Exhibit 99.1
Sonic Automotive, Inc. Reports Strong First Quarter Earnings
Driven by 15% Revenue Growth
CHARLOTTE, N.C. –April 25, 2006 –Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today reported that its 2006 first quarter earnings from continuing operations were $21.8 million, or $0.50 per diluted share, compared to $20.1 million, or $0.47 per diluted share, in the prior year period. The results for the quarter ended March 31, 2006 include $0.02 per diluted share of stock option expense related to the Company’s adoption of SFAS 123R.
“We are pleased to report strong earnings growth during a period of rising interest rates and a competitive industry environment,” said Chairman and Chief Executive Officer O. Bruton Smith. “Our results reflect the combined effect of our improved brand mix and the successful execution of our key operating initiatives. Revenue from our luxury and import stores was 80% of total revenue for the quarter.”
Revenue for the first quarter increased 15.0% from the same period last year to $1.8 billion. On a same store basis, total revenue in the quarter increased 6.5% from the prior year period with solid growth across the business.
President and Chief Operating Officer Jeffrey C. Rachor said, “We were able to maintain our margins and reduce SG&A expenses as a percentage of gross profit while driving top line growth. Our operating team continued their focus on growing the higher margin pieces of our business with 9.0% same store growth in used vehicles and 7.4% same store growth in parts and service. We remain comfortable with our 2006 continuing operations EPS target of $2.40 to $2.50 per diluted share excluding stock option expense and $2.32 to $2.42 per diluted share including stock option expense.”
Presentation materials for the Company’s April 25, 2006 earnings conference call can be accessed on the Company’s website atwww.sonicautomotive.com by clicking on the “For Investors” tab and choosing “Webcasts & Presentations” on the left side of the monitor.
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 176 franchises and 38 collision repair centers. Sonic can be reached on the Web atwww.sonicautomotive.com.
Included herein are forward-looking statements, including statements pertaining to anticipated diluted earnings per share from continuing operations and anticipated stock option expense. 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 annual report on Form 10-K for the year ended December 31, 2005. 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)
| For the Three Months Ended | ||||||||
| 3/31/2006 | 3/31/2005 | |||||||
Revenues | ||||||||
New vehicles | $ | 1,092,695 | $ | 958,124 | ||||
Used vehicles | 301,756 | 260,505 | ||||||
Wholesale vehicles | 129,129 | 110,375 | ||||||
Total vehicles | 1,523,580 | 1,329,004 | ||||||
Parts, service and collision repair | 266,526 | 225,628 | ||||||
Finance, insurance and other | 45,432 | 40,932 | ||||||
Total revenues | 1,835,538 | 1,595,564 | ||||||
Total gross profit | 290,839 | 250,591 | ||||||
SG&A expenses | 226,307 | 197,143 | ||||||
Depreciation | 4,826 | 3,401 | ||||||
Operating income | 59,706 | 50,047 | ||||||
Interest expense, floor plan | 12,125 | 7,448 | ||||||
Interest expense, other | 11,718 | 10,573 | ||||||
Other (expense) / income | (666 | ) | 12 | |||||
Income from continuing operations before taxes | 35,197 | 32,038 | ||||||
Income taxes | 13,374 | 11,972 | ||||||
Income from continuing operations | 21,823 | 20,066 | ||||||
Discontinued operations: | ||||||||
Loss from operations and the sale of discontinued franchises | (7,480 | ) | (4,660 | ) | ||||
Income tax benefit | 2,739 | 1,706 | ||||||
Loss from discontinued operations | (4,741 | ) | (2,954 | ) | ||||
Net income | $ | 17,082 | $ | 17,112 | ||||
Diluted: | ||||||||
Weighted average common shares outstanding | 46,205 | 45,460 | ||||||
Earnings per share from continuing operations | $ | 0.50 | $ | 0.47 | ||||
Loss per share from discontinued operations | ($0.11 | ) | ($0.07 | ) | ||||
Earnings per share | $ | 0.39 | $ | 0.40 | ||||
Gross Margin Data (Continuing Operations): | ||||||||
Retail new vehicles | 7.6 | % | 7.6 | % | ||||
Fleet vehicles | 3.3 | % | 3.0 | % | ||||
Total new vehicles | 7.3 | % | 7.2 | % | ||||
Used vehicles retail | 10.8 | % | 10.7 | % | ||||
Total vehicles retail | 8.0 | % | 8.0 | % | ||||
Parts, service and collision repair | 49.7 | % | 49.4 | % | ||||
Finance, insurance and other | 100.0 | % | 100.0 | % | ||||
Overall gross margin | 15.8 | % | 15.7 | % | ||||
SG&A Expenses (Continuing Operations): | ||||||||
Personnel | $ | 133,470 | $ | 115,934 | ||||
Advertising | 13,902 | 12,936 | ||||||
Facility rent | 22,833 | 18,726 | ||||||
Other | 56,102 | 49,547 | ||||||
Total | $ | 226,307 | $ | 197,143 | ||||
Unit Data (Continuing Operations): | ||||||||
New units | 34,518 | 31,871 | ||||||
Used units | 15,726 | 14,480 | ||||||
Total units retailed | 50,244 | 46,351 | ||||||
Wholesale units | 12,943 | 12,108 | ||||||
Average price per unit: | ||||||||
Total new vehicles | 31,656 | 30,063 | ||||||
Used vehicles | 19,188 | 17,991 | ||||||
Wholesale vehicles | 9,977 | 9,116 | ||||||
Other Data: | ||||||||
Same store revenue percentage changes: | ||||||||
New (retail & fleet) | 5.4 | % | ||||||
Used | 9.0 | % | ||||||
Parts, service and collision repair | 7.4 | % | ||||||
Finance, insurance and other | 6.4 | % | ||||||
Total | 6.5 | % | ||||||
Balance Sheet Data:
| 3/31/2006 | 12/31/2005 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 6,911 | $ | 7,566 | ||||
Receivables, net | 347,245 | 396,225 | ||||||
Inventories | 1,023,119 | 1,016,457 | ||||||
Assets held for sale | 230,966 | 73,837 | ||||||
Construction in progress expected to be sold in sale-leaseback transactions | 101,033 | 95,131 | ||||||
Other current assets | 31,231 | 27,484 | ||||||
Total current assets | 1,740,505 | 1,616,700 | ||||||
Property and Equipment, Net | 137,900 | 148,267 | ||||||
Goodwill, Net | 1,143,844 | 1,122,538 | ||||||
Other Intangibles, Net | 78,379 | 88,696 | ||||||
Other Assets | 57,090 | 49,300 | ||||||
TOTAL ASSETS | $ | 3,157,718 | $ | 3,025,501 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Notes payable - floor plan - trade | $ | 429,190 | $ | 579,022 | ||||
Notes payable - floor plan - non-trade | 615,244 | 410,296 | ||||||
Trade accounts payable | 82,045 | 91,101 | ||||||
Accrued interest | 15,507 | 17,378 | ||||||
Other accrued liabilities | 159,375 | 167,060 | ||||||
Liabilities associated with assets held for sale - trade | 73,969 | 45,953 | ||||||
Liabilities associated with assets held for sale - non-trade | 75,671 | 6,937 | ||||||
Current maturities of long-term debt | 2,911 | 2,747 | ||||||
Total current liabilities | 1,453,912 | 1,320,494 | ||||||
LONG-TERM DEBT | 685,310 | 712,311 | ||||||
OTHER LONG-TERM LIABILITIES | 32,977 | 29,479 | ||||||
DEFERRED INCOME TAXES | 131,964 | 132,419 | ||||||
STOCKHOLDERS’ EQUITY | 853,555 | 830,798 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,157,718 | $ | 3,025,501 | ||||
Balance Sheet Ratios: | ||||||||
Current Ratio | 1.20 | 1.22 | ||||||
Debt to Total Capital, Net of Cash | 44.4 | % | 46.0 | % | ||||