Exhibit 99.1
Sonic Automotive, Inc. First Quarter 2011 Earnings up $9.2 million or 140%; Strong Growth
Trends Continue as Sonic’s Volume Outperforms Industry
Trends Continue as Sonic’s Volume Outperforms Industry
CHARLOTTE, N.C. –April 26, 2011–Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported that 2011 first quarter earnings from continuing operations were $0.27 per diluted share compared to $0.12 per diluted share in the prior year quarter. The prior year period included pretax charges of $0.9 million, or $0.01 per diluted share, related to various debt refinancing transactions completed during the first quarter of 2010.
First Quarter 2011 Highlights
| • | Continuing operations net profit up $9.2 million or 140% |
| • | Total revenues up 19% over prior year quarter |
| • | New vehicle volume up 27% |
| • | Used vehicle volume up 18%; Record used vehicle sales |
| • | Parts and Service revenue up 6% |
Business Overview
| • | Company growth trends continue across all business lines |
| • | Automotive retailing industry continues its steady rebound |
| • | SG&A metrics improved significantly from prior year quarter |
| • | Profits continue to benefit from debt reduction strategy |
Company Strategy
| • | Organic growth through focus on the base business |
| • | Converting leased properties to owned properties |
| • | Opportunistically reduce debt |
Commenting on the first quarter results, B. Scott Smith, the Company’s President, said, “We are pleased with this quarter’s operating performance. Our continuing operations profit was up significantly from the prior year quarter due to our strong revenue growth and the improvement in our SG&A to gross profit metrics. We saw no disruption to our first quarter business from the natural disaster in Japan. We will provide a further business outlook on our conference call later this afternoon.”
Mr. Smith further stated, “Sonic Automotive’s new vehicle volume grew 27% over the first quarter of last year compared with new vehicle industry volume growth of 18% over the same period. Our ability to outperform the industry trend is a direct result of our strategy to grow our base business through the implementation of predictable, repeatable and sustainable best practices at each of our dealerships. We are seeing similar results in each of our business lines as we continue the rollout of our operational playbooks. We continued to see strong, steady growth in the automotive retailing sector this quarter and expect that to continue over the course of this year.”
The Company’s used vehicle retail volume was up 18% with used vehicle retail revenues up 15%. Parts and service revenue was up 6% compared to the first quarter of last year. Commenting on the business, Jeff Dyke, the
Company’s EVP of Operations, stated, “The used vehicle business remains very robust and we continue to gain market share. Our playbook implementation is the most advanced in this segment of our business but we continue to see tremendous growth potential. In our parts and service business, the growth trends we saw in the second half of 2010 have continued into 2011. Growing this high margin area of our business remains a key focus of our operational playbook rollout.”
Presentation materials for the Company’s April 26, 2011 earnings conference call at 2:00 P.M. (Eastern) 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”.
To access the live broadcast of the call over the Internet go to:
www.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, Conference ID: 56248512, International callers dial (706) 645-9291.
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 future industry growth trends and future impacts from the implementation of our various operational playbooks. 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 sales volume, the success of our operational strategies, the rate and timing of overall economic recovery and the risk factors described in the Company’s annual report on Form 10-K for the year ending December 31, 2010. 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)
| First Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| Revenues | ||||||||
| New retail vehicles | $ | 917,105 | $ | 734,592 | ||||
| Fleet vehicles | 63,640 | 43,652 | ||||||
| Total new vehicles | 980,745 | 778,244 | ||||||
| Used vehicles | 482,031 | 418,849 | ||||||
| Wholesale vehicles | 35,362 | 30,806 | ||||||
| Total vehicles | 1,498,138 | 1,227,899 | ||||||
| Parts, service and collision repair | 291,770 | 275,172 | ||||||
| Finance, insurance and other | 49,468 | 40,595 | ||||||
| Total revenues | 1,839,376 | 1,543,666 | ||||||
| Total gross profit | 291,168 | 265,879 | ||||||
| SG&A expenses | (232,514 | ) | (220,653 | ) | ||||
| Impairment charges | (17 | ) | (44 | ) | ||||
| Depreciation | (9,992 | ) | (8,418 | ) | ||||
| Operating income | 48,645 | 36,764 | ||||||
| Interest expense, floor plan | (5,436 | ) | (4,798 | ) | ||||
| Interest expense, other, net | (15,447 | ) | (17,151 | ) | ||||
| Interest expense, non-cash, convertible debt | (1,694 | ) | (1,677 | ) | ||||
| Interest expense / amortization, non-cash, cash flow swaps | 178 | (1,683 | ) | |||||
| Other income (expense), net | 73 | 64 | ||||||
| Income from continuing operations before taxes | 26,319 | 11,519 | ||||||
| Provision for income taxes | (10,528 | ) | (4,953 | ) | ||||
| Income from continuing operations | 15,791 | 6,566 | ||||||
| Loss from discontinued operations | (827 | ) | (2,412 | ) | ||||
| Net income | $ | 14,964 | $ | 4,154 | ||||
| Diluted: | ||||||||
| Weighted average common shares outstanding | 65,950 | 52,579 | ||||||
| Earnings per share from continuing operations | $ | 0.27 | $ | 0.12 | ||||
| Loss per share from discontinued operations | (0.01 | ) | (0.04 | ) | ||||
| Earnings per share | $ | 0.26 | $ | 0.08 | ||||
Gross Margin Data (Continuing Operations): | ||||||||
| New retail vehicles | 6.3 | % | 6.9 | % | ||||
| Fleet vehicles | 3.1 | % | 3.7 | % | ||||
| Total new vehicles | 6.1 | % | 6.8 | % | ||||
| Used vehicles | 7.9 | % | 8.3 | % | ||||
| Total vehicles retail | 6.7 | % | 7.3 | % | ||||
| Wholesale vehicles | (1.3 | %) | (2.1 | %) | ||||
| Parts, service and collision repair | 49.3 | % | 50.4 | % | ||||
| Finance, insurance and other | 100.0 | % | 100.0 | % | ||||
| Overall gross margin | 15.8 | % | 17.2 | % | ||||
SG&A Expenses (Continuing Operations): | ||||||||
| Personnel | $ | 136,565 | $ | 128,890 | ||||
| Advertising | 13,782 | 11,175 | ||||||
| Rent and rent related | 30,416 | 32,850 | ||||||
| Other | 51,751 | 47,738 | ||||||
| Total | $ | 232,514 | $ | 220,653 | ||||
SG&A Expenses as % of Gross Profit | 79.9 | % | 83.0 | % | ||||
Operating Margin % | 2.6 | % | 2.4 | % | ||||
Unit Data (Continuing Operations): | ||||||||
| New retail units | 26,896 | 21,382 | ||||||
| Fleet units | 2,488 | 1,750 | ||||||
| Total new units | 29,384 | 23,132 | ||||||
| Used units | 25,245 | 21,492 | ||||||
| Total units retailed | 54,629 | 44,624 | ||||||
| Wholesale units | 5,644 | 5,128 | ||||||
Other Data: | ||||||||
| Continuing Operations unit volume percentage changes: | ||||||||
| New retail units | 25.8 | % | ||||||
| Fleet units | 42.2 | % | ||||||
| Total new units | 27.0 | % | ||||||
| Used units | 17.5 | % | ||||||
| Total units retailed | 22.4 | % | ||||||
| Wholesale units | 10.1 | % | ||||||
Sonic Automotive, Inc.
Earnings Per Share Reconciliation (Unaudited)
(In thousands, except per share data)
| For the First Quarter Ended March 31, 2011 | ||||||||||||||||||||||||||||
| Income | Loss | |||||||||||||||||||||||||||
| From Continuing | From Discontinued | |||||||||||||||||||||||||||
| Operations | Operations | Net Income | ||||||||||||||||||||||||||
| Weighted | Per | Per | Per | |||||||||||||||||||||||||
| Average | Share | Share | Share | |||||||||||||||||||||||||
| Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||
| Earnings (Loss) and Shares | 52,416 | $ | 15,791 | $ | (827 | ) | $ | 14,964 | ||||||||||||||||||||
| Effect of Participating Securities: | ||||||||||||||||||||||||||||
| Unvested Restricted Stock and Stock Units | — | (206 | ) | — | (206 | ) | ||||||||||||||||||||||
| Basic Earnings (Loss) Per Share | 52,416 | $ | 15,585 | $ | 0.30 | $ | (827 | ) | $ | (0.02 | ) | $ | 14,758 | $ | 0.28 | |||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||||||
| Contingently Convertible Debt (5.0% Convertible Notes) | 12,890 | 2,310 | — | 2,310 | ||||||||||||||||||||||||
| Stock Compensation Plans | 644 | |||||||||||||||||||||||||||
| Diluted Earnings (Loss) Per Share | 65,950 | $ | 17,895 | $ | 0.27 | $ | (827 | ) | $ | (0.01 | ) | $ | 17,068 | $ | 0.26 | |||||||||||||
| For the First Quarter Ended March 31, 2010 | ||||||||||||||||||||||||||||
| Income | Loss | |||||||||||||||||||||||||||
| From Continuing | From Discontinued | |||||||||||||||||||||||||||
| Operations | Operations | Net Income | ||||||||||||||||||||||||||
| Weighted | Per | Per | Per | |||||||||||||||||||||||||
| Average | Share | Share | Share | |||||||||||||||||||||||||
| Shares | Amount | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||
| Earnings (Loss) and Shares | 51,889 | $ | 6,566 | $ | (2,412 | ) | $ | 4,154 | ||||||||||||||||||||
| Effect of Participating Securities: | ||||||||||||||||||||||||||||
| Unvested Restricted Stock and Stock Units | — | (79 | ) | — | (79 | ) | ||||||||||||||||||||||
| Basic Earnings (Loss) Per Share | 51,889 | $ | 6,487 | $ | 0.13 | $ | (2,412 | ) | $ | (0.05 | ) | $ | 4,075 | $ | 0.08 | |||||||||||||
| Effect of Dilutive Securities: | ||||||||||||||||||||||||||||
| Stock Compensation Plans | 690 | |||||||||||||||||||||||||||
| Diluted Earnings (Loss) Per Share | 52,579 | $ | 6,487 | $ | 0.12 | $ | (2,412 | ) | $ | (0.04 | ) | $ | 4,075 | $ | 0.08 | |||||||||||||