Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q4 2017 Earnings Presentation
51 slides from Sonic Automotive's earnings presentation, Feb 27, 2018
Slide 1: Q4 2017 Investor Presentation
Q4 2017 Investor Presentation Exhibit 99.2
Slide 2: Forward-Looking Statements
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 bu
Slide 3: Content
CONTENT COMPANY OVERVIEW FINANCIAL & OPERATIONS REVIEW OUTLOOK
Slide 4: Company Overview
COMPANY OVERVIEW Sonic) EchoPark
Slide 5: Overview – Franchised Geographic
OVERVIEW – FRANCHISED GEOGRAPHIC Headquartered in Charlotte, NC 103 Stores, 23 Brands, 18 Collision Repair Centers Platforms in Major Metro Markets
Slide 6: Overview – EchoPark Geographic - CO
OVERVIEW – ECHOPARK GEOGRAPHIC - CO Colorado Springs - Opened Q2 2017 Have purchased property in the following markets (some are under construction): Dallas/Ft. Worth San Antonio Houston Austin Carolinas
Slide 7: Overview – EchoPark Geographic - TX
OVERVIEW – ECHOPARK GEOGRAPHIC - TX West San Antonio Location Opened in Q4 2017 New Braunfels Location Opened in Q1 2018
Slide 8: Concentration in Major Metro Markets
Note: Percentages are percent of total revenue for FY 2017. Concentration in Major Metro Markets
Slide 9: Revenue streams and brand mix diversification
Revenue streams and brand mix offer attractive diversification across the automotive retail space. Note: Percentages are for FY 2017.
Slide 10: Franchised Segment Q4 2017 Financial Review
FRANCHISED SEGMENT Q4 2017 FINANCIAL REVIEW
Slide 11: Franchised Segment Q4 2017 Results
FRANCHISED SEGMENT Q4 2017 RESULTS – Q4 2017 and Q4 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than Q4 2016 (1) (amounts in millions, except per share data) Q4 2017 (1) $ % Revenue $2,561.60804396 $48.521291280000007 1.930744779433% Gross Profit $372.606423118
Slide 12: New Vehicle SAAR
NEW VEHICLE SAAR Full Year 2017 – 17.2M Full Year 2016 – 17.4M
Slide 13: New Vehicle Retail Same Store - Franchised
NEW VEHICLE RETAIL SAME STORE - Franchised Retail Units Oct Nov Dec Total 2017 10,682 11,223 14,144 36,049 2016 10,307 10,372 13,876 34,555 B/(W) 375 851 268 1,494 % B/(W) 3.6% 8.2% 1.9% 4.3% Q4 2017 Q4 2016 B/(W) Retail Volume 36,049 34,555 4.3235421791% Selling Price $40,720.31519320648 $39,910.23
Slide 14: New Vehicle – Gross, Unit & GPU Trend
NEW VEHICLE – GROSS, UNIT & GPU TREND Continuing Operations - Franchised Gross Per Unit Retailed
Slide 15: Days Supply
DAYS SUPPLY 60 0 50 52 40 a 30 2 34 20 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 —New —Used —Parts
Slide 16: Used Vehicle Retail
USED VEHICLE RETAIL Franchised – Same Store Front End Gross and F&I Q4 2017 Q4 2016 B/(W) Retail Volume 26,956 27,383 -1.5593616477% GPU $1,194.2215788692129 $1,287.5365679436218 $-93.314989074408913 Used to New 0.75 0.79 -,400.34 bps Vehicles/Store/Mth (103 stores) 87.236245954692563 88.61812297734
Slide 17: F&I – Gross & PUR Trend
F&I – GROSS & PUR TREND Franchised – Same Store $1,447 PUR Franchised All Ops – All-Time Record
Slide 18: Fixed Ops
One Less Selling Day FIXED OPS Franchised – Same Store (in millions) Q4 2017 Q4 2016 B/(W) Revenue $348.60663786999902 $343.489100809999 1.4898688337% Gross Profit $170.646423910001 $166.42572632 2.5360848249%
Slide 19: Q4 2017 Financial Review Pre-Owned Segment
Q4 2017 FINANCIAL REVIEW PRE-OWNED SEGMENT
Slide 20: Pre-Owned Segment Q4 2017 Results
PRE-OWNED SEGMENT Q4 2017 RESULTS – Q4 2017 and Q4 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than Q4 2016 (1) (amounts in millions, except per share, unit and per unit data) Q4 2017 (1) $ % Revenue $106.33129334 $62.505442930000008 1.4262231615644307 Gross Pr
Slide 21: Q4 2017 Financial Review Total Enterprise
Q4 2017 FINANCIAL REVIEW TOTAL ENTERPRISE
Slide 22: Consolidated Q4 2017 Results
CONSOLIDATED Q4 2017 RESULTS – Q4 2017 and Q4 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than Q4 2016 (1) (amounts in millions, except per share data) Q4 2017 (1) $ % Revenue $2,667.9393373000098 $111.0267342099999 4.342218583296% Gross Profit $384.08946156833
Slide 23: Q4 2017 Revenue & Gross Profit
Q4 2017 REVENUE & GROSS PROFIT B/(W) than Q4 2016 (amounts in millions, except unit and per unit data) Q4 2017 $ % New Retail Revenue $1,476.84615172999 $80.432670969990085 5.759946611674% Used Retail Revenue $685.96489710999799 $34.356789239995067 5.272615368814% Fixed Operations Revenue $355.13723
Slide 24: Q4 2017 Adjusted SG&A to Gross
Q4 2017 ADJUSTED SG&A (1) TO GROSS 72.6% 76.0% – Q4 2017 and Q4 2016 results are adjusted – See appendix for reconciliation to GAAP amounts.
Slide 25: Q4 2017 Interest Expense
Q4 2017 INTEREST EXPENSE B/(W) than Q4 2016 (amounts in millions) Q4 2017 $ % Floor Plan Interest Expense $9.9824982899999988 $-2.06385141000001 -0.26063182779530802 Interest Expense, Other $13.32371302 $-0.77811851000000021 -6.20232472347% Total Interest Expense $23.306211309999998 $-2.841969920000
Slide 26: FY 2017 Financial Review
FY 2017 FINANCIAL REVIEW EchoPark
Slide 27: FY 2017 Financial Review Franchised Segment
FY 2017 FINANCIAL REVIEW FRANCHISED SEGMENT
Slide 28: Franchised Segment FY 2017 Results
FRANCHISED SEGMENT FY 2017 RESULTS – FY 2017 and FY 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than FY 2016 (1) (amounts in millions, except per share data) FY 2017 (1) $ % Revenue $9,612.8989921099801 $22.146659369980917 .230916810294% Gross Profit $1,429.984
Slide 29: FY 2017 Financial Review Pre-Owned Segment
FY 2017 FINANCIAL REVIEW PRE-OWNED SEGMENT
Slide 30: Pre-Owned Segment FY 2017 Results
Pre-Owned SEGMENT FY 2017 RESULTS – FY 2017 and FY 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than FY 2016 (1) (amounts in millions, except per share, unit and per unit data) FY 2017 (1) $ % Revenue $254.30946813 $113.28287451999998 0.80327313891787322 Gross P
Slide 31: FY 2017 Financial Review Total Enterprise
FY 2017 FINANCIAL REVIEW TOTAL ENTERPRISE
Slide 32: Consolidated FY 2017 Results
CONSOLIDATED FY 2017 RESULTS – FY 2017 and FY 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than FY 2016 (1) (amounts in millions, except per share data) FY 2017 (1) $ % Revenue $9,867.20846023999 $135.42953388997913 1.391621561843% Gross Profit $1,457.6759196583
Slide 33: FY 2017 Revenue & Gross Profit
FY 2017 REVENUE & GROSS PROFIT B/(W) than FY 2016 (amounts in millions, except unit and per unit data) FY 2017 $ % New Retail Revenue $5,216.4861895699905 $35.951100989989939 .693965012789% Used Retail Revenue $2,622.526565300001 $88.930190919999959 3.510694493745% Fixed Operations Revenue $1,416.10
Slide 34: FY 2017 Adjusted SG&A to Gross
FY 2017 ADJUSTED SG&A(1) TO GROSS 78.6% 78.5% – FY 2017 and FY 2016 results are adjusted – See appendix for reconciliation to GAAP amounts.
Slide 35: FY 2017 Interest Expense
FY 2017 INTEREST EXPENSE – FY 2017 and FY 2016 results are adjusted – See appendix for reconciliation to GAAP amounts. B/(W) than FY 2016 (1) (amounts in millions) FY 2017 (1) $ % Floor Plan Interest Expense $36.395427080000005 $-8.6793051699999992 -0.31315005750745017 Interest Expense, Other $51.86
Slide 36: 2017 Capex
2017 CAPEX (amounts in millions) FY 2017 Estimated 2018 Real Estate & Facility Related $199.3 $118.5 All Other Cap Ex 35 23.8 Subtotal $234.3 $142.30000000000001 Less: Mortgage Funding -52.5 -35.700000000000003 Total Cash Used – Cap Ex $181.8 $106.60000000000001
Slide 37: Debt Covenants
DEBT COVENANTS Covenant Q4 2017 Liquidity Ratio >= 1.05 1.1299999999999999 Fixed Charge Coverage Ratio >= 1.20 1.65 Total Lease Adjusted Leverage Ratio <= 5.75 4.72
Slide 38: Share Repurchases
SHARE REPURCHASES Increased Dividend in 2018 to $0.06/Share Quarterly Dividend at $0.05/Share in Q1, Q2, Q3 & Q4 of 2017 Acquired 11.2% of OS in 2016, 4.5% of OS in 2017 New Share Count = 43.2M Down from High of 53.2M (Dec 2012) Dividends Declared of $8.8M in 2017 (000's) (000's) (000's) Shares $/Sh
Slide 39: 2018 Plan
2018 Plan Expect New Car Industry Volume Between 16.75M and 17.0M Units Expect Incentives Continue to Drive Behavior in 2018 New BMW Models Expect to Lift Operations Pre-Owned Growth of EchoPark Through Maturity of Stores and Growth in Texas and Carolinas Markets Expect Fixed Operations to Grow at L
Slide 40: Appendix
APPENDIX Sonic) EchoPark
Slide 41: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS (emounts in thousands) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Income S 31548 $ 89929 § 76,254 S$ 89.101 § 81618 S$ 97217 $ 86311 $ 93193 $§ 92,983 Non-loomplan interest 67,736 68,604 63,576 58.453 55,356 52.269 49,524 48,034 50531 Depreciation & Amortization 57,036
Slide 42: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Franchised Pre-Owned Franchised Pre Owned Dealerships __ Stores __Consolidated__Dealer ‘Stores __Consolidated tuted earings (bss) pe sha S148 5 (08) Ss 1428 088 S$ (004 Se. ‘Adjustments (net of income taxes) Impairment charges 0.08 ¢ os 02 « ‘lament : : (0.20) : (020) Stem d
Slide 43: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores December 31, December 31, December 31, Continuing Operations 2017 2016 2017, 2016 (a millions) Reported: SGBA expenses S$ 276 $ 2671 §$ 2638 $ 297 §$ 138 § 74 ‘Adjustments: OEM settlement form damagi Gain on disposal Adjus
Slide 44: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Continuing Operations teported: erating income Agjstments (before income taxes): exper impatrment oa sade before taxes Adjust Operaing income Reported: ‘Adjustments (before income taxes): Gas Adjust Reported: Adjustments (net of income taxes): SG&A expen: Total adjustment: A
Slide 45: Non-GAAP Reconciliations
N-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores 34 Continuing Operations December 3 20 1016 2017, (a millions) Reported: SGBA expenses § 11478 § 11109 § 11069 $§ 10850 $ 409 § 259 Adjustments: OEM settlement rm damage Gain on disposal Le Adjusted: SGBA expenses Reported:
Slide 46: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships scomber December: Decembe! Continuing Operations 2017 2076 2017 2017 fawaieaa Reported: Operating income S$ 216 $ 2329 $ 2320 $ 2884 $ (204) $ (125) Aapeeaens ooo can et SG8A expens: 19 as) 2) (115) 24 é imparment charges 94 7 5 79 19 Tota
Slide 47: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated ‘Twelve Months Ended December 31, Continuing Operations a7 2016 (a millions) Reported: Interest Expense - Other. § 825 § ‘Adjustments: Double-carry interest- 7.0% Notes, 07) Total other income adjustments (OD) Total Interest Expense - Other. Sis Consolidated ‘Tw
Slide 48: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Reported: Earnings (loss) and shi Effect of participating secs Non-vested restricted basic eaminge (ose) andshares Effect of dilutive securities: pensation plan: Diled earings (oss) and shares fjustments: Impairment charges 4 Gain on disp: Total adustmans before taxe: ome ba
Slide 49: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS ‘Three Months Ended December 31,2016 Income (Loss) Income (Loss) From Continuing From Discontinued Netincome (Loss) Weighted Per Per Per Aver se Shares _Amount__ Ami jin coos Keeper share amouris ) ported: "Zang oss arses 44,764 § 38,041 S (405) $ 37,636 flect of participati
Slide 50: Reconciliations
RECONCILIATIONS ein sti Eid carer Tncome (Loss) Income (Loss) From Continuing fan) Operations rations Net income (Loss) Weighted Per Average Share Share Share Shares __Amount_ _Amount_ _Amount_ _Amount_ _Amount_ _Amount {in thousands, except per share amounts) ns 43.997 $ 94,153 $ (1,170) S 92,983 E
Slide 51: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS jeported: Earnings (loss) an Ere ofoarpatng sccoties Non-vested restricted stock Basi earings (oss) and shares fect ofdilutve securities: "Sean m pensation plans Diluted earnings (loss) and shares fect ofadjustments, net ofincome taxes Earnings (loss) an “iuiad eamings foss)