Le Lézard
Classified in: Transportation, Business
Subjects: ERN, CCA

Sonic Automotive, Inc. Reports Third Quarter Results - Record F&I Results and Total Gross Profit



CHARLOTTE, N.C., Oct. 24, 2017 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported financial results for the third quarter of 2017.

Third Quarter 2017 Results

GAAP Basis

Net income from continuing operations for the third quarter of 2017 was $19.7 million, or $0.45 per diluted share. These results include a gain related to the disposal of a franchise partially offset by charges related to fixed asset impairments, weather-related physical damage costs and legal matters. 

Comparatively, net income from continuing operations for the third quarter of 2016 was $19.0 million, or $0.42 per diluted share.  These results include charges related to fixed asset impairments and legal matters which were partially offset by favorable weather-related physical damage accrual adjustments.

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 2017 was $17.4 million, or $0.40 per diluted share.  The adjustments in the 2017 quarterly period relate to a gain related to the disposal of a franchise and charges related to fixed asset impairments, weather-related physical damage costs and legal matters. Adjusted net income from continuing operations for the third quarter of 2016 was $21.2 million, or $0.47 per diluted share.  The adjustments in the 2016 quarterly period relate to charges for fixed asset impairments and legal matters, which were partially offset by favorable weather-related physical damage accrual adjustments.

Commentary

B. Scott Smith, the Company's Chief Executive Officer, noted, "We would first like to thank all of the first responders and public officials that prepared people and their communities for the storms and then have been tirelessly working to help those in need.  We know all of the work is not close to being completed and the road to recovery will be challenging.  We will continue working with those affected to help them put their lives back together." 

"The retail environment continues to be healthy with what we believe to be an adequate supply of credit and an ample supply of new and pre-owned inventory.  We continue to see strong competition between dealers to acquire customers, which is putting pressure on margins notwithstanding the increase in incentives that we have seen in certain brands.  Our build-out of EchoPark continues as planned and we anticipate opening in San Antonio, Texas in the first quarter and have an active schedule that will include the opening of approximately 10 additional EchoPark locations by the end of 2018."

Jeff Dyke, Sonic's EVP of Operations, stated, "The third quarter was similar to what we have seen for most of the year prior to the hurricanes in the Texas and Florida markets.  Our Houston stores continued to struggle and BMW, which is about 30% of our profit structure, continues to be a major challenge.    Hurricane Harvey closed all of our stores in the Houston market for about a week. Nearly 20% of our store count and 30% of our profit comes from the Houston market, which made the end of August a challenge.  We were able to have the majority of our stores open within a few days, and by September 15, 2017, all of our stores were open and we began to help people replace and repair vehicles damaged by the hurricane.  As a result of our national footprint and scale, we were able to ship in vehicles from around the country to ensure we had an adequate supply of inventory.  Business was robust in Houston in the final half of September due to recovery efforts. We anticipate the retail activity in the Houston market in the fourth quarter of 2017 to continue to be favorable as those affected replace and repair vehicles." 

"Hurricane Irma's effects on Sonic were less significant than those of Harvey, but still affected our operations from south Florida up into the Carolinas.  We believe the threat of the storm kept customers away as they prepared for a storm that had an uncertain track as it approached and proceeded up the west coast of Florida.  We did not see the level of sales activity rebound like we experienced in the Houston market as Irma's flooding was not as significant.  The loss of power affected our south Florida stores and west coast Florida stores from between seven to nine days, but all stores were back in business by September 15."

"EchoPark continues its robust growth and our six stores combined were cash flow positive during the quarter.  Our newest location in Colorado Springs was cash flow positive in its third month of operation, some six months ahead of the original EchoPark stores.  We are very excited about the EchoPark brand and what we have been able to accomplish in the Colorado market."

Scott Smith continued, "We are dedicated to returning capital to our stockholders.  We again declared a dividend of $0.05 per share in the quarter and repurchased approximately 667,000 shares of stock.  Together, these two actions returned approximately $13.6 million to our stockholders."

"As stated in a previous press release, we estimate the negative impact experienced in the third quarter of fiscal 2017 due to the storms to be offset by a lift of increased automotive retail sales and service activity in the fourth quarter.  Accordingly, we expect fiscal 2017 GAAP earnings per share from continuing operations to be between $1.55 and $1.65 and expect fiscal 2017 adjusted earnings per share from continuing operations to be between $1.85 and $1.95.  We can add more color on this during our call today."

Dividend

Sonic's Board of Directors approved a quarterly dividend of $0.05 per share payable in cash for our stockholders of record on December 15, 2017.  The dividend will be payable on January 12, 2018. 

Third Quarter 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 "Earnings Conference Calls."

Presentation materials for the conference call can be accessed on the Company's website at www.sonicautomotive.com by clicking on the "Investor Relations" tab under "Our Company" and choosing "Webcasts & Presentations."

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: 93768785

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: 93768785

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 2017 earnings expectations, our long-term strategy, and the anticipated expansion of our EchoPark business.  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, 2016.  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 Securities and Exchange Commission (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,


2017


2016


2017


2016


(In thousands, except per share and unit data)

Revenues:








New retail vehicles

$          1,344,941


$          1,364,842


$          3,739,640


$          3,784,122

Fleet vehicles

17,360


10,302


69,662


42,056

Total new vehicles

1,362,301


1,375,144


3,809,302


3,826,178

Used vehicles

659,724


660,974


1,936,088


1,881,514

Wholesale vehicles

43,098


70,522


130,174


153,141

Total vehicles

2,065,123


2,106,640


5,875,564


5,860,833

Parts, service and collision repair

347,717


361,709


1,060,873


1,059,093

Finance, insurance and other, net

92,861


89,579


262,832


254,940

Total revenues

2,505,701


2,557,928


7,199,269


7,174,866

Gross profit

362,622


359,085


1,073,586


1,057,540

Selling, general and administrative expenses

(283,974)


(282,141)


(870,139)


(843,721)

Impairment charges

(200)


(6,089)


(3,315)


(6,240)

Depreciation and amortization

(22,686)


(19,928)


(65,751)


(57,302)

Operating income (loss)

55,762


50,927


134,381


150,277

Other income (expense):







Interest expense, floor plan

(8,882)


(6,672)


(26,413)


(19,797)

Interest expense, other, net

(13,028)


(13,016)


(39,200)


(37,560)

Other income (expense), net

4


11


(14,490)


120

Total other income (expense)

(21,906)


(19,677)


(80,103)


(57,237)

Income (loss) from continuing operations before taxes

33,856


31,250


54,278


93,040

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

(14,126)


(12,281)


(22,254)


(36,565)

Income (loss) from continuing operations

19,730


18,969


32,024


56,475

Income (loss) from discontinued operations

(290)


(858)


(993)


(918)

Net income (loss)

$               19,440


$               18,111


$               31,031


$               55,557








Diluted earnings (loss) per common share:







Earnings (loss) per share from continuing operations

$                   0.45


$                   0.42


$                   0.72


$                   1.22

Earnings (loss) per share from discontinued operations

(0.01)


(0.02)


(0.02)


(0.02)

Earnings (loss) per common share

$                   0.44


$                   0.40


$                   0.70


$                   1.20

Weighted average common shares outstanding

43,811


45,354


44,585


46,130








Gross Margin Data (Continuing Operations):







New retail vehicles

4.9%


4.6%


5.0%


4.9%

Fleet vehicles

(0.6%)


0.3%


(1.6%)


0.5%

Total new vehicles

4.9%


4.5%


4.9%


4.9%

Used vehicles

5.9%


6.0%


6.2%


6.2%

Wholesale vehicles

(7.6%)


(3.6%)


(4.9%)


(3.5%)

Parts, service and collision repair

48.2%


47.0%


48.1%


47.6%

Finance, insurance and other

100.0%


100.0%


100.0%


100.0%

Overall gross margin

14.5%


14.0%


14.9%


14.7%








SG&A Expenses (Continuing Operations): 







Compensation

$             172,691


$             171,287


$             520,420


$             506,894

Advertising

15,846


14,987


46,448


45,834

Rent

17,711


18,037


55,309


55,265

Other

77,726


77,830


247,962


235,728

Total SG&A expenses

$             283,974


$             282,141


$             870,139


$             843,721

SG&A expenses as % of gross profit

78.3%


78.6%


81.0%


79.8%








Operating Margin %

2.2%


2.0%


1.9%


2.1%








Unit Data (Continuing Operations):







New retail units

35,117


35,715


97,453


99,100

Fleet units

372


339


1,679


1,341

Total new units

35,489


36,054


99,132


100,441

Used units

30,841


30,933


91,749


89,553

Wholesale units

7,832


10,377


23,922


26,012








 

Sonic Automotive, Inc.
Results of Operations (Unaudited)















Per Share Data





























Three Months Ended September 30, 2017




Income (Loss)


Income (Loss)








From Continuing


From Discontinued








Operations


Operations


Net Income (Loss)


Weighted




Per




Per




Per


Average




Share




Share




Share


Shares


Amount


Amount


Amount


Amount


Amount


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



Storm damage



2,971




-




2,971



Legal and other accruals



959




-




959



Gain on disposal



(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 (1)



$     17,434


$       0.40


$       (290)


$      (0.01)


$     17,144


$       0.39















(1) Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended September 30, 2017.































Three Months Ended September 30, 2016




Income (Loss)


Income (Loss)








From Continuing


From Discontinued








Operations


Operations


Net Income (Loss)


Weighted




Per




Per




Per


Average




Share




Share




Share


Shares


Amount


Amount


Amount


Amount


Amount


Amount


(In thousands, except per share amounts)

Reported:














Earnings (loss) and shares

45,118


$     18,969




$       (858)




$     18,111



Effect of participating securities:














Non-vested restricted stock



(11)




-




(11)



Basic earnings (loss) and shares

45,118


$     18,958


$       0.42


$       (858)


$      (0.02)


$     18,100


$       0.40

Effect of dilutive securities:














Stock compensation plans

236













Diluted earnings (loss) and shares (2)

45,354


$     18,958


$       0.42


$       (858)


$      (0.02)


$     18,100


$       0.40















Adjustments:














Impairment charges



$       6,089




$             -




$       6,089



Storm damage



(2,341)




1,000




(1,341)



Total adjustments before taxes



3,748




1,000




4,748



Income tax effect of adjustments



(1,473)




(390)




(1,863)



Effect of adjustments, net of income taxes



$       2,275


$       0.05


$         610


$       0.01


$       2,885


$       0.06















Adjusted:














Earnings (loss) and 














diluted earnings (loss) per share (2)



$     21,244


$       0.47


$       (248)


$      (0.01)


$     20,996


$       0.46















(2) Net loss attributable to Pre-Owned Stores operations was $0.06 per fully diluted share in the three months ended September 30, 2016.






























Sonic Automotive, Inc.
Results of Operations (Unaudited)















Per Share Data





























Nine Months Ended September 30, 2017




Income (Loss)


Income (Loss)








From Continuing


From Discontinued








Operations


Operations


Net Income (Loss)


Weighted




Per




Per




Per


Average




Share




Share




Share


Shares


Amount


Amount


Amount


Amount


Amount


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



Storm damage



9,971




-




9,971



Legal and other accruals



810




-




810



Lease exit adjustments



992




-




992



Gain on disposal



(8,489)




-




(8,489)



Loss on debt extinguishment



15,268




-




15,268



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 (3)



$     45,660


$       1.02


$       (993)


$      (0.02)


$     44,667


$       1.00















(3) Net loss attributable to Pre-Owned Stores operations was $0.21 per fully diluted share in the nine months ended September 30, 2017.































Nine Months Ended September 30, 2016




Income (Loss)


Income (Loss)








From Continuing


From Discontinued








Operations


Operations


Net Income (Loss)


Weighted




Per




Per




Per


Average




Share




Share




Share


Shares


Amount


Amount


Amount


Amount


Amount


Amount


(In thousands, except per share amounts)

Reported:














Earnings (loss) and shares

45,930


$     56,475




$       (918)




$     55,557



Effect of participating securities:














Non-vested restricted stock



(31)




-




(31)



Basic earnings (loss) and shares

45,930


$     56,444


$       1.23


$       (918)


$      (0.02)


$     55,526


$       1.21

Effect of dilutive securities:














Stock compensation plans

200













Diluted earnings (loss) and shares

46,130


$     56,444


$       1.22


$       (918)


$      (0.02)


$     55,526


$       1.20















Adjustments:














Impairment charges



$       6,089




$             -




$       6,089



Storm damage



3,702




477




4,179



Total adjustments before taxes



9,791




477




10,268



Income tax effect of adjustments



(3,818)




(187)




(4,005)



Effect of adjustments, net of income taxes



$       5,973


$       0.13


$         290


$       0.01


$       6,263


$       0.14















Adjusted:














Earnings (loss) and 














diluted earnings (loss) per share (4)



$     62,448


$       1.35


$       (628)


$      (0.01)


$     61,820


$       1.34















(4) Net loss attributable to Pre-Owned Stores operations was $0.15 per fully diluted share in the nine months ended September 30, 2016.


 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









New Vehicles

















Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Reported:








  Revenue

$          1,362,301


$          1,375,144


$              (12,843)


(0.9%)

  Gross profit

$               66,238


$               62,388


$                 3,850


6.2%

  Unit sales

35,489


36,054


(565)


(1.6%)

  Revenue per unit

$               38,387


$               38,141


$                    246


0.6%

  Gross profit per unit .

$                 1,866


$                 1,730


$                    136


7.9%

  Gross profit as a % of revenue

4.9%


4.5%


40

bps











Nine Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Reported:








  Revenue

$          3,809,302


$          3,826,178


$              (16,876)


(0.4%)

  Gross profit

$             187,038


$             186,678


$                    360


0.2%

  Unit sales

99,132


100,441


(1,309)


(1.3%)

  Revenue per unit

$               38,427


$               38,094


$                    333


0.9%

  Gross profit per unit

$                 1,887


$                 1,859


$                      28


1.5%

  Gross profit as a % of revenue

4.9%


4.9%


-

bps











Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Same Store:








  Revenue

$          1,348,084


$          1,365,641


$             (17,557)


(1.3%)

  Gross profit

$               64,316


$               62,202


$                 2,114


3.4%

  Unit sales

35,063


35,639


(576)


(1.6%)

  Revenue per unit

$               38,447


$               38,319


$                    128


0.3%

  Gross profit per unit

$                 1,834


$                 1,745


$                      89


5.1%

  Gross profit as a % of revenue



4.6%


20

bps











Nine Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Same Store:








  Revenue

$          3,749,137


$          3,799,558


$              (50,421)


(1.3%)

  Gross profit

$             183,239


$             186,356


$                (3,117)


(1.7%)

  Unit sales

97,348


99,275


(1,927)


(1.9%)

  Revenue per unit

$               38,513


$               38,273


$                    240


0.6%

  Gross profit per unit

$                 1,882


$                 1,877


$                        5


0.3%

 Gross profit as a % of revenue

4.9%


4.9%


-

bps


 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









Used Vehicles

















Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Reported:







  Revenue

$             659,724


$             660,974


$               (1,250)


(0.2%)

  Gross profit

$               39,145


$               39,622


$                  (477)


(1.2%)

  Unit sales

30,841


30,933


(92)


(0.3%)

  Revenue per unit

$               21,391


$               21,368


$                     23


0.1%

  Gross profit per unit

$                 1,269


$                 1,281


$                    (12)


(0.9%)

  Gross profit as a % of revenue

5.9%


6.0%


(10)


bps









Nine Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change


(In thousands, except units and per unit data)

Reported:







  Revenue

$          1,936,088


$          1,881,514


$               54,574


2.9%

  Gross profit

$             120,012


$             117,121


$                 2,891


2.5%

  Unit sales

91,749


89,553


2,196


2.5%

  Revenue per unit

$               21,102


$               21,010


$                      92


0.4%

  Gross profit per unit

$                 1,308


$                 1,308


$                         -


0.0%

  Gross profit as a % of revenue

6.2%


6.2%


0


bps









Three Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change


(In thousands, except units and per unit data)

Same Store:







  Revenue

$             640,993


$             654,938


$             (13,945)


(2.1%)

  Gross profit

$               36,541


$               37,841


$               (1,300)


(3.4%)

  Unit sales

29,854


30,554


(700)


(2.3%)

  Revenue per unit

$               21,471


$               21,435


$                      36


0.2%

  Gross profit per unit

$                 1,224


$                 1,238


$                     (14)


(1.1%)

  Gross profit as a % of revenue

5.7%


5.8%


(10)


bps









Nine Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change


(In thousands, except units and per unit data)

Same Store:







  Revenue

$          1,867,337


$          1,867,041


$                    296


0.0%

  Gross profit

$             111,547


$             112,153


$                   (606)


(0.5%)

  Unit sales

88,211


88,592


(381)


(0.4%)

  Revenue per unit

$               21,169


$               21,075


$                      94


0.4%

  Gross profit per unit 

$                 1,265


$                 1,266


$                       (1)


(0.1%)

  Gross profit as a % of revenue

6.0%


6.0%


0


bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









Wholesale Vehicles

















Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Reported:








   Revenue

$                43,098


$               70,522


$             (27,424)


(38.9%)

  Gross profit (loss)

$                (3,292)


$                (2,507)


$                  (785)


(31.3%)

  Unit sales

7,832


10,377


(2,545)


(24.5%)

  Revenue per unit

$                  5,503


$                 6,796


$               (1,293)


(19.0%)

  Gross profit (loss) per unit

$                   (420)


$                   (242)


$                  (178)


(73.6%)

  Gross profit (loss) as a % of revenue

(7.6%)


(3.6%)


(400)


bps










Nine Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Reported:








  Revenue

$             130,174


$             153,141


$             (22,967)


(15.0%)

  Gross profit (loss)

$                (6,381)


$                (5,425)


$                  (956)


(17.6%)

  Unit sales

23,922


26,012


(2,090)


(8.0%)

  Revenue per unit .

$                 5,442


$                 5,887


$                  (445)


(7.6%)

  Gross profit (loss) per unit

$                   (267)


$                   (209)


$                    (58)


(27.8%)

  Gross profit (loss) as a % of revenue

(4.9%)


(3.5%)


(140)


bps










Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Same Store:








  Revenue 

$               41,946


$               69,898


$             (27,952)


(40.0%)

  Gross profit (loss)

$                (3,069)


$                (2,382)


$                  (687)


(28.8%)

  Unit sales

7,572


10,240


(2,668)


(26.1%)

  Revenue per unit

$                 5,540


$                 6,826


$               (1,286)


(18.8%)

  Gross profit (loss) per unit

$                   (405)


$                   (233)


$                  (172)


(73.8%)

  Gross profit (loss) as a % of revenue 

(7.3%)


(3.4%)


(390)


bps










Nine Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except units and per unit data)

Same Store:








  Revenue

$              126,330


$             152,022


$             (25,692)


(16.9%)

  Gross profit (loss)

$                (6,042)


$                (5,222)


$                  (820)


(15.7%)

  Unit sales

23,111


25,671


(2,560)


(10.0%)

  Revenue per unit

$                 5,466


$                 5,922


$                  (456)


(7.7%)

  Gross profit (loss) per unit

$                    (261)


$                   (203)


$                    (58)


(28.6%)

  Gross profit (loss) as a % of revenue

(4.8%)


(3.4%)


(140)


bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









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















Three Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change

Reported:

(In thousands)

Revenue








Customer pay

$             137,850


$             146,365


$               (8,515)


(5.8%)

Warranty

70,575


60,388


10,187


16.9%

Wholesale parts

40,927


44,202


(3,275)


(7.4%)

Internal, sublet and other

98,365


110,754


(12,389)


(11.2%)

Total

$             347,717


$             361,709


$             (13,992)


(3.9%)

Gross profit








Customer pay

$               74,302


$               79,153


$               (4,851)


(6.1%)

Warranty

38,821


32,176


6,645


20.7%

Wholesale parts

6,958


7,566


(608)


(8.0%)

Internal, sublet and other

47,589


51,108


(3,519)


(6.9%)

Total

$             167,670


$             170,003


$               (2,333)


(1.4%)

Gross profit as a % of revenue








Customer pay

53.9%


54.1%


(20)


bps

Warranty

55.0%


53.3%


170


bps

Wholesale parts

17.0%


17.1%


(10)


bps

Internal, sublet and other 

48.4%


46.1%


230


bps

Total

48.2%


47.0%


120


bps










Nine Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change

Reported:

(In thousands)

Revenue








Customer pay 

$             415,179


$             443,007


$             (27,828)


(6.3%)

Warranty

213,155


172,759


40,396


23.4%

Wholesale parts

127,014


133,533


(6,519)


(4.9%)

Internal, sublet and other

305,525


309,794


(4,269)


(1.4%)

Total

$          1,060,873


$          1,059,093


$                 1,780


0.2%

Gross profit








Customer pay

$             222,086


$             240,833


$             (18,747)


(7.8%)

Warranty

117,809


92,951


24,858


26.7%

Wholesale parts

21,839


23,305


(1,466)


(6.3%)

Internal, sublet and other

148,351


147,137


1,214


0.8%

Total

$             510,085


$             504,226


$                 5,859


1.2%

Gross profit as a % of revenue








Customer pay

53.5%


54.4%


(90)


bps

Warranty

55.3%


53.8%


150


bps

Wholesale parts

17.2%


17.5%


(30)


bps

Internal, sublet and other

48.6%


47.5%


110


bps

Total

48.1%


47.6%


50


bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









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















Three Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change

Same Store:

(In thousands)

Revenue








Customer pay

$             136,879


$             145,282


$               (8,403)


(5.8%)

Warranty

69,959


59,924


10,035


16.7%

Wholesale parts

40,790


43,950


(3,160)


(7.2%)

Internal, sublet and other

96,716


109,740


(13,024)


(11.9%)

Total

$             344,344


$             358,896


$             (14,552)


(4.1%)

Gross profit








Customer pay

$               73,781


$               78,528


$               (4,747)


(6.0%)

Warranty

38,508


31,893


6,615


20.7%

Wholesale parts

6,935


7,525


(590)


(7.8%)

Internal, sublet and other

46,632


50,388


(3,756)


(7.5%)

Total

$             165,856


$             168,334


$               (2,478)


(1.5%)

Gross profit as a % of revenue








Customer pay

53.9%


54.1%


(20)


bps

Warranty

55.0%


53.2%


180


bps

Wholesale parts

17.0%


17.1%


(10)


bps

Internal, sublet and other

48.2%


45.9%


230


bps

Total

48.2%


46.9%


130


bps










Nine Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change

Same Store:

(In thousands)

Revenue








Customer pay

$             411,036


$             439,677


$             (28,641)


(6.5%)

Warranty

210,795


171,379


39,416


23.0%

Wholesale parts

126,069


132,758


(6,689)


(5.0%)

Internal, sublet and other

297,807


307,475


(9,668)


(3.1%)

Total

$          1,045,707


$          1,051,289


$               (5,582)


(0.5%)

Gross profit








Customer pay

$             219,890


$             238,929


$             (19,039)


(8.0%)

Warranty

116,493


92,221


24,272


26.3%

Wholesale parts

21,638


23,181


(1,543)


(6.7%)

Internal, sublet and other

144,116


145,196


(1,080)


(0.7%)

Total

$             502,137


$             499,527


$                 2,610


0.5%

Gross profit as a % of revenue








Customer pay

53.5%


54.3%


(80)


bps

Warranty

55.3%


53.8%


150


bps

Wholesale parts

17.2%


17.5%


(30)


bps

Internal, sublet and other

48.4%


47.2%


120


bps

Total

48.0%


47.5%


50


bps

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









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
















Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except per unit data)

Reported:








Revenue

$               92,861


$               89,579


$                 3,282


3.7%

Gross profit per retail unit (excludes fleet)

$                 1,408


$                 1,344


$                      64


4.8%


















Nine Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except per unit data)

Reported:








Revenue

$             262,832


$             254,940


$                 7,892


3.1%

Gross profit per retail unit (excludes fleet)

$                 1,389


$                 1,351


$                      38


2.8%










Three Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except per unit data)

Same Store:








Revenue

$               90,602


$               88,254


$                 2,348


2.7%

Gross profit per retail unit (excludes fleet)

$                 1,404


$                 1,340


$                      64


4.8%


















Nine Months Ended September 30,


Better / (Worse)


2017


2016


Change


% Change


(In thousands, except per unit data)

Same Store:








Revenue

$             253,957


$             251,204


$                 2,753


1.1%

Gross profit per retail unit (excludes fleet)

$                 1,381


$                 1,346


$                      35


2.6%

 

Sonic Automotive, Inc.
Results of Operations (Unaudited)









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















Three Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change


(In thousands)

Reported:








Compensation

$             172,691


$             171,287


$               (1,404)


(0.8%)

Advertising

15,846


14,987


(859)


(5.7%)

Rent 

17,711


18,037


326


1.8%

Other

77,726


77,830


104


0.1%

Total SG&A expenses

$             283,974


$             282,141


$               (1,833)


(0.6%)









Adjustments:








Storm damage

$               (2,971)


$                 2,341





Legal and other accruals

(959)


-





Gain on disposal

8,489


-





Total SG&A adjustments

$                 4,559


$                 2,341













Adjusted:








Total adjusted SG&A expenses

$             288,533


$             284,482


$               (4,051)


(1.4%)









Reported:








SG&A expenses as a % of gross profit







Compensation

47.6%


47.7%


10


bps

Advertising

4.4%


4.2%


(20)


bps

Rent

4.9%


5.0%


10


bps

Other

21.4%


21.7%


30


bps

Total SG&A expenses as a % of gross profit

78.3%


78.6%


30


bps









Adjustments:








Storm damage

(0.8%)


0.6%





Legal and other accruals

(0.3%)


0.0%





Gain on disposal

2.4%


0.0%





Total effect of adjustments

1.3%


0.6%













Adjusted:








Total adjusted SG&A as a % of gross profit

79.6%


79.2%


(40)


bps

























Sonic Automotive, Inc.
Results of Operations (Unaudited)









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















Nine Months Ended September 30,


Better / (Worse)


2017


2016


 Change


% Change


(In thousands)

Reported:







Compensation

$             520,420


$             506,894


$             (13,526)


(2.7%)

Advertising

46,448


45,834


(614)


(1.3%)

Rent

55,309


55,265


(44)


(0.1%)

Other

247,962


235,728


(12,234)


(5.2%)

Total SG&A expenses

$             870,139


$             843,721


$             (26,418)


(3.1%)








Adjustments:








Storm damage

$               (9,971)


$               (3,702)





Legal and other accruals

(810)


-





Gain on disposal

8,489


-





Lease exit adjustments

(992)


-





Total SG&A adjustments

$               (3,284)


$               (3,702)













Adjusted:








Total adjusted SG&A expenses

$             866,855


$             840,019


$             (26,836)


(3.2%)









Reported:








SG&A expenses as a % of gross profit







Compensation

48.5%


47.9%


(60)


bps

Advertising

4.3%


4.3%


0


bps

Rent

5.2%


5.2%


0


bps

Other

23.0%


22.4%


(60)


bps

Total SG&A expenses as a % of gross profit

81.0%


79.8%


(120)


bps









Adjustments:








Storm damage

(0.9%)


(0.4%)





Legal and other accruals

(0.1%)


0.0%





Gain on disposal

0.8%


0.0%





Lease exit adjustments 

(0.1%)


0.0%





Total effect of adjustments

(0.3%)


(0.4%)













Adjusted:








Total adjusted SG&A as a % of gross profit

80.7%


79.4%


(130)


bps

















 

SOURCE Sonic Automotive, Inc.


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