Exhibit 99.1
Sonic Automotive, Inc. Reports Continued Earnings Strength for Third Quarter of 2009
CHARLOTTE, N.C. —October 27, 2009—Sonic Automotive, Inc. (NYSE: SAH), the nation’s third-largest automotive retailer, today reported that 2009 third quarter earnings from continuing operations were $0.22 per diluted share which includes an after-tax gain of $0.01 per diluted share, related to the Company’s repurchase of convertible notes. This compares to a loss from continuing operations of $0.38 per diluted share, in the prior year quarter. The results for the prior year quarter include the after-tax effect of impairment charges, lease exit accruals and hurricane damage of $0.53 per diluted share.
Business Overview – Strong operating results and improved capital structure
B. Scott Smith, the Company’s President, said, “We are pleased with what we were able to accomplish this quarter at Sonic Automotive. In addition to continuing to post strong operating results we completed a very successful public refinancing of our 2010 debt obligations. The offering in late September allowed us to de-lever our balance sheet, remove some extremely dilutive convertible debt from our capital structure and mitigate future refinancing risk in the near term. This also paves the way for what we believe will be a successful refinancing of our upcoming syndicated credit facility. This offering would not have been possible without the strong fundamentals of our business model which is evident in our consistent operating performance and cash flow generation throughout this business cycle.”
New Vehicles – Strongest year-over-year market share performance to date
Commenting on the Company’s new car sales, Mr. Smith noted, “The combination of increased customer traffic from the CARS program and the continued execution of our e-Commerce strategies resulted in Sonic posting its strongest year-over-year new vehicle performance so far this year. We have now had eight consecutive months of new car market share gains. In addition to the improved unit volume, our new vehicle retail margins were up 70 basis points to 7.6% and our new vehicle days supply was at 39 days.”
Used Vehicles – Used vehicle volume up 25%
Overall used vehicle unit volume was up 25% and total used vehicle revenue was up over 18% for the third quarter of 2009 compared to the third quarter of 2008. Jeff Dyke, the Company’s EVP of Operations, stated, “Our used vehicle volume continued to grow throughout the quarter despite the heavy emphasis on new vehicle sales stemming from the CARS program. Our used-to-new ratio, which has continued to improve throughout the year, was at 80% for the third quarter. Our certified pre-owned business, which has been a consistent strength for Sonic, remains strong at 34% of our overall used vehicle volume. We are growing our used vehicle business by continuing to expand our presence across the entire spectrum of the used vehicle market.”
Parts and Service – Margin expansion continues with stable revenues
Sonic’s parts and service revenue for the third quarter was flat with the prior year quarter while the gross margin at 50.6% represents an improvement over the prior year third quarter margin of 49.6% and the second quarter 2009 margin of 50.3%.
Mr. Dyke stated, “Our parts and service business continues to add a substantial amount of stability to our results of operations. We have steadily grown our fixed operations margin every quarter this year as a result of the pricing, merchandising and other strategies being implemented with the rollout of our parts and service playbook. We have every reason to expect this trend will continue as the rollout progresses.”
Presentation materials for the Company’s October 27, 2009 earnings conference call at 11:00 A.M. (Eastern) can be accessed on the Company’s website atwww.sonicautomotive.com by clicking on the “For Investors” tab and choosing “Webcasts & Presentations” on the right side of the monitor.
To access the live broadcast of the call over the Internet go to:www.ccbn.com orwww.sonicautomotive.com
A live audio of the call will be accessible to the public by calling (877) 791-3416. International callers dial (706) 643-0958. Callers should dial in approximately 10 minutes before the call begins.
A conference call replay will be available one hour following the call for seven days and can be accessed by calling: 800-642-1687, International callers dial (706) 645-9291 Conference ID: 34082140
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation’s third-largest automotive retailer, operating 153 franchises. Sonic can be reached on the web at www.sonicautomotive.com.
Included herein are forward-looking statements, including statements with respect to future debt refinancing. 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, risks associated with acquisitions and the risk factors described in the Company’s current report on Form 8-K filed August 21, 2009. The Company does not undertake any obligation to update forward-looking information.
Sonic Automotive, Inc.
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
Results of Operations (Unaudited)
(in thousands, except per share, unit data and percentage amounts)
| Third Quarter Ended | Nine Months Ended | |||||||||||||||
| 9/30/2009 | 9/30/2008 | 9/30/2009 | 9/30/2008 | |||||||||||||
| Revenues | ||||||||||||||||
| New retail vehicles | $ | 776,578 | $ | 889,237 | $ | 2,005,486 | $ | 2,700,879 | ||||||||
| Fleet vehicles | 48,789 | 53,234 | 164,160 | 278,007 | ||||||||||||
| Total new vehicles | 825,367 | 942,471 | 2,169,646 | 2,978,886 | ||||||||||||
| Used vehicles | 365,501 | 308,158 | 1,034,444 | 994,906 | ||||||||||||
| Wholesale vehicles | 33,220 | 64,995 | 97,478 | 216,378 | ||||||||||||
| Total vehicles | 1,224,088 | 1,315,624 | 3,301,568 | 4,190,170 | ||||||||||||
| Parts, service and collision repair | 255,372 | 256,867 | 768,003 | 787,928 | ||||||||||||
| Finance, insurance and other | 41,302 | 43,259 | 110,663 | 139,355 | ||||||||||||
| Total revenues | 1,520,762 | 1,615,750 | 4,180,234 | 5,117,453 | ||||||||||||
| Total gross profit | 257,468 | 259,360 | 729,727 | 816,348 | ||||||||||||
| SG&A expenses | (203,694 | ) | (220,413 | ) | (588,834 | ) | (656,799 | ) | ||||||||
| Impairment charges | (339 | ) | (25,476 | ) | (4,164 | ) | (25,809 | ) | ||||||||
| Depreciation and amortization | (8,080 | ) | (8,286 | ) | (24,523 | ) | (23,562 | ) | ||||||||
| Operating income | 45,355 | 5,185 | 112,206 | 110,178 | ||||||||||||
| Interest expense, floor plan | (4,324 | ) | (8,987 | ) | (14,368 | ) | (31,591 | ) | ||||||||
| Non-cash interest expense, convertible debt | 7,818 | (2,696 | ) | 1,556 | (7,991 | ) | ||||||||||
| Interest expense, other, net | (19,305 | ) | (15,859 | ) | (57,496 | ) | (40,803 | ) | ||||||||
| Other income (expense), net | 2,442 | (9 | ) | 2,504 | 88 | |||||||||||
| Income (Loss) from continuing operations before taxes | 31,986 | (22,366 | ) | 44,402 | 29,881 | |||||||||||
| Income tax (provision) benefit | (13,506 | ) | 7,301 | (19,093 | ) | (13,598 | ) | |||||||||
| Income (Loss) from continuing operations | 18,480 | (15,065 | ) | 25,309 | 16,283 | |||||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from operations and the sale of discontinued franchises | (3,848 | ) | (17,878 | ) | (10,681 | ) | (30,581 | ) | ||||||||
| Income tax benefit | 962 | 5,977 | 2,670 | 9,174 | ||||||||||||
| Loss from discontinued operations | (2,886 | ) | (11,901 | ) | (8,011 | ) | (21,407 | ) | ||||||||
| Net income (loss) | $ | 15,594 | $ | (26,966 | ) | $ | 17,298 | $ | (5,124 | ) | ||||||
| Basic: | ||||||||||||||||
| Weighted average common shares outstanding | 42,305 | 40,138 | 41,130 | 40,447 | ||||||||||||
| Earnings (Loss) per share from continuing operations | $ | 0.43 | $ | (0.38 | ) | $ | 0.61 | $ | 0.40 | |||||||
| Loss per share from discontinued operations | $ | (0.06 | ) | $ | (0.29 | ) | $ | (0.19 | ) | $ | (0.53 | ) | ||||
| Earnings (Loss) per share | $ | 0.37 | $ | (0.67 | ) | $ | 0.42 | $ | (0.13 | ) | ||||||
| Diluted: | ||||||||||||||||
| Weighted average common shares outstanding | 63,195 | 40,138 | 52,529 | 40,626 | ||||||||||||
| Earnings (Loss) per share from continuing operations | $ | 0.22 | $ | (0.38 | ) | $ | 0.42 | $ | 0.40 | |||||||
| Loss per share from discontinued operations | $ | (0.05 | ) | $ | (0.29 | ) | $ | (0.16 | ) | $ | (0.53 | ) | ||||
| Earnings (Loss) per share | $ | 0.17 | $ | (0.67 | ) | $ | 0.26 | $ | (0.13 | ) | ||||||
Gross Margin Data (Continuing Operations): | ||||||||||||||||
| Retail new vehicles | 7.6 | % | 6.9 | % | 7.3 | % | 7.2 | % | ||||||||
| Fleet vehicles | 2.9 | % | 4.8 | % | 3.7 | % | 2.3 | % | ||||||||
| Total new vehicles | 7.3 | % | 6.8 | % | 7.0 | % | 6.8 | % | ||||||||
| Used vehicles retail | 7.8 | % | 8.4 | % | 8.3 | % | 8.9 | % | ||||||||
| Total vehicles retail | 7.5 | % | 7.2 | % | 7.4 | % | 7.3 | % | ||||||||
| Wholesale vehicles | (5.4 | )% | (1.9 | )% | (3.3 | )% | (1.9 | )% | ||||||||
| Parts, service and collision repair | 50.6 | % | 49.6 | % | 50.0 | % | 49.6 | % | ||||||||
| Finance, insurance and other | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Overall gross margin | 16.9 | % | 16.1 | % | 17.5 | % | 16.0 | % | ||||||||
SG&A Expenses (Continuing Operations): | ||||||||||||||||
| Personnel | $ | 118,345 | $ | 116,949 | $ | 337,737 | $ | 365,618 | ||||||||
| Advertising | 10,734 | 12,817 | 31,333 | 42,405 | ||||||||||||
| Facility rent | 22,560 | 27,257 | 67,225 | 68,736 | ||||||||||||
| Other | 52,055 | 63,390 | 152,539 | 180,040 | ||||||||||||
| Total | $ | 203,694 | $ | 220,413 | $ | 588,834 | $ | 656,799 | ||||||||
SG&A Expenses as % of Gross Profit | ||||||||||||||||
| Personnel | 45.9 | % | 45.1 | % | 46.3 | % | 44.7 | % | ||||||||
| Advertising | 4.2 | % | 4.9 | % | 4.3 | % | 5.2 | % | ||||||||
| Facility rent | 8.8 | % | 10.5 | % | 9.2 | % | 8.4 | % | ||||||||
| Other | 20.2 | % | 24.5 | % | 20.9 | % | 22.2 | % | ||||||||
| Total | 79.1 | % | 85.0 | % | 80.7 | % | 80.5 | % | ||||||||
Operating Margin % | 3.0 | % | 0.3 | % | 2.7 | % | 2.2 | % | ||||||||
| Third Quarter Ended | Nine Months Ended | |||||||||||||||
| 9/30/2009 | 9/30/2008 | 9/30/2009 | 9/30/2008 | |||||||||||||
Unit Data (Continuing Operations): | ||||||||||||||||
| New retail units | 24,305 | 26,025 | 60,998 | 80,405 | ||||||||||||
| Fleet units | 1,971 | 2,772 | 6,800 | 11,572 | ||||||||||||
| Used units | 19,360 | 15,444 | 55,062 | 49,617 | ||||||||||||
| Wholesale units | 6,612 | 8,636 | 17,414 | 27,559 | ||||||||||||
| Average price per unit: | ||||||||||||||||
| New retail vehicles | $ | 31,951 | $ | 34,169 | $ | 32,878 | $ | 33,591 | ||||||||
| Fleet vehicles | 24,753 | 19,204 | 24,141 | 24,024 | ||||||||||||
| Used vehicles | 18,879 | 19,953 | 18,787 | 20,052 | ||||||||||||
| Wholesale vehicles | 5,024 | 7,526 | 5,598 | 7,851 | ||||||||||||
Other Data: | ||||||||||||||||
| Same store revenue percentage changes: | ||||||||||||||||
| New retail | (12.7 | )% | (25.9 | )% | ||||||||||||
| Fleet | (8.4 | )% | (41.0 | )% | ||||||||||||
| Total New Vehicles | (12.4 | )% | (27.3 | )% | ||||||||||||
| Used | 18.6 | % | 3.9 | % | ||||||||||||
| Parts, service and collision repair | (0.7 | )% | (2.7 | )% | ||||||||||||
| Finance, insurance and other | (3.8 | )% | (20.2 | )% | ||||||||||||
| Total | (5.9 | )% | (18.4 | )% | ||||||||||||
Balance Sheet Data:
| 9/30/2009 | 12/31/2008 (1) | |||||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 614 | $ | 6,971 | ||||||||||||
| Restricted cash | 106,913 | — | ||||||||||||||
| Receivables, net | 163,161 | 247,025 | ||||||||||||||
| Inventories | 657,475 | 916,837 | ||||||||||||||
| Assets held for sale | 176,128 | 406,576 | ||||||||||||||
| Other current assets | 16,900 | 16,822 | ||||||||||||||
| Total current assets | 1,121,191 | 1,594,231 | ||||||||||||||
| Property and Equipment, Net | 378,170 | 369,892 | ||||||||||||||
| Goodwill, Net | 403,048 | 327,007 | ||||||||||||||
| Other Intangibles, Net | 79,685 | 82,328 | ||||||||||||||
| Other Assets | 22,674 | 32,087 | ||||||||||||||
| TOTAL ASSETS | $ | 2,004,768 | $ | 2,405,545 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current Liabilities: | ||||||||||||||||
| Floor plan notes payable | $ | 605,059 | $ | 921,023 | ||||||||||||
| Other current liabilities | 224,377 | 277,938 | ||||||||||||||
| Liabilities associated with assets held for sale | 53,123 | 199,482 | ||||||||||||||
| Current maturities of long-term debt | 105,750 | 738,447 | ||||||||||||||
| Total current liabilities | 988,309 | 2,136,890 | ||||||||||||||
| LONG-TERM DEBT | 556,243 | — | ||||||||||||||
| OTHER LONG-TERM LIABILITIES | 109,562 | 71,132 | ||||||||||||||
| STOCKHOLDERS’ EQUITY | 350,654 | 197,523 | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,004,768 | $ | 2,405,545 | ||||||||||||
| (1) | Restated for the adoption effects of ASC 470-20-65. |