SONIC AUTOMOTIVE INC - FORM 8-K - EX-99.2

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8-K - 8-K - SONIC AUTOMOTIVE INC	d911005d8k.htm
EX-99.1 - EX-99.1 - SONIC AUTOMOTIVE INC	d911005dex991.htm
EX-99.3 - EX-99.3 - SONIC AUTOMOTIVE INC	d911005dex993.htm

Q1 2015 EARNINGS REVIEW

April 21, 2015

Exhibit 99.2

FORWARD-LOOKING STATEMENTS

This

presentation

contains

“forward-looking

statements”

within

the

meaning

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 2015

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

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 ending December 31, 2015. 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 ended December 31, 2014.

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

•

STRATEGIC FOCUS

•

FINANCIAL RESULTS

•

OPERATIONS REVIEW

•

SUMMARY AND OUTLOOK

STRATEGIC FOCUS

Growth

•

One Sonic-One Experience

•

EchoPark

•

Acquisitions & Open Points

Own Our Properties

Return Capital to Shareholders

STRATEGIC FOCUS

ONE SONIC-ONE EXPERIENCE (OSOE)

•

Goals

•

Pilot Stores Underway

•

36 Month Implementation

•

Charlotte Market Rollout in

Progress

Result -

Increase Market Share and Customer Retention

1 Associate, 1 Price, 1 Hour

Improve Transparency; Increase Trust

Operational Efficiencies

STRATEGIC FOCUS

EchoPark

•

Hub Opened November 3

•

2 Neighborhood Stores

Opened in January 2015

•

Expect at least 1 more in 2015

and another in 2016

STRATEGIC FOCUS

ACQUISITIONS & OPEN POINTS

•

Open Points

Mercedes Benz in Dallas Market

Operational in 2016

Audi in Pensacola Market

Operational in 2016

Nissan in TN Market

Operational in late 2016 / early 2017

•

Exploring Acquisition and Open Point

Opportunities in Other Markets

STRATEGIC FOCUS

OWN OUR PROPERTIES

2007

2008

2011

2012

2013

2014

2015

Proj. -

2017

12%

18%

23%

31%

36%

37%

49%

STRATEGIC FOCUS

RETURN CAPITAL TO SHAREHOLDERS

•

Unused Authorization of Approximately $ 68 million

•

Quarterly Dividend of $0.025 Per Share

(in thousands)

Average Price /

(in millions)

2015 Activity

447

$ 24.89

$ 11.1

Q1 2015

FINANCIAL REVIEW

Q1 2015 FINANCIAL REVIEW

FRANCHISE DEALERSHIPS

ADJUSTED FRANCHISED OPERATIONS

B/(W) than Q1 2014

(amounts in millions, except per share data)

Q1 2015

Revenue

$ 2,220

$ 83

3.9%

Gross Profit

$ 333

$ 4

1.3%

SG&A as % of Gross

(1)

79.2%

50 bps

Operating Profit

(1)

$ 54

$ 1

2.2%

Interest & Other

$ 18

$ 1

3.4%

Pretax

(1)

$ 36

$ 2

5.2%

Diluted EPS

(1)

$ 0.43

$ .03

7.5%

Note –

Continuing operations includes results of sold stores after March 31, 2014.

(1) –

Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts

FRANCHISED SG&A TO GROSS WALK –

210 bps

Better than

Q1 2014 of

79.7%

(1) –

Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts

Q1 2015 Adjusted (1)

Less: OSOE

Less: Centralization

Initiatives

79.2%

(1.1%)

(0.5%)

77.6%

Q1 2015 Adj for

Q1 2015 FINANCIAL REVIEW

ECHOPARK

ECHOPARK

Q1 RESULTS

B/(W) than

Q1 2014

(amounts in millions, except per share data)

Q1 2015

Revenue

$ 15.7

Gross Profit

$ 1.8

Operating Profit (1)

($ 4.8)

($ 3.1)

Interest & Other

($ 0.1)

Pre-tax Profit (Loss) (1)

($ 4.9)

($ 3.2)

Store Level (retail units)

660

n/a

Diluted EPS (1)

($ 0.06)

($0.04)

(1) –

Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts

Q1 2015 FINANCIAL REVIEW

TOTAL ENTERPRISE

ADJUSTED TOTAL Q1 2015 RESULTS

B/(W) than Q1 2014

(amounts in millions, except per share data)

Q1 2015

Revenue

$ 2,236

$ 99

4.6%

Gross Profit

$ 335

$ 6

1.8%

Operating Profit

(1)

$ 49

($ 2)

(3.8%)

Interest & Other

$ 18

$ 1

2.7%

Continuing Ops:

Profit (after tax)

(1)

$ 19

($ 1)

(5.9%)

Diluted EPS

(1)

$ 0.37

($ 0.01)

(2.6%)

SG&A as % of Gross

(1)

80.6%

(40 bps)

Discontinued Ops Profit/(Loss) (after tax)

($ 0.4)

$ 0.2

Note –

Continuing operations includes results of sold stores after March 31, 2014.

(1) –

Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts

TOTAL REVENUE & GROSS PROFIT Q1 2015

B/(W) than Q1 2014

(amounts in millions)

Q1 2015

New Retail Revenue

$ 1,190

$ 78

7.0%

Used Retail Revenue

$ 594

$ 34

6.1%

Fixed Operations Revenue

$ 323

$ 4

1.4%

F&I Revenue

$ 75

$ 5

7.2%

Total Revenue

$ 2,236

$ 99

4.6%

New Retail Gross

$ 63

($ 2)

(3.6%)

Used Retail Gross

$ 41

$ 0

0.4%

Fixed Operations Gross

$ 156

$ 4

2.8%

F&I Gross

$ 75

$ 5

7.2%

Total Gross

$ 335

$ 6

1.8%

(1) –

Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts

ADJUSTED TOTAL SG&A TO GROSS

80.6%

80.2%

Note –

2015 amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts

Q1 2015

Q1 2014

4.6%

4.3%

48.1%

47.8%

5.4%

5.6%

22.5%

Advertising

Comp

Rent

Other

ADJUSTED AND GAAP EPS SUMMARY

(amounts in millions, except per share date)

Q1 2015

Q1 2014

Pre-Tax

EPS

Pre-Tax

EPS

Adjusted Franchised EPS

$35.7

$ 0.43

$ 34.0

$0.40

Adjusted EchoPark®

EPS

($4.9)

($0.06)

($ 1.7)

($ 0.02)

Adjusted Total EPS

$ 30.8

$ 0.37

$32.2

$ 0.38

Adjustments:

Impairment

($ 6.2)

($ 0.07)

$ 0.0

Other

($ 1.1)

($ 0.02)

$ 0.0

GAAP EPS

$ 0.28

$ 0.38

CAPITAL SPEND

(amounts in millions)

YTD Q1

2015

Estimated

2015

Real Estate & Facility Related

$ 37.2

$200.9

All Other Cap Ex

9.7

46.3

Subtotal

$ 46.9

$ 247.2

Less: Mortgage Funding

(25.6)

(87.1)

Total Cash Used –

Cap Ex

$ 21.3

$ 160.1

Note –

Spending excludes the effect of franchise acquisitions.

LIQUIDITY

(amounts in millions)

Q1 2015

Q4 2014

Cash

$4.0

$ 4.2

Revolver Availability

161.1

165.6

Used floor plan availability

21.6

22.6

Floor plan deposit balance

56.0

57.5

Total

$242.7

$ 249.9

DEBT COVENANTS

Covenant

Actual Q1

2015

Liquidity Ratio

>= 1.05

1.21

Fixed Charge Coverage Ratio

>= 1.20

1.64

Total Lease Adjusted Leverage

Ratio

<= 5.50

4.16

Compliant with all Covenants

OPERATIONS

REVIEW

NEW VEHICLE RETAIL

SAME STORE

Q1 2015

Q1 2014

B/(W)

Volume

30,981

28,980

6.9%

Selling Price

$ 38,028

$ 37,120

2.4%

Gross Margin %

5.3%

5.9%

(60 bps)

GPU

$ 2,018

$ 2,199

($ 182)

Gross Profit

$ 63 million

$ 64 million

(1.9%)

SAAR (includes fleet)

16.6 million

15.6 million

6.4%

Q1 2015 vs. Q1 2014

(1)

(1) –

Industry includes fleet –

Sonic does not

NEW VEHICLE -

BRAND

15.4%

6.9%

2.3%

6.9%

5.2%

24.8%

5.0%

15.3%

3.6%

% Sonic Unit Sales

BMW

Cadillac

Ford

Honda

Lexus

Toyota

Audi

13%

(14%)

(3%)

(4%)

11%

19%

12%

13%

(6%)

19%

14%

Sonic

Industry

USED VEHICLE RETAIL

SAME STORE

Q1 2015

Q1 2014

B/(W)

Retail Volume

27,079

26,601

1.8%

Used Retail GPU

$ 1,478

$ 1,477

$ 1

Used to New

0.87:1.00

0.92:1.00

(0.04)

Vehicles / store / month (97 stores)

FIXED OPS

SAME STORE

Q1 2015

B/(W) than 2014

(amounts in millions)

Revenue

$ 318

$ 10

3.2%

Gross Profit

$ 154

$ 7

4.9%

(5.0%)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Customer Pay

Warranty

Wholesale Parts

Internal & Sublet

(1.2%)

21.4%

1.8%

6.8%

YOY Gross % Change

OSOE

OSOE –

TOWN & COUNTRY TOYOTA

NEW RETAIL UNITS

155

140

198

156

177

246

251

182

167

182

153

200

257

100

120

140

160

180

200

220

240

260

280

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

13.2%

12.9%

14.2%

13.1%

14.6%

18.0%

20.8%

15.8%

16.0%

15.1%

15.8%

22.0%

20.5%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

MARKET SHARE

OSOE –

TOWN & COUNTRY FORD

NEW RETAIL UNITS

MARKET SHARE

135

113

138

121

108

141

108

100

121

100

110

120

130

140

150

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

19.5%

18.3%

17.0%

16.9%

13.9%

18.5%

17.3%

12.3%

16.0%

13.3%

15.9%

15.7%

15.2%

10.0%

15.0%

20.0%

25.0%

30.0%

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

OSOE –

FORT MILL FORD

NEW RETAIL UNITS

110

121

156

116

133

124

114

108

111

110

130

150

170

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-14

15.9%

18.5%

20.1%

16.3%

17.0%

15.4%

16.3%

14.9%

12.4%

14.5%

16.9%

14.8%

14.6%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

MARKET SHARE

OSOE –

INFINITI OF CHARLOTTE

NEW RETAIL UNITS

40.7%

51.1%

30.0%

44.4%

43.5%

46.6%

40.5%

50.6%

40.5%

31.7%

42.6%

46.8%

49.5%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

MARKET SHARE

OSOE –

CADILLAC OF SOUTH CHARLOTTE

NEW RETAIL UNITS

47.5%

41.7%

38.7%

36.7%

40.4%

40.0%

37.1%

45.7%

32.2%

26.5%

41.3%

38.0%

38.8%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

Mar-14

Apr-14

May-14

Jun-14

Jul

-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

MARKET SHARE

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

OSOE –

NEXT STEPS

We are still working on the pricing tool (in particular with Ford) we are a

few months away from completion

Drivers of the slowdown are “man”

hours available and new

technology

opportunities

–

simply

put

this

first

its

kind

and

are close to breaking the code

CRM/Desk/F&I and Appraisal system is a major success in the stores all

technologies are running at 100%

Operations team is requesting us to develop a two part rollout of the

technology from OSOE less the pricing (until pricing tool is 100%

operational)

Beginning in Q2 we would start the rollout of the CRM and the Desk

tool

Followed by a rollout out of the F&I and Appraisal tools (3 months

later per location)

A rollout plan of the technology is under development

EchoPark

EchoPark

Openings:

122

183

185

292

143

135

188

100

150

200

250

300

350

Dec-14

Jan-15

Feb-15

Mar-15

Unit Volume

Total

Centennial

Highlands Ranch

HUB

Hub –

11/3/2014

Centennial –

12/26/2015

Highlands Ranch –

1/23/2015

Growth experienced in each revenue category

achieving record results

Gaining expense leverage in the franchised dealership

segment including OSOE expenses

Expect open points to drive future growth

Continued share repurchases with excess capital

Monitoring capital requirements as 2017 lease

maturities approach

SUMMARY

Appendix

NON-GAAP RECONCILIATIONS

Consolidated

Franchised Dealerships

EchoPark®

Three Months Ended

March 31,

2015

2014

2015

2014

2015

2014

(In millions)

SG&A Reconciliation:

As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

270.9

264.0

265.0

262.3

5.9

1.7

Pre-tax Adjustments:

Severance and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1.1)

Total pre-tax adjustments . . . . . . . . . . . . . . . . . . . . .

(1.1)

Adjusted SG&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

269.8

264.0

263.9

262.3

5.9

1.7

SG&A as % of Gross Reconciliation:

As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80.9%

80.2%

79.5%

79.7%

Pre-tax Adjustments:

Severance and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(0.3%)

0.0%

(0.3%)

0.0%

Total pre-tax adjustments . . . . . . . . . . . . . . . . . . . . .

(0.3%)

0.0%

(0.3%)

0.0%

Adjusted SG&A as % of Gross . . . . . . . . . . . . . . . . . . . . . .

80.6%

80.2%

79.2%

79.7%

NM = Not meaningful

This release contains certain non-GAAP financial measures (the "Adjusted" amounts) 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" amounts) 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.

NON-GAAP RECONCILIATIONS

Consolidated

Franchised Dealerships

EchoPark®

Three Months Ended

March 31,

2015

2014

2015

2014

2015

2014

(In millions)

Operating Profit Reconciliation:

As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.5

50.6

47.7

52.3

(6.2)

(1.7)

Pre-tax Adjustments:

Severance and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1

Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.2

4.8

1.4

Total pre-tax adjustments . . . . . . . . . . . . . . . . . . . . .

7.3

5.9

1.4

Adjusted Operating Profit . . . . . . . . . . . . . . . . . . . . . . . . . .

48.8

50.6

53.6

52.3

(4.8)

(1.7)

Pre-tax Profit from Continuing Operations Reconciliation:

As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23.5

32.2

29.8

33.9

(6.3)

(1.7)

Pre-tax Adjustments:

Severance and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.1

Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.2

4.8

1.4

Total after-tax adjustments . . . . . . . . . . . . . . . . . . . .

7.3

5.9

1.4

Adjusted Profit from Continuing Operations (after-tax) . . .

30.8

32.2

35.7

33.9

(4.9)

(1.7)

Profit from Continuing Operations (after-tax) Reconciliation:

As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.4

20.0

After-tax Adjustments:

Severance and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.6

Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.8

Total after-tax adjustments . . . . . . . . . . . . . . . . . . . .

4.4

Adjusted Profit from Continuing Operations (after-tax) . . .

18.8

20.0

NON-GAAP RECONCILIATIONS

Three Months Ended March 31, 2015

Income (Loss)

From Continuing

From Discontinued

Operations

Average

Net Income (Loss)

Weighted

Per

Average

Amount

(In millions, except per share amounts)

Reported:

Earnings (loss) and shares . . . . . . . . . . . . . . .

50.9

14.4

(0.4)

14.0

Effect of participating securities:

Non-vested restricted stock

and stock units . . . . . . . . . . . . . . . . . . . .

Basic earnings (loss) and shares . . . . . . . . . .

50.9

14.4

0.28

(0.4)

(0.01)

14.0

0.27

Effect of dilutive securities:

Stock compensation plans . . . . . . . . . . . . .

0.5

Diluted earnings (loss) and shares . . . . . . . . .

51.4

14.4

0.28

(0.4)

(0.01)

14.0

0.27

Adjustments (net of tax):

Impairment charges . . . . . . . . . . . . . . . . . . . .

3.8

0.07

3.8

0.07

Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.6

0.02

0.6

0.02

Total adjustments . . . . . . . . . . . . . . . . . . .

4.4

0.09

4.4

0.09

Adjusted:

Earnings (loss) and

Diluted earnings (loss) per share (1) . . . . .

18.8

0.37

(0.4)

(0.01)

18.4

0.36

(1) Expenses attributable to the EchoPark® initiative were $0.06 per fully diluted share in the three months ended March 31, 2015.

NON-GAAP RECONCILIATIONS

Three Months Ended March 31, 2014

Income (Loss)

From Continuing

From Discontinued

Operations

Net Income (Loss)

Weighted

Per

Average

Amount

(In millions, except per share amounts)

Reported:

Earnings (loss) and shares . . . . . . . . . . . . . . .

52.4

20.0

(0.6)

19.4

Effect of participating securities:

Non-vested restricted stock

and stock units . . . . . . . . . . . . . . . . . . . .

(0.1)

Basic earnings (loss) and shares . . . . . . . . . .

52.4

19.9

0.38

(0.6)

(0.01)

19.3

0.37

Effect of dilutive securities:

Stock compensation plans . . . . . . . . . . . . .

0.5

Diluted earnings (loss) and shares (2). . . . . .

52.9

19.9

0.38

(0.6)

(0.02)

19.3

0.36

(2) Expenses attributable to the EchoPark® initiative were $0.02 per fully diluted share in the three months ended March 31, 2014.

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