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Jul 31, 2017 5:50 AM ET

Sonic Automotive, Inc. Reports Second Quarter Results and EchoPark® Expansion

Disclosure NewswireTM

iCrowdNewswire - Jul 31, 2017

CHARLOTTE, N.C. — Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported financial results for the second quarter of 2017.

 

Second Quarter 2017 Results & Announcements

  • EchoPark stores retailed 2,049 units, up 80.4% over the prior year quarter
  • Accelerated expansion of an additional 15 EchoPark stores by the end of 2018
  • Record Q2 pre-owned units of 30,536 contributing gross profit of $40.0 million
  • All-time record quarterly fixed operations gross profit of $173.1 million, up 2.9% over the prior year quarter
  • Record Q2 F&I gross profit and gross profit per retail unit of $86.9 million and $1,379, respectively
  • Record Q2 total gross profit of $360.6 million, up 2.1% over the prior year quarter
  • Repurchased 1.2 million Class A shares (approximately 2.6% of outstanding stock) for $22.0 million and declared $0.05/share dividend
  • GAAP continuing operations net income of $12.3 million with EPS of $0.27 per diluted share
  • Adjusted continuing operations net income of $17.9 million with adjusted EPS of $0.40 per diluted share

GAAP Basis

Net income from continuing operations for the second quarter of 2017 was $12.3 million, or $0.27 per diluted share. These results include charges related to fixed asset impairments, weather-related physical damage costs, legal matters, and charges associated with closing and relocating stores.  Also included in the GAAP reported amounts for the second quarter of 2017 is a net after-tax loss from operations related to EchoPark of $4.7 million, or $0.11 per diluted share.

Comparatively, net income from continuing operations for the second quarter of 2016 was $23.0 million, or $0.50 per diluted share.  Included in the GAAP reported amounts for the second quarter of 2016 is a net after-tax loss from operations related to EchoPark of $2.0 million, or $0.04 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 second quarter of 2017 was $17.9 million, or $0.40 per diluted share.  There were no adjustments in the second quarter of 2016.  The adjustments in the 2017 quarterly period relate to fixed asset impairments, weather-related physical damage costs, legal matters, and charges associated with closing and relocating stores.

Commentary

Jeff Dyke, Sonic’s EVP of Operations, stated, “Given our performance at EchoPark, we are accelerating our expansion into the Carolinas, FloridaGeorgia and Texas markets.  Our Colorado stores were cash flow positive in the quarter.  Currently, we have more than 15 locations in the aforementioned markets that will break ground in 2017 and 2018.” 

“The new vehicle retail sales environment continues to be challenging in Houston and across certain brands.  Our exposure to BMW, coupled with economic conditions in Houston’s energy corridor, pressured sales and profitability in the second quarter.  On a same store basis, our new vehicle unit sales declined 3.0% compared to the prior year quarter.  This decline was slightly higher than the overall SAAR decline of 2.9%.  Other parts of the business, however, continue to experience growth.  We were able to grow used vehicle, fixed operations and F&I (finance and insurance) gross profit during the quarter which is a testament to the dealer operating model.  In addition, our operations and financial management teams have been busy during the quarter adjusting our cost structure in various areas to compensate for increased competition that has pressured margins.  We expect this highly competitive retail landscape to continue and possibly intensify over the next several quarters as dealers balance volume and gross per unit expectations.” 

B. Scott Smith, the Company’s Chief Executive Officer, noted, “Our activities in the quarter continue to support our long-term growth strategies. During the second quarter, we opened our new open point Audi store in Pensacola, Florida and our sixth EchoPark store in Colorado.  We believe these investments will offer strong earning streams as the underlying businesses mature.  Year to date, we also invested approximately $30 million returning capital to stockholders through dividends and share repurchases.  Our facilities teams have been extremely busy as well, evidenced by the $121 millioninvested in capital expenditures during the first half of 2017.  We are committed to offering the best customer buying experience in the industry, which includes state of the art facilities at both our franchised dealerships and EchoPark stores.”

“Based on results experienced in the first half of the year and our forecast for the remainder of 2017, we are updating our earnings guidance.  We currently project adjusted diluted earnings per share from continuing operations for 2017 to be between $1.85 and $1.95 per share ($1.49 and $1.59 per diluted share, on an unadjusted GAAP basis).  This range includes the effect of projected EchoPark results and expansion.  We are also now projecting an adjusted loss related to EchoPark for 2017 of between $0.29 and $0.33 per diluted share ($0.32 and $0.36 per diluted share, on an unadjusted GAAP basis).  We will have additional comments on our guidance in our earnings call later today.”

Dividend

Sonic’s Board of Directors approved a quarterly dividend of $0.05 per share payable in cash for stockholders of record on September 15, 2017.  The dividend will be payable on October 13, 2017. 

Second 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.comby 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: 1.877.450.3867
International: 1.706.643.0958
Conference ID: 48697046

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

Domestic: 1.855.859.2056
International: 1.404.537.3406
Conference ID: 48697046

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, the anticipated expansion of our EchoPark business and our franchised dealerships, and our expectation that the highly competitive retail landscape will continue and possibly intensify over the next several quarters.  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.

 

           
 

Results of Operations

         
           
   

Three Months Ended June 30,

 

Six Months Ended June 30,

 
   

2017

 

2016

 

2017

 

2016

 
   

(In thousands, except per share and unit data)

 

Revenues:

         
 

New retail vehicles

 

$          1,247,318

 

$          1,269,843

 

$          2,394,699

 

$          2,419,280

 
 

Fleet vehicles

 

27,751

 

16,621

 

52,302

 

31,754

 
 

Total new vehicles

 

1,275,069

 

1,286,464

 

2,447,001

 

2,451,034

 
 

Used vehicles

 

641,891

 

622,186

 

1,276,364

 

1,220,540

 
 

Wholesale vehicles

 

40,765

 

38,245

 

87,076

 

82,620

 
 

Total vehicles

 

1,957,725

 

1,946,895

 

3,810,441

 

3,754,194

 
 

Parts, service and collision repair

 

361,113

 

351,329

 

713,156

 

697,384

 
 

Finance, insurance and other, net

 

86,908

 

84,088

 

169,971

 

165,361

 
 

Total revenues

 

2,405,746

 

2,382,312

 

4,693,568

 

4,616,939

 
 

Gross profit

 

360,618

 

353,305

 

710,965

 

698,455

 
 

Selling, general and administrative expenses

 

(293,931)

 

(277,204)

 

(586,165)

 

(561,580)

 
 

Impairment charges

 

(2,605)

 

(151)

 

(3,115)

 

(151)

 
 

Depreciation and amortization

 

(21,911)

 

(18,905)

 

(43,065)

 

(37,374)

 
 

Operating income (loss)

 

42,171

 

57,045

 

78,620

 

99,350

 
 

Other income (expense):

        
 

Interest expense, floor plan

 

(9,144)

 

(6,690)

 

(17,531)

 

(13,126)

 
 

Interest expense, other, net

 

(12,764)

 

(12,205)

 

(26,172)

 

(24,544)

 
 

Other income (expense), net

 

7

 

6

 

(14,495)

 

110

 
 

Total other income (expense)

 

(21,901)

 

(18,889)

 

(58,198)

 

(37,560)

 
 

Income (loss) from continuing operations before taxes

 

20,270

 

38,156

 

20,422

 

61,790

 
 

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

 

(7,956)

 

(15,113)

 

(8,128)

 

(24,283)

 
 

Income (loss) from continuing operations

 

12,314

 

23,043

 

12,294

 

37,507

 
 

Income (loss) from discontinued operations

 

(182)

 

(221)

 

(703)

 

(61)

 
 

Net income (loss)

 

$               12,132

 

$               22,822

 

$               11,591

 

$               37,446

 
          
 

Diluted earnings (loss) per common share:

        
 

Earnings (loss) per share from continuing operations

 

$                   0.27

 

$                   0.50

 

$                   0.27

 

$                   0.81

 
 

Earnings (loss) per share from discontinued operations

 

 

 

(0.01)

 

(0.01)

 
 

Earnings (loss) per common share

 

$                   0.27

 

$                   0.50

 

$                   0.26

 

$                   0.80

 
 

Weighted average common shares outstanding

 

44,810

 

45,924

 

44,976

 

46,523

 
          
 

Gross Margin Data (Continuing Operations):

        
 

New retail vehicles

 

5.1%

 

5.2%

 

5.1%

 

5.1%

 
 

Fleet vehicles

 

(2.8%)

 

0.9%

 

(1.9%)

 

0.6%

 
 

Total new vehicles

 

4.9%

 

5.1%

 

4.9%

 

5.1%

 
 

Used vehicles

 

6.2%

 

5.9%

 

6.3%

 

6.3%

 
 

Wholesale vehicles

 

(4.7%)

 

(4.8%)

 

(3.5%)

 

(3.5%)

 
 

Parts, service and collision repair

 

47.9%

 

47.9%

 

48.0%

 

47.9%

 
 

Finance, insurance and other

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 
 

Overall gross margin

 

15.0%

 

14.8%

 

15.1%

 

15.1%

 
          
 

SG&A Expenses (Continuing Operations): 

        
 

Compensation

 

$             171,182

 

$             166,560

 

$             347,729

 

$             335,601

 
 

Advertising

 

15,344

 

15,499

 

30,602

 

30,847

 
 

Rent

 

19,110

 

18,508

 

37,598

 

37,228

 
 

Other

 

88,295

 

76,637

 

170,236

 

157,904

 
 

Total SG&A expenses

 

$             293,931

 

$             277,204

 

$             586,165

 

$             561,580

 
 

SG&A expenses as % of gross profit

 

81.5%

 

78.5%

 

82.4%

 

80.4%

 
          
 

Operating Margin %

 

1.8%

 

2.4%

 

1.7%

 

2.2%

 
          
 

Unit Data (Continuing Operations):

        
 

New retail units

 

32,466

 

33,229

 

62,336

 

63,385

 
 

Fleet units

 

682

 

553

 

1,307

 

1,002

 
 

Total new units

 

33,148

 

33,782

 

63,643

 

64,387

 
 

Used units

 

30,536

 

29,287

 

60,908

 

58,620

 
 

Wholesale units

 

7,783

 

7,212

 

16,090

 

15,635

 
          

 

               

Per Share Data

              
               
  

Three Months Ended June 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

 

44,570

 

$     12,314

   

$       (182)

   

$     12,132

  

Effect of participating securities:

              

Non-vested restricted stock

   

(9)

   

   

(9)

  

Basic earnings (loss) and shares

 

44,570

 

$     12,305

 

$       0.28

 

$       (182)

 

$      (0.01)

 

$     12,123

 

$       0.27

Effect of dilutive securities:

              

Stock compensation plans

 

240

            

Diluted earnings (loss) and shares

 

44,810

 

$     12,305

 

$       0.27

 

$       (182)

 

$           –

 

$     12,123

 

$       0.27

               

Adjustments:

              

Impairment charges

   

$       2,605

   

$             –

   

$       2,605

  

Storm damage

   

4,618

   

   

4,618

  

Legal accruals and settlements

   

1,000

   

   

1,000

  

Lease exit adjustments

   

992

   

   

992

  

Total adjustments before taxes

   

9,215

   

   

9,215

  

Income tax effect of above adjustments

   

(3,617)

   

   

(3,617)

  

Effect of adjustments, net of income taxes

   

$       5,598

 

$       0.13

 

$             –

 

$           –

 

$       5,598

 

$       0.13

               

Adjusted:

              

Earnings (loss) and 

              

diluted earnings (loss) per share (1)

   

$     17,912

 

$       0.40

 

$       (182)

 

$           –

 

$     17,730

 

$       0.40

               

(1) Net loss attributable to EchoPark®operations was $0.07 per fully diluted share in the three months ended June 30, 2017.

    
               
               
  

Three Months Ended June 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

 

45,731

 

$     23,043

   

$       (221)

   

$     22,822

  

Effect of participating securities:

              

Non-vested restricted stock

   

(13)

   

   

(13)

  

Basic earnings (loss) and shares

 

45,731

 

$     23,030

 

$       0.50

 

$       (221)

 

$           –

 

$     22,809

 

$       0.50

Effect of dilutive securities:

              

Stock compensation plans

 

193

            

Diluted earnings (loss) and shares (2)

 

45,924

 

$     23,030

 

$       0.50

 

$       (221)

 

$           –

 

$     22,809

 

$       0.50

               
               

(2) Net loss attributable to EchoPark®operations was $0.04 per fully diluted share in the three months ended June 30, 2016.

    
               
               

Per Share Data

              
               
  

Six Months Ended June 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

 

44,680

 

$     12,294

   

$       (703)

   

$     11,591

  

Effect of participating securities:

              

Non-vested restricted stock

   

(9)

   

   

(9)

  

Basic earnings (loss) and shares

 

44,680

 

$     12,285

 

$       0.27

 

$       (703)

 

$      (0.01)

 

$     11,582

 

$       0.26

Effect of dilutive securities:

              

Stock compensation plans

 

296

            

Diluted earnings (loss) and shares

 

44,976

 

$     12,285

 

$       0.27

 

$       (703)

 

$      (0.01)

 

$     11,582

 

$       0.26

               

Adjustments:

              

Impairment charges

   

$       3,115

   

$             –

   

$       3,115

  

Storm damage

   

7,000

   

   

7,000

  

Legal accruals and settlements

   

(149)

   

   

(149)

  

Lease exit adjustments

   

992

   

   

992

  

Loss on debt extinguishment 

   

15,268

   

   

15,268

  

Total adjustments before taxes

   

26,226

   

   

26,226

  

Income tax effect of above adjustments

   

(10,294)

   

   

(10,294)

  

Effect of adjustments, net of income taxes

   

$     15,932

 

$       0.36

 

$             –

 

$      (0.01)

 

$     15,932

 

$       0.35

               

Adjusted:

              

Earnings (loss) and 

              

diluted earnings (loss) per share (3)

   

$     28,226

 

$       0.63

 

$       (703)

 

$      (0.02)

 

$     27,523

 

$       0.61

               

(3) Net loss attributable to EchoPark®operations was $0.15 per fully diluted share in the six months ended June 30, 2017.

    
               
               
  

Six Months Ended June 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

 

46,340

 

$     37,507

   

$         (61)

   

$     37,446

  

Effect of participating securities:

              

Non-vested restricted stock

   

(21)

   

   

(21)

  

Basic earnings (loss) and shares

 

46,340

 

$     37,486

 

$       0.81

 

$         (61)

 

$           –

 

$     37,425

 

$       0.81

Effect of dilutive securities:

              

Stock compensation plans

 

183

            

Diluted earnings (loss) and shares

 

46,523

 

$     37,486

 

$       0.81

 

$         (61)

 

$      (0.01)

 

$     37,425

 

$       0.80

               

Adjustments:

              

Storm damage

   

$       6,043

   

$             –

   

$       6,043

  

Lease exit adjustments

   

   

(523)

   

(523)

  

Total adjustments before taxes

   

6,043

   

(523)

   

5,520

  

Income tax effect of above adjustments

   

(2,345)

   

203

   

(2,142)

  

Effect of adjustments, net of income taxes

   

$       3,698

 

$       0.08

 

$       (320)

 

$           –

 

$       3,378

 

$       0.08

               

Adjusted:

              

Earnings (loss) and 

              

diluted earnings (loss) per share (4)

   

$     41,205

 

$       0.89

 

$       (381)

 

$      (0.01)

 

$     40,824

 

$       0.88

               

(4) Net loss attributable to EchoPark® operations was $0.09 per fully diluted share in the six months ended June 30, 2016.

    
               

 

New Vehicles

        
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Reported:

       

Revenue

 

$          1,275,069

 

$          1,286,464

 

$             (11,395)

 

(0.9%)

Gross profit

 

$               62,522

 

$               65,866

 

$               (3,344)

 

(5.1%)

Unit sales

 

33,148

 

33,782

 

(634)

 

(1.9%)

Revenue per unit

 

$               38,466

 

$               38,081

 

$                    385

 

1.0%

Gross profit per unit

 

$                 1,886

 

$                 1,950

 

$                    (64)

 

(3.3%)

Gross profit as a % of revenue

 

4.9%

 

5.1%

 

(20)

 

bps

        
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Reported:

       

Revenue

 

$          2,447,001

 

$          2,451,034

 

$               (4,033)

 

(0.2%)

Gross profit

 

$             120,800

 

$             124,290

 

$               (3,490)

 

(2.8%)

Unit sales

 

63,643

 

64,387

 

(744)

 

(1.2%)

Revenue per unit

 

$               38,449

 

$               38,067

 

$                    382

 

1.0%

Gross profit per unit

 

$                 1,898

 

$                 1,930

 

$                    (32)

 

(1.7%)

Gross profit as a % of revenue 

 

4.9%

 

5.1%

 

(20)

 

bps

        
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Same Store:

       

Revenue

 

$          1,258,531

 

$          1,286,464

 

$             (27,933)

 

(2.2%)

Gross profit

 

$               61,477

 

$               65,842

 

$               (4,365)

 

(6.6%)

Unit sales

 

32,767

 

33,782

 

(1,015)

 

(3.0%)

Revenue per unit

 

$               38,408

 

$               38,081

 

$                    327

 

0.9%

Gross profit per unit

 

$                 1,876

 

$                 1,949

 

$                    (73)

 

(3.7%)

Gross profit as a % of revenue

 

4.9%

 

5.1%

 

(20)

 

bps

        
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Same Store:

       

Revenue

 

$          2,416,646

 

$          2,451,034

 

$             (34,388)

 

(1.4%)

Gross profit

 

$             119,034

 

$             124,217

 

$               (5,183)

 

(4.2%)

Unit sales

 

62,955

 

64,387

 

(1,432)

 

(2.2%)

Revenue per unit

 

$               38,387

 

$               38,067

 

$                    320

 

0.8%

Gross profit per unit

 

$                 1,891

 

$                 1,929

 

$                    (38)

 

(2.0%)

Gross profit as a % of revenue

 

4.9%

 

5.1%

 

(20)

 

bps

 

Used Vehicles

        
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Reported:

       

Revenue

 

$             641,891

 

$             622,186

 

$               19,705

 

3.2%

Gross profit

 

$               40,035

 

$               36,969

 

$                 3,066

 

8.3%

Unit sales

 

30,536

 

29,287

 

1,249

 

4.3%

Revenue per unit

 

$               21,021

 

$               21,244

 

$                  (223)

 

(1.0%)

Gross profit per unit

 

$                 1,311

 

$                 1,262

 

$                      49

 

3.9%

Gross profit as a % of revenue

 

6.2%

 

5.9%

 

30

 

bps

        
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

  

(In thousands, except units and per unit data)

Reported:

       

Revenue

 

$          1,276,364

 

$          1,220,540

 

$               55,824

 

4.6%

Gross profit

 

$               80,867

 

$               77,499

 

$                 3,368

 

4.3%

Unit sales

 

60,908

 

58,620

 

2,288

 

3.9%

Revenue per unit

 

$               20,956

 

$               20,821

 

$                    135

 

0.6%

Gross profit per unit

 

$                 1,328

 

$                 1,322

 

$                        6

 

0.5%

Gross profit as a % of revenue

 

6.3%

 

6.3%

 

0

 

bps

        
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

  

(In thousands, except units and per unit data)

Same Store:

       

Revenue

 

$             618,082

 

$             621,748

 

$               (3,666)

 

(0.6%)

Gross profit

 

$               37,209

 

$               35,919

 

$                 1,290

 

3.6%

Unit sales

 

29,388

 

29,267

 

121

 

0.4%

Revenue per unit

 

$               21,032

 

$               21,244

 

$                  (212)

 

(1.0%)

Gross profit per unit

 

$                 1,266

 

$                 1,227

 

$                      39

 

3.2%

Gross profit as a % of revenue

 

6.0%

 

5.8%

 

20

 

bps

        
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

  

(In thousands, except units and per unit data)

Same Store:

       

Revenue

 

$          1,233,473

 

$          1,220,103

 

$               13,370

 

1.1%

Gross profit

 

$               75,495

 

$               74,910

 

$                    585

 

0.8%

Unit sales

 

58,846

 

58,600

 

246

 

0.4%

Revenue per unit

 

$               20,961

 

$               20,821

 

$                    140

 

0.7%

Gross profit per unit

 

$                 1,283

 

$                 1,278

 

$                        5

 

0.4%

Gross profit as a % of revenue

 

6.1%

 

6.1%

 

0

 

bps

 

Wholesale Vehicles

        
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Reported:

        

Revenue

 

$

40,765

 

$

38,245

 

$

2,520

 

6.6%

Gross profit (loss)

 

$

(1,917)

 

$

(1,839)

 

$

(78)

 

(4.2%)

Unit sales

  

7,783

  

7,212

  

571

 

7.9%

Revenue per unit

 

$

5,238

 

$

5,303

 

$

(65)

 

(1.2%)

Gross profit (loss) per unit

 

$

(246)

 

$

(255)

 

$

9

 

3.5%

Gross profit (loss) as a % of revenue

  

(4.7%)

  

(4.8%)

  

10

 

bps

         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Reported:

        

Revenue

 

$

87,076

 

$

82,620

 

$

4,456

 

5.4%

Gross profit (loss)

 

$

(3,087)

 

$

(2,917)

 

$

(170)

 

(5.8%)

Unit sales

  

16,090

  

15,635

  

455

 

2.9%

Revenue per unit

 

$

5,412

 

$

5,284

 

$

128

 

2.4%

Gross profit (loss) per unit

 

$

(192)

 

$

(187)

 

$

(5)

 

(2.7%)

Gross profit (loss) as a % of revenue

  

(3.5%)

  

(3.5%)

  

0

 

bps

         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Same Store:

        

Revenue

 

$

39,524

 

$

38,246

 

$

1,278

 

3.3%

Gross profit (loss)

 

$

(1,909)

 

$

(1,840)

 

$

(69)

 

(3.8%)

Unit sales

  

7,577

  

7,212

  

365

 

5.1%

Revenue per unit

 

$

5,216

 

$

5,303

 

$

(87)

 

(1.6%)

Gross profit (loss) per unit

 

$

(252)

 

$

(255)

 

$

3

 

1.2%

Gross profit (loss) as a % of revenue

  

(4.8%)

  

(4.8%)

  

0

 

bps

         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except units and per unit data)

Same Store:

        

Revenue

 

$

84,784

 

$

82,599

 

$

2,185

 

2.6%

Gross profit (loss)

 

$

(2,994)

 

$

(2,915)

 

$

(79)

 

(2.7%)

Unit sales

  

15,697

  

15,630

  

67

 

0.4%

Revenue per unit

 

$

5,401

 

$

5,285

 

$

116

 

2.2%

Gross profit (loss) per unit

 

$

(191)

 

$

(187)

 

$

(4)

 

(2.1%)

Gross profit (loss) as a % of revenue

  

(3.5%)

  

(3.5%)

  

0

 

bps

 

Parts, Service and Collision Repair (“Fixed Operations”) 

      
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

Reported:

 

(In thousands)

Revenue

        

Customer pay

 

$             139,194

 

$             149,248

 

$             (10,054)

 

(6.7%)

Warranty

 

72,661

 

54,812

 

17,849

 

32.6%

Wholesale parts

 

42,806

 

44,021

 

(1,215)

 

(2.8%)

Internal, sublet and other

 

106,452

 

103,248

 

3,204

 

3.1%

Total

 

$             361,113

 

$             351,329

 

$                 9,784

 

2.8%

Gross profit

        

Customer pay

 

$               74,344

 

$               81,323

 

$               (6,979)

 

(8.6%)

Warranty

 

40,319

 

29,449

 

10,870

 

36.9%

Wholesale parts

 

7,331

 

7,797

 

(466)

 

(6.0%)

Internal, sublet and other

 

51,076

 

49,652

 

1,424

 

2.9%

Total

 

$             173,070

 

$             168,221

 

$                 4,849

 

2.9%

Gross profit as a % of revenue

        

Customer pay

 

53.4%

 

54.5%

 

(110)

 

bps

Warranty

 

55.5%

 

53.7%

 

180

 

bps

Wholesale parts

 

17.1%

 

17.7%

 

(60)

 

bps

Internal, sublet and other

 

48.0%

 

48.1%

 

(10)

 

bps

Total

 

47.9%

 

47.9%

 

0

 

bps

         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

Reported:

 

(In thousands)

Revenue

        

Customer pay

 

$             277,328

 

$             296,642

 

$             (19,314)

 

(6.5%)

Warranty

 

142,579

 

112,371

 

30,208

 

26.9%

Wholesale parts

 

86,087

 

89,331

 

(3,244)

 

(3.6%)

Internal, sublet and other

 

207,162

 

199,040

 

8,122

 

4.1%

Total

 

$             713,156

 

$             697,384

 

$               15,772

 

2.3%

Gross profit

        

Customer pay

 

$             147,784

 

$             161,680

 

$             (13,896)

 

(8.6%)

Warranty

 

78,989

 

60,775

 

18,214

 

30.0%

Wholesale parts

 

14,881

 

15,738

 

(857)

 

(5.4%)

Internal, sublet and other

 

100,760

 

96,029

 

4,731

 

4.9%

Total

 

$             342,414

 

$             334,222

 

$                 8,192

 

2.5%

Gross profit as a % of revenue

        

Customer pay

 

53.3%

 

54.5%

 

(120)

 

bps

Warranty

 

55.4%

 

54.1%

 

130

 

bps

Wholesale parts

 

17.3%

 

17.6%

 

(30)

 

bps

Internal, sublet and other

 

48.6%

 

48.2%

 

40

 

bps

Total

 

48.0%

 

47.9%

 

10

 

bps

 

Parts, Service and Collision Repair (“Fixed Operations”) 

      
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

Same Store:

 

(In thousands)

Revenue

        

Customer pay

 

$             138,408

 

$             149,246

 

$             (10,838)

 

(7.3%)

Warranty

 

72,325

 

54,812

 

17,513

 

32.0%

Wholesale parts

 

42,478

 

44,021

 

(1,543)

 

(3.5%)

Internal, sublet and other

 

103,273

 

103,231

 

42

 

0.0%

Total

 

$             356,484

 

$             351,310

 

$                 5,174

 

1.5%

Gross profit

        

Customer pay

 

$               73,942

 

$               81,322

 

$               (7,380)

 

(9.1%)

Warranty

 

40,129

 

29,543

 

10,586

 

35.8%

Wholesale parts

 

7,239

 

7,797

 

(558)

 

(7.2%)

Internal, sublet and other

 

49,803

 

49,470

 

333

 

0.7%

Total

 

$             171,113

 

$             168,132

 

$                 2,981

 

1.8%

Gross profit as a % of revenue

        

Customer pay

 

53.4%

 

54.5%

 

(110)

 

bps

Warranty

 

55.5%

 

53.9%

 

160

 

bps

Wholesale parts

 

17.0%

 

17.7%

 

(70)

 

bps

Internal, sublet and other

 

48.2%

 

47.9%

 

30

 

bps

Total

 

48.0%

 

47.9%

 

10

 

bps

         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

Same Store:

 

(In thousands)

Revenue

        

Customer pay

 

$             275,827

 

$             296,640

 

$             (20,813)

 

(7.0%)

Warranty

 

141,914

 

112,371

 

29,543

 

26.3%

Wholesale parts

 

85,705

 

89,331

 

(3,626)

 

(4.1%)

Internal, sublet and other

 

202,482

 

199,023

 

3,459

 

1.7%

Total

 

$             705,928

 

$             697,365

 

$                 8,563

 

1.2%

Gross profit

        

Customer pay

 

$             147,031

 

$             161,679

 

$             (14,648)

 

(9.1%)

Warranty

 

78,568

 

60,825

 

17,743

 

29.2%

Wholesale parts

 

14,776

 

15,739

 

(963)

 

(6.1%)

Internal, sublet and other

 

98,216

 

95,538

 

2,678

 

2.8%

Total

 

$             338,591

 

$             333,781

 

$                 4,810

 

1.4%

Gross profit as a % of revenue

        

Customer pay

 

53.3%

 

54.5%

 

(120)

 

bps

Warranty

 

55.4%

 

54.1%

 

130

 

bps

Wholesale parts

 

17.2%

 

17.6%

 

(40)

 

bps

Internal, sublet and other

 

48.5%

 

48.0%

 

50

 

bps

Total

 

48.0%

 

47.9%

 

10

 

bps

 

Finance, Insurance and Other, Net (“F&I”)

       
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except per unit data)

Reported:

        

Revenue

 

$               86,908

 

$               84,088

 

$                 2,820

 

3.4%

Gross profit per retail unit (excludes fleet)

 

$                 1,379

 

$                 1,345

 

$                      34

 

2.5%

         
         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except per unit data)

Reported:

        

Revenue

 

$             169,971

 

$             165,361

 

$                 4,610

 

2.8%

Gross profit per retail unit (excludes fleet)

 

$                 1,379

 

$                 1,355

 

$                      24

 

1.8%

         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except per unit data)

Same Store:

        

Revenue

 

$               84,457

 

$               83,884

 

$                    573

 

0.7%

Gross profit per retail unit (excludes fleet)

 

$                 1,374

 

$                 1,342

 

$                      32

 

2.4%

         
         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

Change

 

% Change

  

(In thousands, except per unit data)

Same Store:

        

Revenue

 

$             165,318

 

$             164,736

 

$                    582

 

0.4%

Gross profit per retail unit (excludes fleet)

 

$                 1,372

 

$                 1,350

 

$                      22

 

1.6%

 

Selling, General and Administrative (“SG&A”) Expenses

      
         
  

Three Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

  

(In thousands)

Reported:

        

Compensation

 

$             171,182

 

$             166,560

 

$               (4,622)

 

(2.8%)

Advertising

 

15,344

 

15,499

 

155

 

1.0%

Rent

 

19,110

 

18,508

 

(602)

 

(3.3%)

Other

 

88,295

 

76,637

 

(11,658)

 

(15.2%)

Total SG&A expenses

 

$             293,931

 

$             277,204

 

$             (16,727)

 

(6.0%)

         

Adjustments:

        

Storm damage

 

$               (4,618)

 

$                      –

    

Legal accruals and settlements

 

(1,000)

 

    

Lease exit adjustments

 

(992)

 

    

Total SG&A adjustments

 

$               (6,610)

 

$                      –

    
         

Adjusted:

        

Total adjusted SG&A expenses

 

$             287,321

 

$             277,204

 

$             (10,117)

 

(3.6%)

         

Reported:

        

SG&A expenses as a % of gross profit

       

Compensation

 

47.5%

 

47.1%

 

(40)

 

bps

Advertising

 

4.3%

 

4.4%

 

10

 

bps

Rent

 

5.3%

 

5.2%

 

(10)

 

bps

Other

 

24.4%

 

21.8%

 

(260)

 

bps

Total SG&A expenses as a % of gross profit

 

81.5%

 

78.5%

 

(300)

 

bps

         

Adjustments:

        

Storm damage

 

(1.2%)

 

0.0%

    

Legal accruals and settlements

 

(0.3%)

 

0.0%

    

Lease exit adjustments

 

(0.3%)

 

0.0%

    

Total effect of adjustments

 

(1.8%)

 

0.0%

    
         

Adjusted:

        

Total adjusted SG&A as a % of gross profit

 

79.7%

 

78.5%

 

(120)

 

bps

         

 

Selling, General and Administrative (“SG&A”) Expenses

      
         
  

Six Months Ended June 30,

 

Better / (Worse)

  

2017

 

2016

 

 Change

 

% Change

  

(In thousands)

Reported:

       

Compensation

 

$             347,729

 

$             335,601

 

$             (12,128)

 

(3.6%)

Advertising

 

30,602

 

30,847

 

245

 

0.8%

Rent

 

37,598

 

37,228

 

(370)

 

(1.0%)

Other

 

170,236

 

157,904

 

(12,332)

 

(7.8%)

Total SG&A expenses

 

$             586,165

 

$             561,580

 

$             (24,585)

 

(4.4%)

        

Adjustments:

        

Storm damage

 

$               (7,000)

 

$               (6,043)

    

Legal accruals and settlements

 

149

 

    

Lease exit adjustments

 

(992)

 

    

Total SG&A adjustments

 

$               (7,843)

 

$               (6,043)

    
         

Adjusted:

        

Total adjusted SG&A expenses

 

$             578,322

 

$             555,537

 

$             (22,785)

 

(4.1%)

         

Reported:

        

SG&A expenses as a % of gross profit

       

Compensation

 

48.9%

 

48.0%

 

(90)

 

bps

Advertising

 

4.3%

 

4.4%

 

10

 

bps

Rent

 

5.3%

 

5.3%

 

0

 

bps

Other

 

23.9%

 

22.7%

 

(120)

 

bps

Total SG&A expenses as a % of gross profit

 

82.4%

 

80.4%

 

(200)

 

bps

         

Adjustments:

        

Storm damage

 

(1.0%)

 

(0.9%)

    

Legal accruals and settlements

 

0.1%

 

0.0%

    

Lease exit adjustments

 

(0.2%)

 

0.0%

    

Total effect of adjustments

 

(1.1%)

 

(0.9%)

    
         

Adjusted:

        

Total adjusted SG&A as a % of gross profit

 

81.3%

 

79.5%

 

(180)

 

bps

         

 

SOURCE Sonic Automotive, Inc.

Related Links

http://www.sonicautomotive.com

Contact Information:

Sonic Automotive, Inc.

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