EX-99.1 2 d178086dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Sonic Automotive, Inc. Reports Record Q1 Results

Adjusted Continuing Operations EPS of $0.39

First Quarter 2016 Results

 

  •   Record Q1 pre-owned units of 29,333, up 4.3% over the prior year quarter

 

  •   Record Q1 finance and insurance (“F&I”) gross profit of $81.3 million, up 8.9% over the prior year quarter

 

  •   Record Q1 fixed operations gross profit of $166.0 million, up 6.2% over the prior year quarter

 

  •   Record Q1 total gross profit of $345.2 million, up 3.0% over the prior year quarter

 

  •   EchoPark® stores retailed 941 units

CHARLOTTE, N.C. – April 26, 2016 – Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported adjusted net income from continuing operations for the first quarter of 2016 of $18.2 million, or $0.39 per diluted share. Included in these adjusted amounts are pre-tax expenses of $3.6 million, or $0.05 per diluted share, related to the Company’s EchoPark® operations. Adjusted net income from continuing operations and related diluted earnings per share are non-GAAP financial measures. The schedules included in this press release reconcile these non-GAAP financial measures to the comparable GAAP financial measures.

Adjusted net income from continuing operations for the first quarter of 2015 was $18.8 million, or $0.37 per diluted share. Included in these adjusted amounts are pre-tax expenses of $4.9 million, or $0.06 per share, related to the Company’s EchoPark® operations.

On a GAAP basis, net income from continuing operations and related diluted earnings per share for the first quarter of 2016 were $14.5 million and $0.31 per share, respectively, compared to $14.4 million and $0.28 per diluted share, respectively, for the first quarter of 2015.

Jeff Dyke, Sonic’s EVP of Operations, stated, “We are pleased with our operating results during the quarter. Strong performances in the fixed operations and the F&I areas drove the overall increase in gross profit to record levels. We continued to see gross profit compression in new vehicles and expect this to continue until inventory supply corrects to more normalized levels. The used vehicle market continues to demonstrate its resiliency despite the compression related to new vehicles. Our EchoPark® stores continue to grow and mature. The expansion in Denver is on schedule and we anticipate opening two additional stores in the second quarter of 2016 and another by the end of the year. We are also happy to announce we will be introducing the EchoPark® brand to the Texas and Carolinas markets in 2017 where we have been actively accumulating property.”

B. Scott Smith, the Company’s Chief Executive Officer, noted, “Execution of our core strategies continued in the first quarter. Our commitment to return capital through dividends and share repurchases has rewarded our long-term stockholders. Subsequent to the end of the quarter, we repurchased an additional 363,000 shares for approximately $6.4 million. In addition to the real estate and construction activities related to EchoPark®, we are aggressively replacing leased

properties with image-compliant facilities on owned land. We anticipate investing approximately $250 million in land and facilities in the current year funded by mortgages and cash generated through operations. These hard assets are the cornerstones of our long-term plan. We are maintaining our guidance of adjusted diluted earnings per share from continuing operations for 2016 to be between $2.07 and $2.17 per share.”

Dividend

Sonic’s Board of Directors approved a quarterly dividend of $0.05 per share payable in cash for stockholders of record on June 15, 2016. The dividend will be payable on July 15, 2016.

First 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: 1.877.450.3867

International: 1.706.643.0958

Conference ID: 81083014

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: 81083014

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 expansion of our EchoPark® store initiatives and the anticipated amount of investments related to capital expenditures. 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 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 ending December 31, 2015. The Company does not undertake any obligation to update forward-looking information.

###

 

Contact:    Heath Byrd, Chief Financial Officer (704) 566-2400
   C.G. Saffer, Vice President and Chief Accounting Officer (704) 566-2439

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

This release contains certain non-GAAP financial measures 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 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.

 

     Three Months Ended March 31,  
                 2016                     2015          
     (In thousands, except per share and unit data)  

Revenues:

     

New retail vehicles

    $ 1,149,437      $ 1,190,215   

Fleet vehicles

      15,133        12,108   
  

 

 

    

 

 

  

Total new vehicles

      1,164,570        1,202,323   

Used vehicles

      598,355        593,742   

Wholesale vehicles

      44,374        41,656   
  

 

 

    

 

 

  

Total vehicles

      1,807,299        1,837,721   

Parts, service and collision repair

      346,054        323,194   

Finance, insurance and other, net

      81,273        74,600   
  

 

 

    

 

 

  

Total revenues

      2,234,626        2,235,515   

Gross profit

      345,150        334,959   

Selling, general and administrative expenses

      (284,375 )      (270,862 ) 

Impairment charges

      —          (6,192 ) 

Depreciation and amortization

      (18,470 )      (16,409 ) 
  

 

 

    

 

 

  

Operating income (loss)

      42,305        41,496   

Other income (expense):

     

Interest expense, floor plan

      (6,436 )      (4,778 ) 

Interest expense, other, net

      (12,339 )      (13,219 ) 

Other income (expense), net

      104        90   
  

 

 

    

 

 

  

Total other income (expense)

      (18,671 )      (17,907 ) 
  

 

 

    

 

 

  

Income (loss) from continuing operations before taxes

      23,634        23,589   

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

      (9,170 )      (9,200 ) 
  

 

 

    

 

 

  

Income (loss) from continuing operations

      14,464        14,389   
  

 

 

    

 

 

  

Income (loss) from discontinued operations

      160        (422 ) 
  

 

 

    

 

 

  

Net income (loss)

    $ 14,624      $ 13,967   
  

 

 

    

 

 

  

Diluted earnings (loss) per common share:

     

Earnings (loss) per share from continuing operations

    $ 0.31      $ 0.28   

Earnings (loss) per share from discontinued operations

      —          (0.01 ) 
  

 

 

    

 

 

  

Earnings (loss) per common share

    $ 0.31      $ 0.27   
  

 

 

    

 

 

  

Weighted average common shares outstanding

      47,122        51,403   

Gross Margin Data (Continuing Operations):

     

New retail vehicles

      5.1 %      5.3 % 

Fleet vehicles

      0.2 %      (0.6 %) 

Total new vehicles

      5.0 %      5.3 % 

Used vehicles

      6.8 %      6.9 % 

Wholesale vehicles

      (2.4 %)      (0.5 %) 

Parts, service and collision repair

      48.0 %      48.4 % 

Finance, insurance and other

      100.0 %      100.0 % 

Overall gross margin

      15.4 %      15.0 % 

SG&A Expenses (Continuing Operations):

     

Compensation

    $ 169,041      $ 161,858   

Advertising

      15,347        15,332   

Rent

      18,720        18,254   

Other

      81,267        75,418   
  

 

 

    

 

 

  

Total SG&A expenses

    $ 284,375      $ 270,862   

SG&A expenses as % of gross profit

      82.4 %      80.9 % 

Operating Margin %

      1.9 %      1.9 % 

Unit Data (Continuing Operations):

     

New retail units

      30,156        31,334   

Fleet units

      449        355   
  

 

 

    

 

 

  

Total new units

      30,605        31,689   

Used units

      29,333        28,135   

Wholesale units

      8,423        7,777   

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Per Share Data

 

     Three Months Ended March 31, 2016  
            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  
     (In thousands, except per share amounts)  

Reported:

                 

Earnings (loss) and shares

      46,950       $ 14,464         $ 160        $ 14,624     

Effect of participating securities:

                 

Non-vested restricted stock

         (6 )         —            (6 )   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Basic earnings (loss) and shares

      46,950       $ 14,458      $ 0.31       $ 160      $ —        $ 14,618      $ 0.31   

Effect of dilutive securities:

                 

Stock compensation plans

      172                 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Diluted earnings (loss) and shares

      47,122       $ 14,458      $ 0.31       $ 160      $ —        $ 14,618      $ 0.31   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Adjustments (net of tax):

                 

Storm damage and other

       $ 3,698      $ 0.08       $ (320 )    $ (0.01 )    $ 3,378      $ 0.07   
     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total adjustments

       $ 3,698      $ 0.08       $ (320 )    $ (0.01 )    $ 3,378      $ 0.07   

Adjusted:

                 
       

 

 

       

 

 

      

 

 

  

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

       $ 18,162      $ 0.39       $ (160 )    $ (0.01 )    $ 18,002      $ 0.38   
       

 

 

       

 

 

      

 

 

  

(1)    Net loss attributable to EchoPark® operations was $0.05 per fully diluted share in the three months ended March 31, 2016.

       

     Three Months Ended March 31, 2015  
            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  
     (In thousands, except per share amounts)  

Reported:

                 

Earnings (loss) and shares

      50,854       $ 14,389         $ (422 )      $ 13,967     

Effect of participating securities:

                 

Non-vested restricted stock and stock units

         (5 )         —            (5 )   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Basic earnings (loss) and shares

      50,854       $ 14,384      $ 0.28       $ (422 )    $ (0.01 )    $ 13,962      $ 0.27   

Effect of dilutive securities:

                 

Stock compensation plans

      549                 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Diluted earnings (loss) and shares

      51,403       $ 14,384      $ 0.28       $ (422 )    $ (0.01 )    $ 13,962      $ 0.27   
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Adjustments (net of tax):

                 

Storm damage and other

       $ 634      $ 0.02       $ —        $ —        $ 634      $ 0.02   

Impairment charges

         3,777        0.07         —          —          3,777        0.07   
     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total adjustments

       $ 4,411      $ 0.09       $ —        $ —        $ 4,411      $ 0.09   

Adjusted:

                 
       

 

 

       

 

 

      

 

 

  

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

       $ 18,800      $ 0.37       $ (422 )    $ (0.01 )    $ 18,378      $ 0.36   
       

 

 

       

 

 

      

 

 

  

(2)    Net loss attributable to EchoPark® operations was $0.06 per fully diluted share in the three months ended March 31, 2015.

       

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

New Vehicles

 

     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands, except units and per unit data)  

Reported:

         

Revenue

    $ 1,164,570      $ 1,202,323      $ (37,753 )      (3.1 %) 

Gross profit

    $ 58,424      $ 63,350      $ (4,926 )      (7.8 %) 

Unit sales

      30,605        31,689        (1,084 )      (3.4 %) 

Revenue per unit

    $ 38,052      $ 37,941      $ 111        0.3 % 

Gross profit per unit

    $ 1,909      $ 1,999      $ (90 )      (4.5 %) 

Gross profit as a % of revenue

      5.0 %      5.3 %      (30 ) bps   
     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands, except units and per unit data)  

Same Store:

         

Revenue

    $ 1,164,570      $ 1,189,495      $ (24,925 )      (2.1 %) 

Gross profit

    $ 58,375      $ 62,498      $ (4,123 )      (6.6 %) 

Unit sales

      30,605        31,372        (767 )      (2.4 %) 

Revenue per unit

    $ 38,052      $ 37,916      $ 136        0.4 % 

Gross profit per unit

    $ 1,907      $ 1,992      $ (85 )     (4.3 %) 

Gross profit as a % of revenue

      5.0 %      5.3 %      (30 ) bps   

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Used Vehicles

 

     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands, except units and per unit data)  

Reported:

         

Revenue

    $ 598,355      $ 593,742      $ 4,613        0.8 % 

Gross profit

    $ 40,531      $ 40,844      $ (313 )      (0.8 %) 

Unit sales

      29,333        28,135        1,198        4.3 % 

Revenue per unit

    $ 20,399      $ 21,103      $ (704 )      (3.3 %) 

Gross profit per unit

    $ 1,382      $ 1,452      $ (70 )      (4.8 %) 

Gross profit as a % of revenue

      6.8 %      6.9 %      (10 ) bps   
     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands, except units and per unit data)  

Same Store:

         

Revenue

    $ 598,355      $ 584,987      $ 13,368        2.3 % 

Gross profit

    $ 40,690      $ 41,008      $ (318 )      (0.8 %) 

Unit sales

      29,333        27,687        1,646        5.9 % 

Revenue per unit

    $ 20,399      $ 21,129      $ (730 )      (3.5 %) 

Gross profit per unit

    $ 1,387      $ 1,481      $ (94 )      (6.3 %) 

Gross profit as a % of revenue

      6.8 %      7.0 %      (20 ) bps   

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Wholesale Vehicles

 

     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands, except units and per unit data)  

Reported:

         

Revenue

    $ 44,374      $ 41,656      $ 2,718        6.5 % 

Gross profit (loss)

    $ (1,078 )    $ (210 )    $ (868 )      (413.3 %) 

Unit sales

      8,423        7,777        646        8.3 % 

Revenue per unit

    $ 5,268      $ 5,356      $ (88 )      (1.6 %) 

Gross profit (loss) per unit

    $ (128 )    $ (27 )    $ (101 )      (374.1 %) 

Gross profit (loss) as a % of revenue

      (2.4 %)      (0.5 %)      (190 ) bps   
     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands, except units and per unit data)  

Same Store:

         

Revenue

    $ 44,353      $ 41,253      $ 3,100        7.5 % 

Gross profit (loss)

    $ (1,076 )    $ (197 )    $ (879 )      (446.2 %) 

Unit sales

      8,418        7,688        730        9.5 % 

Revenue per unit

    $ 5,269      $ 5,366      $ (97 )      (1.8 %) 

Gross profit (loss) per unit

    $ (128 )    $ (26 )    $ (102 )      (392.3 %) 

Gross profit (loss) as a % of revenue

      (2.4 %)      (0.5 %)      (190 ) bps   

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Parts, Service and Collision Repair (“Fixed Operations”)

 

         Three Months Ended March 31,         Better / (Worse)  
         2016             2015         Change     % Change  
     (In thousands)  

Reported:

   

Revenue

         

Customer pay

    $ 147,394      $ 137,623      $ 9,771        7.1 % 

Warranty

      57,559        53,498        4,061        7.6 % 

Wholesale parts

      45,309        45,012        297        0.7 % 

Internal, sublet and other

      95,792        87,061        8,731        10.0 % 
  

 

 

    

 

 

    

 

 

    

Total

    $ 346,054      $ 323,194      $ 22,860        7.1 % 
  

 

 

    

 

 

    

 

 

    

Gross profit

         

Customer pay

    $ 80,358      $ 75,678      $ 4,680        6.2 % 

Warranty

      31,326        29,760        1,566        5.3 % 

Wholesale parts

      7,941        8,138        (197 )      (2.4 %) 

Internal, sublet and other

      46,375        42,799        3,576        8.4 % 
  

 

 

    

 

 

    

 

 

    

Total

    $ 166,000      $ 156,375      $ 9,625        6.2 % 
  

 

 

    

 

 

    

 

 

    

Gross profit as a % of revenue

         

Customer pay

      54.5 %      55.0 %      (50 ) bps   

Warranty

      54.4 %      55.6 %      (120 ) bps   

Wholesale parts

      17.5 %      18.1 %      (60 ) bps   

Internal, sublet and other

      48.4 %      49.2 %      (80 ) bps   

Total

      48.0 %      48.4 %      (40 ) bps   

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Parts, Service and Collision Repair (“Fixed Operations”)

 

     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands)  

Same Store:

         

Revenue

         

Customer pay

    $ 147,394      $ 134,636      $ 12,758        9.5 % 

Warranty

      57,559        52,694        4,865        9.2 % 

Wholesale parts

      45,309        44,201        1,108        2.5 % 

Internal, sublet and other

      95,792        85,742        10,050        11.7 % 
  

 

 

    

 

 

    

 

 

    

Total

    $ 346,054      $ 317,273      $ 28,781        9.1 % 
  

 

 

    

 

 

    

 

 

    

Gross profit

         

Customer pay

    $ 80,358      $ 74,050      $ 6,308        8.5 % 

Warranty

      31,282        29,300        1,982        6.8 % 

Wholesale parts

      7,941        7,988        (47 )      (0.6 %) 

Internal, sublet and other

      46,068        42,165        3,903        9.3 % 
  

 

 

    

 

 

    

 

 

    

Total

    $ 165,649      $ 153,503      $ 12,146        7.9 % 
  

 

 

    

 

 

    

 

 

    

Gross profit as a % of revenue

         

Customer pay

      54.5 %      55.0 %      (50 ) bps   

Warranty

      54.3 %      55.6 %      (130 ) bps   

Wholesale parts

      17.5 %      18.1 %      (60 ) bps   

Internal, sublet and other

      48.1 %      49.2 %      (110 ) bps   

Total

      47.9 %      48.4 %      (50 ) bps   

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Finance, Insurance and Other, Net (“F&I”)

 

     Three Months Ended March 31,      Better / (Worse)  
     2016      2015      Change      % Change  
     (In thousands, except per unit data)  

Reported:

            

Revenue

    $ 81,273       $ 74,600       $ 6,673         8.9 % 

Gross profit per retail unit (excludes fleet)

    $ 1,366       $ 1,254       $ 112         8.9 % 
     Three Months Ended March 31,      Better / (Worse)  
     2016      2015      Change      % Change  
     (In thousands, except per unit data)  

Same Store:

            

Revenue

    $ 80,852       $ 73,689       $ 7,163         9.7 % 

Gross profit per retail unit (excludes fleet)

    $ 1,359       $ 1,255       $ 104         8.3 % 

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Selling, General and Administrative (“SG&A”) Expenses

 

     Three Months Ended March 31,     Better / (Worse)  
     2016     2015     Change     % Change  
     (In thousands)  

Reported:

         

Compensation

    $ 169,041      $ 161,858      $ (7,183 )      (4.4 %) 

Advertising

      15,347        15,332        (15 )      (0.1 %) 

Rent

      18,720        18,254        (466 )      (2.6 %) 

Other

      81,267        75,418        (5,849 )      (7.8 %) 
  

 

 

    

 

 

    

 

 

    

Total

    $ 284,375      $ 270,862      $ (13,513 )      (5.0 %) 
  

 

 

    

 

 

    

 

 

    

Total pre-tax adjustments

      (6,042 )      (1,051 )      4,991        NM   
  

 

 

    

 

 

    

 

 

    

Adjusted SG&A

    $ 278,333      $ 269,811        (8,522 )      (3.2 %) 
  

 

 

    

 

 

    

 

 

    

SG&A expenses as a % of gross profit

         

Compensation

      49.0 %      48.3 %      (70 ) bps   

Advertising

      4.4 %      4.6 %      20   bps   

Rent

      5.4 %      5.4 %      0   bps   

Other

      23.6 %      22.6 %      (100 ) bps   
  

 

 

    

 

 

    

 

 

    

Total

      82.4 %      80.9 %      (150 ) bps   
  

 

 

    

 

 

    

 

 

    

Total pre-tax adjustments

      (1.8 %)      (0.3 %)      150   bps   
  

 

 

    

 

 

    

 

 

    

Adjusted SG&A as a % of gross profit

      80.6 %      80.6 %      0   bps   
  

 

 

    

 

 

    

 

 

    

 

NM = Not meaningful