Attached files
| file | filename |
|---|---|
| 8-K - 8-K - SONIC AUTOMOTIVE INC | d679011d8k.htm |
| EX-99.3 - EX-99.3 - SONIC AUTOMOTIVE INC | d679011dex993.htm |
| EX-99.1 - EX-99.1 - SONIC AUTOMOTIVE INC | d679011dex991.htm |
 Q4 2012
EARNINGS REVIEW February 19, 2014
Exhibit 99.2 |
 2
FORWARD-LOOKING STATEMENTS
This presentation contains “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements relate to
future events, are not historical facts and are based on our current expectations and
assumptions regarding our business, the economy and other future conditions.
These statements can generally be identified by lead-in words such as “believe”,
“expect”, “anticipate”, “intend”, “plan”,
“foresee”, “may” ,”will” and other similar words. Statements
that describe our Company’s objectives, plans or goals are also forward-looking
statements. Examples of such forward-looking information we may be discussing
in this presentation include, without limitation, anticipated 2014 industry new vehicle
sales volume, the implementation of growth and operating strategies, including
acquisitions of dealerships and properties, the development of open points and
stand-alone pre-owned stores, the return of capital to shareholders , anticipated future
success and impacts from the implementation of our strategic initiatives and earnings per
share expectations.
You are cautioned that these forward-looking statements are not guarantees of future
performance, involve risks and uncertainties and actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors. These risks and uncertainties include, among other things, (a) economic
conditions in the markets in which we operate, (b) the success of our operational
strategies, (c) our relationships with the automobile manufacturers, (d) new and pre-owned
vehicle sales volume, and (e) earnings expectations for the year ended December 31, 2014.
These risks and uncertainties, as well as additional factors that could affect our
forward-looking statements, are described in our Form 10-K for the year ending
December 31, 2012. These forward-looking statements, risks, uncertainties and additional factors speak only
as of the date of this presentation. We undertake no obligation to update any
such statements. |
 CONTENT
•
QUARTER IN REVIEW
•
FINANCIAL RESULTS
•
OPERATIONS RECAP
•
SUMMARY AND OUTLOOK
3 |
 QUARTER
IN REVIEW |
 Q4
RESULTS 5
Revenue
growth
–
Up
5.8%
New
retail
revenue
up
3.1%
-
volume
up
0.7%
Pre-owned revenue up 12.7% -
unit volume up 10.1%
F&I revenue up 6.6%
Fixed operations revenue up 10.4%
Gross
profit
growth
–
Up
7.8%
SG&A
at
75.2%
-
Includes
180
bps
of
initiative
expenses
Adjusted income from continuing operations up $6.8 million, or
23.4%
(1)
Adjusted diluted earnings per share from continuing operations
of $0.67, up 29%
(1)
(1) –
See appendix for reconciliation of adjusted amounts to GAAP amounts.
|
 FINANCIAL RESULTS |
 ADJUSTED
Q4 2013 RESULTS B/(W) than Q4
2012
B/(W) than 2012
(amounts in millions, except per share data)
Q4 2013
$
%
2013
$
%
Revenue
$ 2,315
$ 127
6%
$ 8,843
$ 478
6%
Gross Profit
$ 339
$ 25
8%
$ 1,302
$ 67
5%
Operating Profit
(1)
$ 69
$ 4
6%
$ 244
$ 4
2%
Interest & Other
(1)
($ 19)
$ 1
4%
($ 77)
$ 2
2%
Continuing Ops:
Profit (after tax)
(1)
$ 36
$ 7
23%
$ 108
$ 8
8%
Diluted EPS
(1)
$ 0.67
$ 0.15
29%
$ 2.03
$ 0.31
18%
SG&A as % of Gross
75.2%
20 bps
77.1%
(30 bps)
Discontinued Ops Profit/(Loss) (after tax)
($ 1)
($ 3)
($ 3)
($ 1)
7
(1) –
Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP
amounts |
 SG&A
TO GROSS 8
20 bps
Better
Targeted 77% for FY 2013
Q4 2012
Q4 2013
FY 2012
FY 2013
75.4%
75.2%
76.8%
77.1% |
 SG&A
TO
GROSS
–
Q4
2013
200 bps Better Than Q4 2012
Q4 2013
Reported
Less: Stand-
Alone
Concept
Less:
Customer
Experience
Less: SOX
Remediation
Q4 2013 Adj
for Initiatives
75.2%
(1.0%)
(0.6%)
(0.2%)
73.4%
9 |
 SG&A
TO GROSS – FY 2013
10
120 bps Better
2013 Reported
Less: Stand-
Alone
Concept
Less:
Customer
Experience
Less:
Standardize
2013 Adj for
Initiatives
77.1%
(0.6%)
(0.5%)
(0.4%)
75.6% |
 CAPITAL
SPENDING 11
(amounts in millions)
YTD 2013
Real Estate Acquisitions
$ 52.5
All Other Cap Ex
105.1
Subtotal
$ 157.6
Less: Mortgage Funding
(53.7)
Total
Cash
Used
–
Cap
Ex
$ 103.9 |
 DEBT
COVENANTS 12
Covenant
Actual Q4
2013
Liquidity Ratio
>= 1.05
1.16
Fixed Charge Coverage Ratio
>= 1.20
1.83
Total Lease Adjusted Leverage
Ratio
<= 5.50
3.96
Compliant with all Covenants |
 SHARE
REPURCHASES 13
(shares in thousands)
Shares
Average
Price
2013 Activity
759
$22.50
Unused authorization of approximately $132.5 million
|
 OPERATIONS
REVIEW |
 NEW
VEHICLE RETAIL 15
Q4 2013
Q4 2012
B/(W)
Volume
34,001
33,767
0.7%
Selling Price
$ 38,218
$ 37,312
2.4%
Gross Margin %
6.3%
6.1%
20 bps
GPU
$ 2,415
$
2,260
$ 154
Gross Profit
$ 82 million
$ 76 million
7.6%
SAAR
(includes fleet)
15.6
million
14.9 million
4.5% |
 USED
VEHICLE RETAIL 16
Q4 2013
Q4 2012
B/(W)
Retail Volume
26,354
23,943
10.1%
Used Retail GPU
$
1,358
$ 1,369
($
11)
Used Related Retail Gross*
$ 82 million
$
73 million
$ 9
million
Used to New
0.78 : 1
0.71
: 1
0.07
Vehicles
/ store / month
86
80
6
* -
Includes front-end gross plus F&I related gross and fixed
operations related gross |
 FIXED
OPS QTD YOY Gross Profit Change Breakdown:
Customer Pay Up 6.6%
Whsl. Parts Up 11.6%
Internal & Sublet Up 3.6%
Warranty Up 21.5%
17
Q4 2013
B/(W)
than 2012
(amounts in millions)
2013
$
%
Revenue
$
317
$ 30
10.4%
Gross Profit
$ 153
$ 12
8.3% |
 18
PRE-OWNED STORES
Break Ground
Hiring & Training
Merchandising & Advertising
Grand
Opening
Q1
Q2
Q3
Q4 |
 19
ONE SONIC-ONE EXPERIENCE
Begin rollout at pilot store in July 2014
Test Technologies
Train Associates
Gauge Guest Acceptance
Additional stores will be introduced once perfected at
the pilot store
Anticipate at least an 18 month roll-out period
once pilot store is perfected |
 RECAP
& OUTLOOK |
 21
Continued to grow the base business achieving record
results
Refinancing activities will benefit future periods
Continued strategy of dealership property acquisitions
Growths & Operating Strategies
Stand-alone pre-owned stores
One Sonic-One Experience
Continue franchise acquisitions
Own our properties
Return capital to shareholders through dividends and share
repurchases
SUMMARY |
 22
2014 PLAN
2014 Plan
Expect new car industry volume to be between 15.75M to
16.25M units
We will continue to increase pre-owned volume in the mid-
single digits
Expect fixed operations to grow at mid-single digits
Expenses related to pre-owned and customer experience
initiatives to continue
2014 Continued Ops EPS Guidance:
New Car Franchise Business
$2.09 - $2.19 Effect of stand-alone pre-owned
initiative ($0.14)
Total Sonic w/Standalone Pre-Owned Ops
$1.95 - $2.05
|
 |
 APPENDIX |
 Reconciliation of Non-GAAP Financial Information
Fourth Quarter Ended December 31,
Adjusted 2013 B/(W)
2013
2012
than Adjusted 2012
($ in millions, shares in
thousands, except per share data)
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
$
%
Revenues
2,315.4
$
-
$
2,315.4
$
2,188.7
$
-
$
2,188.7
$
126.6
$
5.8%
Gross profit
338.7
-
338.7
314.1
-
314.1
24.6
7.8%
Gross margin
14.6%
14.6%
14.4%
14.4%
20
bps
SG&A
(254.6)
-
(254.6)
(236.8)
-
(236.8)
(17.8)
(7.5%)
SG&A as % of gross profit
75.2%
75.2%
75.4%
75.4%
20
bps
Impairment charges
(9.8)
9.8
(1)
-
(0.4)
-
(0.4)
0.4
100.0%
Depreciation and amortization
(15.0)
-
(15.0)
(11.9)
-
(11.9)
(3.1)
(26.1%)
Operating income
59.3
9.8
69.1
65.1
-
65.1
4.0
6.2%
Operating margin
2.6%
3.0%
3.0%
3.0%
0 bps
Interest expense, floor plan
(5.7)
-
(5.7)
(5.5)
-
(5.5)
(0.2)
(2.8%)
Interest expense, other, net
(13.2)
-
(13.2)
(14.2)
-
(14.2)
1.0
7.3%
Other income (expense), net
0.0
-
0.0
0.2
-
0.2
(0.2)
(99.5%)
Income (loss) from continuing operations
29.6
6.0
35.5
28.8
-
28.8
6.8
23.4%
Income (loss) from discontinued operations
(1.5)
-
(1.5)
1.6
-
1.6
(3.1)
(193.0%)
Net income (loss)
28.1
$
6.0
$
34.1
$
30.4
$
-
$
30.4
$
3.7
$
12.1%
Diluted earnings (loss) per common share:
Earnings (loss) per share
from continuing operations
0.55
$
0.12
$
0.67
$
0.52
$
-
$
0.52
$
0.15
$
28.8%
Earnings (loss) per share from
discontinued operations
(0.02)
(0.01)
(0.03)
0.03
-
0.03
(0.06)
(200.0%)
Earnings (loss) per common share
0.53
$
0.11
$
0.64
$
0.55
$
-
$
0.55
$
0.09
$
16.4%
Weighted average shares outstanding
52,974
52,974
54,763
54,763
(1) Represents property, equipment and franchise asset impairment
charges. This release contains certain non-GAAP financial
measures (the "Adjusted" columns) as defined under SEC rules, such as, but not limited to, adjusted income from continuing operations and
related earnings per share data. The Company has reconciled these
measures to the most directly comparable GAAP measures (the "Reported" columns) in the release. The Company believes
that these non-GAAP financial measures improve the transparency
of the Company’s disclosure by providing period-to-period comparability of the Company’s results from operations. |
 Reconciliation of Non-GAAP Financial Information
Year Ended December 31,
Adjusted 2013 B/(W)
2013
2012
than Adjusted 2012
($ in millions, shares in
thousands, except per share data)
Reported
Adjustments
Adjusted
Reported
Adjustments
Adjusted
$
%
Revenues
8,843.2
$
-
$
8,843.2
$
8,365.5
$
-
$
8,365.5
$
477.7
$
5.7%
Gross profit
1,301.6
-
1,301.6
1,235.2
-
1,235.2
66.5
5.4%
Gross margin
14.7%
14.7%
14.8%
14.8%
(10) bps
SG&A
(1,003.1)
-
(1,003.1)
(949.0)
-
(949.0)
(54.1)
(5.7%)
SG&A as % of gross profit
77.1%
77.1%
76.8%
76.8%
(30) bps
Impairment charges
(9.9)
9.9
(1)
-
(0.4)
-
(0.4)
0.4
100.0%
Depreciation and amortization
(54.0)
-
(54.0)
(45.3)
-
(45.3)
(8.7)
(19.3%)
Operating income
234.6
9.9
244.5
240.4
-
240.4
4.1
1.7%
Operating margin
2.7%
2.8%
2.9%
2.9%
(10) bps
Interest expense, floor plan
(22.0)
-
(22.0)
(19.5)
-
(19.5)
(2.5)
(12.9%)
Interest expense, other, net
(55.5)
0.8
(2)
(54.7)
(60.1)
1.2
(4)
(58.9)
4.2
7.2%
Other income (expense), net
(28.1)
28.2
(3)
0.1
(19.6)
19.9
(5)
0.3
(0.2)
(66.3%)
Income (loss) from continuing operations
84.7
23.7
108.4
91.3
9.3
(6)
100.5
7.9
7.8%
Income (loss) from discontinued operations
(3.1)
-
(3.1)
(2.2)
-
(2.2)
(0.9)
(41.7%)
Net income (loss)
81.6
$
23.7
$
105.3
$
89.1
$
9.3
$
98.4
$
7.0
$
7.1%
Diluted earnings (loss) per common share:
Earnings (loss) per share
from continuing operations
1.59
$
0.44
$
2.03
$
1.56
$
0.16
$
1.72
$
0.31
$
18.0%
Earnings (loss) per share from
discontinued operations
(0.06)
0.01
(0.05)
(0.03)
(0.01)
(0.04)
(0.01)
(25.0%)
Earnings (loss) per common share
1.53
$
0.45
$
1.98
$
1.53
$
0.15
$
1.68
$
0.30
$
17.9%
Weighted average shares outstanding
52,941
52,941
60,406
60,406
(1) Represents property, equipment and franchise asset impairment
charges. (2) Represents double-carry interest on the 9.0%
Senior Subordinated Notes. (3) Represents loss on extinguishment of
the 9.0% Senior Subordinated Notes. (4) Represents double-carry
interest on the 7.0% Senior Subordinated Notes. (5) Represents loss
on extinguishment of the 5.0% Convertible Senior Notes. (6)
Includes tax adjustments related to the settlement of certain tax matters and the tax effect of items (4) and (5) above. |
 Reconciliation of Non-GAAP Financial Information
Fourth Quarter Ended December 31, 2013
Continuing Operations
Discontinued Operations
Total Operations
($ in millions, shares in
thousands, except per share data)
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Reported basic
29.6
$
52,492
(1.5)
$
52,492
28.1
$
52,492
Effect of dilutive securities:
Two class method
(0.2)
-
-
-
(0.2)
-
Stock compensation plans
-
482
-
482
-
482
Reported
diluted 29.4
52,974
0.55
$
(1.5)
52,974
(0.02)
$
27.9
52,974
0.53
$
Adjustments (tax-effected):
Impairment charges
6.0
-
-
-
6.0
-
Adjusted diluted
35.3
$
52,974
0.67
$
(1.5)
$
52,974
(0.03)
$
33.9
$
52,974
0.64
$ |
 Reconciliation of Non-GAAP Financial Information
Fourth Quarter Ended December 31, 2012
Continuing Operations
Discontinued Operations
Total Operations
($ in millions, shares in
thousands, except per share data)
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Reported basic
28.8
$
54,289
1.6
$
54,289
30.4
$
54,289
Effect of dilutive securities:
Two class method
(0.4)
-
-
-
(0.4)
-
Contingently convertible debt
-
-
-
-
-
-
Stock compensation plans
-
474
-
474
-
474
Reported
diluted 28.4
$
54,763
0.52
$
1.6
$
54,763
0.03
$
29.9
$
54,763
0.55
$ |
 Reconciliation of Non-GAAP Financial Information
Year Ended December 31, 2013
Continuing Operations
Discontinued Operations
Total Operations
($ in millions, shares in
thousands, except per share data)
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Reported basic
84.7
$
52,556
(3.1)
$
52,556
81.6
$
52,556
Effect of dilutive securities:
Two class method
(0.6)
-
-
-
(0.6)
-
Contingently convertible debt
-
-
-
-
-
-
Stock compensation plans
-
385
-
385
-
385
Reported
diluted 84.1
52,941
1.59
$
(3.1)
52,941
(0.06)
$
81.0
52,941
1.53
$
Adjustments (tax-effected):
Impairment charges
6.0
-
-
-
6.0
-
Double-carry interest
0.5
-
-
-
0.5
-
Debt extinguishment charges
17.2
-
-
-
17.2
-
Subtotal
107.8
52,941
2.04
$
(3.1)
52,941
(0.06)
$
104.7
52,941
1.98
$
Effect of dilutive securities:
Two class method & rounding
(0.2)
-
-
-
(0.2)
-
Adjusted diluted
107.6
$
52,941
2.03
$
(3.1)
$
52,941
(0.05)
$
104.6
$
52,941
1.98
$ |
 Reconciliation of Non-GAAP Financial Information
Year Ended December 31, 2012
Continuing Operations
Discontinued Operations
Total Operations
($ in millions, shares in
thousands, except per share data)
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Net Income
(Loss):
Numerator
Share
Count:
Denominator
Diluted
EPS
Reported basic
91.3
$
53,550
(2.2)
$
53,550
89.1
$
53,550
Effect of dilutive securities:
Two class method
(1.4)
-
-
-
(1.4)
-
Contingently convertible debt
4.6
6,411
0.1
6,411
4.7
6,411
Stock compensation plans
-
445
-
445
-
445
Reported
diluted 94.5
60,406
1.56
$
(2.1)
60,406
(0.03)
$
92.4
60,406
1.53
$
Adjustments (tax-effected):
Double-carry interest
0.7
-
-
-
0.7
-
Debt extinguishment charges
12.1
-
-
-
12.1
-
Settlement of tax matters
(3.6)
-
-
-
(3.6)
-
Subtotal
103.8
60,406
1.72
$
(2.1)
60,406
(0.04)
$
101.7
60,406
1.68
$
Effect of dilutive securities:
Two class method
(0.1)
-
-
-
(0.1)
-
Adjusted diluted
103.6
$
60,406
1.72
$
(2.1)
$
60,406
(0.04)
$
101.5
$
60,406
1.68
$ |