Sonic Automotive, Inc. Reports Third Quarter Results

EchoPark Revenue Up 226% with Volume Up 221%

News provided by

Sonic Automotive, Inc.

Oct 25, 2018, 07:30 ET

CHARLOTTE, N.C., Oct. 25, 2018 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported financial results for the third quarter of 2018.

  • Third quarter revenue and gross profit of $2.5 billion and $360.5 million, respectively
  • Record third quarter pre-owned retail unit sales of 34,952 units
  • Record third quarter F&I gross profit per retail unit of $1,505
  • Record third quarter F&I gross of $98.1 million
  • EchoPark stores retailed 7,698 units during the quarter, up 221% from the third quarter of 2017
  • GAAP continuing operations earnings per diluted share of $0.36 per diluted share in the third quarter of 2018
  • Adjusted continuing operations earnings per diluted share of $0.43 per diluted share in the third quarter of 2018

Third Quarter 2018 Results

GAAP Basis

Net income from continuing operations for the third quarter of 2018 was $15.3 million, or $0.36 per diluted share.  Comparatively, net income from continuing operations for the third quarter of 2017 was $19.7 million, or $0.45 per diluted share.

Adjusted Basis

Adjusted net income from continuing operations and related earnings per diluted share are non-GAAP financial measures.  The schedules included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Adjusted net income from continuing operations for the third quarter of 2018 was $18.3 million, or $0.43 per diluted share.  The adjustments in the third quarter of 2018 relate to storm damage, executive transition costs and charges related to the disposal of franchises.  Adjusted net income from continuing operations for the third quarter of 2017 was $17.4 million, or $0.40 per diluted share.  The adjustments in the third quarter of 2017 relate to a gain from the disposal of a franchise and charges related to fixed asset impairments, storm damage and legal matters.

Commentary

David Bruton Smith, the Company's Chief Executive Officer, noted, "Our EchoPark strategy to grow our pre-owned business continued according to plan in the third quarter of 2018.  Revenues grew by nearly $130 million, or 226%, compared to the prior year quarter and we anticipate this upward trajectory to continue into the fourth quarter of 2018 with the opening of two additional EchoPark locations. On October 8, 2018, we opened an EchoPark store in Charlotte, North Carolina, and we expect to open another EchoPark Store in Houston, Texas by the end of 2018. On the franchise side of the business, revenues declined 1.7% on a same store basis primarily due to the strong third quarter comparison in 2017 containing the rebound effects of Hurricane Harvey.  Despite this headwind, the franchised dealerships increased total gross profit by 1.1% during the quarter with strong performances in used vehicles and fixed operations.  We look forward to a robust selling environment in the fourth quarter."

Jeff Dyke, the Company's President, noted, "We continue to work with our manufacturer partners to improve our margins at the store level and to make facility investments that provide the appropriate return for all parties. I am pleased with the progress we are making but believe we have more opportunity for improvement with certain brands.  As David mentioned, we are very excited about the performance of EchoPark and our expansion plans."

Dividend

Sonic's Board of Directors approved a quarterly dividend of $0.06 per share payable in cash for our stockholders of record on December 14, 2018.  The dividend will be payable on January 15, 2019.

Third Quarter 2018 Earnings Conference Call

Senior management will host a conference call today at 11:00 A.M. (Eastern) to discuss the quarter's results.  To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com, then click on "Our Company," then "Investor Relations," then the "Earnings Conference Calls" link at the bottom of the page.

Presentation materials for the conference call will be accessible beginning the morning of the conference call on the Company's website at www.sonicautomotive.com by clicking on the "Investor Relations" tab under "Our Company" and choosing the "Webcasts & Presentations" link at the bottom of the page.

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

Domestic: (877) 450-3867  
International: (706) 643-0958 
Conference ID: 9177697

A conference call replay will be available one hour following the call for seven days and can be accessed by calling:

Domestic: (855) 859-2056  
International: (404) 537-3406  
Conference ID: 9177697

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation's largest automotive retailers.  Sonic can be reached on the web at www.sonicautomotive.com. More information about EchoPark Automotive can be found at www.echopark.com.

Forward-Looking Statements

Included herein are forward-looking statements, including statements with respect to our EchoPark brand expansion and our performance in the fourth quarter of 2018.  There are many factors that affect management's views about future events and trends of the Company's business.  These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management's views, including, without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 and the Company's other periodic reports and information filed with the Securities and Exchange Commission (the "SEC").  The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the SEC.

Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income from continuing operations and related earnings per diluted share, which exclude certain items disclosed in the attached financial tables.  As required by SEC rules, the Company provides reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures.  The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure, provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

Results of Operations


Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

(Dollars and shares in thousands, except per share amounts)

Revenues:






New vehicles

$

1,235,094

$

1,362,301

$

3,654,510

$

3,809,302

Used vehicles

745,998

659,724

2,217,616

1,936,088

Wholesale vehicles

48,578

43,098

167,726

130,174

Total vehicles

2,029,670

2,065,123

6,039,852

5,875,564

Parts, service and collision repair

343,118

347,717

1,041,630

1,060,873

Finance, insurance and other, net

98,061

92,861

295,890

262,832

Total revenues

2,470,849

2,505,701

7,377,372

7,199,269

Cost of Sales:






New vehicles

(1,173,453)

(1,296,063)

(3,478,802)

(3,622,264)

Used vehicles

(710,681)

(620,579)

(2,108,219)

(1,816,076)

Wholesale vehicles

(49,877)

(46,390)

(176,806)

(136,555)

Total vehicles

(1,934,011)

(1,963,032)

(5,763,827)

(5,574,895)

Parts, service and collision repair

(176,302)

(180,047)

(538,135)

(550,788)

Total cost of sales

(2,110,313)

(2,143,079)

(6,301,962)

(6,125,683)

Gross profit

360,536

362,622

1,075,410

1,073,586

Selling, general and administrative expenses

(289,022)

(283,974)

(871,410)

(870,139)

Impairment charges

—

(200)

(13,961)

(3,315)

Depreciation and amortization

(23,377)

(22,686)

(71,067)

(65,751)

Operating income (loss)

48,137

55,762

118,972

134,381

Other income (expense):






Interest expense, floor plan

(12,192)

(8,882)

(34,815)

(26,413)

Interest expense, other, net

(13,313)

(13,028)

(40,144)

(39,200)

Other income (expense), net

—

4

107

(14,490)

Total other income (expense)

(25,505)

(21,906)

(74,852)

(80,103)

Income (loss) from continuing operations before taxes

22,632

33,856

44,120

54,278

Provision for income taxes for continuing operations - benefit (expense)

(7,331)

(14,126)

(13,711)

(22,254)

Income (loss) from continuing operations

15,301

19,730

30,409

32,024

Discontinued operations:






Income (loss) from discontinued operations before taxes

(252)

(481)

(797)

(1,650)

Provision for income taxes for discontinued operations - benefit (expense)

69

191

218

657

Income (loss) from discontinued operations

(183)

(290)

(579)

(993)

Net income (loss)

$

15,118

$

19,440

$

29,830

$

31,031

Basic earnings (loss) per common share:






Earnings (loss) per share from continuing operations

$

0.36

$

0.45

$

0.71

$

0.72

Earnings (loss) per share from discontinued operations

(0.01)

—

(0.01)

(0.02)

Earnings (loss) per common share

$

0.35

$

0.45

$

0.70

$

0.70

Weighted average common shares outstanding

42,673

43,496

42,708

44,281

Diluted earnings (loss) per common share:






Earnings (loss) per share from continuing operations

$

0.36

$

0.45

$

0.71

$

0.72

Earnings (loss) per share from discontinued operations

(0.01)

(0.01)

(0.02)

(0.02)

Earnings (loss) per common share

$

0.35

$

0.44

$

0.69

$

0.70

Weighted average common shares outstanding

42,994

43,811

42,964

44,585

Dividends declared per common share

$

0.06

$

0.05

$

0.18

$

0.15

Sonic Automotive, Inc.

Results of Operations (Unaudited)

Per Share Data


Three Months Ended September 30, 2018



Income (Loss) From
Continuing
Operations

Income (Loss) From
Discontinued
Operations

Net Income (Loss)

Weighted
Average
Shares

Amount

Per Share
Amount

Amount

Per Share
Amount

Amount

Per Share
Amount

(In thousands, except per share amounts)

Reported:












Earnings (loss) and shares

42,673

$

15,301


$

(183)


$

15,118

Effect of participating securities:












Non-vested restricted stock

(14)


—


(14)

Basic earnings (loss) and shares

42,673

$

15,287

$

0.36

$

(183)

$

(0.01)

$

15,104

$

0.35

Effect of dilutive securities:












Stock compensation plans

321











Diluted earnings (loss) and shares

42,994

$

15,287

$

0.36

$

(183)

$

(0.01)

$

15,104

$

0.35














Adjustments:












Storm damage charges

$

1,185


$

—


$

1,185

Loss on disposal of franchises

346


—


346

Executive transition costs

1,581


—


1,581

Total adjustments before taxes

3,112


—


3,112

Income tax effect of adjustments

(848)


—


(848)

Non-recurring tax items

763


—


763

Effect of adjustments, net of income taxes

$

3,027

$

0.07

$

—

$

—

$

3,027

$

0.07














Adjusted:












Earnings (loss) and diluted earnings (loss) per share (1)

$

18,328

$

0.43

$

(183)

$

(0.01)

$

18,145

$

0.42

(1)   Net loss attributable to EchoPark was $0.09 per fully diluted share in the three months ended September 30, 2018.

Three Months Ended September 30, 2017



Income (Loss) From
Continuing
Operations

Income (Loss) From
Discontinued
Operations

Net Income (Loss)

Weighted
Average
Shares

Amount

Per Share
Amount

Amount

Per Share
Amount

Amount

Per Share
Amount

(In thousands, except per share amounts)

Reported:












Earnings (loss) and shares

43,496

$

19,730


$

(290)


$

19,440

Effect of participating securities:












Non-vested restricted stock

(18)


—


(18)

Basic earnings (loss) and shares

43,496

$

19,712

$

0.45

$

(290)

$

—

$

19,422

$

0.45

Effect of dilutive securities:












Stock compensation plans

315











Diluted earnings (loss) and shares

43,811

$

19,712

$

0.45

$

(290)

$

(0.01)

$

19,422

$

0.44














Adjustments:












Impairment charges

$

198


$

—


$

198

Legal and storm damage charges

3,930


—


3,930

Gain on disposal of franchises

(8,489)


—


(8,489)

Total adjustments before taxes

(4,361)


—


(4,361)

Income tax effect of adjustments

2,065






$

2,065

Effect of adjustments, net of income taxes

$

(2,296)

$

(0.05)

$

—

$

—

$

(2,296)

$

(0.05)














Adjusted:












Earnings (loss) and diluted earnings (loss) per share (2)

$

17,434

$

0.40

$

(290)

$

(0.01)

$

17,144

$

0.39














(2)   Net loss attributable to EchoPark was $0.07 per fully diluted share in the three months ended September 30, 2017.

Nine Months Ended September 30, 2018



Income (Loss) From
Continuing
Operations

Income (Loss) From
Discontinued
Operations

Net Income (Loss)

Weighted
Average
Shares

Amount

Per Share
Amount

Amount

Per Share
Amount

Amount

Per Share
Amount

(In thousands, except per share amounts)

Reported:












Earnings (loss) and shares

42,708

$

30,409


$

(579)


$

29,830

Effect of participating securities:












Non-vested restricted stock

(29)


—


(29)

Basic earnings (loss) and shares

42,708

$

30,380

$

0.71

$

(579)

$

(0.01)

$

29,801

$

0.70

Effect of dilutive securities:












Stock compensation plans

256











Diluted earnings (loss) and shares

42,964

$

30,380

$

0.71

$

(579)

$

(0.02)

$

29,801

$

0.69














Adjustments:












Impairment charges

$

13,958


$

—


$

13,958

Legal and storm damage charges

5,749


—


5,749

Lease exit adjustments

2,235


—


2,235

Gain on disposal of franchises

(38,893)


—


(38,893)

Long-term compensation-related charges

32,522


—


32,522

Executive transition costs

1,581


—


1,581

Total adjustments before taxes

17,152


—


17,152

Income tax effect of adjustments

(4,674)


—


(4,674)

Non-recurring tax items

1,313


—


1,313

Effect of adjustments, net of income taxes

$

13,791

$

0.32

$

—

$

—

$

13,791

$

0.32














Adjusted:












Earnings (loss) and diluted earnings (loss) per share (3)

$

44,200

$

1.03

$

(579)

$

(0.02)

$

43,621

$

1.01

(3)   Net loss attributable to EchoPark was $0.26 per fully diluted share in the nine months ended September 30, 2018.

Nine Months Ended September 30, 2017



Income (Loss) From
Continuing
Operations

Income (Loss) From
Discontinued
Operations

Net Income (Loss)

Weighted
Average
Shares

Amount

Per Share
Amount

Amount

Per Share
Amount

Amount

Per Share
Amount

(In thousands, except per share amounts)

Reported:












Earnings (loss) and shares

44,281

$

32,024


$

(993)


$

31,031

Effect of participating securities:












Non-vested restricted stock

(28)


—


(28)

Basic earnings (loss) and shares

44,281

$

31,996

$

0.72

$

(993)

$

(0.02)

$

31,003

$

0.70

Effect of dilutive securities:












Stock compensation plans

304











Diluted earnings (loss) and shares

44,585

$

31,996

$

0.72

$

(993)

$

(0.02)

$

31,003

$

0.70














Adjustments:












Impairment charges

$

3,313


$

—


$

3,313

Legal and storm damage charges

10,781


—


10,781

Lease exit adjustments

992


—


992

Loss on debt extinguishment

15,268


—


15,268

Gain on disposal of franchises

(8,489)


—


(8,489)

Total adjustments before taxes

21,865


—


21,865

Income tax effect of adjustments

(8,229)


—


$

(8,229)

Effect of adjustments, net of income taxes

$

13,636

$

0.30

$

—

$

—

$

13,636

$

0.30














Adjusted:












Earnings (loss) and diluted earnings (loss) per share (4)

$

45,660

$

1.02

$

(993)

$

(0.02)

$

44,667

$

1.00

(4)  Net loss attributable to EchoPark was $0.22 per fully diluted share in the nine months ended September 30, 2017.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

New Vehicles


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Reported new vehicle:






Revenue

$

1,235,094

$

1,362,301

$

(127,207)

(9.3)

%

Gross profit

$

61,641

$

66,238

$

(4,597)

(6.9)

%

Unit sales

31,009

35,489

(4,480)

(12.6)

%

Revenue per unit

$

39,830

$

38,387

$

1,443

3.8

%

Gross profit per unit

$

1,988

$

1,866

$

122

6.5

%

Gross profit as a % of revenue

5.0

%

4.9

%

10

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Reported new vehicle:






Revenue

$

3,654,510

$

3,809,302

$

(154,792)

(4.1)

%

Gross profit

$

175,708

$

187,038

$

(11,330)

(6.1)

%

Unit sales

91,386

99,132

(7,746)

(7.8)

%

Revenue per unit

$

39,990

$

38,427

$

1,563

4.1

%

Gross profit per unit

$

1,923

$

1,887

$

36

1.9

%

Gross profit as a % of revenue

4.8

%

4.9

%

(10)

bps









Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Same store new vehicle:






Revenue

$

1,235,103

$

1,288,932

$

(53,829)

(4.2)

%

Gross profit

$

61,106

$

63,590

$

(2,484)

(3.9)

%

Unit sales

31,010

33,162

(2,152)

(6.5)

%

Revenue per unit

$

39,829

$

38,868

$

961

2.5

%

Gross profit per unit

$

1,971

$

1,918

$

53

2.8

%

Gross profit as a % of revenue

4.9

%

4.9

%

—

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Same store new vehicle:






Revenue

$

3,588,102

$

3,590,192

$

(2,090)

(0.1)

%

Gross profit

$

173,825

$

180,889

$

(7,064)

(3.9)

%

Unit sales

89,414

92,135

(2,721)

(3.0)

%

Revenue per unit

$

40,129

$

38,967

$

1,162

3.0

%

Gross profit per unit

$

1,944

$

1,963

$

(19)

(1.0)

%

Gross profit as a % of revenue

4.8

%

5.0

%

(20)

bps














Sonic Automotive, Inc.

Results of Operations (Unaudited)

Used Vehicles


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Reported used vehicle:






Revenue

$

745,998

$

659,724

$

86,274

13.1

%

Gross profit

$

35,317

$

39,145

$

(3,828)

(9.8)

%

Unit sales

34,952

30,841

4,111

13.3

%

Revenue per unit

$

21,343

$

21,391

$

(48)

(0.2)

%

Gross profit per unit

$

1,010

$

1,269

$

(259)

(20.4)

%

Gross profit as a % of revenue

4.7

%

5.9

%

(120)

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Reported used vehicle:






Revenue

$

2,217,616

$

1,936,088

$

281,528

14.5

%

Gross profit

$

109,397

$

120,012

$

(10,615)

(8.8)

%

Unit sales

104,470

91,749

12,721

13.9

%

Revenue per unit

$

21,227

$

21,102

$

125

0.6

%

Gross profit per unit

$

1,047

$

1,308

$

(261)

(20.0)

%

Gross profit as a % of revenue

4.9

%

6.2

%

(130)

bps









Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Same store used vehicle:






Revenue

$

653,793

$

614,894

$

38,899

6.3

%

Gross profit

$

35,302

$

35,270

$

32

0.1

%

Unit sales

30,527

28,328

2,199

7.8

%

Revenue per unit

$

21,417

$

21,706

$

(289)

(1.3)

%

Gross profit per unit

$

1,156

$

1,245

$

(89)

(7.1)

%

Gross profit as a % of revenue

5.4

%

5.7

%

(30)

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Same store used vehicle:






Revenue

$

1,913,815

$

1,795,568

$

118,247

6.6

%

Gross profit

$

104,945

$

107,503

$

(2,558)

(2.4)

%

Unit sales

89,311

83,873

5,438

6.5

%

Revenue per unit

$

21,429

$

21,408

$

21

0.1

%

Gross profit per unit

$

1,175

$

1,282

$

(107)

(8.3)

%

Gross profit as a % of revenue

5.5

%

6.0

%

(50)

bps














Sonic Automotive, Inc.

Results of Operations (Unaudited)

Wholesale Vehicles


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Reported wholesale vehicle:






Revenue

$

48,578

$

43,098

$

5,480

12.7

%

Gross profit

$

(1,299)

$

(3,292)

$

1,993

60.5

%

Unit sales

7,831

7,832

(1)

—

%

Revenue per unit

$

6,203

$

5,503

$

700

12.7

%

Gross profit per unit

$

(166)

$

(420)

$

254

60.5

%

Gross profit as a % of revenue

(2.7)

%

(7.6)

%

490

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Reported wholesale vehicle:






Revenue

$

167,726

$

130,174

$

37,552

28.8

%

Gross profit

$

(9,080)

$

(6,381)

$

(2,699)

(42.3)

%

Unit sales

25,953

23,922

2,031

8.5

%

Revenue per unit

$

6,463

$

5,442

$

1,021

18.8

%

Gross profit per unit

$

(350)

$

(267)

$

(83)

(31.1)

%

Gross profit as a % of revenue

(5.4)

%

(4.9)

%

(50)

bps









Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Same store wholesale vehicle:






Revenue

$

46,238

$

40,254

$

5,984

14.9

%

Gross profit

$

(1,212)

$

(2,912)

$

1,700

58.4

%

Unit sales

7,377

7,180

197

2.7

%

Revenue per unit

$

6,268

$

5,606

$

662

11.8

%

Gross profit per unit

$

(164)

$

(406)

$

242

59.6

%

Gross profit as a % of revenue

(2.6)

%

(7.2)

%

460

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except unit and per unit data)

Same store wholesale vehicle:






Revenue

$

155,463

$

121,102

$

34,361

28.4

%

Gross profit

$

(9,118)

$

(5,539)

$

(3,579)

(64.6)

%

Unit sales

23,817

21,799

2,018

9.3

%

Revenue per unit

$

6,527

$

5,555

$

972

17.5

%

Gross profit per unit

$

(383)

$

(254)

$

(129)

(50.8)

%

Gross profit as a % of revenue

(5.9)

%

(4.6)

%

(130)

bps














Sonic Automotive, Inc.

Results of Operations (Unaudited)

Parts, Service and Collision Repair ("Fixed Operations")


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands)

Reported:






Revenue






Customer pay

$

139,642

$

137,850

$

1,792

1.3

%

Warranty

66,730

70,575

(3,845)

(5.4)

%

Wholesale parts

39,419

40,927

(1,508)

(3.7)

%

Internal, sublet and other

97,327

98,365

(1,038)

(1.1)

%

Total

$

343,118

$

347,717

$

(4,599)

(1.3)

%








Gross profit






Customer pay

$

74,994

$

74,302

$

692

0.9

%

Warranty

38,563

38,821

(258)

(0.7)

%

Wholesale parts

6,784

6,958

(174)

(2.5)

%

Internal, sublet and other

46,475

47,589

(1,114)

(2.3)

%

Total

$

166,816

$

167,670

$

(854)

(0.5)

%








Gross profit as a % of revenue






Customer pay

53.7

%

53.9

%

(20)

bps

Warranty

57.8

%

55.0

%

280

bps

Wholesale parts

17.2

%

17.0

%

20

bps

Internal, sublet and other

47.8

%

48.4

%

(60)

bps

Total

48.6

%

48.2

%

40

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands)

Reported:






Revenue






Customer pay

$

422,348

$

415,179

$

7,169

1.7

%

Warranty

198,219

213,155

(14,936)

(7.0)

%

Wholesale parts

122,763

127,014

(4,251)

(3.3)

%

Internal, sublet and other

298,300

305,525

(7,225)

(2.4)

%

Total

$

1,041,630

$

1,060,873

$

(19,243)

(1.8)

%








Gross profit






Customer pay

$

226,443

$

222,086

$

4,357

2.0

%

Warranty

112,335

117,809

(5,474)

(4.6)

%

Wholesale parts

20,949

21,839

(890)

(4.1)

%

Internal, sublet and other

143,768

148,351

(4,583)

(3.1)

%

Total

$

503,495

$

510,085

$

(6,590)

(1.3)

%








Gross profit as a % of revenue






Customer pay

53.6

%

53.5

%

10

bps

Warranty

56.7

%

55.3

%

140

bps

Wholesale parts

17.1

%

17.2

%

(10)

bps

Internal, sublet and other

48.2

%

48.6

%

(40)

bps

Total

48.3

%

48.1

%

20

bps














Sonic Automotive, Inc.

Results of Operations (Unaudited)

Parts, Service and Collision Repair ("Fixed Operations")


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands)

Same Store:






Revenue






Customer pay

$

137,848

$

131,453

$

6,395

4.9

%

Warranty

65,923

67,182

(1,259)

(1.9)

%

Wholesale parts

39,419

38,961

458

1.2

%

Internal, sublet and other

94,652

92,429

2,223

2.4

%

Total

$

337,842

$

330,025

$

7,817

2.4

%








Gross profit






Customer pay

$

74,047

$

70,769

$

3,278

4.6

%

Warranty

36,605

36,949

(344)

(0.9)

%

Wholesale parts

6,782

6,634

148

2.2

%

Internal, sublet and other

45,886

44,529

1,357

3.0

%

Total

$

163,320

$

158,881

$

4,439

2.8

%








Gross profit as a % of revenue






Customer pay

53.7

%

53.8

%

(10)

bps

Warranty

55.5

%

55.0

%

50

bps

Wholesale parts

17.2

%

17.0

%

20

bps

Internal, sublet and other

48.5

%

48.2

%

30

bps

Total

48.3

%

48.1

%

20

bps









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands)

Same Store:






Revenue






Customer pay

$

413,920

$

393,933

$

19,987

5.1

%

Warranty

195,477

202,223

(6,746)

(3.3)

%

Wholesale parts

120,819

120,731

88

0.1

%

Internal, sublet and other

285,025

286,474

(1,449)

(0.5)

%

Total

$

1,015,241

$

1,003,361

$

11,880

1.2

%








Gross profit






Customer pay

$

222,048

$

210,369

$

11,679

5.6

%

Warranty

109,107

111,714

(2,607)

(2.3)

%

Wholesale parts

20,654

20,807

(153)

(0.7)

%

Internal, sublet and other

138,948

137,930

1,018

0.7

%

Total

$

490,757

$

480,820

$

9,937

2.1

%








Gross profit as a % of revenue






Customer pay

53.6

%

53.4

%

20

bps

Warranty

55.8

%

55.2

%

60

bps

Wholesale parts

17.1

%

17.2

%

(10)

bps

Internal, sublet and other

48.7

%

48.1

%

60

bps

Total

48.3

%

47.9

%

40

bps














Sonic Automotive, Inc.

Results of Operations (Unaudited)

Finance, Insurance and Other, Net ("F&I")   


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except per unit data)

Reported:






Revenue

$

98,061

$

92,861

$

5,200

5.6

%

Gross profit per retail unit (excludes fleet)

$

1,505

$

1,408

$

97

6.9

%









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except per unit data)

Reported:






Revenue

$

295,890

$

262,832

$

33,058

12.6

%

Gross profit per retail unit (excludes fleet)

$

1,523

$

1,389

$

134

9.6

%









Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except per unit data)

Same Store:






Revenue

$

87,697

$

85,928

$

1,769

2.1

%

Gross profit per retail unit (excludes fleet)

$

1,444

$

1,405

$

39

2.8

%









Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands, except per unit data)

Same Store:






Revenue

$

257,369

$

241,018

$

16,351

6.8

%

Gross profit per retail unit (excludes fleet)

$

1,452

$

1,381

$

71

5.1

%

Sonic Automotive, Inc.

Results of Operations (Unaudited)

Selling, General and Administrative ("SG&A") Expenses


Three Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands)

Reported:






Compensation

$

175,393

$

172,691

$

(2,702)

(1.6)

%

Advertising

14,652

15,846

1,194

7.5

%

Rent

14,881

17,711

2,830

16.0

%

Other

84,096

77,726

(6,370)

(8.2)

%

Total SG&A expenses

$

289,022

$

283,974

$

(5,048)

(1.8)

%

Adjustments:






Legal and storm damage charges

$

(1,185)

$

(3,930)



Executive transition costs

(1,581)

—



Gain (loss) on disposal of franchises

(346)

8,489



Total SG&A adjustments

$

(3,112)

$

4,559



Adjusted:






Total adjusted SG&A expenses

$

285,910

$

288,533

$

2,623

0.9

%

Reported:






SG&A expenses as a % of gross profit:






Compensation

48.6

%

47.6

%

(100)

bps

Advertising

4.1

%

4.4

%

30

bps

Rent

4.1

%

4.9

%

80

bps

Other

23.4

%

21.4

%

(200)

bps

Total SG&A expenses as a % of gross profit

80.2

%

78.3

%

(190)

bps

Adjustments:





Legal and storm damage charges

(0.3)

%

(1.1)

%


Executive transition costs

(0.5)

%

—

%


Gain (loss) on disposal of franchises

(0.1)

%

2.4

%


Total effect of adjustments

(0.9)

%

1.3

%


Adjusted:





Total adjusted SG&A expenses as a % of gross profit

79.3

%

79.6

%

30

bps














Sonic Automotive, Inc.

Results of Operations (Unaudited)

Selling, General and Administrative ("SG&A") Expenses


Nine Months Ended September 30,

Better / (Worse)

2018

2017

Change

% Change

(In thousands)

Reported:






Compensation

$

558,071

$

520,420

$

(37,651)

(7.2)

%

Advertising

46,938

46,448

(490)

(1.1)

%

Rent

50,451

55,309

4,858

8.8

%

Other

215,950

247,962

32,012

12.9

%

Total SG&A expenses

$

871,410

$

870,139

$

(1,271)

(0.1)

%

Adjustments:






Legal and storm damage charges

$

(5,749)

$

(10,781)



Long-term compensation-related charges

(32,522)

—



Executive transition costs

(1,581)

—



Lease exit adjustments

(2,235)

(992)



Gain on disposal of franchises

38,893

8,489



Total SG&A adjustments

$

(3,194)

$

(3,284)



Adjusted:






Total adjusted SG&A expenses

$

868,216

$

866,855

$

(1,361)

(0.2)

%

Reported:






SG&A expenses as a % of gross profit:






Compensation

51.9

%

48.5

%

(340)

bps

Advertising

4.4

%

4.3

%

(10)

bps

Rent

4.7

%

5.2

%

50

bps

Other

20.0

%

23.0

%

300

bps

Total SG&A expenses as a % of gross profit

81.0

%

81.0

%

—

bps

Adjustments:





Legal and storm damage charges

(0.5)

%

(1.0)

%


Long-term compensation-related charges

(3.1)

%

—

%


Executive transition costs

(0.1)

%

—

%



Lease exit adjustments

(0.2)

%

(0.1)

%


Gain on disposal of franchises

3.7

%

0.8

%


Total effect of adjustments

(0.3)

%

(0.3)

%


Adjusted:





Total adjusted SG&A expenses as a % of gross profit

80.7

%

80.7

%

—

bps






















SOURCE Sonic Automotive, Inc.

Related Links

http://www.sonicautomotive.com

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