Sonic Automotive, Inc. Reports Second Quarter Results - EchoPark Grows Revenue 267%
CHARLOTTE, N.C., July 27, 2018 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported financial results for the second quarter of 2018.
-- Second quarter record revenue and gross profit of $2.5 billion and
$362.4 million, respectively
-- All-time record quarterly pre-owned retail unit sales of 35,779 units
-- All-time record quarterly F&I gross profit per retail unit of $1,572
-- All-time record quarterly F&I gross of $104.1 million
-- EchoPark stores retailed 7,459 units during the quarter, up 35.2%
sequentially from first quarter 2018
Second Quarter 2018 Results
GAAP Basis
Net income from continuing operations for the second quarter of 2018 was $17.1 million, or $0.40 per diluted share. Comparatively, net income from continuing operations for the second quarter of 2017 was $12.3 million, or $0.27 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 second quarter of 2018 was $14.8 million, or $0.35 per diluted share. The adjustments in the second quarter of 2018 relate to impairment charges, legal and storm damage charges and long-term compensation related charges, offset partially by gains on the disposal of franchises and adjustments to lease exit accruals. Adjusted net income from continuing operations for the second quarter of 2017 was $17.9 million, or $0.40 per diluted share. The adjustments in the second quarter of 2017 relate to fixed asset impairments, weather-related physical damage costs, legal matters and lease exit charges.
Commentary
Heath Byrd, the Company's Chief Financial Officer, noted, "The second quarter of 2018 fell short of our expectations as we experienced new vehicle gross compression in several of our more significant brands. We anticipate this compression to carry into the third quarter of 2018."
"We remain committed to our pre-owned EchoPark brand and continue to see improvements in that segment's operating performance. Based on current performance, we will continue to expand the EchoPark brand with new stores opening in Charlotte, North Carolina and Houston, Texas in the fourth quarter of this year."
"As a result of our performance thus far during 2018 and the current operating environment, we expect full year 2018 GAAP diluted earnings per share from continuing operations to be between $1.65 and $1.75. On an adjusted basis, we expect full year earnings per share from continuing operations to be between $1.90 and $2.00. The full year adjusted earnings per share range exclude items such as impairment charges, legal and storm damage charges, long-term compensation-related charges and lease exit adjustments, offset partially by gains from the disposal of franchises."
Dividend
Sonic's Board of Directors approved a quarterly dividend of $0.06 per share payable in cash for our stockholders of record on September 14, 2018. The dividend will be payable on October 15, 2018.
Second 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: (877) 450-3867
International: (706) 643-0958
Conference ID: 2348946
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: 2348946
Presentation materials for the Company's earnings 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 "Webcasts & Presentations."
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, including statements with respect to our 2018 earnings expectations, EchoPark brand expansion and new vehicle gross margin performance in the latter half of 2018. 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. 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 Securities and Exchange Commission (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 June 30, Six Months Ended June 30, 2018
2018 2017 2018 2017
---- ---- ---- ----
(Dollars and shares in thousands, except per share amounts)
Revenues:
New vehicles $1,238,571 $1,275,069 $2,419,416 $2,447,001
Used vehicles 762,572 641,891 1,471,618 1,276,364
Wholesale vehicles 53,748 40,765 119,148 87,076
------ ------ ------- ------
Total vehicles 2,054,891 1,957,725 4,010,182 3,810,441
Parts, service and collision repair 346,754 361,113 698,512 713,156
Finance, insurance and other, net 104,104 86,908 197,829 169,971
------- ------ ------- -------
Total revenues 2,505,749 2,405,746 4,906,523 4,693,568
Cost of Sales:
New vehicles (1,181,303) (1,212,547) (2,305,349) (2,326,201)
Used vehicles (725,263) (601,856) (1,397,538) (1,195,497)
Wholesale vehicles (57,105) (42,682) (126,929) (90,163)
------- ------- -------- -------
Total vehicles (1,963,671) (1,857,085) (3,829,816) (3,611,861)
Parts, service and collision repair (179,703) (188,043) (361,833) (370,742)
-------- -------- -------- --------
Total cost of sales (2,143,374) (2,045,128) (4,191,649) (3,982,603)
Gross profit 362,375 360,618 714,874 710,965
Selling, general and administrative expenses (277,462) (293,931) (582,387) (586,165)
Impairment charges (10,317) (2,605) (13,960) (3,115)
Depreciation and amortization (23,949) (21,911) (47,692) (43,065)
------- ------- ------- -------
Operating income (loss) 50,647 42,171 70,835 78,620
Other income (expense):
Interest expense, floor plan (11,945) (9,144) (22,622) (17,531)
Interest expense, other, net (13,375) (12,764) (26,831) (26,172)
Other income (expense), net 17 7 106 (14,495)
--- --- --- -------
Total other income (expense) (25,303) (21,901) (49,347) (58,198)
------- ------- ------- -------
Income (loss) from continuing operations before taxes 25,344 20,270 21,488 20,422
Provision for income taxes for continuing operations - benefit (expense) (8,222) (7,956) (6,380) (8,128)
------ ------ ------ ------
Income (loss) from continuing operations 17,122 12,314 15,108 12,294
Discontinued operations:
Income (loss) from discontinued operations before taxes (297) (301) (545) (1,168)
Provision for income taxes for discontinued operations - benefit (expense) 80 119 148 465
--- --- --- ---
Income (loss) from discontinued operations (217) (182) (397) (703)
---- ---- ---- ----
Net income (loss) $16,905 $12,132 $14,711 $11,591
======= ======= ======= =======
Basic earnings (loss) per common share:
Earnings (loss) per share from continuing operations $0.40 $0.28 $0.35 $0.27
Earnings (loss) per share from discontinued operations - (0.01) (0.01) (0.01)
--- ----- ----- -----
Earnings (loss) per common share $0.40 $0.27 $0.34 $0.26
===== ===== ===== =====
Weighted average common shares outstanding 42,662 44,570 42,725 44,680
====== ====== ====== ======
Diluted earnings (loss) per common share:
Earnings (loss) per share from continuing operations $0.40 $0.27 $0.35 $0.27
Earnings (loss) per share from discontinued operations (0.01) - (0.01) (0.01)
----- --- ----- -----
Earnings (loss) per common share $0.39 $0.27 $0.34 $0.26
===== ===== ===== =====
Weighted average common shares outstanding 42,920 44,810 42,948 44,976
====== ====== ====== ======
Dividends declared per common share $0.06 $0.05 $0.12 $0.10
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Per Share Data
Three Months Ended June 30, 2018
Income (Loss) Income (Loss)
From Continuing From Discontinued Net
Operations Operations Income (Loss)
Weighted Amount Per Amount Per Amount Per
Average Share Share Share
Shares Amount Amount Amount
------ ------ ------ ------
(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares 42,662 $17,122 $(217) $16,905
Effect of participating securities:
Non-vested restricted stock (3) - (3)
--- --- ---
Basic earnings (loss) and shares 42,662 $17,119 $0.40 $(217) $ - $16,902 $0.40
Effect of dilutive securities:
Stock compensation plans 258
---
Diluted earnings (loss) and shares 42,920 $17,119 $0.40 $(217) $(0.01) $16,902 $0.39
====== ======= ===== ===== ====== ======= =====
Adjustments:
Impairment charges $10,315 $ - $10,315
Legal and storm damage charges 3,064 - 3,064
Long-term compensation-related charges 23,333 - 23,333
Lease exit adjustments (2,579) - (2,579)
Gain on disposal of franchises (38,048) - (38,048)
------- ---
Total adjustments before taxes (3,915) - (3,915)
Income tax effect of adjustments 1,067 - 1,067
Non-recurring tax items 550 - 550
---
Effect of adjustments, net of income taxes $(2,298) (0.05) $ - $ - $(2,298) $(0.05)
------- --- --- -------
Adjusted:
Earnings (loss) and diluted earnings (loss) per share (1) $14,824 $0.35 $(217) $(0.01) $14,607 $0.34
===== ====== =====
(1) Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended June 30, 2018.
Three Months Ended June 30, 2017
Income (Loss) Income (Loss)
From Continuing From Discontinued Net
Operations Operations Income (Loss)
Weighted Amount Per Amount Per Amount Per
Average Share Share Share
Shares Amount Amount Amount
------ ------ ------ ------
(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares 44,570 $12,314 $(182) $12,132
Effect of participating securities:
Non-vested restricted stock (9) - (9)
--- --- ---
Basic earnings (loss) and shares 44,570 $12,305 $0.28 $(182) $(0.01) $12,123 $0.27
Effect of dilutive securities:
Stock compensation plans 240
---
Diluted earnings (loss) and shares 44,810 $12,305 $0.27 $(182) $ - $12,123 $0.27
====== ======= ===== ===== === === ======= =====
Adjustments:
Impairment charges $2,605 $ - $2,605
Legal and storm damage charges 5,618 - 5,618
Lease exit adjustments 992 - 992
Total adjustments before taxes 9,215 - 9,215
Income tax effect of adjustments (2,982) $(2,982)
------
Effect of adjustments, net of income taxes $6,233 $0.13 $ - $ - $6,233 $0.13
------ --- --- ------
Adjusted:
Earnings (loss) and diluted earnings (loss) per share (2) $18,547 $0.40 $(182) $ - $18,365 $0.40
===== === === =====
(2) Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended June 30, 2017.
Six Months Ended June 30, 2018
Income (Loss) Income (Loss)
From Continuing From Discontinued Net
Operations Operations Income (Loss)
Weighted Amount Per Amount Per Amount Per
Average Share Share Share
Shares Amount Amount Amount
------ ------ ------ ------
(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares 42,725 $15,108 $(397) $14,711
Effect of participating securities:
Non-vested restricted stock (5) - (5)
--- --- ---
Basic earnings (loss) and shares 42,725 $15,103 $0.35 $(397) $(0.01) $14,706 $0.34
Effect of dilutive securities:
Stock compensation plans 223
---
Diluted earnings (loss) and shares 42,948 $15,103 $0.35 $(397) $(0.01) $14,706 $0.34
====== ======= ===== ===== ====== ======= =====
Adjustments:
Impairment charges $13,958 $ - $13,958
Legal and storm damage charges 4,564 - 4,564
Lease exit adjustments 2,235 - 2,235
Gain on disposal of franchises (39,239) - (39,239)
Long-term compensation-related charges 32,522 - 32,522
------ ---
Total adjustments before taxes 14,040 - 14,040
Income tax effect of adjustments (3,826) (3,826)
Non-recurring tax items 550 550
---
Effect of adjustments, net of income taxes $10,764 $0.25 $ - $ - $10,764 $0.25
------- --- --- -------
Adjusted:
Earnings (loss) and diluted earnings (loss) per share (1) $25,872 $0.60 $(397) $(0.01) $25,475 $0.59
===== ====== =====
(1) Net loss attributable to Pre-Owned Stores operations was $0.17 per fully diluted share in the six months ended June 30, 2018.
Six Months Ended June 30, 2017
Income (Loss) Income (Loss)
From Continuing From Discontinued Net
Operations Operations Income (Loss)
Weighted Amount Per Amount Per Amount Per
Average Share Share Share
Shares Amount Amount Amount
------ ------ ------ ------
(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares 44,680 $12,294 $(703) $11,591
Effect of participating securities:
Non-vested restricted stock (9) - (9)
--- --- ---
Basic earnings (loss) and shares 44,680 $12,285 $0.27 $(703) $(0.01) $11,582 $0.26
Effect of dilutive securities:
Stock compensation plans 296
---
Diluted earnings (loss) and shares 44,976 $12,285 $0.27 $(703) $(0.01) $11,582 $0.26
====== ======= ===== ===== ====== ======= =====
Adjustments:
Impairment charges $3,115 $ - $3,115
Legal and storm damage charges 6,851 - 6,851
Lease exit adjustments 992 - 992
Loss on debt extinguishment 15,268 - 15,268
------ ---
Total adjustments before taxes 26,226 - 26,226
Income tax effect of adjustments (10,294) - $(10,294)
-------
Effect of adjustments, net of income taxes $15,932 $0.36 $ - $(0.01) $15,932 $0.35
------- --- --- -------
Adjusted:
Earnings (loss) and diluted earnings (loss) per share (2) $28,226 $0.63 $(703) $(0.02) $27,523 $0.61
===== ====== =====
(2) Net loss attributable to Pre-Owned Stores operations was $0.15 per fully diluted share in the six months ended June 30, 2017.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
New Vehicles
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported new vehicle:
Revenue $1,238,571 $1,275,069 $(36,498) (2.9)%
Gross profit $57,268 $62,522 $(5,254) (8.4)%
Unit sales 30,877 33,148 (2,271) (6.9)%
Revenue per unit $40,113 $38,466 $1,647 4.3%
Gross profit per unit $1,855 $1,886 $(31) (1.6)%
Gross profit as a % of revenue 4.6% 4.9% (30) bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported new vehicle:
Revenue $2,419,416 $2,447,001 $(27,585) (1.1)%
Gross profit $114,067 $120,800 $(6,733) (5.6)%
Unit sales 60,377 63,643 (3,266) (5.1)%
Revenue per unit $40,072 $38,449 $1,623 4.2%
Gross profit per unit $1,889 $1,898 $(9) (0.5)%
Gross profit as a % of revenue 4.7% 4.9% (20) bps
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same store new vehicle:
Revenue $1,218,895 $1,199,305 $19,590 1.6%
Gross profit $56,911 $60,723 $(3,812) (6.3)%
Unit sales 30,314 30,749 (435) (1.4)%
Revenue per unit $40,209 $39,003 $1,206 3.1%
Gross profit per unit $1,877 $1,975 $(98) (5.0)%
Gross profit as a % of revenue 4.7% 5.1% (40) bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same store new vehicle:
Revenue $2,352,999 $2,301,260 $51,739 2.2%
Gross profit $112,719 $117,299 $(4,580) (3.9)%
Unit sales 58,404 58,973 (569) (1.0)%
Revenue per unit $40,288 $39,022 $1,266 3.2%
Gross profit per unit $1,930 $1,989 $(59) (3.0)%
Gross profit as a % of revenue 4.8% 5.1% (30) bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Used Vehicles
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported used vehicle:
Revenue $762,572 $641,891 $120,681 18.8%
Gross profit $37,309 $40,035 $(2,726) (6.8)%
Unit sales 35,779 30,536 5,243 17.2%
Revenue per unit $21,313 $21,021 $292 1.4%
Gross profit per unit $1,043 $1,311 $(268) (20.4)%
Gross profit as a % of revenue 4.9% 6.2% (130) bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported used vehicle:
Revenue $1,471,618 $1,276,364 $195,254 15.3%
Gross profit $74,080 $80,867 $(6,787) (8.4)%
Unit sales 69,518 60,908 8,610 14.1%
Revenue per unit $21,169 $20,956 $213 1.0%
Gross profit per unit $1,066 $1,328 $(262) (19.7)%
Gross profit as a % of revenue 5.0% 6.3% (130) bps
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same store used vehicle:
Revenue $653,646 $600,181 $53,465 8.9%
Gross profit $36,396 $36,062 $334 0.9%
Unit sales 30,395 28,165 2,230 7.9%
Revenue per unit $21,505 $21,309 $196 0.9%
Gross profit per unit $1,197 $1,280 $(83) (6.5)%
Gross profit as a % of revenue 5.6% 6.0% (40) bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same store used vehicle:
Revenue $1,266,307 $1,193,826 $72,481 6.1%
Gross profit $69,588 $72,738 $(3,150) (4.3)%
Unit sales 59,064 56,111 2,953 5.3%
Revenue per unit $21,440 $21,276 $164 0.8%
Gross profit per unit $1,178 $1,296 $(118) (9.1)%
Gross profit as a % of revenue 5.5% 6.1% (60) bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Wholesale Vehicles
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported used vehicle:
Revenue $53,748 $40,765 $12,983 31.8%
Gross profit $(3,357) $(1,917) $(1,440) (75.1)%
Unit sales 8,442 7,783 659 8.5%
Revenue per unit $6,367 $5,238 $1,129 21.6%
Gross profit per unit $(398) $(246) $(152) (61.8)%
Gross profit as a % of revenue (6.2)% (4.7)% (150) bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported used vehicle:
Revenue $119,148 $87,076 $32,072 36.8%
Gross profit $(7,781) $(3,087) $(4,694) (152.1)%
Unit sales 18,122 16,090 2,032 12.6%
Revenue per unit $6,575 $5,412 $1,163 21.5
%
Gross profit per unit $(429) $(192) $(237) (123.4)%
Gross profit as a % of revenue (6.5)% (3.5)% (300) bps
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same store used vehicle:
Revenue $49,160 $37,796 $11,364 30.1%
Gross profit $(3,455) $(1,692) $(1,763) (104.2)%
Unit sales 7,644 7,092 552 7.8%
Revenue per unit $6,431 $5,329 $1,102 20.7%
Gross profit per unit $(452) $(239) $(213) (89.1)%
Gross profit as a % of revenue (7.0)% (4.5)% (250) bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same store used vehicle:
Revenue $109,225 $80,848 $28,377 35.1%
Gross profit $(7,906) $(2,627) $(5,279) (201.0)%
Unit sales 16,440 14,619 1,821 12.5%
Revenue per unit $6,644 $5,530 $1,114 20.1%
Gross profit per unit $(481) $(180) $(301) (167.2)%
Gross profit as a % of revenue (7.2)% (3.2)% (400) bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair ("Fixed Operations")
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported:
Revenue
Customer pay $140,351 $139,194 $1,157 0.8%
Warranty 63,888 72,661 (8,773) (12.1)%
Wholesale parts 40,844 42,806 (1,962) (4.6)%
Internal, sublet and other 101,671 106,452 (4,781) (4.5)%
Total $346,754 $361,113 $(14,359) (4.0)%
======== ======== ========
Gross profit
Customer pay $75,100 $74,344 $756 1.0%
Warranty 35,871 40,319 (4,448) (11.0)%
Wholesale parts 6,900 7,331 (431) (5.9)%
Internal, sublet and other 49,180 51,076 (1,896) (3.7)%
------ ------
Total $167,051 $173,070 $(6,019) (3.5)%
======== ======== =======
Gross profit as a % of revenue
Customer pay 53.5% 53.4% 10bps
Warranty 56.1% 55.5% 60bps
Wholesale parts 16.9% 17.1% (20) bps
Internal, sublet and other 48.4% 48.0% 40bps
Total 48.2% 47.9% 30bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Reported:
Revenue
Customer pay $282,706 $277,328 $5,378 1.9%
Warranty 131,489 142,579 (11,090) (7.8)%
Wholesale parts 83,345 86,087 (2,742) (3.2)%
Internal, sublet and other 200,972 207,162 (6,190) (3.0)%
Total $698,512 $713,156 $(14,644) (2.1)%
======== ======== ========
Gross profit
Customer pay $151,449 $147,784 $3,665 2.5%
Warranty 73,772 78,989 (5,217) (6.6)%
Wholesale parts 14,165 14,881 (716) (4.8)%
Internal, sublet and other 97,293 100,760 (3,467) (3.4)%
------ -------
Total $336,679 $342,414 $(5,735) (1.7)%
======== ======== =======
Gross profit as a % of revenue
Customer pay 53.6% 53.3% 30bps
Warranty 56.1% 55.4% 70bps
Wholesale parts 17.0% 17.3% (30) bps
Internal, sublet and other 48.4% 48.6% (20) bps
Total 48.2% 48.0% 20bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Parts, Service and Collision Repair ("Fixed Operations")
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same Store:
Revenue
Customer pay $139,871 $131,447 $8,424 6.4%
Warranty 63,709 69,369 (5,660) (8.2)%
Wholesale parts 40,288 40,779 (491) (1.2)%
Internal, sublet and other 97,287 100,114 (2,827) (2.8)%
Total $341,155 $341,709 $(554) (0.2)%
======== ======== =====
Gross profit
Customer pay $74,910 $69,979 $4,931 7.0%
Warranty 35,667 38,582 (2,915) (7.6)%
Wholesale parts 6,837 6,996 (159) (2.3)%
Internal, sublet and other 47,674 47,705 (31) (0.1)%
------ ------
Total $165,088 $163,262 $1,826 1.1%
======== ======== ======
Gross profit as a % of revenue
Customer pay 53.6% 53.2% 40bps
Warranty 56.0% 55.6% 40bps
Wholesale parts 17.0% 17.2% (20) bps
Internal, sublet and other 49.0% 47.7% 130bps
Total 48.4% 47.8% 60bps
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except unit and per unit data)
Same Store:
Revenue
Customer pay $276,278 $262,639 $13,639 5.2%
Warranty 129,554 135,041 (5,487) (4.1)%
Wholesale parts 81,400 81,770 (370) (0.5)%
Internal, sublet and other 190,633 194,575 (3,942) (2.0)%
Total $677,865 $674,025 $3,840 0.6%
======== ======== ======
Gross profit
Customer pay $148,092 $139,662 $8,430 6.0%
Warranty 72,502 74,764 (2,262) (3.0)%
Wholesale parts 13,872 14,173 (301) (2.1)%
Internal, sublet and other 93,124 93,773 (649) (0.7)%
------ ------
Total $327,590 $322,372 $5,218 1.6%
======== ======== ======
Gross profit as a % of revenue
Customer pay 53.6% 53.2% 40bps
Warranty 56.0% 55.4% 60bps
Wholesale parts 17.0% 17.3% (30) bps
Internal, sublet and other 48.8% 48.2% 60bps
Total 48.3% 47.8% 50bps
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Finance, Insurance and Other, Net ("F&I")
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands, except per unit data)
Reported:
Revenue $104,104 $86,908 $17,196 19.8%
Gross profit per retail unit (excludes fleet) $1,572 $1,379 $193 14.0%
Six Months Ended June 30, Better / (Worse)
2018 2017 Change
---- ---- ------
(In thousands, except per unit data)
Reported:
Revenue $197,829 $169,971 $27,858 16.4%
Gross profit per retail unit (excludes fleet) $1,532 $1,379 $153 11.1%
Three Months Ended June 30, Better / (Worse)
2018 2017 Change
---- ---- ------
(In thousands, except per unit data)
Same Store:
Revenue $89,344 $79,575 $9,769 12.3%
Gross profit per retail unit (excludes fleet) $1,481 $1,366 $115 8.4%
Six Months Ended June 30, Better / (Worse)
2018 2017 Change
---- ---- ------
(In thousands, except per unit data)
Same Store:
Revenue $169,985 $155,646 $14,339 9.2%
Gross profit per retail unit (excludes fleet) $1,456 $1,367 $89 6.5%
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Selling, General and Administrative ("SG&A") Expenses
Three Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands)
Reported:
Compensation $197,641 $171,182 $(26,459) (15.5)%
Advertising 16,270 15,344 (926) (6.0)%
Rent 13,702 19,110 5,408 28.3%
Other 49,849 88,295 38,446 43.5%
------ ------ ------
Total SG&A expenses $277,462 $293,931 $16,469 5.6%
Adjustments:
Legal and storm damage charges $(3,064) $(5,618)
Long-term compensation-related charges (23,333) -
Lease exit adjustments 2,579 (992)
Gain on disposal of franchises 38,048 -
Total SG&A adjustments $14,230 $(6,610)
Adjusted:
Total adjusted SG&A expenses $291,692 $287,321 $(4,371) (1.5)%
======== ========
Reported:
SG&A expenses as a % of gross profit:
Compensation 54.5% 47.5% (700) bps
Advertising 4.5% 4.3% (20) bps
Rent 3.8% 5.3% 150bps
Other 13.8% 24.4% 1,060bps
---- ----
Total SG&A expenses as a % of gross profit 76.6% 81.5% 490bps
---- ---- ------
Adjustments:
Legal and storm damage charges (0.8)% (1.5)%
Long-term compensation-related charges (6.5)% - %
Lease exit adjustments 0.7% (0.3)%
Gain on disposal of franchises 10.5% - %
Total effect of adjustments 3.9% (1.8)%
Adjusted:
Total adjusted SG&A expenses as a % of gross profit 80.5% 79.7% (80) bps
==== ====
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Selling, General and Administrative ("SG&A") Expenses
Six Months Ended June 30, Better / (Worse)
2018 2017 Change % Change
---- ---- ------ --------
(In thousands)
Reported:
Compensation $382,678 $347,729 $(34,949) (10.1)%
Advertising 32,287 30,602 (1,685) (5.5)%
Rent 35,570 37,598 2,028 5.4%
Other 131,852 170,236 38,384 22.5%
------- ------- ------
Total SG&A expenses $582,387 $586,165 $3,778 0.6%
Adjustments:
Legal and storm damage charges $(4,564) $(6,851)
Long-term compensation-related charges (32,522) -
Lease exit adjustments (2,235) (992)
Gain on disposal of franchises 39,239 -
Total SG&A adjustments $(82) $(7,843)
Adjusted:
Total adjusted SG&A expenses $582,305 $578,322 $(3,983) (0.7)%
======== ========
Reported:
SG&A expenses as a % of gross profit:
Compensation 53.5% 48.9% (460) bps
Advertising 4.5% 4.3% (20) bps
Rent 5.0% 5.3% 30bps
Other 18.5% 23.9% 540bps
---- ----
Total SG&A expenses as a % of gross profit 81.5% 82.4% 90bps
---- ---- -----
Adjustments:
Legal and storm damage charges (0.7)% (1.0)%
Long-term compensation-related charges (4.5)% - %
Lease exit adjustments (0.3)% (0.1)%
Gain on disposal of franchises 5.5% - %
Total effect of adjustments - % (1.1)%
Adjusted:
Total adjusted SG&A expenses as a % of gross profit 81.5% 81.3% (20) bps
==== ====
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Reconciliation of Other Non-GAAP Financial Measures
Twelve Months Ending
December 31, 2018
Low High
--- ----
Expected GAAP diluted earnings per share from continuing operations $1.65 $1.75
Adjustments:
Impairment charges $0.24 $0.24
Legal and storm damage charges $0.08 $0.08
Long-term compensation-related charges $0.55 $0.55
Lease exit adjustments $0.04 $0.04
Gain on disposal of franchises $(0.66) $(0.66)
------ ------
Expected adjusted non-GAAP diluted earnings per share from continuing operations $1.90 $2.00
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SOURCE Sonic Automotive, Inc.
