SONIC AUTOMOTIVE, INC. 
By CHARLOTTE, N.C., April 22, 2014 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported 2014 first quarter earnings from continuing operations of $20.0 million compared to $21.7 million in the prior year quarter. Continuing operations earnings per diluted share were $0.38 in the first quarter of 2014 compared to $0.41 in the prior year quarter. Sonic estimates that first quarter 2014 weather events in the southeast negatively affected continuing operations earnings per diluted share by approximately $0.02. Expenses attributable to Sonic's stand-alone pre-owned store initiative also reduced continuing operations earnings per diluted share by an additional $0.02 in the first quarter of 2014.
Q1 2014 Highlights:
-- All-time record pre-owned unit sales of 27,657 in Q1 2014
-- Record Q1 pre-owned gross profit of $40.7 million in 2014
-- Pre-owned unit sales per store per month reached 90 units in Q1 2014
-- Q1 2014 fixed operations revenue up $22.1 million, or 7.5% over the
prior year quarter
-- Record Q1 fixed operations gross profit of $152.1 million, up $7.9
million over the prior year quarter
B. Scott Smith, the Company's President, noted, "We have been very busy in the first quarter. I'm happy with the progress we have made in both pre-owned and in our customer experience initiatives. We are very excited about the opening of our pre-owned stores in Denver expected in the fourth quarter 2014. Our collection of highly skilled professionals, operational playbooks and state-of-the-art technology will provide us with a competitive advantage over others in this pre-owned space."
"With our customer experience initiative (One-Sonic One-Experience), we intend on helping the retail automotive industry change toward the way current and future consumers want to shop for cars and trucks. Our goal is to provide options to customers that are enjoyable, transparent and consistent with their lifestyles. We plan on beginning the roll out this new shopping experience to our customers in the Charlotte, North Carolina market in the third quarter of 2014, and we will launch the customer experience initiative in other markets after the Charlotte roll out is complete."
"We would also like to reiterate our targeted range of diluted earnings per share from continuing operations for full year 2014 of $1.95 to $2.05. This range includes an expected $0.14 per diluted share effect related to costs of our stand-alone pre-owned initiative. Excluding the anticipated effects of this initiative, our targeted range of diluted earnings per share from continuing operations for full year 2014 is $2.09 to $2.19."
Jeff Dyke, Sonic's EVP of Operations, stated, "We continue to demonstrate our ability to operate and grow in the pre-owned space at record levels. Compared to the prior year quarter, we were able to grow pre-owned unit sales by 4.5% and pre-owned gross profit by 7.0%. In addition, our fixed operations teams were able to achieve record results despite the weather issues that plagued many of our southeastern stores during the quarter. We achieved fixed operations revenue and gross profit growth over the prior year quarter of 7.5% and 5.5%, respectively. While new retail unit volumes were relatively flat compared to the prior year quarter, we were able to increase our gross profit per unit to $2,191, up $58 per unit versus Q1 2013. We continue to make progress on our One-Sonic One-Experience and stand-alone pre-owned store projects, which are all on track. While the weather caused a slowdown in January and February, we still beat our internal forecast for Q1 2014, and we remain on track to achieve our EPS target for the full year."
"We continue testing our True Price® pricing methodology. This quarter we began to see two things happen - as the market grew stronger, our share stabilized, and we grew market share sequentially over the prior quarter and we were able to grow new car margin by $58 per retail unit. This marks the first time in over a year of adjusting our model that both share and margin grew together in the quarter. As we move toward our One-Sonic One-Experience launch, we expect to gain significant market share as customers benefit from the entire complement of our new shopping experience. Bottom line, when we fully implement One-Sonic One-Experience, we will offer the automobile buying community a shopping experience that no other competitor in our industry can offer, or will be able to offer, for several years to come."
First Quarter Earnings Conference Call
Senior management will host a conference call today at 10:00 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: 76537421
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: 76537421
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 earnings per share from continuing operations, expected expense impacts of our company's stand-alone pre-owned store initiative, anticipated growth in new vehicle sales, and anticipated future success and impacts from the implementation of our planned customer experience and stand-alone pre-owned store initiatives. There are many factors that affect management's views about future events and trends of the Company's business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management's view, including without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company's annual report on Form 10-K for the year ending December 31, 2013. The Company does not undertake any obligation to update forward-looking information.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
First Quarter Ended First Quarter Ended
March 31, 2014 March 31, 2013
-------------- --------------
(In thousands, except per share and unit
data)
Revenues:
New retail vehicles $1,112,291 $1,101,109
Fleet vehicles 34,329 41,947
Total new vehicles 1,146,620 1,143,056
Used vehicles 559,816 526,182
Wholesale vehicles 41,598 51,792
------ ------
Total vehicles 1,748,034 1,721,030
Parts, service and collision repair 318,771 296,642
Finance, insurance and other, net 69,581 65,494
------ ------
Total revenues 2,136,386 2,083,166
Gross profit 329,000 313,020
Selling, general and administrative expenses (263,973) (245,824)
Impairment charges (3) (15)
Depreciation and amortization (14,381) (12,134)
------- -------
Operating income (loss) 50,643 55,047
Other income (expense):
Interest expense, floor plan (4,689) (5,213)
Interest expense, other, net (13,818) (14,359)
Other income (expense), net 97 95
--- ---
Total other income (expense) (18,410) (19,477)
------- -------
Income (loss) from continuing operations before taxes 32,233 35,570
Provision for income taxes - benefit (expense) (12,249) (13,873)
------- -------
Income (loss) from continuing operations 19,984 21,697
Income (loss) from discontinued operations (598) (406)
---- ----
Net income (loss) $19,386 $21,291
======= =======
Diluted earnings (loss) per common share:
Earnings (loss) per share from continuing operations $0.38 $0.41
Earnings (loss) per share from discontinued operations (0.02) (0.01)
Earnings (loss) per common share $0.36 $0.40
===== =====
Weighted average common shares outstanding 52,946 52,931
Gross Margin Data (Continuing Operations):
New retail vehicles 5.9% 5.9%
Fleet vehicles 2.6% 3.0%
Total new vehicles 5.8% 5.8%
Used vehicles 7.3% 7.2%
Wholesale vehicles (0.2%) (2.3%)
Parts, service and collision repair 47.7% 48.6%
Finance, insurance and other 100.0% 100.0%
Overall gross margin 15.4% 15.0%
SG&A Expenses (Continuing Operations):
Compensation $157,154 $148,580
Advertising 14,119 13,431
Rent 18,535 19,022
Other 74,165 64,791
Total SG&A expenses $263,973 $245,824
SG&A expenses as % of gross profit 80.2% 78.5%
Operating Margin % 2.4% 2.6%
Unit Data (Continuing Operations):
New retail units 30,029 30,590
Fleet units 1,102 1,493
Total new units 31,131 32,083
Used units 27,657 26,469
Wholesale units 7,380 8,393
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Per Share Data
First Quarter Ended March 31, 2014
----------------------------------
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 52,418 $19,984 $(598) $19,386
Effect of participating securities:
Non-vested restricted stock
and stock units (63) - (63)
--- --- ---
Basic earnings (loss) and shares 52,418 $19,921 $0.38 $(598) $(0.01) $19,323 $0.37
Effect of dilutive securities:
Stock compensation plans 528
Diluted earnings (loss) and shares 52,946 $19,921 $0.38 $(598) $(0.02) $19,323 $0.36
====== ======= ===== ===== ====== ======= =====
First Quarter Ended March 31, 2013
----------------------------------
Income (Loss) Income (Loss)
From Continuing From Discontinued
Operations Operations Net Income (Loss)
---------- ---------- ----------------
Weighted Per Per Per
Average Share Share Share
Shares Amount Amount Amount Amount Amount Amount
------ ------ ------ ------ ------ ------ ------
(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares 52,586 $21,697 $(406) $21,291
Effect of participating securities:
Non-vested restricted stock
and stock units (170) - (170)
---- --- ----
Basic earnings (loss) and shares 52,586 $21,527 $0.41 $(406) $(0.01) $21,121 $0.40
Effect of dilutive securities:
Stock compensation plans 345
---
Diluted earnings (loss) and shares 52,931 $21,527 $0.41 $(406) $(0.01) $21,121 $0.40
====== ======= ===== ===== ====== ======= =====
Sonic Automotive, Inc.
Results of Operations (Unaudited)
New Vehicles
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except units and per unit data)
Reported:
Revenue $1,146,620 $1,143,056 $3,564 0.3%
Gross profit $66,673 $66,470 $203 0.3%
Unit sales 31,131 32,083 (952) (3.0%)
Revenue per unit $36,832 $35,628 $1,204 3.4%
Gross profit per unit $2,142 $2,072 $70 3.4%
Gross profit as a % of revenue 5.8% 5.8% 0 bps
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except units and per unit data)
Same Store:
Revenue $1,129,303 $1,143,056 $(13,753) (1.2%)
Gross profit $65,372 $66,341 $(969) (1.5%)
Unit sales 30,818 32,083 (1,265) (3.9%)
Revenue per unit $36,644 $35,628 $1,016 2.9%
Gross profit per unit $2,121 $2,068 $53 2.6%
Gross profit as a % of revenue 5.8% 5.8% 0 bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Used Vehicles
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except units and per unit data)
Reported:
Revenue $559,816 $526,182 $33,634 6.4%
Gross profit $40,693 $38,030 $2,663 7.0%
Unit sales 27,657 26,469 1,188 4.5%
Revenue per unit $20,241 $19,879 $362 1.8%
Gross profit per unit $1,471 $1,437 $34 2.4%
Gross profit as a % of revenue 7.3% 7.2% 10
bps
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except units and per unit data)
Same Store:
Revenue $546,937 $526,182 $20,755 3.9%
Gross profit $39,870 $37,262 $2,608 7.0%
Unit sales 27,126 26,469 657 2.5%
Revenue per unit $20,163 $19,879 $284 1.4%
Gross profit per unit $1,470 $1,408 $62 4.4%
Gross profit as a % of revenue 7.3% 7.1% 20
bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Wholesale Vehicles
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except units and per unit data)
Reported:
Revenue $41,598 $51,792 $(10,194) (19.7%)
Gross profit (loss) $(93) $(1,203) $1,110 92.3%
Unit sales 7,380 8,393 (1,013) (12.1%)
Revenue per unit $5,637 $6,171 $(534) (8.7%)
Gross profit (loss) per unit $(13) $(143) $130 90.9%
Gross profit (loss) as a % of revenue (0.2%) (2.3%) 210
bps
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except units and per unit data)
Same Store:
Revenue $40,627 $51,792 $(11,165) (21.6%)
Gross profit (loss) $28 $(1,203) $1,231 102.3%
Unit sales 7,270 8,393 (1,123) (13.4%)
Revenue per unit $5,588 $6,171 $(583) (9.4%)
Gross profit (loss) per unit $4 $(143) $147 102.8%
Gross profit (loss) as a % of revenue 0.1% (2.3%) 240
bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair ("Fixed Operations")
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
Reported: (In thousands)
Revenue
Customer pay $141,121 $133,803 $7,318 5.5%
Warranty 46,591 44,813 1,778 4.0%
Wholesale parts 47,944 40,538 7,406 18.3%
Internal, sublet and other 83,115 77,488 5,627 7.3%
Total $318,771 $296,642 $22,129 7.5%
======== ======== ======= ===
Gross profit
Customer pay $77,999 $74,116 $3,883 5.2%
Warranty 25,238 23,895 1,343 5.6%
Wholesale parts 8,161 7,619 542 7.1%
Internal, sublet and other 40,748 38,599 2,149 5.6%
Total $152,146 $144,229 $7,917 5.5%
======== ======== ====== ===
Gross profit as a % of revenue
Customer pay 55.3% 55.4% (10)
bps
Warranty 54.2% 53.3% 90
bps
Wholesale parts 17.0% 18.8% (180)
bps
Internal, sublet and other 49.0% 49.8% (80)
bps
Total 47.7% 48.6% (90)
bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair ("Fixed Operations")
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
Same Store: (In thousands)
Revenue
Customer pay $136,121 $133,803 $2,318 1.7%
Warranty 45,237 44,813 424 0.9%
Wholesale parts 46,607 40,538 6,069 15.0%
Internal, sublet and other 81,538 77,489 4,049 5.2%
Total $309,503 $296,643 $12,860 4.3%
======== ======== ======= ===
Gross profit
Customer pay $75,365 $74,116 $1,249 1.7%
Warranty 24,523 24,195 328 1.4%
Wholesale parts 7,820 7,619 201 2.6%
Internal, sublet and other 39,724 38,423 1,301 3.4%
Total $147,432 $144,353 $3,079 2.1%
======== ======== ====== ===
Gross profit as a % of revenue
Customer pay 55.4% 55.4% 0
bps
Warranty 54.2% 54.0% 20
bps
Wholesale parts 16.8% 18.8% (200)
bps
Internal, sublet and other 48.7% 49.6% (90)
bps
Total 47.6% 48.7% (110)
bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Finance, Insurance and Other, Net ("F&I")
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except per unit data)
Reported:
Revenue $69,581 $65,494 $4,087 6.2%
Gross profit per retail unit (excludes fleet) $1,206 $1,148 $58 5.1%
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands, except per unit data)
Same Store:
Revenue $68,408 $65,507 $2,901 4.4%
Gross profit per retail unit (excludes fleet) $1,203 $1,148 $55 4.8%
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Selling, General and Administrative ("SG&A") Expenses
First Quarter Ended March 31, Better / (Worse)
----------------------------- ----------------
2014 2013 Change % Change
---- ---- ------ --------
(In thousands)
Compensation $157,154 $148,580 $(8,574) (5.8%)
Advertising 14,119 13,431 (688) (5.1%)
Rent 18,535 19,022 487 2.6%
Other 74,165 64,791 (9,374) (14.5%)
------ ------
Total $263,973 $245,824 $(18,149) (7.4%)
======== ======== ======== =====
SG&A expenses as a % of gross profit
Compensation 47.8% 47.5% (30)
bps
Advertising 4.3% 4.3% 0
bps
Rent 5.6% 6.1% 50
bps
Other 22.5% 20.6% (190)
bps
Total 80.2% 78.5% (170)
bps
SOURCE Sonic Automotive, Inc.
