Sonic Automotive Reports All-Time Record Third Quarter Earnings

Record EchoPark Revenues and Unit Sales Volume As Expansion Kicks Into High Gear

CHARLOTTE, N.C.--()--Sonic Automotive, Inc. (“Sonic” or the “Company”) (NYSE:SAH), one of the nation’s largest automotive retailers, today reported financial results for the third quarter ended September 30, 2020.

Third Quarter Highlights

  • All-time record earnings per diluted share from continuing operations of $1.35 for the third quarter of 2020, an increase of 105% compared to $0.66 for the third quarter of 2019 (included in the results for the third quarter of 2020 is a pre-tax gain of $3.2 million, or $0.06 per share, related to franchise disposals)
  • Selling, general and administrative (“SG&A”) expenses as a percentage of gross profit were 68.3% for the third quarter of 2020, compared to 76.7% for the third quarter of 2019 (results for the third quarter of 2020 include an 80 basis point benefit related to a gain on franchise disposals)
  • Total Sonic consolidated third quarter 2020 revenues of $2.5 billion and gross profit of $376.6 million
  • All-time record EchoPark quarterly revenues of $385.1 million, up 23.3% from the third quarter of 2019
  • All-time record EchoPark quarterly retail sales volume of 15,127 units, up 14.5% from the third quarter of 2019
  • Same store Franchised Dealerships Segment operating results for the third quarter of 2020, compared to the third quarter of 2019:
    • Revenues down 5.6%, gross profit up 1.5%
    • New vehicle unit sales volume down 14.6%; new vehicle gross profit per unit up 38.4%, to $2,607
    • Retail used vehicle unit sales volume down 4.6%; retail used vehicle gross profit per unit up 3.9%, to $1,307
    • Parts, service and collision repair gross profit down 3.9%, customer pay gross profit down 0.9%; gross margin up 130 basis points, to 49.2%
    • Finance and insurance (“F&I”) gross profit down 1.4%; total Franchised Dealerships Segment F&I gross profit per retail unit of $1,810, up 10.0%

Commentary

Jeff Dyke, Sonic’s and EchoPark’s President, commented, “Our third quarter results demonstrate the strength and resilience of our business model, driving the highest third quarter profit in our Company’s history. All business lines saw sequential improvement from the second quarter, with a combination of increasing consumer demand and enhanced operating efficiency and profitability as a result of the strategic actions our team took early in the pandemic. We believe the third quarter marks an inflection point in our Company’s path to more than double its total revenues and dramatically increase profitability in the next five years. We remain committed to providing our guests with an industry-leading vehicle purchase experience, offering a variety of options across the omni-channel spectrum to suit each individual’s needs. We continue to enhance our e-commerce platform to offer our guests a fully-integrated online and on-site sales experience at both our franchised dealership websites and EchoPark.com, further supporting the long-term growth plans for our business.”

Mr. Dyke continued, “We are very pleased with our franchised dealerships’ performance during the quarter, which reflects steadily increasing automotive retail consumer demand and the extraordinary dedication of our teammates to continue to deliver exceptional results despite the challenges of the pandemic. As importantly, EchoPark achieved all-time record retail sales volume in the quarter, selling over 15,000 units at our 12 existing locations. Our guests continue to see incredible value in the inventory selection, pricing, and buying experience that EchoPark offers and we remain focused on accelerating the expansion of this brand nationally. Our recent EchoPark expansion in Greenville, South Carolina, Houston, Texas, and Nashville, Tennessee, plus expected new openings by year end in Plano, Texas and Atlanta, Georgia, continue to drive toward a 140-point nationwide distribution network, expected to retail over half a million pre-owned vehicles annually by 2025.”

Heath Byrd, Sonic’s and EchoPark’s Chief Financial Officer, commented, “We have continued to increase operating efficiency at both our franchised dealerships and EchoPark stores, driving improved profitability throughout our operations. Total SG&A expenses for the third quarter were down $39.7 million, or 13.4%, year-over-year, while SG&A expenses as a percentage of gross profit were 68.3%, down 840 basis points from the year-ago quarter. Due to our ongoing cost-management initiatives, we are now a much leaner, more efficient organization than we were prior to the COVID-19 pandemic.”

Third Quarter 2020 Operational Summary

For the third quarter of 2020, Sonic’s consolidated total revenues were $2.5 billion, down 5.7% compared to the third quarter of 2019 and up 20.7% sequentially from the second quarter of 2020. EchoPark Segment revenues were $385.1 million for the third quarter of 2020, representing a 23.3% increase from the third quarter of 2019 and a 22.1% increase sequentially from the second quarter of 2020. Franchised Dealerships Segment revenues were $2.2 billion for the third quarter of 2020, representing a 9.5% decrease from the third quarter of 2019 and a 20.4% increase sequentially from $1.8 billion in the second quarter of 2020.

Adjusted SG&A expenses as a percentage of gross profit (a non-GAAP measure) for the third quarter of 2020 were 69.1%, a decrease of 760 basis points compared to the third quarter of 2019, due primarily to ongoing cost-control measures consistent with the Company’s stated goal of approximately $84.0 million in permanent SG&A expense reductions annually.

Net income from continuing operations for the third quarter of 2020 was $60.0 million, or $1.35 per diluted share, compared to $29.2 million, or $0.66 per diluted share, for the third quarter of 2019. Adjusted net income from continuing operations (a non-GAAP measure) for the third quarter of 2020 was $57.7 million, or $1.29 per diluted share. Comparatively, adjusted net income from continuing operations (a non-GAAP measure) for the third quarter of 2019 was $29.2 million, or $0.66 per diluted share.

Dividend

Sonic’s Board of Directors approved a quarterly cash dividend of $0.10 per share payable on January 15, 2021 to all stockholders of record on December 15, 2020.

Third Quarter 2020 Earnings Conference Call

Senior management will host a conference call on Thursday, October 29, 2020 at 11:00 A.M. (Eastern) to discuss the quarter’s results. To access the live broadcast of the call over the Internet, please go to ir.sonicautomotive.com. The conference call will also be available live by dialing in 15 minutes prior to the start of the call at:

Domestic: (833) 519-1243
International: (914) 800-3816
Conference ID: 2553839

A conference call replay will be available one hour following the call for 14 days and can be accessed by calling:

Domestic: (855) 859-2056
International: (404) 537-3406
Conference ID: 2553839

Investor presentation and earnings press release materials for the Company’s earnings conference call will be accessible beginning the morning of the conference call on the Company’s website at ir.sonicautomotive.com.

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, North Carolina, is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.

About EchoPark Automotive

EchoPark Automotive is a growing operating segment within the Company that specializes in pre-owned vehicle sales and provides a unique guest experience unlike traditional used car stores. More information about EchoPark Automotive can be found at www.echopark.com.

Forward-Looking Statements

Included herein are forward-looking statements, including statements regarding anticipated future revenue levels, future profitability, projected SG&A expense levels, pre-owned vehicle sales projections and the opening of additional EchoPark points. 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, anticipated future growth in our EchoPark Segment, the success of our operational strategies, the rate and timing of overall economic expansion or contraction, the effect of the COVID-19 pandemic and related government-imposed restrictions on operations, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 and other 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, adjusted earnings per diluted share from continuing operations, adjusted SG&A expenses, and adjusted SG&A expenses as a percentage of gross profit. As required by SEC rules, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the schedules included in this press release. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosures and provide a meaningful presentation of the Company’s results.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Results of Operations - Consolidated

 

Three Months Ended
September 30,

 

Better /
(Worse)

 

Nine Months Ended
September 30,

 

Better /
(Worse)

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(In thousands, except per share amounts)

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

1,098,302

 

 

$

1,258,018

 

 

(12.7)

%

 

$

2,957,794

 

 

$

3,529,106

 

 

(16.2)

%

Used vehicles

946,028

 

 

914,272

 

 

3.5

%

 

2,604,957

 

 

2,620,264

 

 

(0.6)

%

Wholesale vehicles

56,502

 

 

51,542

 

 

9.6

%

 

138,221

 

 

156,351

 

 

(11.6)

%

Total vehicles

2,100,832

 

 

2,223,832

 

 

(5.5)

%

 

5,700,972

 

 

6,305,721

 

 

(9.6)

%

Parts, service and collision repair

320,929

 

 

352,047

 

 

(8.8)

%

 

914,667

 

 

1,048,789

 

 

(12.8)

%

Finance, insurance and other, net

126,784

 

 

126,841

 

 

%

 

352,848

 

 

351,429

 

 

0.4

%

Total revenues

2,548,545

 

 

2,702,720

 

 

(5.7)

%

 

6,968,487

 

 

7,705,939

 

 

(9.6)

%

Cost of Sales:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

(1,035,624)

 

 

(1,202,710)

 

 

13.9

%

 

(2,804,314)

 

 

(3,363,603)

 

 

16.6

%

Used vehicles

(917,993)

 

 

(877,444)

 

 

(4.6)

%

 

(2,517,421)

 

 

(2,509,699)

 

 

(0.3)

%

Wholesale vehicles

(53,958)

 

 

(52,648)

 

 

(2.5)

%

 

(136,260)

 

 

(159,437)

 

 

14.5

%

Total vehicles

(2,007,575)

 

 

(2,132,802)

 

 

5.9

%

 

(5,457,995)

 

 

(6,032,739)

 

 

9.5

%

Parts, service and collision repair

(164,403)

 

 

(183,107)

 

 

10.2

%

 

(475,964)

 

 

(546,067)

 

 

12.8

%

Total cost of sales

(2,171,978)

 

 

(2,315,909)

 

 

6.2

%

 

(5,933,959)

 

 

(6,578,806)

 

 

9.8

%

Gross profit

376,567

 

 

386,811

 

 

(2.6)

%

 

1,034,528

 

 

1,127,133

 

 

(8.2)

%

Selling, general and administrative expenses

(257,174)

 

 

(296,826)

 

 

13.4

%

 

(769,688)

 

 

(838,453)

 

 

8.2

%

Impairment charges

(26)

 

 

(1,124)

 

 

97.7

%

 

(268,859)

 

 

(3,076)

 

 

(8,640.5)

%

Depreciation and amortization

(22,934)

 

 

(23,665)

 

 

3.1

%

 

(67,879)

 

 

(70,120)

 

 

3.2

%

Operating income (loss)

96,433

 

 

65,196

 

 

47.9

%

 

(71,898)

 

 

215,484

 

 

(133.4)

%

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense, floor plan

(4,999)

 

 

(11,638)

 

 

57.0

%

 

(21,821)

 

 

(37,382)

 

 

41.6

%

Interest expense, other, net

(10,762)

 

 

(13,013)

 

 

17.3

%

 

(31,523)

 

 

(39,494)

 

 

20.2

%

Other income (expense), net

1

 

 

(5)

 

 

120.0

%

 

100

 

 

90

 

 

(11.1)

%

Total other income (expense)

(15,760)

 

 

(24,656)

 

 

36.1

%

 

(53,244)

 

 

(76,786)

 

 

30.7

%

Income (loss) from continuing operations before taxes

80,673

 

 

40,540

 

 

99.0

%

 

(125,142)

 

 

138,698

 

 

(190.2)

%

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

(20,685)

 

 

(11,372)

 

 

(81.9)

%

 

16,995

 

 

(40,430)

 

 

142.0

%

Income (loss) from continuing operations

59,988

 

 

29,168

 

 

105.7

%

 

(108,147)

 

 

98,268

 

 

(210.1)

%

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations before taxes

(234)

 

 

(223)

 

 

(4.9)

%

 

(808)

 

 

(616)

 

 

(31.2)

%

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

64

 

 

65

 

 

(1.5)

%

 

231

 

 

179

 

 

29.1

%

Income (loss) from discontinued operations

(170)

 

 

(158)

 

 

(7.6)

%

 

(577)

 

 

(437)

 

 

(32.0)

%

Net income (loss)

$

59,818

 

 

$

29,010

 

 

106.2

%

 

$

(108,724)

 

 

$

97,831

 

 

(211.1)

%

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from continuing operations

$

1.41

 

 

$

0.68

 

 

107.4

%

 

$

(2.53)

 

 

$

2.28

 

 

(211.0)

%

Earnings (loss) per share from discontinued operations

 

 

(0.01)

 

 

100.0

%

 

(0.02)

 

 

(0.01)

 

 

(100.0)

%

Earnings (loss) per common share

$

1.41

 

 

$

0.67

 

 

110.4

%

 

$

(2.55)

 

 

$

2.27

 

 

(212.3)

%

Weighted-average common shares outstanding

42,510

 

 

43,078

 

 

1.3

%

 

42,687

 

 

42,995

 

 

0.7

%

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from continuing operations

$

1.35

 

 

$

0.66

 

 

104.5

%

 

$

(2.53)

 

 

$

2.26

 

 

(211.9)

%

Earnings (loss) per share from discontinued operations

(0.01)

 

 

 

 

(100.0)

%

 

(0.02)

 

 

(0.01)

 

 

(100.0)

%

Earnings (loss) per common share

$

1.34

 

 

$

0.66

 

 

103.0

%

 

$

(2.55)

 

 

$

2.25

 

 

(213.3)

%

Weighted-average common shares outstanding

44,577

 

 

44,203

 

 

(0.8)

%

 

42,687

 

 

43,456

 

 

1.8

%

Dividends declared per common share

$

0.10

 

 

$

0.10

 

 

%

 

$

0.30

 

 

$

0.30

 

 

%

Franchised Dealerships Segment - Reported

 

Three Months Ended
September 30,

 

Better /
(Worse)

 

Nine Months Ended
September 30,

 

Better /
(Worse)

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(In thousands, except unit and per unit data)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

1,098,302

 

 

$

1,258,018

 

 

(12.7)

%

 

$

2,957,794

 

 

$

3,529,106

 

 

(16.2)

%

Used vehicles

615,565

 

 

648,006

 

 

(5.0)

%

 

1,718,151

 

 

1,889,045

 

 

(9.0)

%

Wholesale vehicles

48,526

 

 

44,517

 

 

9.0

%

 

119,474

 

 

140,770

 

 

(15.1)

%

Total vehicles

1,762,393

 

 

1,950,541

 

 

(9.6)

%

 

4,795,419

 

 

5,558,921

 

 

(13.7)

%

Parts, service and collision repair

310,035

 

 

343,820

 

 

(9.8)

%

 

886,534

 

 

1,027,382

 

 

(13.7)

%

Finance, insurance and other, net

91,035

 

 

96,142

 

 

(5.3)

%

 

254,465

 

 

266,171

 

 

(4.4)

%

Total revenues

2,163,463

 

 

2,390,503

 

 

(9.5)

%

 

5,936,418

 

 

6,852,474

 

 

(13.4)

%

Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

62,678

 

 

55,308

 

 

13.3

%

 

153,480

 

 

165,503

 

 

(7.3)

%

Used vehicles

34,385

 

 

37,623

 

 

(8.6)

%

 

97,114

 

 

111,815

 

 

(13.1)

%

Wholesale vehicles

2,556

 

 

(971)

 

 

363.2

%

 

2,116

 

 

(2,845)

 

 

174.4

%

Total vehicles

99,619

 

 

91,960

 

 

8.3

%

 

252,710

 

 

274,473

 

 

(7.9)

%

Parts, service and collision repair

156,711

 

 

169,158

 

 

(7.4)

%

 

439,272

 

 

503,311

 

 

(12.7)

%

Finance, insurance and other, net

91,035

 

 

96,142

 

 

(5.3)

%

 

254,465

 

 

266,171

 

 

(4.4)

%

Total gross profit

347,365

 

 

357,260

 

 

(2.8)

%

 

946,447

 

 

1,043,955

 

 

(9.3)

%

Selling, general and administrative expenses

(231,882)

 

 

(274,585)

 

 

15.6

%

 

(697,796)

 

 

(773,915)

 

 

9.8

%

Impairment charges

(26)

 

 

 

 

(100.0)

%

 

(268,859)

 

 

(26)

 

 

NM

 

Depreciation and amortization

(20,170)

 

 

(20,967)

 

 

3.8

%

 

(59,654)

 

 

(62,348)

 

 

4.3

%

Operating income (loss)

95,287

 

 

61,708

 

 

54.4

%

 

(79,862)

 

 

207,666

 

 

(138.5)

%

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense, floor plan

(4,234)

 

 

(10,679)

 

 

60.4

%

 

(19,517)

 

 

(34,781)

 

 

43.9

%

Interest expense, other, net

(10,615)

 

 

(12,607)

 

 

15.8

%

 

(30,771)

 

 

(38,214)

 

 

19.5

%

Other income (expense), net

(4)

 

 

(5)

 

 

20.0

%

 

96

 

 

29

 

 

231.0

%

Total other income (expense)

(14,853)

 

 

(23,291)

 

 

36.2

%

 

(50,192)

 

 

(72,966)

 

 

31.2

%

Income (loss) before taxes

80,434

 

 

38,417

 

 

109.4

%

 

(130,054)

 

 

134,700

 

 

(196.6)

%

Add: impairment charges

26

 

 

 

 

NM

 

 

268,859

 

 

26

 

 

NM

 

Segment income (loss)

$

80,460

 

 

$

38,417

 

 

109.4

%

 

$

138,805

 

 

$

134,727

 

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Unit Sales Volume:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

24,100

 

 

30,147

 

 

(20.1)

%

 

65,715

 

 

83,540

 

 

(21.3)

%

Used vehicles

26,363

 

 

29,247

 

 

(9.9)

%

 

76,374

 

 

85,530

 

 

(10.7)

%

Wholesale vehicles

6,679

 

 

7,123

 

 

(6.2)

%

 

18,416

 

 

22,231

 

 

(17.2)

%

Retail new & used vehicles

50,463

 

 

59,394

 

 

(15.0)

%

 

142,089

 

 

169,070

 

 

(16.0)

%

Used:New Ratio

1.09

 

 

0.97

 

 

12.8

%

 

1.16

 

 

1.02

 

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Per Unit:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

2,601

 

 

$

1,835

 

 

41.7

%

 

$

2,336

 

 

$

1,981

 

 

17.9

%

Used vehicles

$

1,304

 

 

$

1,286

 

 

1.4

%

 

$

1,272

 

 

$

1,307

 

 

(2.7)

%

Finance, insurance and other, net

$

1,810

 

 

$

1,645

 

 

10.0

%

 

$

1,802

 

 

$

1,590

 

 

13.3

%

 

NM = Not Meaningful

Franchised Dealerships Segment - Same Store

 

Three Months Ended
September 30,

 

Better /
(Worse)

 

Nine Months Ended
September 30,

 

Better /
(Worse)

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(In thousands, except unit and per unit data)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

1,092,360

 

 

$

1,194,486

 

 

(8.5)

%

 

$

2,937,057

 

 

$

3,329,926

 

 

(11.8)

%

Used vehicles

613,097

 

 

620,278

 

 

(1.2)

%

 

1,706,949

 

 

1,795,833

 

 

(4.9)

%

Wholesale vehicles

48,326

 

 

42,880

 

 

12.7

%

 

118,744

 

 

134,038

 

 

(11.4)

%

Total vehicles

1,753,783

 

 

1,857,644

 

 

(5.6)

%

 

4,762,750

 

 

5,259,797

 

 

(9.4)

%

Parts, service and collision repair

308,385

 

 

331,247

 

 

(6.9)

%

 

878,191

 

 

981,967

 

 

(10.6)

%

Finance, insurance and other, net

85,971

 

 

87,185

 

 

(1.4)

%

 

238,328

 

 

241,483

 

 

(1.3)

%

Total revenues

$

2,148,139

 

 

$

2,276,076

 

 

(5.6)

%

 

$

5,879,269

 

 

$

6,483,247

 

 

(9.3)

%

Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

62,237

 

 

$

52,657

 

 

18.2

%

 

$

151,250

 

 

$

157,799

 

 

(4.2)

%

Used vehicles

34,261

 

 

34,592

 

 

(1.0)

%

 

93,234

 

 

101,886

 

 

(8.5)

%

Wholesale vehicles

2,676

 

 

(786)

 

 

440.5

%

 

2,331

 

 

(2,150)

 

 

208.4

%

Total vehicles

99,174

 

 

86,463

 

 

14.7

%

 

246,815

 

 

257,535

 

 

(4.2)

%

Parts, service and collision repair

156,446

 

 

162,779

 

 

(3.9)

%

 

435,484

 

 

479,904

 

 

(9.3)

%

Finance, insurance and other, net

85,971

 

 

87,185

 

 

(1.4)

%

 

238,328

 

 

241,483

 

 

(1.3)

%

Total gross profit

$

341,591

 

 

$

336,427

 

 

1.5

%

 

$

920,627

 

 

$

978,922

 

 

(6.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

Unit Sales Volume:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

23,875

 

 

27,971

 

 

(14.6)

%

 

64,955

 

 

76,653

 

 

(15.3)

%

Used vehicles

26,216

 

 

27,490

 

 

(4.6)

%

 

75,678

 

 

79,571

 

 

(4.9)

%

Wholesale vehicles

6,638

 

 

6,545

 

 

1.4

%

 

18,271

 

 

20,274

 

 

(9.9)

%

Retail new & used vehicles

50,091

 

 

55,461

 

 

(9.7)

%

 

140,633

 

 

156,224

 

 

(10.0)

%

Used:New Ratio

1.10

 

 

0.98

 

 

11.7

%

 

1.17

 

 

1.04

 

 

12.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Per Unit:

 

 

 

 

 

 

 

 

 

 

 

New vehicles

$

2,607

 

 

$

1,883

 

 

38.4

%

 

$

2,329

 

 

$

2,059

 

 

13.1

%

Used vehicles

$

1,307

 

 

$

1,258

 

 

3.9

%

 

$

1,232

 

 

$

1,280

 

 

(3.8)

%

Finance, insurance and other, net

$

1,722

 

 

$

1,600

 

 

7.6

%

 

$

1,706

 

 

$

1,563

 

 

9.1

%

EchoPark Segment - Reported

 

Three Months Ended
September 30,

 

Better /
(Worse)

 

Nine Months Ended
September 30,

 

Better /
(Worse)

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(In thousands, except unit and per unit data)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Used vehicles

$

330,463

 

 

$

266,266

 

 

24.1

%

 

$

886,806

 

 

$

731,219

 

 

21.3

%

Wholesale vehicles

7,976

 

 

7,025

 

 

13.5

%

 

18,747

 

 

15,581

 

 

20.3

%

Total vehicles

338,439

 

 

273,291

 

 

23.8

%

 

905,553

 

 

746,800

 

 

21.3

%

Parts, service and collision repair

10,894

 

 

8,227

 

 

32.4

%

 

28,133

 

 

21,407

 

 

31.4

%

Finance, insurance and other, net

35,749

 

 

30,699

 

 

16.5

%

 

98,383

 

 

85,258

 

 

15.4

%

Total revenues

385,082

 

 

312,217

 

 

23.3

%

 

1,032,069

 

 

853,465

 

 

20.9

%

Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

Used vehicles

(6,350)

 

 

(795)

 

 

(698.7)

%

 

(9,578)

 

 

(1,250)

 

 

(666.2)

%

Wholesale vehicles

(12)

 

 

(135)

 

 

91.1

%

 

(155)

 

 

(241)

 

 

35.7

%

Total vehicles

(6,362)

 

 

(930)

 

 

584.1

%

 

(9,733)

 

 

(1,491)

 

 

552.8

%

Parts, service and collision repair

(185)

 

 

(218)

 

 

15.1

%

 

(569)

 

 

(589)

 

 

3.4

%

Finance, insurance and other, net

35,749

 

 

30,699

 

 

16.5

%

 

98,383

 

 

85,258

 

 

15.4

%

Total gross profit

29,202

 

 

29,551

 

 

(1.2)

%

 

88,081

 

 

83,178

 

 

5.9

%

Selling, general and administrative expenses

(25,292)

 

 

(22,241)

 

 

(13.7)

%

 

(71,892)

 

 

(64,538)

 

 

(11.4)

%

Impairment charges

 

 

(1,124)

 

 

100.0

%

 

 

 

(3,050)

 

 

100.0

%

Depreciation and amortization

(2,764)

 

 

(2,698)

 

 

(2.4)

%

 

(8,225)

 

 

(7,772)

 

 

(5.8)

%

Operating income (loss)

1,146

 

 

3,488

 

 

(67.1)

%

 

7,964

 

 

7,818

 

 

1.9

%

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense, floor plan

(765)

 

 

(959)

 

 

20.2

%

 

(2,304)

 

 

(2,601)

 

 

11.4

%

Interest expense, other, net

(147)

 

 

(406)

 

 

63.8

%

 

(752)

 

 

(1,280)

 

 

41.3

%

Other income (expense), net

5

 

 

 

 

100.0

%

 

4

 

 

61

 

 

(93.4)

%

Total other income (expense)

(907)

 

 

(1,365)

 

 

33.6

%

 

(3,052)

 

 

(3,820)

 

 

20.1

%

Income (loss) before taxes

239

 

 

2,123

 

 

(88.7)

%

 

4,912

 

 

3,998

 

 

22.9

%

Add: impairment charges

 

 

(1,124)

 

 

NM

 

 

 

 

(3,050)

 

 

NM

 

Segment income (loss)

$

239

 

 

$

3,247

 

 

(92.6)

%

 

$

4,912

 

 

$

7,047

 

 

(30.3)

%

 

 

 

 

 

 

 

 

 

 

 

 

Unit Sales Volume:

 

 

 

 

 

 

 

 

 

 

 

Used vehicles

15,127

 

 

13,206

 

 

14.5

%

 

42,320

 

 

36,844

 

 

14.9

%

Wholesale vehicles

1,955

 

 

1,838

 

 

6.4

%

 

5,174

 

 

4,023

 

 

28.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Per Unit:

 

 

 

 

 

 

 

 

 

 

 

Total used vehicle and F&I

$

1,943

 

 

$

2,264

 

 

(14.2)

%

 

$

2,098

 

 

$

2,280

 

 

(8.0)

%

 

NM = Not Meaningful

EchoPark Segment - Same Store

 

Three Months Ended
September 30,

 

Better /
(Worse)

 

Nine Months Ended
September 30,

 

Better /
(Worse)

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(In thousands, except unit and per unit data)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Used vehicles

$

281,959

 

 

$

266,266

 

 

5.9

%

 

$

790,302

 

 

$

731,219

 

 

8.1

%

Wholesale vehicles

7,195

 

 

7,025

 

 

2.4

%

 

17,418

 

 

15,581

 

 

11.8

%

Total vehicles

289,154

 

 

273,291

 

 

5.8

%

 

807,720

 

 

746,800

 

 

8.2

%

Parts, service and collision repair

9,673

 

 

8,227

 

 

17.6

%

 

25,524

 

 

21,407

 

 

19.2

%

Finance, insurance and other, net

30,523

 

 

30,588

 

 

(0.2)

%

 

87,796

 

 

84,840

 

 

3.5

%

Total revenues

$

329,350

 

 

$

312,106

 

 

5.5

%

 

$

921,040

 

 

$

853,047

 

 

8.0

%

Gross Profit:

 

 

 

 

 

 

 

 

 

 

 

Used vehicles

$

(7,365)

 

 

$

(2,501)

 

 

(194.5)

%

 

$

(13,197)

 

 

$

(5,222)

 

 

(152.7)

%

Wholesale vehicles

(17)

 

 

(135)

 

 

87.4

%

 

(156)

 

 

(240)

 

 

35.0

%

Total vehicles

(7,382)

 

 

(2,636)

 

 

180.0

%

 

(13,353)

 

 

(5,462)

 

 

144.5

%

Parts, service and collision repair

(95)

 

 

(218)

 

 

56.4

%

 

(395)

 

 

(568)

 

 

30.5

%

Finance, insurance and other, net

30,523

 

 

30,588

 

 

(0.2)

%

 

87,796

 

 

84,840

 

 

3.5

%

Total gross profit

$

23,046

 

 

$

27,734

 

 

(16.9)

%

 

$

74,048

 

 

$

78,810

 

 

(6.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

Unit Sales Volume:

 

 

 

 

 

 

 

 

 

 

 

Used vehicles

12,869

 

 

13,206

 

 

(2.6)

%

 

37,652

 

 

36,844

 

 

2.2

%

Wholesale vehicles

1,720

 

 

1,838

 

 

(6.4)

%

 

4,715

 

 

4,023

 

 

17.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Per Unit:

 

 

 

 

 

 

 

 

 

 

 

Total used vehicle and F&I

$

1,800

 

 

$

2,127

 

 

(15.4)

%

 

$

1,981

 

 

$

2,161

 

 

(8.3)

%

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

 

 

Three Months Ended September 30,

 

Better / (Worse)

 

2020

 

2019

 

Change

 

% Change

 

(In thousands)

Reported:

 

 

 

 

 

 

 

Compensation

$

169,097

 

 

$

184,089

 

 

$

14,992

 

 

8.1

%

Advertising

9,455

 

 

15,856

 

 

6,401

 

 

40.4

%

Rent

13,846

 

 

12,721

 

 

(1,125)

 

 

(8.8)

%

Other

64,776

 

 

84,160

 

 

19,384

 

 

23.0

%

Total SG&A expenses

$

257,174

 

 

$

296,826

 

 

$

39,652

 

 

13.4

%

Items of interest:

 

 

 

 

 

 

 

Gain (loss) on franchise disposals

$

3,150

 

 

$

 

 

 

 

 

Total SG&A adjustments

$

3,150

 

 

$

 

 

 

 

 

Adjusted:

 

 

 

 

 

 

 

Total adjusted SG&A expenses

$

260,324

 

 

$

296,826

 

 

$

36,502

 

 

12.3

%

 

 

 

 

 

 

 

 

Reported:

 

 

 

 

 

 

 

SG&A expenses as a % of gross profit:

 

 

 

 

 

 

 

Compensation

44.9

%

 

47.6

%

 

270

 

bps

Advertising

2.5

%

 

4.1

%

 

160

 

bps

Rent

3.7

%

 

3.3

%

 

(40)

 

bps

Other

17.2

%

 

21.7

%

 

450

 

bps

Total SG&A expenses as a % of gross profit

68.3

%

 

76.7

%

 

840

 

bps

Items of interest:

 

 

 

 

 

 

Gain (loss) on franchise disposals

0.8

%

 

%

 

 

 

Total effect of adjustments

0.8

%

 

%

 

 

 

Adjusted:

 

 

 

 

 

 

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

69.1

%

 

76.7

%

 

760

 

bps

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

 

 

Nine Months Ended September 30,

 

Better / (Worse)

 

2020

 

2019

 

Change

 

% Change

 

(In thousands)

Reported:

 

 

 

 

 

 

 

Compensation

$

483,784

 

 

$

549,470

 

 

$

65,686

 

 

12.0

%

Advertising

31,677

 

 

46,308

 

 

14,631

 

 

31.6

%

Rent

40,934

 

 

41,308

 

 

374

 

 

0.9

%

Other

213,293

 

 

201,367

 

 

(11,926)

 

 

(5.9)

%

Total SG&A expenses

$

769,688

 

 

$

838,453

 

 

$

68,765

 

 

8.2

%

Items of interest:

 

 

 

 

 

 

 

Gain (loss) on franchise disposals

$

3,150

 

 

$

46,680

 

 

 

 

 

Executive transition costs

 

 

(6,264)

 

 

 

 

 

Total SG&A adjustments

$

3,150

 

 

$

40,416

 

 

 

 

 

Adjusted:

 

 

 

 

 

 

 

Total adjusted SG&A expenses

$

772,838

 

 

$

878,869

 

 

$

106,031

 

 

12.1

%

 

 

 

 

 

 

 

 

Reported:

 

 

 

 

 

 

 

SG&A expenses as a % of gross profit:

 

 

 

 

 

 

 

Compensation

46.8

%

 

48.7

%

 

190

 

bps

Advertising

3.1

%

 

4.1

%

 

100

 

bps

Rent

4.0

%

 

3.7

%

 

(30)

 

bps

Other

20.5

%

 

17.9

%

 

(260)

 

bps

Total SG&A expenses as a % of gross profit

74.4

%

 

74.4

%

 

 

bps

Items of interest:

 

 

 

 

 

 

Gain (loss) on franchise disposals

0.3

%

 

4.2

%

 

 

 

Executive transition costs

%

 

(0.6)

%

 

 

 

 

Total effect of adjustments

0.3

%

 

3.6

%

 

 

 

Adjusted:

 

 

 

 

 

 

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

74.7

%

 

78.0

%

 

330

 

bps

Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation

 

 

Three Months Ended September 30, 2020

 

Three Months Ended September 30, 2019

 

Weighted-
Average
Shares

 

Amount

 

Per
Share
Amount

 

Weighted-
Average
Shares

 

Amount

 

Per
Share
Amount

 

(In thousands, except per share amounts)

Diluted earnings (loss) and shares from continuing operations

44,577

 

$

59,988

 

 

$

1.35

 

44,203

 

$

29,168

 

$

0.66

Pre-tax items of interest:

 

 

 

 

 

 

 

 

 

 

 

(Gain) loss on franchise disposals

 

 

$

(3,150

)

 

 

 

 

 

$

 

 

Total pre-tax items of interest

 

 

$

(3,150

)

 

 

 

 

 

$

 

 

Tax effect of above items

 

 

$

827

 

 

 

 

 

 

$

 

 

Adjusted diluted earnings (loss) and shares from continuing operations

44,577

 

$

57,665

 

 

$

1.29

 

44,203

 

$

29,168

 

$

0.66

 

Nine Months Ended September 30, 2020

 

Nine Months Ended September 30, 2019

 

Weighted-
Average
Shares

 

Amount

 

Per
Share
Amount

 

Weighted-
Average
Shares

 

Amount

 

Per
Share
Amount

 

(In thousands, except per share amounts)

Diluted earnings (loss) and shares from continuing operations (1)

42,687

 

$

(108,147

)

 

$

(2.53

)

 

43,456

 

$

98,268

 

 

$

2.26

Pre-tax items of interest:

 

 

 

 

 

 

 

 

 

 

 

(Gain) loss on franchise disposals

 

 

$

(3,150

)

 

 

 

 

 

$

(46,680

)

 

 

Executive transition costs

 

 

 

 

 

 

 

 

 

 

6,264

 

 

 

Impairment charges

 

 

 

268,000

 

 

 

 

 

 

 

1,926

 

 

 

Total pre-tax items of interest

 

 

$

264,850

 

 

 

 

 

 

$

(38,490

)

 

 

Tax effect of above items

 

 

$

(53,643

)

 

 

 

 

 

$

12,902

 

 

 

Adjusted diluted earnings (loss) and shares from continuing operations

43,864

 

$

103,060

 

 

$

2.35

 

 

43,456

 

$

72,680

 

 

$

1.67

 

 

 

 

 

 

 

 

 

 

 

 

(1) Basic Weighted-Average Shares Used For Nine Months Ended September 30, 2020 Due To Net Loss On GAAP Basis

 

Contacts

Investor Inquiries:
Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400
Danny Wieland, Investor Relations (704) 927-3462
ir@sonicautomotive.com

Press Inquiries:
Danielle DeVoren / Anthony Feldman
212-896-1272 / 347-487-6194
ddevoren@kcsa.com / afeldman@kcsa.com

Release Summary

Sonic Automotive Reports All-Time Record Third Quarter Earnings, Record EchoPark Revenues and Unit Sales Volume As Expansion Kicks Into High Gear

Contacts

Investor Inquiries:
Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400
Danny Wieland, Investor Relations (704) 927-3462
ir@sonicautomotive.com

Press Inquiries:
Danielle DeVoren / Anthony Feldman
212-896-1272 / 347-487-6194
ddevoren@kcsa.com / afeldman@kcsa.com