’s and EchoPark’s President, commented, “Our EchoPark stores had another exceptional quarter. EchoPark grew revenues by 67.9%, gross profit by 107.2% and pre-tax income by 138.9%. As we continue to grow our top-line revenues, a greater amount of incremental gross profit flows through to the bottom line, demonstrating the significant earnings upside potential in this business over the long term. Our path to opening our next EchoPark market in Long Beach, California is becoming clearer and we anticipate an opening in the latter half of the fourth quarter of this year. We are excited to introduce the EchoPark brand to the California market and look forward to continuing to execute on our plans for EchoPark growth, omni-channel selling and other digital initiatives.”

Dividend

Sonic’s Board of Directors approved a quarterly cash dividend of $0.10 per share payable on January 15, 2020 to all stockholders of record on December 13, 2019.

Third Quarter 2019 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 the “Investor Relations” tab under “Our Company” and choosing 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: 5598838

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: 5598838

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, EchoPark revenue estimates, EchoPark unit sales volume, EchoPark profit estimates, 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, 2018 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 EBITDA. 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 disclosures and provide a meaningful presentation of the Company’s results.

 

 

 
 
 

Sonic Automotive, Inc.
Results of Operations (Unaudited)

 

Results of Operations

 

 

Three Months Ended

September 30,

 

Better /

(Worse)

 

Nine Months Ended

September 30,

 

Better /

(Worse)

 

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

 

(In thousands, except per share amounts)

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

1,258,018

 

$

1,235,094

 

1.9

%

 

$

3,529,106

 

$

3,654,510

 

(3.4)

%

Used vehicles

914,272

 

745,998

 

22.6

%

 

2,620,264

 

2,217,616

 

18.2

%

Wholesale vehicles

51,542

 

48,578

 

6.1

%

 

156,351

 

167,726

 

(6.8)

%

Total vehicles

2,223,832

 

2,029,670

 

9.6

%

 

6,305,721

 

6,039,852

 

4.4

%

Parts, service and collision repair

352,047

 

343,118

 

2.6

%

 

1,048,789

 

1,041,630

 

0.7

%

Finance, insurance and other, net

126,841

 

98,061

 

29.3

%

 

351,429

 

295,890

 

18.8

%

Total revenues

2,702,720

 

2,470,849

 

9.4

%

 

7,705,939

 

7,377,372

 

4.5

%

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

(1,202,710)

 

(1,173,453)

 

2.5

%

 

(3,363,603)

 

(3,478,802)

 

(3.3)

%

Used vehicles

(877,444)

 

(710,681)

 

23.5

%

 

(2,509,699)

 

(2,108,219)

 

19.0

%

Wholesale vehicles

(52,648)

 

(49,877)

 

5.6

%

 

(159,437)

 

(176,806)

 

(9.8)

%

Total vehicles

(2,132,802)

 

(1,934,011)

 

10.3

%

 

(6,032,739)

 

(5,763,827)

 

4.7

%

Parts, service and collision repair

(183,107)

 

(176,302)

 

3.9

%

 

(546,067)

 

(538,135)

 

1.5

%

Total cost of sales

(2,315,909)

 

(2,110,313)

 

9.7

%

 

(6,578,806)

 

(6,301,962)

 

4.4

%

Gross profit

386,811

 

360,536

 

7.3

%

 

1,127,133

 

1,075,410

 

4.8

%

Selling, general and administrative expenses

(296,826)

 

(289,022)

 

(2.7)

%

 

(838,453)

 

(871,410)

 

3.8

%

Impairment charges

(1,124)

 

 

(100.0)

%

 

(3,076)

 

(13,961)

 

78.0

%

Depreciation and amortization

(23,665)

 

(23,377)

 

(1.2)

%

 

(70,120)

 

(71,067)

 

1.3

%

Operating income (loss)

65,196

 

48,137

 

35.4

%

 

215,484

 

118,972

 

81.1

%

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense, floor plan

(11,638)

 

(12,192)

 

4.5

%

 

(37,382)

 

(34,815)

 

(7.4)

%

Interest expense, other, net

(13,013)

 

(13,313)

 

2.3

%

 

(39,494)

 

(40,144)

 

1.6

%

Other income (expense), net

(5)

 

 

(100.0)

%

 

90

 

107

 

15.9

%

Total other income (expense)

(24,656)

 

(25,505)

 

3.3

%

 

(76,786)

 

(74,852)

 

(2.6)

%

Income (loss) from continuing operations before taxes

40,540

 

22,632

 

79.1

%

 

138,698

 

44,120

 

214.4

%

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

(11,372)

 

(7,331)

 

(55.1)

%

 

(40,430)

 

(13,711)

 

(194.9)

%

Income (loss) from continuing operations

29,168

 

15,301

 

90.6

%

 

98,268

 

30,409

 

223.2

%

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations before taxes

(223)

 

(252)

 

11.5

%

 

(616)

 

(797)

 

22.7

%

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

65

 

69

 

(5.8)

%

 

179

 

218

 

(17.9)

%

Income (loss) from discontinued operations

(158)

 

(183)

 

13.7

%

 

(437)

 

(579)

 

24.5

%

Net income (loss)

$

29,010

 

$

15,118

 

91.9

%

 

$

97,831

 

$

29,830

 

228.0

%

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from continuing operations

$

0.68

 

$

0.36

 

88.9

%

 

$

2.28

 

$

0.71

 

221.1

%

Earnings (loss) per share from discontinued operations

(0.01)

 

(0.01)

 

%

 

(0.01)

 

(0.01)

 

%

Earnings (loss) per common share

$

0.67

 

$

0.35

 

91.4

%

 

$

2.27

 

$

0.70

 

224.3

%

Weighted-average common shares outstanding

43,078

 

42,673

 

(0.9)

%

 

42,995

 

42,708

 

(0.7)

%

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from continuing operations

$

0.66

 

$

0.36

 

83.3

%

 

$

2.26

 

$

0.71

 

218.3

%

Earnings (loss) per share from discontinued operations

 

(0.01)

 

100.0

%

 

(0.01)

 

(0.02)

 

50.0

%

Earnings (loss) per common share

$

0.66

 

$

0.35

 

88.6

%

 

$

2.25

 

$

0.69

 

226.1

%

Weighted-average common shares outstanding

44,203

 

42,994

 

(2.8)

%

 

43,456

 

42,964

 

(1.1)

%

Dividends declared per common share

$

0.10

 

$

0.06

 

66.7

%

 

$

0.30

 

$

0.18

 

66.7

%

 

 

 

New Vehicles - Consolidated

 

 

Three Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Reported new vehicle:

 

 

 

 

 

 

 

Revenue

$

1,258,018

 

$

1,235,094

 

$

22,924

 

1.9

%

Gross profit

$

55,308

 

$

61,641

 

$

(6,333)

 

(10.3)

%

Unit sales

30,147

 

31,009

 

(862)

 

(2.8)

%

Revenue per unit

$

41,729

 

$

39,830

 

$

1,899

 

4.8

%

Gross profit per unit

$

1,835

 

$

1,988

 

$

(153)

 

(7.7)

%

Gross profit as a % of revenue

4.4%

 

5.0%

 

(60)

 

bps

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Reported new vehicle:

 

 

 

 

 

 

 

Revenue

$

3,529,106

 

$

3,654,510

 

$

(125,404)

 

(3.4)

%

Gross profit

$

165,503

 

$

175,708

 

$

(10,205)

 

(5.8)

%

Unit sales

83,540

 

91,386

 

(7,846)

 

(8.6)

%

Revenue per unit

$

42,245

 

$

39,990

 

$

2,255

 

5.6

%

Gross profit per unit

$

1,981

 

$

1,923

 

$

58

 

3.0

%

Gross profit as a % of revenue

4.7%

 

4.8%

 

(10)

 

bps

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Same store new vehicle:

 

 

 

 

 

 

 

Revenue

$

1,253,233

 

$

1,174,705

 

$

78,528

 

6.7

%

Gross profit

$

54,823

 

$

58,425

 

$

(3,602)

 

(6.2)

%

Unit sales

30,046

 

29,139

 

907

 

3.1

%

Revenue per unit

$

41,710

 

$

40,314

 

$

1,396

 

3.5

%

Gross profit per unit

$

1,825

 

$

2,005

 

$

(180)

 

(9.0)

%

Gross profit as a % of revenue

4.4%

 

5.0%

 

(60)

 

bps

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Same store new vehicle:

 

 

 

 

 

 

 

Revenue

$

3,487,153

 

$

3,429,897

 

$

57,256

 

1.7

%

Gross profit

$

163,128

 

$

167,188

 

$

(4,060)

 

(2.4)

%

Unit sales

82,301

 

84,352

 

(2,051)

 

(2.4)

%

Revenue per unit

$

42,371

 

$

40,662

 

$

1,709

 

4.2

%

Gross profit per unit

$

1,982

 

$

1,982

 

$

 

%

Gross profit as a % of revenue

4.7%

 

4.9%

 

(20)

 

bps

 
 
 
 

Used Vehicles - Consolidated

 

 

Three Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Reported used vehicle:

 

 

 

 

 

 

 

Revenue

$

914,272

 

$

745,998

 

$

168,274

 

22.6

%

Gross profit

$

36,828

 

$

35,317

 

$

1,511

 

4.3

%

Unit sales

42,453

 

34,952

 

7,501

 

21.5

%

Revenue per unit

$

21,536

 

$

21,343

 

$

193

 

0.9

%

Gross profit per unit

$

868

 

$

1,010

 

$

(142)

 

(14.1)

%

Gross profit as a % of revenue

4.0%

 

4.7%

 

(70)

 

bps

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Reported used vehicle:

 

 

 

 

 

 

 

Revenue

$

2,620,264

 

$

2,217,616

 

$

402,648

 

18.2

%

Gross profit

$

110,565

 

$

109,397

 

$

1,168

 

1.1

%

Unit sales

122,374

 

104,470

 

17,904

 

17.1

%

Revenue per unit

$

21,412

 

$

21,227

 

$

185

 

0.9

%

Gross profit per unit

$

904

 

$

1,047

 

$

(143)

 

(13.7)

%

Gross profit as a % of revenue

4.2%

 

4.9%

 

(70)

 

bps

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Same store used vehicle:

 

 

 

 

 

 

 

Revenue

$

855,900

 

$

713,677

 

$

142,223

 

19.9

%

Gross profit

$

33,764

 

$

33,088

 

$

676

 

2.0

%

Unit sales

39,521

 

33,128

 

6,393

 

19.3

%

Revenue per unit

$

21,657

 

$

21,543

 

$

114

 

0.5

%

Gross profit per unit

$

854

 

$

999

 

$

(145)

 

(14.5)

%

Gross profit as a % of revenue

3.9%

4.6%

 

(70)

 

bps

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Same store used vehicle:

 

 

 

 

 

 

 

Revenue

$

2,440,633

 

$

2,102,425

 

$

338,208

 

16.1

%

Gross profit

$

101,638

 

$

100,248

 

$

1,390

 

1.4

%

Unit sales

113,224

 

98,028

 

15,196

 

15.5

%

Revenue per unit

$

21,556

 

$

21,447

 

$

109

 

0.5

%

Gross profit per unit

$

898

 

$

1,023

 

$

(125)

 

(12.2)

%

Gross profit as a % of revenue

4.2%

 

4.8%

 

(60)

 

bps

 
...
 
 
 

Wholesale Vehicles - Consolidated

 

Three Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Reported wholesale vehicle:

 

 

 

 

 

 

 

Revenue

$

51,542

 

$

48,578

 

$

2,964

 

6.1

%

Gross profit (loss)

$

(1,106)

 

$

(1,299)

 

$

193

 

14.9

%

Unit sales

8,961

 

7,831

 

1,130

 

14.4

%

Revenue per unit

$

5,752

 

$

6,203

 

$

(451)

 

(7.3)

%

Gross profit (loss) per unit

$

(123)

 

$

(166)

 

$

43

 

25.9

%

Gross profit (loss) as a % of revenue

(2.1)%

 

(2.7)%

 

60

 

bps

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Reported wholesale vehicle:

 

 

 

 

 

 

 

Revenue

$

156,351

 

$

167,726

 

$

(11,375)

 

(6.8)

%

Gross profit (loss)

$

(3,086)

 

$

(9,080)

 

$

5,994

 

66.0

%

Unit sales

26,254

 

25,953

 

301

 

1.2

%

Revenue per unit

$

5,955

 

$

6,463

 

$

(508)

 

(7.9)

%

Gross profit (loss) per unit

$

(118)

 

$

(350)

 

$

232

 

66.3

%

Gross profit (loss) as a % of revenue

(2.0)%

 

(5.4)%

 

340

 

bps

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Same store wholesale vehicle:

 

 

 

 

 

 

 

Revenue

$

49,791

 

$

45,144

 

$

4,647

 

10.3

%

Gross profit (loss)

$

(1,009)

 

$

(1,324)

 

$

315

 

23.8

%

Unit sales

8,559

 

7,173

 

1,386

 

19.3

%

Revenue per unit

$

5,817

 

$

6,294

 

$

(477)

 

(7.6)

%

Gross profit (loss) per unit

$

(118)

 

$

(185)

 

$

67

 

36.2

%

Gross profit (loss) as a % of revenue

(2.0)%

 

(2.9)%

 

90

 

bps

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2019

 

2018

 

Change

 

% Change

 

(In thousands, except unit and per unit data)

Same store wholesale vehicle:

 

 

 

 

 

 

 

Revenue

$

150,890

 

$

152,934

 

$

(2,044)

 

(1.3)

%

Gross profit (loss)

$

(2,746)

 

$

(8,224)

 

$

5,478

 

66.6

%

Unit sales

25,081

 

23,367

 

1,714

 

7.3

%

Revenue per unit

$

6,016

 

$

6,545

 

$

(529)

 

(8.1)

%

Gross profit (loss) per unit

$

(109)

 

$

(352)

 

$

243

 

69.0

%

Gross profit (loss) as a % of revenue

(1.8)%

 

(5.4)%