Exhibit 99.1
Sonic Automotive, Inc. Reports First Quarter Continuing Operations Earnings Up 10%
CHARLOTTE, N.C. –May 1, 2007 –Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today reported that its 2007 first quarter earnings from continuing operations were $23.7 million, an increase of 10% from the $21.5 million earned in the first quarter of 2006. Diluted earnings per share from continuing operations was $0.52 for the quarter compared to $0.49 a year ago.
Total revenue for the first quarter of 2007 increased 3.6% with same store revenue up 2.2% over the prior year quarter. On a same store basis compared to the same quarter last year, new vehicle retail revenues were up 2.3%, used vehicle retail revenues were up 5.1%, fixed operations revenue was up 5.4% and finance and insurance revenues were up 6.3%. Luxury and import brands represented 83% of total revenues for the quarter.
B. Scott Smith, the Company’s President said, “Our results this quarter reflect the continued execution of our key operating initiatives. Our same store sales growth in the higher-margin segments of our business demonstrate the effectiveness of our used vehicle merchandising program and our electronic F&I menu rollout along with our core strength in the parts and service business. In addition to these revenue improvements, we continue to focus on our expense structure and ended the quarter with SG&A as a percentage of gross profit at 77.4%, or a 90 basis improvement, compared to the same quarter last year. We remain comfortable with our 2007 continuing operations EPS target of $2.48 to $2.58 per diluted share.”
Presentation materials for the Company’s May 1, 2007 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.
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 at 11:00 A.M. EST 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: 5333288, International callers dial (706) 645-9291.
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 175 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. 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, 2006. 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)
| Three Months Ended | ||||||||
| 3/31/2007 | 3/31/2006 | |||||||
Revenues | ||||||||
Retail new vehicles | $ | 1,075,551 | $ | 1,037,301 | ||||
Fleet vehicles | 88,971 | 86,485 | ||||||
New vehicles | 1,164,522 | 1,123,786 | ||||||
Used vehicles | 331,032 | 310,208 | ||||||
Wholesale vehicles | 115,156 | 132,476 | ||||||
Total vehicles | 1,610,710 | 1,566,470 | ||||||
Parts, service and collision repair | 294,852 | 273,728 | ||||||
Finance, insurance and other | 48,846 | 45,879 | ||||||
Total revenues | 1,954,408 | 1,886,077 | ||||||
Total gross profit | 310,463 | 298,069 | ||||||
SG&A expenses | 240,288 | 233,451 | ||||||
Depreciation | 5,794 | 4,818 | ||||||
Operating income | 64,381 | 59,800 | ||||||
Interest expense, floor plan | 16,291 | 12,297 | ||||||
Interest expense, other | 9,277 | 11,949 | ||||||
Other (expense) / income | 6 | (665 | ) | |||||
Income from continuing operations before taxes | 38,819 | 34,889 | ||||||
Income taxes | 15,140 | 13,357 | ||||||
Income from continuing operations | 23,679 | 21,532 | ||||||
Discontinued operations: | ||||||||
Loss from operations and the sale of discontinued franchises | (5,269 | ) | (7,171 | ) | ||||
Income tax benefit | 1,581 | 2,721 | ||||||
Loss from discontinued operations | (3,688 | ) | (4,450 | ) | ||||
Net income | $ | 19,991 | $ | 17,082 | ||||
Diluted: | ||||||||
Weighted average common shares outstanding | 47,938 | 46,205 | ||||||
Earnings per share from continuing operations | $0.52 | $0.49 | ||||||
Loss per share from discontinued operations | ($0.08) | ($0.10) | ||||||
Earnings per share | $0.44 | $0.39 | ||||||
Gross Margin Data (Continuing Operations): | ||||||||
Retail new vehicles | 7.3 | % | 7.6 | % | ||||
Fleet vehicles | 2.2 | % | 3.2 | % | ||||
Total new vehicles | 7.0 | % | 7.3 | % | ||||
Used vehicles | 10.3 | % | 10.8 | % | ||||
Total vehicles | 7.2 | % | 7.4 | % | ||||
Parts, service and collision repair | 49.6 | % | 49.7 | % | ||||
Finance, insurance and other | 100.0 | % | 100.0 | % | ||||
Overall gross margin | 15.9 | % | 15.8 | % | ||||
SG&A Expenses (Continuing Operations): | ||||||||
Personnel | $ | 136,105 | $ | 136,785 | ||||
Advertising | 15,566 | 14,491 | ||||||
Facility rent | 26,059 | 23,712 | ||||||
Other | 62,558 | 58,463 | ||||||
Total | $ | 240,288 | $ | 233,451 | ||||
Unit Data (Continuing Operations): | ||||||||
New retail units | 32,143 | 31,700 | ||||||
Fleet units | 3,745 | 3,944 | ||||||
New units | 35,888 | 35,644 | ||||||
Used units | 17,008 | 16,144 | ||||||
Total units retailed | 52,896 | 51,788 | ||||||
Wholesale units | 12,861 | 13,377 | ||||||
Average price per unit: | ||||||||
New retail vehicles | 33,461 | 32,722 | ||||||
Fleet vehicles | 23,757 | 21,928 | ||||||
Total new vehicles | 32,449 | 31,528 | ||||||
Used vehicles | 19,463 | 19,215 | ||||||
Wholesale vehicles | 8,954 | 9,903 | ||||||
Other Data: | ||||||||
Same store revenue percentage changes: | ||||||||
New retail | 2.3 | % | ||||||
Fleet | 0.4 | % | ||||||
New total | 2.1 | % | ||||||
Used | 5.1 | % | ||||||
Parts, service and collision repair | 5.4 | % | ||||||
Finance, insurance and other | 6.3 | % | ||||||
Total | 2.2 | % | ||||||
Balance Sheet Data:
| 3/31/2007 (1) | 12/31/2006 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 14,001 | $ | 12,696 | ||||
Receivables, net | 334,097 | 385,849 | ||||||
Inventories | 1,069,693 | 991,984 | ||||||
Assets held for sale | 152,340 | 160,571 | ||||||
Construction in progress and land expected to be sold in sale-leaseback transactions | 32,294 | 26,198 | ||||||
Other current assets | 41,825 | 35,834 | ||||||
Total current assets | 1,644,250 | 1,613,132 | ||||||
Property and Equipment, Net | 230,639 | 220,551 | ||||||
Goodwill, Net | 1,162,562 | 1,155,428 | ||||||
Other Intangibles, Net | 97,770 | 94,136 | ||||||
Other Assets | 44,774 | 41,517 | ||||||
TOTAL ASSETS | $ | 3,179,995 | $ | 3,124,764 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Floor plan notes payable - trade | $ | 245,163 | $ | 377,943 | ||||
Floor plan notes payable - non-trade | 852,085 | 686,515 | ||||||
Trade accounts payable | 71,063 | 68,016 | ||||||
Accrued interest | 15,980 | 19,336 | ||||||
Other accrued liabilities (1) | 181,476 | 180,884 | ||||||
Liabilities associated with assets held for sale - trade | 55,309 | 54,229 | ||||||
Liabilities associated with assets held for sale - non-trade | 38,908 | 42,063 | ||||||
Current maturities of long-term debt | 2,696 | 2,707 | ||||||
Total current liabilities | 1,462,680 | 1,431,693 | ||||||
LONG-TERM DEBT | 601,272 | 598,627 | ||||||
OTHER LONG-TERM LIABILITIES (1) | 38,548 | 39,570 | ||||||
DEFERRED INCOME TAXES | 149,918 | 151,034 | ||||||
STOCKHOLDERS’ EQUITY (1) | 927,577 | 903,840 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,179,995 | $ | 3,124,764 | ||||
Balance Sheet Ratios: | ||||||||
Current Ratio (1) | 1.12 | 1.13 | ||||||
Debt to Total Capital, Net of Cash (1) | 38.9 | % | 39.4 | % | ||||
(1) - Excludes the impact of the adoption of FIN 48