Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 25, 2017 | |
Document and Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | SAH | |
Entity Registrant Name | SONIC AUTOMOTIVE INC | |
Entity Central Index Key | 1,043,509 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Common Class A [Member] | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 31,832,131 | |
Common Class B [Member] | ||
Document and Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,029,375 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
New vehicles | $ 1,275,069 | $ 1,286,464 | $ 2,447,001 | $ 2,451,034 |
Used vehicles | 641,891 | 622,186 | 1,276,364 | 1,220,540 |
Wholesale vehicles | 40,765 | 38,245 | 87,076 | 82,620 |
Total vehicles | 1,957,725 | 1,946,895 | 3,810,441 | 3,754,194 |
Parts, service and collision repair | 361,113 | 351,329 | 713,156 | 697,384 |
Finance, insurance and other, net | 86,908 | 84,088 | 169,971 | 165,361 |
Total revenues | 2,405,746 | 2,382,312 | 4,693,568 | 4,616,939 |
Cost of Sales: | ||||
New vehicles | (1,212,547) | (1,220,598) | (2,326,201) | (2,326,744) |
Used vehicles | (601,856) | (585,217) | (1,195,497) | (1,143,041) |
Wholesale vehicles | (42,682) | (40,084) | (90,163) | (85,537) |
Total vehicles | (1,857,085) | (1,845,899) | (3,611,861) | (3,555,322) |
Parts, service and collision repair | (188,043) | (183,108) | (370,742) | (363,162) |
Total cost of sales | (2,045,128) | (2,029,007) | (3,982,603) | (3,918,484) |
Gross profit | 360,618 | 353,305 | 710,965 | 698,455 |
Selling, general and administrative expenses | (293,931) | (277,204) | (586,165) | (561,580) |
Impairment charges | (2,605) | (151) | (3,115) | (151) |
Depreciation and amortization | (21,911) | (18,905) | (43,065) | (37,374) |
Operating income (loss) | 42,171 | 57,045 | 78,620 | 99,350 |
Other income (expense): | ||||
Interest expense, floor plan | (9,144) | (6,690) | (17,531) | (13,126) |
Interest expense, other, net | (12,764) | (12,205) | (26,172) | (24,544) |
Other income (expense), net | 7 | 6 | (14,495) | 110 |
Total other income (expense) | (21,901) | (18,889) | (58,198) | (37,560) |
Income (loss) from continuing operations before taxes | 20,270 | 38,156 | 20,422 | 61,790 |
Provision for income taxes for continuing operations - benefit (expense) | (7,956) | (15,113) | (8,128) | (24,283) |
Income (loss) from continuing operations | 12,314 | 23,043 | 12,294 | 37,507 |
Discontinued operations: | ||||
Income (loss) from discontinued operations before taxes | (301) | (362) | (1,168) | (100) |
Provision for income taxes for discontinued operations - benefit (expense) | 119 | 141 | 465 | 39 |
Income (loss) from discontinued operations | (182) | (221) | (703) | (61) |
Net income (loss) | $ 12,132 | $ 22,822 | $ 11,591 | $ 37,446 |
Basic earnings (loss) per common share: | ||||
Earnings (loss) per share from continuing operations | $ 0.28 | $ 0.50 | $ 0.27 | $ 0.81 |
Earnings (loss) per share from discontinued operations | (0.01) | (0.01) | ||
Earnings (loss) per common share | $ 0.27 | $ 0.50 | $ 0.26 | $ 0.81 |
Weighted average common shares outstanding | 44,570 | 45,731 | 44,680 | 46,340 |
Diluted earnings (loss) per common share: | ||||
Earnings (loss) per share from continuing operations | $ 0.27 | $ 0.50 | $ 0.27 | $ 0.81 |
Earnings (loss) per share from discontinued operations | (0.01) | (0.01) | ||
Earnings (loss) per common share | $ 0.27 | $ 0.50 | $ 0.26 | $ 0.80 |
Weighted average common shares outstanding | 44,810 | 45,924 | 44,976 | 46,523 |
Dividends declared per common share | $ 0.05 | $ 0.05 | $ 0.10 | $ 0.10 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 12,132 | $ 22,822 | $ 11,591 | $ 37,446 |
Other comprehensive income (loss) before taxes: | ||||
Change in fair value of interest rate swap agreements | 42 | (2,798) | 2,144 | (7,676) |
Provision for income tax benefit (expense) related to components of other comprehensive income (loss) | (16) | 1,063 | (815) | 2,916 |
Other comprehensive income (loss) | 26 | (1,735) | 1,329 | (4,760) |
Comprehensive income (loss) | $ 12,158 | $ 21,087 | $ 12,920 | $ 32,686 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 4,380 | $ 3,108 |
Receivables, net | 289,820 | 430,242 |
Inventories | 1,622,338 | 1,570,701 |
Other current assets | 43,622 | 26,993 |
Total current assets | 1,960,160 | 2,031,044 |
Property and Equipment, net | 1,087,369 | 1,010,380 |
Goodwill | 471,493 | 472,437 |
Other Intangible Assets, net | 79,911 | 80,233 |
Other Assets | 46,223 | 45,242 |
Total Assets | 3,645,156 | 3,639,336 |
Current Liabilities: | ||
Notes payable - floor plan - trade | 802,255 | 850,537 |
Notes payable - floor plan - non-trade | 679,075 | 675,353 |
Trade accounts payable | 123,010 | 117,740 |
Accrued interest | 11,924 | 13,265 |
Other accrued liabilities | 221,389 | 236,982 |
Current maturities of long-term debt | 67,231 | 43,003 |
Total current liabilities | 1,904,884 | 1,936,880 |
Long-Term Debt | 887,327 | 839,675 |
Other Long-Term Liabilities | 63,037 | 61,170 |
Deferred Income Taxes | 76,498 | 76,447 |
Commitments and Contingencies | ||
Stockholders’ Equity: | ||
Class A convertible preferred stock, none issued | ||
Paid-in capital | 727,459 | 721,695 |
Retained earnings | 548,242 | 541,146 |
Accumulated other comprehensive income (loss) | (933) | (2,262) |
Treasury stock, at cost; 31,623,378 Class A common stock shares held at June 30, 2017 and 30,263,196 Class A common stock shares held at December 31, 2016 | (562,114) | (536,166) |
Total Stockholders’ Equity | 713,410 | 725,164 |
Total Liabilities and Stockholders’ Equity | 3,645,156 | 3,639,336 |
Common Class A [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | 635 | 630 |
Common Class B [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | $ 121 | $ 121 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Convertible preferred stock issued | 0 | 0 |
Common Class A [Member] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 63,455,509 | 62,967,061 |
Common stock, shares outstanding | 31,832,131 | 32,703,865 |
Treasury stock, shares | 31,623,378 | 30,263,196 |
Common Class B [Member] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 12,029,375 | 12,029,375 |
Common stock, shares outstanding | 12,029,375 | 12,029,375 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) shares in Thousands, $ in Thousands | Total | Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Common Class A [Member]Common Stock [Member] | Common Class A [Member]Treasury Stock [Member] | Common Class B [Member]Common Stock [Member] |
Beginning Balance at Dec. 31, 2016 | $ 725,164 | $ 721,695 | $ 541,146 | $ (2,262) | $ 630 | $ (536,166) | $ 121 |
Beginning Balance, Shares at Dec. 31, 2016 | 62,967 | (30,263) | 12,029 | ||||
Shares awarded under stock compensation plans | 46 | 41 | $ 5 | ||||
Shares awarded under stock compensation plans, shares | 489 | ||||||
Purchases of treasury stock | (25,948) | $ (25,948) | |||||
Purchases of treasury stock, shares | (1,360) | ||||||
Change in fair value of interest rate swap agreements, net of tax expense of $815 | 1,329 | 1,329 | |||||
Restricted stock amortization | 5,723 | 5,723 | |||||
Net income (loss) | 11,591 | 11,591 | |||||
Dividends declared | (4,495) | (4,495) | |||||
Ending Balance at Jun. 30, 2017 | $ 713,410 | $ 727,459 | $ 548,242 | $ (933) | $ 635 | $ (562,114) | $ 121 |
Ending Balance, Shares at Jun. 30, 2017 | 63,456 | (31,623) | 12,029 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Tax effect on fair value of interest rate swap agreements | $ 815 |
Accumulated Other Comprehensive Income (Loss) [Member] | |
Tax effect on fair value of interest rate swap agreements | $ 815 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 11,591 | $ 37,446 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization of property, plant and equipment | 43,062 | 37,371 |
Provision for bad debt expense | 495 | 248 |
Other amortization | 325 | 325 |
Debt issuance cost amortization | 1,193 | 1,250 |
Debt discount amortization, net of premium amortization | 99 | 150 |
Stock-based compensation expense | 5,723 | 5,634 |
Deferred income taxes | 182 | 11,192 |
Net distributions from equity investee | 190 | 35 |
Asset impairment charges | 3,115 | 151 |
Loss (gain) on disposal of dealerships and property and equipment | (67) | (149) |
Loss (gain) on exit of leased dealerships | 1,827 | (139) |
(Gain) loss on retirement of debt | 14,607 | |
Changes in assets and liabilities that relate to operations: | ||
Receivables | 144,029 | 70,389 |
Inventories | (51,637) | 9,365 |
Other assets | (19,837) | 46,560 |
Notes payable - floor plan - trade | (48,282) | (106,336) |
Trade accounts payable and other liabilities | (13,732) | (6,773) |
Total adjustments | 81,292 | 69,273 |
Net cash provided by (used in) operating activities | 92,883 | 106,719 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of land, property and equipment | (121,222) | (108,970) |
Proceeds from sales of property and equipment | 291 | 887 |
Net cash provided by (used in) investing activities | (120,931) | (108,083) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net (repayments) borrowings on notes payable - floor plan - non-trade | 3,722 | 29,915 |
Borrowings on revolving credit facilities | 44,017 | 155,208 |
Repayments on revolving credit facilities | (44,017) | (159,411) |
Proceeds from issuance of long-term debt | 282,458 | 76,409 |
Debt issuance costs | (4,512) | (293) |
Principal payments and repurchase of long-term debt | (11,051) | (9,633) |
Repurchase of debt securities | (210,914) | |
Purchases of treasury stock | (25,948) | (87,504) |
Income tax benefit (expense) associated with stock compensation plans | (364) | |
Issuance of shares under stock compensation plans | 46 | 6 |
Dividends paid | (4,481) | (4,175) |
Net cash provided by (used in) financing activities | 29,320 | 158 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,272 | (1,206) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 3,108 | 3,625 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 4,380 | 2,419 |
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||
Change in fair value of cash flow interest rate swap agreements (net of tax expense of $815 and benefit of $2,916 in the six months ended June 30, 2017 and 2016, respectively) | 1,329 | (4,760) |
Cash paid (received) during the period for: | ||
Interest, including amount capitalized | 44,897 | 37,576 |
Income taxes | $ 12,664 | $ 10,875 |
CONDENSED CONSOLIDATED STATEME9
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Statement Of Cash Flows [Abstract] | ||
Tax effect on fair value of interest rate swap agreements | $ 815 | $ (2,916) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation – The accompanying condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (“Sonic,” the “Company,” “we,” “us” and “our”) for the three and six months ended June 30, 2017 and 2016 are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material normal recurring adjustments necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The operating results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year or future interim periods, because the first quarter normally contributes less operating profit than the second, third and fourth quarters. These interim financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016. Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 to amend the accounting guidance on revenue recognition. The amendments in this ASU are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The amendments in this ASU must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). This ASU is effective for reporting periods beginning after December 15, 2017. Earlier application is permitted only as of reporting periods beginning after December 15, 2016. Sonic plans to adopt this ASU effective January 1, 2018 and anticipates adopting a full retrospective transition approach. While management is still evaluating the specific financial statement impact and quantitative and qualitative disclosure impact of the provisions of this ASU, based on preliminary analysis, management expects similar performance obligations to result under this ASU as compared with deliverables and separate units of accounting currently identified. As a result, management expects the amounts and timing of revenue recognition to generally remain the same. In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU require that leases are classified as either finance or operating leases, a right-of-use asset and lease liability is recognized in the statement of financial position, and repayments are classified within operating activities in the statement of cash flows. The amendments in this ASU are to be applied using a modified retrospective approach and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (early adoption is permitted). Sonic plans to adopt this ASU effective January 1, 2019. While management is still evaluating the impact of adopting the provisions of this ASU, management expects that upon In March 2016, the FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (early adoption is permitted). Sonic adopted this ASU effective January 1, 2017. Upon adoption of this ASU, interim period and annual income tax expense is affected by stock option exercises and restricted stock and restricted stock unit vesting activity, potentially creating volatility in Sonic’s effective income tax rate from period to period. See the heading “Income Tax Expense” below for further discussion of the impact of the adoption of this ASU on Sonic’s effective income tax rate for the three and six months ended June 30, 2017. In August 2016, the FASB issued ASU 2016-15 related to the classification of certain cash receipts and cash payments on the statement of cash flows. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 (early adoption is permitted). Sonic plans to adopt this ASU effective January 1, 2018. Upon adoption of this ASU, the presentation of certain items in Sonic’s cash flows and other disclosures may be impacted. Principles of Consolidation – All of Sonic’s subsidiaries are wholly owned and consolidated in the accompanying condensed consolidated financial statements, except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements. Lease Exit Accruals – Lease exit accruals relate to facilities Sonic has ceased using in its operations that remain subject to a current lease agreement. The accruals represent the present value of the lease payments, net of estimated or actual sublease proceeds, for the remaining life of the operating leases and other accruals necessary to satisfy the lease commitment to the landlord. These situations could include the relocation of an existing facility or the sale of a dealership when the buyer will not be subleasing the property for either the remaining term of the lease or for an amount of rent equal to Sonic’s obligation under the lease, or situations in which a store is closed as a result of the associated franchise being terminated by Sonic or the manufacturer and no other operations continue on the leased property. See Note 12, “Commitments and Contingencies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion. A summary of the activity of these operating lease exit accruals consists of the following: (In thousands) Balance at December 31, 2016 $ 9,790 Lease exit expense (1) 1,827 Payments (2) (1,877 ) Other (3) (1,377 ) Balance at June 30, 2017 $ 8,363 (1) Expense of approximately $1.1 million is recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of income and expense of approximately $0.7 million is recorded in income (loss) from discontinued operations before taxes in the accompanying condensed consolidated statements of income. (2) Amount is recorded as an offset to rent expense, with approximately $0.4 million recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of income and approximately $1.5 million recorded in income (loss) from discontinued operations before taxes in the accompanying condensed consolidated statements of income. (3) Amount represents the cash settlement of accruals related to certain deferred maintenance costs and other liabilities related to lease termination. Income Tax Expense – The overall effective tax rate from continuing operations was 39.3% and 39.8% for the three and six months ended June 30, 2017, respectively, and was 39.6% and 39.3% for the three and six months ended June 30, 2016, respectively. Income tax expense for the three and six months ended June 30, 2017 includes a benefit of approximately $0.2 million and $0.5 million, respectively, as a result of the adoption of ASU 2016-09 discussed above. Sonic’s effective tax rate varies from year to year based on the distribution of taxable income between states in which Sonic operates and other tax adjustments. Sonic expects the effective tax rate in future periods to fall within a range of 38.0% to 40.0% before the impact, if any, of changes in valuation allowances related to deferred income tax assets or discrete tax adjustments. |
Business Acquisitions and Dispo
Business Acquisitions and Dispositions | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Business Acquisitions and Dispositions | 2. Business Acquisitions and Dispositions Sonic did not acquire or dispose of any franchises during the three and six months ended June 30, 2017 and 2016. Revenues and other activities associated with dealerships classified as discontinued operations were as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Income (loss) from operations $ (162 ) $ (135 ) $ (441 ) $ (327 ) Lease exit accrual adjustments and charges (139 ) (227 ) (727 ) 227 Pre-tax income (loss) $ (301 ) $ (362 ) $ (1,168 ) $ (100 ) Total revenues $ - $ - $ - $ - Revenues and other activities associated with disposed dealerships that remain in continuing operations were as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Income (loss) from operations $ (16 ) $ (241 ) $ (43 ) $ (273 ) Gain (loss) on disposal - (11 ) (24 ) (58 ) Pre-tax income (loss) $ (16 ) $ (252 ) $ (67 ) $ (331 ) Total revenues $ - $ - $ - $ - |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. Inventories Inventories consist of the following: June 30, 2017 December 31, 2016 (In thousands) New vehicles $ 1,116,708 $ 1,088,814 Used vehicles 301,283 282,288 Service loaners 133,552 128,821 Parts, accessories and other 70,795 70,778 Net inventories $ 1,622,338 $ 1,570,701 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment, net consists of the following: June 30, 2017 December 31, 2016 (In thousands) Land $ 335,238 $ 306,457 Building and improvements 836,976 777,766 Software and computer equipment 138,250 128,366 Parts and service equipment 102,301 93,901 Office equipment and fixtures 92,050 86,216 Company vehicles 9,542 9,107 Construction in progress 67,211 62,982 Total, at cost 1,581,568 1,464,795 Less accumulated depreciation (490,710 ) (450,184 ) Subtotal 1,090,858 1,014,611 Less assets held for sale (1) (3,489 ) (4,231 ) Property and equipment, net $ 1,087,369 $ 1,010,380 (1) Classified in other current assets in the accompanying condensed consolidated balance sheets. In the three and six months ended June 30, 2017, capital expenditures were approximately $45.5 million and $121.2 million, respectively, and in the three and six months ended June 30, 2016, capital expenditures were approximately $67.6 million and $109.0 million, respectively. Capital expenditures in all periods were primarily related to real estate acquisitions, construction of new franchised dealerships and EchoPark stores, building improvements and equipment purchased for use in Sonic’s franchised dealerships and EchoPark stores. Assets held for sale as of June 30, 2017 consists of vacant land that Sonic expects to dispose of in the next twelve months. Impairment charges for the three and six months ended June 30, 2017 were approximately $2.6 million and $3.1 million, respectively, which include the write-off of goodwill and property and equipment as part of the closure of two stand-alone pre-owned stores that were purchased in 2016, and the write-off of costs associated with the abandonment of certain construction projects. Impairment charges for both the three and six months ended June 30, 2016 were approximately $0.2 million related to the write-off of costs associated with the abandonment of certain construction projects. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets The carrying amount of goodwill was approximately $471.5 million and $472.4 million, respectively, as of June 30, 2017 and December 31, 2016. Sonic impaired approximately $0.9 million of goodwill in the three and six months ended June 30, 2017 related to the closure of two stand-alone pre-owned stores that were purchased in 2016. The carrying amount of goodwill is net of accumulated impairment losses of approximately $797.6 million and $796.7 million, respectively, as of June 30, 2017 and December 31, 2016. The carrying amount of franchise assets was approximately $74.9 million as of both June 30, 2017 and December 31, 2016. At December 31, 2016, Sonic had approximately $5.3 million of definite life intangibles related to favorable lease agreements. After the effect of amortization of the definite life intangibles, the balance recorded at June 30, 2017 was approximately $5.0 million. Both franchise assets and favorable lease agreement assets are included in other intangible assets, net in the accompanying condensed consolidated balance sheets. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 6. Long-Term Debt Long-term debt consists of the following: June 30, 2017 December 31, 2016 (In thousands) 2016 Revolving Credit Facility (1) $ - $ - 7.0% Senior Subordinated Notes due 2022 (the “7.0% Notes”) - 200,000 5.0% Senior Subordinated Notes due 2023 (the “5.0% Notes”) 289,273 289,273 6.125% Senior Subordinated Notes due 2027 (the “6.125% Notes”) 250,000 - Mortgage notes to finance companies-fixed rate, bearing interest from 3.51% to 7.03% 199,856 176,369 Mortgage notes to finance companies-variable rate, bearing interest at 1.25 to 2.80 percentage points above one-month or three-month LIBOR 225,427 227,342 Net debt discount and premium (2) (58 ) (1,258 ) Debt issuance costs (14,055 ) (13,328 ) Other 4,115 4,280 Total debt $ 954,558 $ 882,678 Less current maturities (67,231 ) (43,003 ) Long-term debt $ 887,327 $ 839,675 (1) The interest rate on the 2016 Revolving Credit Facility (as defined below) was 200 basis points and 225 basis points above LIBOR at June 30, 2017 and December 31, 2016, respectively. (2) June 30, 2017 includes a $0.1 million discount associated with mortgage notes payable. December 31, 2016 includes a $1.1 million discount associated with the 7.0% Notes and a $0.2 million discount associated with mortgage notes payable. 2016 Credit Facilities On November 30, 2016, Sonic entered into an amended and restated syndicated revolving credit facility (the “2016 Revolving Credit Facility”) and amended and restated syndicated new and used vehicle floor plan credit facilities (the “2016 Floor Plan Facilities” and, together with the 2016 Revolving Credit Facility, the “2016 Credit Facilities”), which are scheduled to mature on November 30, 2021. Availability under the 2016 Revolving Credit Facility is calculated as the lesser of $250.0 million or a borrowing base calculated based on certain eligible assets, less the aggregate face amount of any outstanding letters of credit under the 2016 Revolving Credit Facility (the “2016 Revolving Borrowing Base”). The 2016 Revolving Credit Facility may be increased at Sonic’s option up to $300.0 million upon satisfaction of certain conditions. Based on balances as of June 30, 2017, the 2016 Revolving Borrowing Base was approximately $211.4 million. As of June 30, 2017, Sonic had no outstanding borrowings and approximately $17.3 million in outstanding letters of credit under the 2016 Revolving Credit Facility, resulting in total borrowing availability of $194.1 million under the 2016 Revolving Credit Facility. 7.0% Notes On July 2, 2012, Sonic issued $200.0 million in aggregate principal amount of unsecured senior subordinated 7.0% Notes which were scheduled to mature on July 15, 2022. The 7.0% Notes were issued at a price of 99.11% of the principal amount thereof, resulting in a yield to maturity of 7.125%. Interest on the 7.0% Notes was payable semi-annually in arrears on January 15 and July 15 of each year. On March 27, 2017, Sonic repurchased all of the outstanding 7.0% Notes using net proceeds from the issuance of the 6.125% Notes. Sonic paid approximately $213.7 million in cash, including an early redemption premium and accrued and unpaid interest, to extinguish the 7.0% Notes and recognized a loss of approximately $14.6 million on the repurchase of the 7.0% Notes, recorded in other income (expense), net in the accompanying condensed consolidated statements of income. 5.0% Notes On May 9, 2013, Sonic issued $300.0 million in aggregate principal amount of unsecured senior subordinated 5.0% Notes which mature on May 15, 2023. The 5.0% Notes were issued at a price of 100.0% of the principal amount thereof. The 5.0% Notes are guaranteed by Sonic’s domestic operating subsidiaries. Interest on the 5.0% Notes is payable semi-annually in arrears on May 15 and November 15 of each year. On September 30, 2016, Sonic repurchased approximately $10.7 million of its outstanding 5.0% Notes for approximately $10.6 million in cash, plus accrued and unpaid interest related thereto. See Note 6, “Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion. 6.125% Notes On March 10, 2017, Sonic issued $250.0 million in aggregate principal amount of unsecured senior subordinated 6.125% Notes which mature on March 15, 2027. The 6.125% Notes were issued at a price of 100.0% of the principal amount thereof. Sonic used the net proceeds from the issuance of the 6.125% Notes to repurchase all of the outstanding 7.0% Notes during the six months ended June 30, 2017. Remaining proceeds from the issuance of the 6.125% Notes will be used for general corporate purposes. The 6.125% Notes are guaranteed by Sonic’s domestic operating subsidiaries. Interest on the 6.125% Notes is payable semi-annually in arrears on March 15 and September 15 of each year. Sonic may redeem the 6.125% Notes, in whole or in part, at any time on or after March 15, 2022 at the following redemption prices, which are expressed as percentages of the principal amount: Redemption Price Beginning on March 15, 2022 103.063 % Beginning on March 15, 2023 102.042 % Beginning on March 15, 2024 101.021 % Beginning on March 15, 2025 and thereafter 100.000 % Before March 15, 2022, Sonic may redeem all or a part of the 6.125% Notes at a redemption price equal to 100.0% of the principal amount of the 6.125% Notes redeemed plus the Applicable Premium (as defined in the indenture governing the 6.125% Notes) and any accrued and unpaid interest, if any, to the redemption date. In addition, on or before March 15, 2020, Sonic may redeem up to 35% of the aggregate principal amount of the 6.125% Notes at a redemption price equal to 106.125% of the par value of the 6.125% Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date with proceeds from certain equity offerings. The indenture governing the 6.125% Notes also provides that holders of the 6.125% Notes may require Sonic to repurchase the 6.125% Notes at a purchase price equal to 101.0% of the par value of the 6.125% Notes, plus accrued and unpaid interest, if any, to the date of purchase if Sonic undergoes a Change of Control (as defined in the indenture governing the 6.125% Notes). The indenture governing the 6.125% Notes contains certain specified restrictive covenants. Sonic has agreed not to pledge any assets to any third-party lender of senior subordinated debt except under certain limited circumstances. Sonic also has agreed to certain other limitations or prohibitions concerning the incurrence of other indebtedness, guarantees, liens, certain types of investments, certain transactions with affiliates, mergers, consolidations, issuance of preferred stock, cash dividends to stockholders, distributions, redemptions and the sale, assignment, lease, conveyance or disposal of certain assets. Specifically, the indenture governing the 6.125% Notes limits Sonic’s ability to pay quarterly cash dividends on Sonic’s Class A and Class B common stock in excess of $0.12 per share. Sonic may only pay quarterly cash dividends on Sonic’s Class A and Class B common stock if Sonic complies with the terms of the indenture governing the 6.125% Notes. Sonic was in compliance with all restrictive covenants in the indenture governing the 6.125% Notes as of June 30, 2017. Sonic’s obligations under the 6.125% Notes may be accelerated by the holders of 25% of the outstanding principal amount of the 6.125% Notes then outstanding if certain events of default occur, including: (1) defaults in the payment of principal or interest when due; (2) defaults in the performance, or breach, of Sonic’s covenants under the 6.125% Notes; and (3) certain defaults under other agreements under which Sonic or its subsidiaries have outstanding indebtedness in excess of $50.0 million. Mortgage Notes During the six months ended June 30, 2017 2017 Covenants Sonic agreed under the 2016 Credit Facilities not to pledge any assets to any third party (other than those explicitly allowed under the amended terms of the 2016 Credit Facilities), including other lenders, subject to certain stated exceptions, including floor plan financing arrangements. In addition, the 2016 Credit Facilities contain certain negative covenants, including covenants which could restrict or prohibit the payment of dividends, capital expenditures and material dispositions of assets, as well as other customary covenants and default provisions. Sonic was in compliance with the covenants under the 2016 Credit Facilities as of June 30, 2017. Financial covenants include required specified ratios (as each is defined in the 2016 Credit Facilities) of: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Required ratio 1.05 1.20 5.75 June 30, 2017 actual 1.14 1.95 4.38 The 2016 Credit Facilities contain events of default, including cross defaults to other material indebtedness, change of control events and other events of default customary for syndicated commercial credit facilities. Upon the future occurrence of an event of default, Sonic could be required to immediately repay all outstanding amounts under the 2016 Credit Facilities. After giving effect to the applicable restrictions on the payment of dividends under its debt agreements, as of , Sonic had approximately $113.5 million of its net income and retained earnings free of such restrictions. Sonic was in compliance with all restrictive covenants as of . In addition, many of Sonic’s facility leases are governed by a guarantee agreement between the landlord and Sonic that contains financial and operating covenants. The financial covenants under the guarantee agreement are identical to those under the 2016 Credit Facilities with the exception of one financial covenant related to the ratio of EBTDAR to Rent (as defined in the guarantee agreement) with a required ratio of no less than 1.50 to 1.00. As of June 30, 2017, the ratio was 3.88 to 1.00. Derivative Instruments and Hedging Activities Sonic has interest rate cash flow swap agreements to effectively convert a portion of its LIBOR-based variable rate debt to a fixed rate. Under the terms of these cash flow swaps, interest rates reset monthly. The fair value of these swap positions at June 30, 2017 was a net liability of approximately $1.3 million, with $1.8 million included in other accrued liabilities and $1.9 million included in other long-term liabilities in the accompanying condensed consolidated balance sheets, offset partially by an asset of approximately $2.4 million included in other assets in the accompanying condensed consolidated balance sheets. The fair value of these swap positions at December 31, 2016 was a net liability of approximately $3.7 million, with $4.1 million included in other accrued liabilities and $2.4 million included in other long-term liabilities in the accompanying condensed consolidated balance sheets, offset partially by an asset of approximately $2.8 million included in other current assets and other assets in the accompanying condensed consolidated balance sheets. Under the terms of these cash flow swaps, Sonic will receive and pay interest based on the following: Notional Amount Pay Rate Receive Rate (1) Maturing Date (In millions) $ 2.2 7.100% one-month LIBOR + 1.50% July 10, 2017 $ 7.0 4.655% one-month LIBOR December 10, 2017 $ 6.4 (2) 6.860% one-month LIBOR + 1.25% August 1, 2017 $ 5.9 (2) 6.410% one-month LIBOR + 1.25% September 12, 2017 $ 50.0 1.320% one-month LIBOR July 1, 2017 $ 250.0 (3) 1.887% one-month LIBOR June 30, 2018 $ 25.0 2.080% one-month LIBOR July 1, 2017 $ 100.0 1.560% one-month LIBOR July 1, 2017 $ 125.0 1.303% one-month LIBOR July 1, 2017 $ 125.0 (4) 1.900% one-month LIBOR July 1, 2018 $ 50.0 (5) 2.320% one-month LIBOR July 1, 2019 $ 200.0 (5) 2.313% one-month LIBOR July 1, 2019 $ 100.0 (6) 1.384% one-month LIBOR July 1, 2020 $ 125.0 (5) 1.158% one-month LIBOR July 1, 2019 $ 150.0 (6) 1.310% one-month LIBOR July 1, 2020 $ 125.0 (4) 1.020% one-month LIBOR July 1, 2018 (1) The one-month LIBOR rate was approximately 1.224% at June 30, 2017. (2) Changes in fair value are recorded through earnings. (3) The effective date of this forward-starting swap is July 3, 2017. (4) The effective date of these forward-starting swaps is July 1, 2017. (5) The effective date of these forward-starting swaps is July 2, 2018. (6) The effective date of these forward-starting swaps is July 1, 2019. For the interest rate swaps not designated as cash flow hedges, the changes in the fair value of these swaps are recognized through earnings and are included in interest expense, other, net in the accompanying condensed consolidated statements of income. For the three and six months ended June 30, 2017, these items were a benefit of approximately $0.1 million and $0.3 million, respectively, and for the three and six months ended June 30, 2016, these items were a benefit of approximately $0.1 million and $0.2 million, respectively. For the interest rate swaps that qualify as cash flow hedges, the changes in the fair value of these swaps are recorded in other comprehensive income (loss) in the accompanying condensed consolidated statements of comprehensive income and are disclosed in the supplemental schedule of non-cash financing activities in the accompanying condensed consolidated statements of cash flows. The incremental interest expense (the difference between interest paid and interest received) related to these cash flow swaps was approximately $0.7 million and $1.9 million for the three and six months ended June 30, 2017, respectively, and $1.3 million and $2.5 million for the three and six months ended June 30, 2016, respectively, and is included in interest expense, other, net in the accompanying condensed consolidated statements of income and the interest paid amount is disclosed in the supplemental disclosures of cash flow information in the accompanying condensed consolidated statements of cash flows. The estimated net expense expected to be reclassified out of accumulated other comprehensive income (loss) into results of operations during the next twelve months is approximately $1.1 million. |
Per Share Data and Stockholders
Per Share Data and Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Per Share Data and Stockholders' Equity | 7. Per Share Data and Stockholders’ Equity The calculation of diluted earnings per share considers the potential dilutive effect of stock options and shares under Sonic’s stock compensation plans. Certain of Sonic’s non-vested restricted stock awards contain rights to receive non-forfeitable dividends and, thus, are considered participating securities and are included in the two-class method of computing earnings per share. The following tables illustrate the dilutive effect of such items on earnings per share for the three and six months ended June 30, 2017 and 2016: Three Months Ended June 30, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) 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 Three Months Ended June 30, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Earnings (loss) and shares 45,731 $ 23,043 $ (221 ) $ 22,822 Effect of participating securities: Non-vested restricted stock (13 ) - (13 ) Basic earnings (loss) and shares 45,731 $ 23,030 $ 0.50 $ (221 ) $ - $ 22,809 $ 0.50 Effect of dilutive securities: Stock compensation plans 193 Diluted earnings (loss) and shares 45,924 $ 23,030 $ 0.50 $ (221 ) $ - $ 22,809 $ 0.50 Six Months Ended June 30, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) 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 Six Months Ended June 30, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Earnings (loss) and shares 46,340 $ 37,507 $ (61 ) $ 37,446 Effect of participating securities: Non-vested restricted stock (21 ) - (21 ) Basic earnings (loss) and shares 46,340 $ 37,486 $ 0.81 $ (61 ) $ - $ 37,425 $ 0.81 Effect of dilutive securities: Stock compensation plans 183 Diluted earnings (loss) and shares 46,523 $ 37,486 $ 0.81 $ (61 ) $ (0.01 ) $ 37,425 $ 0.80 In addition to the stock options included in the tables above, options to purchase approximately 0.2 million shares of Sonic’s Class A common stock were outstanding at June 30, 2016, but were not included in the computation of diluted earnings (loss) per share because the options were not dilutive. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Contingencies | 8. Contingencies Legal and Other Proceedings Sonic is involved, and expects to continue to be involved, in various legal and administrative proceedings arising out of the conduct of its business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although Sonic vigorously defends itself in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of Sonic’s business, including litigation with customers, employment-related lawsuits, contractual disputes, class actions, purported class actions and actions brought by governmental authorities, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on Sonic’s business, financial condition, results of operations, cash flows or prospects. Included in other accrued liabilities and other long-term liabilities at June 30, 2017 was approximately $2.5 million and $0.2 million, respectively, in reserves that Sonic was holding for pending proceedings. Included in at December 31, 2016 was approximately $0.3 million and $0.2 million, respectively, for such reserves. Except as reflected in such reserves, Sonic is currently unable to estimate a range of reasonably possible loss, or a range of reasonably possible loss in excess of the amount accrued, for pending proceedings. Guarantees and Indemnification Obligations In accordance with the terms of Sonic’s operating lease agreements, Sonic’s dealership subsidiaries, acting as lessees, generally agree to indemnify the lessor from certain exposure arising as a result of the use of the leased premises, including environmental exposure and repairs to leased property upon termination of the lease. In addition, Sonic has generally agreed to indemnify the lessor in the event of a breach of the lease by the lessee. In connection with dealership dispositions and facility relocations, certain of Sonic’s subsidiaries have assigned or sublet to the buyer their interests in real property leases associated with such dealerships. In general, the subsidiaries retain responsibility for the performance of certain obligations under such leases, including rent payments and repairs to leased property upon termination of the lease, to the extent that the assignee or sublessee does not perform. In the event a sublessee does not perform its obligations, Sonic remains liable for the lease payments. See Note 12, “Commitments and Contingencies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion. In accordance with the terms of agreements entered into for the sale of Sonic’s dealerships, Sonic generally agrees to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While Sonic’s exposure with respect to environmental remediation and repairs is difficult to quantify, Sonic’s maximum exposure associated with these general indemnifications was approximately $0.5 million at both June 30, 2017 and December 31, 2016. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at June 30, 2017. Sonic also guarantees the floor plan commitments of its 50%-owned joint venture, the amount of which was approximately $2.8 million at both June 30, 2017 and December 31, 2016. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 9. Fair Value Measurements In determining fair value, Sonic uses various valuation approaches including market, income and/or cost approaches. “Fair Value Measurements and Disclosures” in the Accounting Standards Codification establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of Sonic. Unobservable inputs are inputs that reflect Sonic’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that Sonic has the ability to access. Assets utilizing Level 1 inputs include marketable securities that are actively traded, including Sonic’s stock or public bonds. Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Assets and liabilities utilizing Level 2 inputs include cash flow swap instruments and deferred compensation plan balances. Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating fair value of non-financial assets and non-financial liabilities in purchase acquisitions, those used in assessing impairment of property, plant and equipment and other intangibles and those used in the reporting unit valuation in the annual goodwill impairment evaluation. The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required by Sonic in determining fair value is greatest for assets and liabilities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input (Level 3 being the lowest level) that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, Sonic’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. Sonic uses inputs that are current as of the measurement date, including during periods when the market may be abnormally high or abnormally low. Accordingly, fair value measurements can be volatile based on various factors that may or may not be within Sonic’s control. Assets and liabilities recorded at fair value in the accompanying condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) June 30, 2017 December 31, 2016 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 32,383 $ 31,475 Cash flow swaps designated as hedges (2) 2,428 2,772 Total assets $ 34,811 $ 34,247 Liabilities: Cash flow swaps designated as hedges (3) $ 3,646 $ 6,135 Cash flow swaps not designated as hedges (4) 68 346 Deferred compensation plan (5) 16,578 14,824 Total liabilities $ 20,292 $ 21,305 (1) Included in other assets in the accompanying condensed consolidated balance sheets. (2) As of June 30, 2017, approximately $2.4 million was included in other assets in the accompanying condensed consolidated balance sheets. As of December 31, 2016, approximately $2.8 million was included in other assets in the accompanying condensed consolidated balance sheets. (3) As of June 30, 2017, approximately $1.7 million and $1.9 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets. As of December 31, 2016, approximately $3.7 million and $2.4 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets. (4) As of June 30, 2017, approximately $0.1 million was included in other accrued liabilities in the accompanying condensed consolidated balance sheets. As of December 31, 2016, approximately $0.3 million was included in other accrued liabilities in the accompanying condensed consolidated balance sheets. (5) Included in other long-term liabilities in the accompanying condensed consolidated balance sheets. During the three months ended September 30, 2016, Sonic acquired three stand-alone pre-owned businesses and related real estate. As a result of continued operating losses at these locations, management decided to cease operations of two of these businesses during the three months ended June 30, 2017. As these businesses were never integrated into the reporting unit after acquisition, and thus the benefits of acquired goodwill were never realized by the rest of the reporting unit, Sonic determined that it was appropriate to impair approximately $0.9 million of goodwill related to the closure of these two businesses. In addition, Sonic impaired approximately $0.8 million of property and equipment related to the two closed businesses’ operating locations. Other than these items, there were no instances in the six months ended June 30, 2017 which required a fair value measurement of assets ordinarily measured at fair value on a non-recurring basis. These assets will be evaluated as of the annual valuation assessment date of October 1, 2017 or as events or changes in circumstances require. As of June 30, 2017 and December 31, 2016, the fair values of Sonic’s financial instruments, including receivables, notes receivable from finance contracts, notes payable – floor plan, trade accounts payable, borrowings under the revolving credit facilities and certain mortgage notes, approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates. At June 30, 2017 and December 31, 2016, the fair value and carrying value of Sonic’s significant fixed rate long-term debt were as follows: June 30, 2017 December 31, 2016 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 7.0% Notes (1) $ - $ - $ 211,000 $ 198,871 5.0% Notes (1) $ 276,256 $ 289,273 $ 284,934 $ 289,273 6.125% Notes (1) $ 247,500 $ 250,000 $ - $ - Mortgage Notes (2) $ 206,220 $ 199,856 $ 185,979 $ 176,369 Other (2) $ 3,910 $ 4,114 $ 4,057 $ 4,280 (1) As determined by market quotations as of June 30, 2017 and December 31, 2016, respectively (Level 1). (2) As determined by discounted cash flows (Level 3). |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 10. Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2017 are as follows: Gains and Losses on Cash Flow Hedges Defined Benefit Pension Plan Total Accumulated Other Comprehensive Income (Loss) (In thousands) Balance at December 31, 2016 $ (2,085 ) $ (177 ) $ (2,262 ) Other comprehensive income (loss) before reclassifications (1) (38 ) - (38 ) Amounts reclassified out of accumulated other comprehensive income (loss) (2) 1,367 - 1,367 Net current-period other comprehensive income (loss) 1,329 - 1,329 Balance at June 30, 2017 $ (756 ) $ (177 ) $ (933 ) (1) Net of tax benefit of $23. (2) Net of tax expense of $838. See the heading “Derivative Instruments and Hedging Activities” in Note 6, “Long-Term Debt,” for further discussion of Sonic’s cash flow hedges. For further discussion of Sonic’s defined benefit pension plan, see Note 10, “Employee Benefit Plans,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 11. Segment Information As of June 30, 2017, Sonic had two operating segments: Franchised Dealerships and EchoPark. The Franchised Dealerships segment is comprised of retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products. The EchoPark segment is comprised of stand-alone specialty retail locations that provide customers an opportunity to search, buy, service, finance and sell pre-owned vehicles. The operating segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by Sonic’s chief operating decision maker to assess operating performance and allocate resources. Sonic’s chief operating decision maker is a group of three individuals consisting of the Company’s Chief Executive Officer and President, Executive Vice President and Chief Financial Officer, and Executive Vice President of Operations. The Company has determined that its operating segments also represent its reportable segments. Reportable segment revenues and segment income (loss) for the three and six months ended June 30, 2017 and 2016 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Revenues: Franchised Dealerships $ 2,356,692 $ 2,352,840 $ 4,602,717 $ 4,563,425 EchoPark 49,054 29,472 90,851 53,514 Total consolidated revenues $ 2,405,746 $ 2,382,312 $ 4,693,568 $ 4,616,939 Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Segment income (loss) (1): Franchised Dealerships $ 40,544 $ 53,561 $ 74,013 $ 92,854 EchoPark (7,517 ) (3,206 ) (12,924 ) (6,630 ) Total segment income (loss) 33,027 50,355 61,089 86,224 Interest expense, other, net (12,764 ) (12,205 ) (26,172 ) (24,544 ) Other income (expense), net 7 6 (14,495 ) 110 Income (loss) from continuing operations before taxes $ 20,270 $ 38,156 $ 20,422 $ 61,790 (1) Segment income (loss) for each segment is defined as operating income (loss) less interest expense, floor plan. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events Subsequent to June 30, 2017, we incurred storm damage to vehicle inventory at a group of our stores in Ohio. Preliminary estimates of the loss not covered by insurance total approximately $1.0 million. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (“Sonic,” the “Company,” “we,” “us” and “our”) for the three and six months ended June 30, 2017 and 2016 are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material normal recurring adjustments necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The operating results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year or future interim periods, because the first quarter normally contributes less operating profit than the second, third and fourth quarters. These interim financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 to amend the accounting guidance on revenue recognition. The amendments in this ASU are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The amendments in this ASU must be applied using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). This ASU is effective for reporting periods beginning after December 15, 2017. Earlier application is permitted only as of reporting periods beginning after December 15, 2016. Sonic plans to adopt this ASU effective January 1, 2018 and anticipates adopting a full retrospective transition approach. While management is still evaluating the specific financial statement impact and quantitative and qualitative disclosure impact of the provisions of this ASU, based on preliminary analysis, management expects similar performance obligations to result under this ASU as compared with deliverables and separate units of accounting currently identified. As a result, management expects the amounts and timing of revenue recognition to generally remain the same. In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU require that leases are classified as either finance or operating leases, a right-of-use asset and lease liability is recognized in the statement of financial position, and repayments are classified within operating activities in the statement of cash flows. The amendments in this ASU are to be applied using a modified retrospective approach and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (early adoption is permitted). Sonic plans to adopt this ASU effective January 1, 2019. While management is still evaluating the impact of adopting the provisions of this ASU, management expects that upon In March 2016, the FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (early adoption is permitted). Sonic adopted this ASU effective January 1, 2017. Upon adoption of this ASU, interim period and annual income tax expense is affected by stock option exercises and restricted stock and restricted stock unit vesting activity, potentially creating volatility in Sonic’s effective income tax rate from period to period. See the heading “Income Tax Expense” below for further discussion of the impact of the adoption of this ASU on Sonic’s effective income tax rate for the three and six months ended June 30, 2017. In August 2016, the FASB issued ASU 2016-15 related to the classification of certain cash receipts and cash payments on the statement of cash flows. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017 (early adoption is permitted). Sonic plans to adopt this ASU effective January 1, 2018. Upon adoption of this ASU, the presentation of certain items in Sonic’s cash flows and other disclosures may be impacted. |
Principles of Consolidation | Principles of Consolidation – All of Sonic’s subsidiaries are wholly owned and consolidated in the accompanying condensed consolidated financial statements, except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements. |
Lease Exit Accruals | Lease Exit Accruals – Lease exit accruals relate to facilities Sonic has ceased using in its operations that remain subject to a current lease agreement. The accruals represent the present value of the lease payments, net of estimated or actual sublease proceeds, for the remaining life of the operating leases and other accruals necessary to satisfy the lease commitment to the landlord. These situations could include the relocation of an existing facility or the sale of a dealership when the buyer will not be subleasing the property for either the remaining term of the lease or for an amount of rent equal to Sonic’s obligation under the lease, or situations in which a store is closed as a result of the associated franchise being terminated by Sonic or the manufacturer and no other operations continue on the leased property. See Note 12, “Commitments and Contingencies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2016 for further discussion. A summary of the activity of these operating lease exit accruals consists of the following: (In thousands) Balance at December 31, 2016 $ 9,790 Lease exit expense (1) 1,827 Payments (2) (1,877 ) Other (3) (1,377 ) Balance at June 30, 2017 $ 8,363 (1) Expense of approximately $1.1 million is recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of income and expense of approximately $0.7 million is recorded in income (loss) from discontinued operations before taxes in the accompanying condensed consolidated statements of income. (2) Amount is recorded as an offset to rent expense, with approximately $0.4 million recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of income and approximately $1.5 million recorded in income (loss) from discontinued operations before taxes in the accompanying condensed consolidated statements of income. (3) Amount represents the cash settlement of accruals related to certain deferred maintenance costs and other liabilities related to lease termination. |
Income Tax Expense | Income Tax Expense – The overall effective tax rate from continuing operations was 39.3% and 39.8% for the three and six months ended June 30, 2017, respectively, and was 39.6% and 39.3% for the three and six months ended June 30, 2016, respectively. Income tax expense for the three and six months ended June 30, 2017 includes a benefit of approximately $0.2 million and $0.5 million, respectively, as a result of the adoption of ASU 2016-09 discussed above. Sonic’s effective tax rate varies from year to year based on the distribution of taxable income between states in which Sonic operates and other tax adjustments. Sonic expects the effective tax rate in future periods to fall within a range of 38.0% to 40.0% before the impact, if any, of changes in valuation allowances related to deferred income tax assets or discrete tax adjustments. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Lease Exit Accruals | A summary of the activity of these operating lease exit accruals consists of the following: (In thousands) Balance at December 31, 2016 $ 9,790 Lease exit expense (1) 1,827 Payments (2) (1,877 ) Other (3) (1,377 ) Balance at June 30, 2017 $ 8,363 (1) Expense of approximately $1.1 million is recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of income and expense of approximately $0.7 million is recorded in income (loss) from discontinued operations before taxes in the accompanying condensed consolidated statements of income. (2) Amount is recorded as an offset to rent expense, with approximately $0.4 million recorded in selling, general and administrative expenses in the accompanying condensed consolidated statements of income and approximately $1.5 million recorded in income (loss) from discontinued operations before taxes in the accompanying condensed consolidated statements of income. (3) Amount represents the cash settlement of accruals related to certain deferred maintenance costs and other liabilities related to lease termination. |
Business Acquisitions and Dis24
Business Acquisitions and Dispositions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Business Combinations [Abstract] | |
Revenues and Other Activities Associated with Dealerships Classified as Discontinued Operations | Revenues and other activities associated with dealerships classified as discontinued operations were as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Income (loss) from operations $ (162 ) $ (135 ) $ (441 ) $ (327 ) Lease exit accrual adjustments and charges (139 ) (227 ) (727 ) 227 Pre-tax income (loss) $ (301 ) $ (362 ) $ (1,168 ) $ (100 ) Total revenues $ - $ - $ - $ - |
Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations | Revenues and other activities associated with disposed dealerships that remain in continuing operations were as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Income (loss) from operations $ (16 ) $ (241 ) $ (43 ) $ (273 ) Gain (loss) on disposal - (11 ) (24 ) (58 ) Pre-tax income (loss) $ (16 ) $ (252 ) $ (67 ) $ (331 ) Total revenues $ - $ - $ - $ - |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | Inventories consist of the following: June 30, 2017 December 31, 2016 (In thousands) New vehicles $ 1,116,708 $ 1,088,814 Used vehicles 301,283 282,288 Service loaners 133,552 128,821 Parts, accessories and other 70,795 70,778 Net inventories $ 1,622,338 $ 1,570,701 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property Plant And Equipment [Abstract] | |
Components of Property and Equipment, Net | Property and equipment, net consists of the following: June 30, 2017 December 31, 2016 (In thousands) Land $ 335,238 $ 306,457 Building and improvements 836,976 777,766 Software and computer equipment 138,250 128,366 Parts and service equipment 102,301 93,901 Office equipment and fixtures 92,050 86,216 Company vehicles 9,542 9,107 Construction in progress 67,211 62,982 Total, at cost 1,581,568 1,464,795 Less accumulated depreciation (490,710 ) (450,184 ) Subtotal 1,090,858 1,014,611 Less assets held for sale (1) (3,489 ) (4,231 ) Property and equipment, net $ 1,087,369 $ 1,010,380 (1) Classified in other current assets in the accompanying condensed consolidated balance sheets. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Instrument [Line Items] | |
Long-Term Debt | Long-term debt consists of the following: June 30, 2017 December 31, 2016 (In thousands) 2016 Revolving Credit Facility (1) $ - $ - 7.0% Senior Subordinated Notes due 2022 (the “7.0% Notes”) - 200,000 5.0% Senior Subordinated Notes due 2023 (the “5.0% Notes”) 289,273 289,273 6.125% Senior Subordinated Notes due 2027 (the “6.125% Notes”) 250,000 - Mortgage notes to finance companies-fixed rate, bearing interest from 3.51% to 7.03% 199,856 176,369 Mortgage notes to finance companies-variable rate, bearing interest at 1.25 to 2.80 percentage points above one-month or three-month LIBOR 225,427 227,342 Net debt discount and premium (2) (58 ) (1,258 ) Debt issuance costs (14,055 ) (13,328 ) Other 4,115 4,280 Total debt $ 954,558 $ 882,678 Less current maturities (67,231 ) (43,003 ) Long-term debt $ 887,327 $ 839,675 (1) The interest rate on the 2016 Revolving Credit Facility (as defined below) was 200 basis points and 225 basis points above LIBOR at June 30, 2017 and December 31, 2016, respectively. (2) June 30, 2017 includes a $0.1 million discount associated with mortgage notes payable. December 31, 2016 includes a $1.1 million discount associated with the 7.0% Notes and a $0.2 million discount associated with mortgage notes payable. |
Financial Covenants Include Required Specified Ratios | Sonic was in compliance with the covenants under the 2016 Credit Facilities as of June 30, 2017. Financial covenants include required specified ratios (as each is defined in the 2016 Credit Facilities) of: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Required ratio 1.05 1.20 5.75 June 30, 2017 actual 1.14 1.95 4.38 |
Summary of Interest Received and Paid under Term of Cash Flow Swap | Under the terms of these cash flow swaps, Sonic will receive and pay interest based on the following: Notional Amount Pay Rate Receive Rate (1) Maturing Date (In millions) $ 2.2 7.100% one-month LIBOR + 1.50% July 10, 2017 $ 7.0 4.655% one-month LIBOR December 10, 2017 $ 6.4 (2) 6.860% one-month LIBOR + 1.25% August 1, 2017 $ 5.9 (2) 6.410% one-month LIBOR + 1.25% September 12, 2017 $ 50.0 1.320% one-month LIBOR July 1, 2017 $ 250.0 (3) 1.887% one-month LIBOR June 30, 2018 $ 25.0 2.080% one-month LIBOR July 1, 2017 $ 100.0 1.560% one-month LIBOR July 1, 2017 $ 125.0 1.303% one-month LIBOR July 1, 2017 $ 125.0 (4) 1.900% one-month LIBOR July 1, 2018 $ 50.0 (5) 2.320% one-month LIBOR July 1, 2019 $ 200.0 (5) 2.313% one-month LIBOR July 1, 2019 $ 100.0 (6) 1.384% one-month LIBOR July 1, 2020 $ 125.0 (5) 1.158% one-month LIBOR July 1, 2019 $ 150.0 (6) 1.310% one-month LIBOR July 1, 2020 $ 125.0 (4) 1.020% one-month LIBOR July 1, 2018 (1) The one-month LIBOR rate was approximately 1.224% at June 30, 2017. (2) Changes in fair value are recorded through earnings. (3) The effective date of this forward-starting swap is July 3, 2017. (4) The effective date of these forward-starting swaps is July 1, 2017. (5) The effective date of these forward-starting swaps is July 2, 2018. (6) The effective date of these forward-starting swaps is July 1, 2019. |
6.125% Senior Subordinated Notes due 2027 [Member] | |
Debt Instrument [Line Items] | |
Redemption Price, Percentage | Sonic may redeem the 6.125% Notes, in whole or in part, at any time on or after March 15, 2022 at the following redemption prices, which are expressed as percentages of the principal amount: Redemption Price Beginning on March 15, 2022 103.063 % Beginning on March 15, 2023 102.042 % Beginning on March 15, 2024 101.021 % Beginning on March 15, 2025 and thereafter 100.000 % |
Per Share Data and Stockholde28
Per Share Data and Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
Dilutive Effect on Earnings Per Share | The following tables illustrate the dilutive effect of such items on earnings per share for the three and six months ended June 30, 2017 and 2016: Three Months Ended June 30, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) 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 Three Months Ended June 30, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Earnings (loss) and shares 45,731 $ 23,043 $ (221 ) $ 22,822 Effect of participating securities: Non-vested restricted stock (13 ) - (13 ) Basic earnings (loss) and shares 45,731 $ 23,030 $ 0.50 $ (221 ) $ - $ 22,809 $ 0.50 Effect of dilutive securities: Stock compensation plans 193 Diluted earnings (loss) and shares 45,924 $ 23,030 $ 0.50 $ (221 ) $ - $ 22,809 $ 0.50 Six Months Ended June 30, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) 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 Six Months Ended June 30, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Earnings (loss) and shares 46,340 $ 37,507 $ (61 ) $ 37,446 Effect of participating securities: Non-vested restricted stock (21 ) - (21 ) Basic earnings (loss) and shares 46,340 $ 37,486 $ 0.81 $ (61 ) $ - $ 37,425 $ 0.81 Effect of dilutive securities: Stock compensation plans 183 Diluted earnings (loss) and shares 46,523 $ 37,486 $ 0.81 $ (61 ) $ (0.01 ) $ 37,425 $ 0.80 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Recorded at Fair Value | Assets and liabilities recorded at fair value in the accompanying condensed consolidated balance sheets as of June 30, 2017 and December 31, 2016 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) June 30, 2017 December 31, 2016 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 32,383 $ 31,475 Cash flow swaps designated as hedges (2) 2,428 2,772 Total assets $ 34,811 $ 34,247 Liabilities: Cash flow swaps designated as hedges (3) $ 3,646 $ 6,135 Cash flow swaps not designated as hedges (4) 68 346 Deferred compensation plan (5) 16,578 14,824 Total liabilities $ 20,292 $ 21,305 (1) Included in other assets in the accompanying condensed consolidated balance sheets. (2) As of June 30, 2017, approximately $2.4 million was included in other assets in the accompanying condensed consolidated balance sheets. As of December 31, 2016, approximately $2.8 million was included in other assets in the accompanying condensed consolidated balance sheets. (3) As of June 30, 2017, approximately $1.7 million and $1.9 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets. As of December 31, 2016, approximately $3.7 million and $2.4 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets. (4) As of June 30, 2017, approximately $0.1 million was included in other accrued liabilities in the accompanying condensed consolidated balance sheets. As of December 31, 2016, approximately $0.3 million was included in other accrued liabilities in the accompanying condensed consolidated balance sheets. (5) Included in other long-term liabilities in the accompanying condensed consolidated balance sheets. |
Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt | At June 30, 2017 and December 31, 2016, the fair value and carrying value of Sonic’s significant fixed rate long-term debt were as follows: June 30, 2017 December 31, 2016 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 7.0% Notes (1) $ - $ - $ 211,000 $ 198,871 5.0% Notes (1) $ 276,256 $ 289,273 $ 284,934 $ 289,273 6.125% Notes (1) $ 247,500 $ 250,000 $ - $ - Mortgage Notes (2) $ 206,220 $ 199,856 $ 185,979 $ 176,369 Other (2) $ 3,910 $ 4,114 $ 4,057 $ 4,280 (1) As determined by market quotations as of June 30, 2017 and December 31, 2016, respectively (Level 1). (2) As determined by discounted cash flows (Level 3). |
Accumulated Other Comprehensi30
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2017 are as follows: Gains and Losses on Cash Flow Hedges Defined Benefit Pension Plan Total Accumulated Other Comprehensive Income (Loss) (In thousands) Balance at December 31, 2016 $ (2,085 ) $ (177 ) $ (2,262 ) Other comprehensive income (loss) before reclassifications (1) (38 ) - (38 ) Amounts reclassified out of accumulated other comprehensive income (loss) (2) 1,367 - 1,367 Net current-period other comprehensive income (loss) 1,329 - 1,329 Balance at June 30, 2017 $ (756 ) $ (177 ) $ (933 ) (1) Net of tax benefit of $23. (2) Net of tax expense of $838. |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Reporting [Abstract] | |
Summary of Reportable Operating Segment | Reportable segment revenues and segment income (loss) for the three and six months ended June 30, 2017 and 2016 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Revenues: Franchised Dealerships $ 2,356,692 $ 2,352,840 $ 4,602,717 $ 4,563,425 EchoPark 49,054 29,472 90,851 53,514 Total consolidated revenues $ 2,405,746 $ 2,382,312 $ 4,693,568 $ 4,616,939 Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 (In thousands) Segment income (loss) (1): Franchised Dealerships $ 40,544 $ 53,561 $ 74,013 $ 92,854 EchoPark (7,517 ) (3,206 ) (12,924 ) (6,630 ) Total segment income (loss) 33,027 50,355 61,089 86,224 Interest expense, other, net (12,764 ) (12,205 ) (26,172 ) (24,544 ) Other income (expense), net 7 6 (14,495 ) 110 Income (loss) from continuing operations before taxes $ 20,270 $ 38,156 $ 20,422 $ 61,790 (1) Segment income (loss) for each segment is defined as operating income (loss) less interest expense, floor plan. |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Significant Accounting Policies [Line Items] | |||||
Effective tax rate from continuing operations | 39.30% | 39.60% | 39.80% | 39.30% | |
Income tax benefit | $ (7,956) | $ (15,113) | $ (8,128) | $ (24,283) | |
ASU 2016-09 [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Income tax benefit | $ 200 | $ 500 | |||
Minimum [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Expected effective tax rate for continuing operations Range | 38.00% | ||||
Maximum [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Expected effective tax rate for continuing operations Range | 40.00% | ||||
Dealership [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Percentage of dealership that is accounted for under the equity method | 50.00% | 50.00% | 50.00% |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Summary of Lease Exit Accruals (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Accounting Policies [Abstract] | |
Beginning balance | $ 9,790 |
Lease exit expense | 1,827 |
Payments | (1,877) |
Other | (1,377) |
Ending balance | $ 8,363 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Summary of Lease Exit Accruals (Parenthetical) (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Accounting Policies [Abstract] | |
Component of lease exit expense in selling, general and administrative expenses | $ 1.1 |
Component of lease exit expense in income (loss) from operations and the sale of dealerships before tax | 0.7 |
Component of lease exit payments in selling, general and administrative expenses | 0.4 |
Component of lease exit payments in income (loss) from operations and the sale of dealerships before tax | $ 1.5 |
Business Acquisitions and Dis35
Business Acquisitions and Dispositions - Additional Information (Detail) - Franchise | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Business Combinations [Abstract] | ||||
Number of franchises acquired | 0 | 0 | 0 | 0 |
Number of franchises disposed | 0 | 0 | 0 | 0 |
Business Acquisitions and Dis36
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Dealerships Classified as Discontinued Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Business Combinations [Abstract] | ||||
Income (loss) from operations | $ (162) | $ (135) | $ (441) | $ (327) |
Lease exit accrual adjustments and charges | (139) | (227) | (727) | 227 |
Pre-tax income (loss) | $ (301) | $ (362) | $ (1,168) | $ (100) |
Business Acquisitions and Dis37
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Business Combinations [Abstract] | ||||
Income (loss) from operations | $ (16) | $ (241) | $ (43) | $ (273) |
Gain (loss) on disposal | (11) | (24) | (58) | |
Pre-tax income (loss) | $ (16) | $ (252) | $ (67) | $ (331) |
Inventories - Components of Inv
Inventories - Components of Inventories (Detail) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
New vehicles | $ 1,116,708 | $ 1,088,814 |
Used vehicles | 301,283 | 282,288 |
Service loaners | 133,552 | 128,821 |
Parts, accessories and other | 70,795 | 70,778 |
Net inventories | $ 1,622,338 | $ 1,570,701 |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Total, at cost | $ 1,581,568 | $ 1,464,795 |
Less accumulated depreciation | (490,710) | (450,184) |
Subtotal | 1,090,858 | 1,014,611 |
Less assets held for sale | (3,489) | (4,231) |
Property and equipment, net | 1,087,369 | 1,010,380 |
Land [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 335,238 | 306,457 |
Building and Improvements [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 836,976 | 777,766 |
Software and Computer Equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 138,250 | 128,366 |
Parts and Service Equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 102,301 | 93,901 |
Office Equipment and Fixtures [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 92,050 | 86,216 |
Company Vehicles [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 9,542 | 9,107 |
Construction in Progress [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | $ 67,211 | $ 62,982 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property Plant And Equipment [Abstract] | ||||
Capital expenditures | $ 45,500 | $ 67,600 | $ 121,200 | $ 109,000 |
Asset impairment charges | $ 2,605 | $ 151 | $ 3,115 | $ 151 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Additional Information (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2017USD ($) | Jun. 30, 2017USD ($)Store | Dec. 31, 2016USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 471,493 | $ 471,493 | $ 472,437 |
Net of accumulated impairment losses | 797,600 | $ 797,600 | 796,700 |
Number of stand-alone pre-owned stores | Store | 2 | ||
Lease Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Definite life intangibles | 5,000 | $ 5,000 | 5,300 |
Stand-alone Pre-owned Stores [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment of goodwill | 900 | 900 | |
Franchise Assets [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Franchise assets | $ 74,900 | $ 74,900 | $ 74,900 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt (Detail) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Net debt discount and premium | $ (58,000) | $ (1,258,000) |
Debt issuance costs | (14,055,000) | (13,328,000) |
Other | 4,115,000 | 4,280,000 |
Total debt | 954,558,000 | 882,678,000 |
Less current maturities | (67,231,000) | (43,003,000) |
Long-Term Debt | 887,327,000 | 839,675,000 |
2016 Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
2016 Revolving Credit Facility | 0 | |
7.0% Senior Subordinated Notes Due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Subordinated Notes | 200,000,000 | |
Total debt | 198,871,000 | |
5.0% Senior Subordinated Notes due 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Subordinated Notes | 289,273,000 | 289,273,000 |
Total debt | 289,273,000 | 289,273,000 |
6.125% Senior Subordinated Notes due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Subordinated Notes | 250,000,000 | |
Total debt | 250,000,000 | |
Mortgage Notes [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage notes to finance companies-fixed rate, bearing interest from 3.51% to 7.03% | 199,856,000 | 176,369,000 |
Mortgage notes to finance companies-variable rate, bearing interest at 1.25 to 2.80 percentage points above one-month or three-month LIBOR | $ 225,427,000 | $ 227,342,000 |
Long-Term Debt - Long-Term De43
Long-Term Debt - Long-Term Debt (Parenthetical) (Detail) - USD ($) $ in Millions | Jun. 30, 2017 | Mar. 10, 2017 | Dec. 31, 2016 | May 09, 2013 | Jul. 02, 2012 |
7.0% Senior Subordinated Notes Due 2022 [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | ||
Discount associated with notes | $ 1.1 | ||||
5.0% Senior Subordinated Notes due 2023 [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | ||
6.125% Senior Subordinated Notes due 2027 [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% | ||
2016 Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.00% | 2.25% | |||
Mortgage Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Discount associated with notes | $ 0.1 | $ 0.2 | |||
Minimum [Member] | Mortgage Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Mortgage notes to finance companies-fixed rate, percentage | 3.51% | ||||
Mortgage notes to finance companies-variable rate, percentage | 1.25% | ||||
Maximum [Member] | Mortgage Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Mortgage notes to finance companies-fixed rate, percentage | 7.03% | ||||
Mortgage notes to finance companies-variable rate, percentage | 2.80% |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | Mar. 27, 2017 | Mar. 10, 2017 | Sep. 30, 2016 | May 09, 2013 | Jul. 02, 2012 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||||||||
Loss on repurchase of debt instrument | $ 14,607,000 | |||||||||
Incremental interest expense | $ 700,000 | $ 1,300,000 | 1,900,000 | $ 2,500,000 | ||||||
Net expense expected to be reclassified | 1,100,000 | 1,100,000 | ||||||||
Derivative Instruments and Hedging Activities [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of swap positions | 1,300,000 | 1,300,000 | $ 3,700,000 | |||||||
Expense and (benefit) related to cash flow swaps not designated as hedges | (100,000) | $ (100,000) | (300,000) | $ (200,000) | ||||||
Derivative Instruments and Hedging Activities [Member] | Other Current Assets [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of swap positions | 2,800,000 | |||||||||
Derivative Instruments and Hedging Activities [Member] | Other Assets [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of swap positions | 2,400,000 | 2,400,000 | 2,800,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Accrued Liabilities [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of swap positions | 1,800,000 | 1,800,000 | 4,100,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Long-Term Liabilities [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of swap positions | 1,900,000 | 1,900,000 | $ 2,400,000 | |||||||
Mortgage Notes [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Mortgage financing aggregate | $ 32,500,000 | $ 32,500,000 | ||||||||
Debt weighted average interest rate on note | 4.01% | 4.01% | ||||||||
Outstanding principal balance | $ 425,300,000 | $ 425,300,000 | ||||||||
Percentage of operating locations related to mortgage financing | 50.00% | |||||||||
Notes payable due date | between 2017 and 2033 | |||||||||
2016 Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maturity date of revolving credit facility and floor plan facility | Nov. 30, 2021 | |||||||||
Net income and retained earnings free of restrictions | $ 113,500,000 | $ 113,500,000 | ||||||||
Minimum EBTDAR to rent ratio | 388.00% | 388.00% | ||||||||
2016 Credit Facility [Member] | Required Ratio [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Minimum EBTDAR to rent ratio | 150.00% | 150.00% | ||||||||
2016 Revolving Credit Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Current borrowing capacity | $ 250,000,000 | $ 250,000,000 | ||||||||
Maximum borrowing capacity | 300,000,000 | 300,000,000 | ||||||||
Borrowing base | 211,400,000 | 211,400,000 | ||||||||
Letters of credit outstanding amount | 17,300,000 | 17,300,000 | ||||||||
2016 Revolving Credit Facility | 0 | 0 | ||||||||
Borrowing availability amount | $ 194,100,000 | $ 194,100,000 | ||||||||
7.0% Senior Subordinated Notes Due 2022 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 200,000,000 | |||||||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | 7.00% | ||||||
Notes issued at a price of principal amount | 99.11% | |||||||||
Notes issued yield maturity, percentage | 7.125% | |||||||||
Notes maturity date | Jul. 15, 2022 | |||||||||
Interest payable description | semi-annually in arrears on January 15 and July 15 of each year | |||||||||
Cash paid to extinguish of debt instrument including early redemption premium and accrued and unpaid interest | $ 213,700,000 | |||||||||
Loss on repurchase of debt instrument | $ 14,600,000 | |||||||||
5.0% Senior Subordinated Notes due 2023 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 300,000,000 | |||||||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | 5.00% | ||||||
Notes issued at a price of principal amount | 100.00% | |||||||||
Notes maturity date | May 15, 2023 | |||||||||
Interest payable description | semi-annually in arrears on May 15 and November 15 of each year | |||||||||
Outstanding notes repurchased amount | $ 10,700,000 | |||||||||
Repurchase amount paid in cash, plus accrued and unpaid interest related thereto | $ 10,600,000 | |||||||||
6.125% Senior Subordinated Notes due 2027 [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 250,000,000 | |||||||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% | 6.125% | ||||||
Notes issued at a price of principal amount | 100.00% | |||||||||
Notes issued yield maturity, percentage | 6.125% | |||||||||
Notes maturity date | Mar. 15, 2027 | |||||||||
Interest payable description | semi-annually in arrears on March 15 and September 15 of each year | |||||||||
Notes redemption price percentage of the principal amount | 100.00% | |||||||||
Redemption Price | 106.125% | |||||||||
Notes redemption price percentage of the par value due to Change of Control | 101.00% | |||||||||
Debt instrument maximum allowed dividends per share | $ 0.12 | |||||||||
Restrictive covenants under credit facilities and 6.125% notes | Specifically, the indenture governing the 6.125% Notes limits Sonic’s ability to pay quarterly cash dividends on Sonic’s Class A and Class B common stock in excess of $0.12 per share. Sonic may only pay quarterly cash dividends on Sonic’s Class A and Class B common stock if Sonic complies with the terms of the indenture governing the 6.125% Notes. | |||||||||
Outstanding principal amount of the 6.125% notes | 25.00% | |||||||||
6.125% Senior Subordinated Notes due 2027 [Member] | Maximum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes redemption price percentage of the principal amount | 35.00% | |||||||||
6.125% Senior Subordinated Notes due 2027 [Member] | Minimum [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Indebtedness with outstanding balance under other agreements | $ 50,000,000 |
Long-Term Debt - Redemption Pri
Long-Term Debt - Redemption Price, Percentage (Detail) - 6.125% Senior Subordinated Notes due 2027 [Member] | 6 Months Ended |
Jun. 30, 2017 | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 106.125% |
Beginning on March 15, 2022 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 103.063% |
Beginning on March 15, 2023 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 102.042% |
Beginning on March 15, 2024 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 101.021% |
Beginning on March 15, 2025 and Thereafter [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 100.00% |
Long-Term Debt - Financial Cove
Long-Term Debt - Financial Covenants Include Required Specified Ratios (Detail) | Jun. 30, 2017 |
Line Of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 114.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 195.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 438.00% |
Required Ratio [Member] | |
Line Of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 105.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 120.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 575.00% |
Long-Term Debt - Summary of Int
Long-Term Debt - Summary of Interest Received and Paid under Term of Cash Flow Swap (Detail) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Variable Interest Rate | 1.224% |
Cash Flow Swap [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 2,200,000 |
Pay Rate | 7.10% |
Receive Rate | one-month LIBOR + 1.50% |
Maturing Date | Jul. 10, 2017 |
Variable Interest Rate | 1.50% |
Cash Flow Swap 1 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 7,000,000 |
Pay Rate | 4.655% |
Receive Rate | one-month LIBOR |
Maturing Date | Dec. 10, 2017 |
Cash Flow Swap 2 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 6,400,000 |
Pay Rate | 6.86% |
Receive Rate | one-month LIBOR + 1.25% |
Maturing Date | Aug. 1, 2017 |
Variable Interest Rate | 1.25% |
Cash Flow Swap 3 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 5,900,000 |
Pay Rate | 6.41% |
Receive Rate | one-month LIBOR + 1.25% |
Maturing Date | Sep. 12, 2017 |
Variable Interest Rate | 1.25% |
Cash Flow Swap 4 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 50,000,000 |
Pay Rate | 1.32% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2017 |
Cash Flow Swap 5 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 250,000,000 |
Pay Rate | 1.887% |
Receive Rate | one-month LIBOR |
Maturing Date | Jun. 30, 2018 |
Cash Flow Swap 6 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 25,000,000 |
Pay Rate | 2.08% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2017 |
Cash Flow Swap 7 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 100,000,000 |
Pay Rate | 1.56% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2017 |
Cash Flow Swap 8 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.303% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2017 |
Cash Flow Swap 9 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.90% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2018 |
Cash Flow Swap 10 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 50,000,000 |
Pay Rate | 2.32% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2019 |
Cash Flow Swap 11 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 200,000,000 |
Pay Rate | 2.313% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2019 |
Cash Flow Swap 12 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 100,000,000 |
Pay Rate | 1.384% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2020 |
Cash Flow Swap 13 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.158% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2019 |
Cash Flow Swap 14 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 150,000,000 |
Pay Rate | 1.31% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2020 |
Cash Flow Swap 15 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.02% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2018 |
Long-Term Debt - Summary of I48
Long-Term Debt - Summary of Interest Received and Paid under Term of Cash Flow Swap (Parenthetical) (Detail) | 6 Months Ended |
Jun. 30, 2017 | |
Derivatives, Fair Value [Line Items] | |
One-month LIBOR rate | 1.224% |
Receive Rate | one-month LIBOR |
Cash Flow Swap 5 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 3, 2017 |
Cash Flow Swap 9 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 1, 2017 |
Cash Flow Swap 15 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 1, 2017 |
Cash Flow Swap 10 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 2, 2018 |
Cash Flow Swap 11 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 2, 2018 |
Cash Flow Swap 13 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 2, 2018 |
Cash Flow Swap 12 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 1, 2019 |
Cash Flow Swap 14 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 1, 2019 |
Per Share Data and Stockholde49
Per Share Data and Stockholders' Equity - Dilutive Effect on Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Weighted Average Shares, Basic | 44,570 | 45,731 | 44,680 | 46,340 |
Weighted Average Shares, Stock compensation plans | 240 | 193 | 296 | 183 |
Weighted Average Shares, Diluted | 44,810 | 45,924 | 44,976 | 46,523 |
Income (Loss) From Continuing Operations, Amount | $ 12,314 | $ 23,043 | $ 12,294 | $ 37,507 |
Participating securities income (loss) from continuing operations non-vested restricted stock | (9) | (13) | (9) | (21) |
Income (Loss) From Continuing Operations, Basic, Amount | 12,305 | 23,030 | 12,285 | 37,486 |
Income (Loss) From Continuing Operations Diluted, Amount | $ 12,305 | $ 23,030 | $ 12,285 | $ 37,486 |
Income (Loss) From Continuing Operations, Basic, Per Share Amount | $ 0.28 | $ 0.50 | $ 0.27 | $ 0.81 |
Income (Loss) From Continuing Operations, Diluted, Per Share Amount | $ 0.27 | $ 0.50 | $ 0.27 | $ 0.81 |
Income (Loss) From Discontinued Operations, Earnings (loss), Amount | $ (182) | $ (221) | $ (703) | $ (61) |
Income (Loss) From Discontinued Operations, Basic earnings (loss), Amount | (182) | (221) | (703) | (61) |
Income (Loss) From Discontinued Operations, Diluted earnings (loss), Amount | $ (182) | (221) | $ (703) | $ (61) |
Income (Loss) From Discontinued Operations, Basic earnings (loss), Per Share Amount | $ (0.01) | $ (0.01) | ||
Income (Loss) From Discontinued Operations, Diluted earnings (loss), Per Share Amount | $ (0.01) | $ (0.01) | ||
Net Income (Loss), Amount | $ 12,132 | 22,822 | $ 11,591 | $ 37,446 |
Participating securities net income (loss) non-vested restricted stock | (9) | (13) | (9) | (21) |
Net Income (Loss), Basic, Amount | 12,123 | 22,809 | 11,582 | 37,425 |
Net Income (Loss), Diluted, Amount | $ 12,123 | $ 22,809 | $ 11,582 | $ 37,425 |
Net Income (Loss), Basic, Per Share Amount | $ 0.27 | $ 0.50 | $ 0.26 | $ 0.81 |
Net Income (Loss), Diluted, Per Share Amount | $ 0.27 | $ 0.50 | $ 0.26 | $ 0.80 |
Per Share Data and Stockholde50
Per Share Data and Stockholders' Equity - Additional Information (Detail) shares in Millions | 6 Months Ended |
Jun. 30, 2016shares | |
Common Class A [Member] | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive stock options excluded in computation of diluted earnings (loss) per share | 0.2 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Contingencies And Commitments [Line Items] | ||
Maximum exposure associated with general indemnifications | $ 0.5 | $ 0.5 |
General indemnifications minimum expiration period | 1 year | |
General indemnifications maximum expiration period | 3 years | |
Contingent liability reserve balance after reduction | $ 2.8 | $ 2.8 |
Dealership [Member] | ||
Contingencies And Commitments [Line Items] | ||
Joint venture ownership percentage | 50.00% | 50.00% |
Other Accrued Liabilities [Member] | ||
Contingencies And Commitments [Line Items] | ||
Amount reserved for pending proceedings | $ 2.5 | $ 0.3 |
Other Long-Term Liabilities [Member] | ||
Contingencies And Commitments [Line Items] | ||
Amount reserved for pending proceedings | $ 0.2 | $ 0.2 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Detail) - Fair Value Based on Significant Other Observable Inputs (Level 2) [Member] - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Cash surrender value of life insurance policies | $ 32,383 | $ 31,475 |
Cash flow swaps designated as hedges | 2,428 | 2,772 |
Total assets | 34,811 | 34,247 |
Liabilities: | ||
Cash flow swaps designated as hedges | 3,646 | 6,135 |
Cash flow swaps not designated as hedges | 68 | 346 |
Deferred compensation plan | 16,578 | 14,824 |
Total liabilities | $ 20,292 | $ 21,305 |
Fair Value Measurements - Ass53
Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Parenthetical) (Detail) - USD ($) $ in Millions | Jun. 30, 2017 | Dec. 31, 2016 |
Other Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps designated as hedges | $ 2.4 | $ 2.8 |
Other Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps designated as hedges | 1.7 | 3.7 |
Cash flow swaps not designated as hedges | 0.1 | 0.3 |
Other Long-Term Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps designated as hedges | $ 1.9 | $ 2.4 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($)FranchiseBusiness | Sep. 30, 2016Business | Jun. 30, 2016Franchise | Jun. 30, 2017FranchiseBusiness | Jun. 30, 2016Franchise | |
Business Acquisition [Line Items] | |||||
Number of businesses acquired | Franchise | 0 | 0 | 0 | 0 | |
Stand-alone Pre-owned Businesses and Real Estate [Member] | |||||
Business Acquisition [Line Items] | |||||
Number of businesses acquired | Business | 3 | ||||
Impairment of goodwill | $ | $ 0.9 | ||||
Impairment of property and equipment | $ | $ 0.8 | ||||
Number of businesses closed | Business | 2 | 2 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt (Detail) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Carrying Value | $ 954,558 | $ 882,678 |
7.0% Senior Subordinated Notes Due 2022 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 211,000 | |
Long-term Debt, Carrying Value | 198,871 | |
5.0% Senior Subordinated Notes due 2023 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 276,256 | 284,934 |
Long-term Debt, Carrying Value | 289,273 | 289,273 |
6.125% Senior Subordinated Notes due 2027 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 247,500 | |
Long-term Debt, Carrying Value | 250,000 | |
Mortgage Loan at Fix Interest Rate [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 206,220 | 185,979 |
Long-term Debt, Carrying Value | 199,856 | 176,369 |
Other [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 3,910 | 4,057 |
Long-term Debt, Carrying Value | $ 4,114 | $ 4,280 |
Fair Value Measurements - Fai56
Fair Value Measurements - Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt (Parenthetical) (Detail) | Jun. 30, 2017 | Mar. 10, 2017 | Dec. 31, 2016 | May 09, 2013 | Jul. 02, 2012 |
7.0% Senior Subordinated Notes Due 2022 [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | ||
5.0% Senior Subordinated Notes due 2023 [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | ||
6.125% Senior Subordinated Notes due 2027 [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% |
Accumulated Other Comprehensi57
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | $ 725,164 | |||
Other comprehensive income (loss) before reclassifications | (38) | |||
Amounts reclassified out of accumulated other comprehensive income (loss) | 1,367 | |||
Other comprehensive income (loss) | $ 26 | $ (1,735) | 1,329 | $ (4,760) |
Ending Balance | 713,410 | 713,410 | ||
Gains and Losses on Cash Flow Hedges [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | (2,085) | |||
Other comprehensive income (loss) before reclassifications | (38) | |||
Amounts reclassified out of accumulated other comprehensive income (loss) | 1,367 | |||
Other comprehensive income (loss) | 1,329 | |||
Ending Balance | (756) | (756) | ||
Defined Benefit Pension Plan [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | (177) | |||
Ending Balance | (177) | (177) | ||
Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning Balance | (2,262) | |||
Ending Balance | $ (933) | $ (933) |
Accumulated Other Comprehensi58
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Equity [Abstract] | |
Other comprehensive income (loss) before reclassifications, tax benefit | $ 23 |
Amounts reclassified out of accumulated other comprehensive income (loss), tax expense | $ 838 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2017Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Reportable Operating Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | $ 2,405,746 | $ 2,382,312 | $ 4,693,568 | $ 4,616,939 |
Total segment income (loss) | 33,027 | 50,355 | 61,089 | 86,224 |
Interest expense, other, net | (12,764) | (12,205) | (26,172) | (24,544) |
Other income (expense), net | 7 | 6 | (14,495) | 110 |
Income (loss) from continuing operations before taxes | 20,270 | 38,156 | 20,422 | 61,790 |
Franchised Dealerships [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 2,356,692 | 2,352,840 | 4,602,717 | 4,563,425 |
Total segment income (loss) | 40,544 | 53,561 | 74,013 | 92,854 |
Echo Park [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 49,054 | 29,472 | 90,851 | 53,514 |
Total segment income (loss) | $ (7,517) | $ (3,206) | $ (12,924) | $ (6,630) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ in Millions | Jul. 01, 2017USD ($) |
Uninsured Risk [Member] | Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Preliminary estimates loss of storm damage to vehicle inventory | $ 1 |