Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Investor Presentation (October 2020)
48 slides from Sonic Automotive's investor presentation, Oct 29, 2020
Slide 1: Sonic Automotive – Investor Presentation October 2020
Exhibit 99.2 Sonic Automotive – Investor Presentation October 2020 Updated October 29, 2020
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: Company Overview
Company Overview 3
Slide 4: Sonic Automotive: Who We Are
Sonic Automotive: Who We Are QUICK FACTS 97 14 Our Core Franchised Dealerships Dealerships Collision Centers Segment is a Full-Service Automotive Retailer, Selling New and Used Vehicles, Arranging F&I Product Sales, and Providing (NYSE: SAH) Parts, Service and Collision 20+ 12 Repair a Fortune 500 A
Slide 5: Investment Highlights
Investment Highlights Multiple Growth And Profit Drivers For Franchised Segment Broad Revenue Unique, High Stream Return EchoPark Diversification Business Model Expect To More Than Double Total Revenue By 2025 Complementary Focused On Expense Relationship – Sonic Control And Franchised And Strengthe
Slide 6: Revenue Composition by Geography
Revenue Composition BY GEOGRAPHY Geographic Footprint, Revenue Streams and Brand Mix Offer Attractive Diversification Across the Automotive Retail Space SC 2% NV 2% Other * 3% MD 2% VA 2% GA 3% NC 4% CA 28% AL 5% Concentration in Major Metro FL 6% Markets TN 7% CO 9% TX 27% Note: Percentages are Per
Slide 7: Revenue Composition – Diversified Revenue Streams
Revenue Composition – Diversified Revenue Streams Brand Distribution Business Line Mix % of % of New Vehicle Brand Revenue Franchise Brand Revenue Used Vehicle (Including Wholesale) BMW 23% Mercedes 11% Parts, Service & Collision Repair ("Fixed Operations") Audi 6% Finance & Insurance ("F&I") Lexus
Slide 8: EchoPark Automotive – A Unique Growth Story
EchoPark Automotive – A Unique Growth Story The New Car Alternative™ Price. Quality. Convenience. Focus On 10% Below Pre-Owned Market – More Stable Market Than New Vehicle Pricing With Simplified, Easy Market Purchase Experience Unique, High Return Business Model 1 to 4-Year-Old 30% of Guests Vehicl
Slide 9: EchoPark – High Volume Model Drives Superior Returns
EchoPark – High Volume Model Drives Superior Returns Ultra-Low Pricing Attractive F&I High Volume Throughput May Yield Slightly Negative Higher Penetration Rates 5X Volume Per Store Per Front-End Gross Profit Per On F&I Products Month vs. Sonic Franchised Unit vs. Sonic Franchised Stores Stores Gros
Slide 10: Complementary Relationship Between Segments
Complementary Relationship Between Segments Franchised Dealerships • Thrives When New Vehicle Industry Is • Strong Secular Growth Phase Due To: Healthy, Particularly Where Luxury ✓ Focus On Recession-Resistant Brands Are Strong Pre-Owned Vehicle Market • Diverse Revenue Streams - Some ✓ Below-Market
Slide 11: Industry-Leading Used Vehicle Volume Throughput
Industry-Leading Used Vehicle Volume Throughput Retail Used Vehicle Unit Sales Per Store Per Month 491 440 329 104 94 69 Peer Average* Sonic Franchised Sonic Franchised CarMax** EchoPark** EchoPark** (Q2 2020) (Q3 2020) (Q2 2020) (Q3 2020) Utilize Highly Efficient Inventory Sourcing, Pricing And Sel
Slide 12: Inventory Management Expertise
Inventory Management Expertise Used Vehicle Inventory Days’ Supply 57 36 30 38 34 25 Peer Average* Sonic Franchised Sonic Franchised CarMax** EchoPark EchoPark (June 30, 2020) (September 30, 2020) (June 30, 2020) (September 30, 2020) Low Inventory Days’ Supply Reduces Risk Of Normal Fluctuations In
Slide 13: Strategic Direction
Strategic Direction Franchised Dealerships EchoPark Capital Allocation Drive New And Used Vehicle Early Stage Strong Secular Opportunistic Divestitures Of Profit Growth Through Growth Phase Underperforming Or Capital- Multiple Channels Intensive Franchised (Traditional Sale Or Lease, Profitability I
Slide 14: EchoPark Accelerated Expansion Plan
EchoPark Accelerated Expansion Plan 14
Slide 15: EchoPark – Developing Nationwide Distribution Network
EchoPark – Developing Nationwide Distribution Network 140+ Point Distribution Network By 2025 Existing New Retail Hub New Retail Hub Delivery & Buy Center Retail Hub To Open In 2020 To Open In 2021 Coverage Area 15
Slide 16: EchoPark – Modeled 4-Wall Economics At Maturity
EchoPark – Modeled 4-Wall Economics At Maturity Delivery & Medium Large (Modeled Metrics Assume 100% Maturity) Buy Center Retail Hub Retail Hub Average Monthly Retail Unit Volume 300 750 1,500 Average Vehicle Selling Price $ 20,500 $ 20,500 $ 20,500 Total Annual Revenues $ 82,000,000 $ 210,000,000 $
Slide 17: EchoPark – Delivery & Buy Center Rollout
EchoPark – Delivery & Buy Center Rollout Delivery & Buy Center Model • Tremendous Operating Leverage Utilizing Existing Physical Store For Inventory Reconditioning • Advertise Inventory In Surrounding Markets • Complete E-Commerce Sales Into New Markets • Inspect & Buy Vehicles From Guests After App
Slide 18: EchoPark – 5-Year Accelerated Growth Forecast
EchoPark – 5-Year Accelerated Growth Forecast Total Revenues (In Billions) $14.0 Pre-Tax Profit (In Millions) EBITDA (In Millions) Retail Unit Sales Volume $261.0 $221.0 575,000 $17.3 59,000 $5.4 55% 2020E 2025E 2020E 2025E 2020E 2025E CAGR Rate Of Expansion Total Addressable Market • Expect to Open
Slide 19: EchoPark Accelerated Expansion Plan Enablers
EchoPark Accelerated Expansion Plan Enablers 19
Slide 20: EchoPark – Brand Promise
EchoPark – Brand Promise Price. Quality. Convenience. Up To 40% Below Up To 10% Below High Quality, Low Transparent New Vehicle Price Used Vehicle Market Mileage Vehicle With Guest-Centric Price Existing Warranty Experience New Car Feel Zero Reported Buy & Sell Complete Purchase Without The New Acci
Slide 21: EchoPark – Full Omni-Channel Infrastructure
EchoPark – Full Omni-Channel Infrastructure Buy & Sell Your Way ON-SITE ONLINE Proprietary EchoPark E-Commerce User Interface Developed By Cox Automotive Customer Appraise & Sell Us Your Old Car Buy Your Nearly New Car Facing Technology Darwin Automotive – Bridging Online And On-Site Purchase Experi
Slide 22: Buy & Sell Your Way
Buy & Sell Your Way Buy & Sell Buy Begin Online, Buy Your Way On-Site Finish On-Site Online • Our Blend Of Brick And • Complete A Traditional • Research Online, Utilize • Complete An E- Mortar And E- Vehicle Purchase Chat, Text, Phone, Zoom Commerce Transaction Commerce Strategies Experience With A
Slide 23: EchoPark Segment Historical Data
EchoPark Segment Historical Data 23
Slide 24: EchoPark – Growth Path
EchoPark – Growth Path $450 16,000 15,127 13,986 $400 13,206 13,207 14,000 12,587 12,676 $350 12,000 11,051 $300 10,000 8,762 $250 7,459 7,698 8,000 (In Millions) (In $200 5,518 6,000 $150 4,496 4,000 $100 2,400 2,049 1,585 1,685 1,673 2,000 $50 941 1,136 660 881 920 764 212 $- - Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 25: EchoPark – Adjusted EBITDA Trend
EchoPark – Adjusted EBITDA Trend $6,352 $6,000 $5,569 $5,299 $5,169 $4,957 $4,792 $4,000 $3,149 $2,000 (In (In Thousands) $- Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 ($1,115) Newly Opened & Future Stores $(2,000) Reduced Adjusted EBITDA
Slide 26: EchoPark – Market Maturity Comparison
EchoPark – Market Maturity Comparison Average Monthly Retail Unit Volume - 150 300 450 600 750 900 1,050 1,200 1,350 1,500 1,650 1,800 Denver/Colorado Springs Opened Q4 2014 * Dallas Acquired Q3 2017 Houston Retail Hub Opened Q4 2018 nd 2 Retail Hub Opened September 2020 Newer Markets Continue To Ch
Slide 27: Franchised Dealerships Segment
Franchised Dealerships Segment 27
Slide 28: Franchised Dealerships
Franchised Dealerships Franchised Brands, Luxury 84 Dealerships 20+ Weighted NewNew & & Used Used VehicleVehicle Sales Sales PartsParts & & ServiceService (P&S) (P&S) FinanceFinance && Insurance (F&I) (F&I) Major Collision Metropolitan Repair Centers 14 20 Markets Focused On Inventory Mix and Attrac
Slide 29: Franchised Dealerships – Geographic Footprint
Franchised Dealerships – Geographic Footprint Headquartered in 84 Stores, 20+ Brands, Platforms in Major Charlotte, NC 14 Collision Repair Centers Metro Markets 29
Slide 30: Franchised Dealerships – Strategic Levers
Franchised Dealerships – Strategic Levers Grow Parts and Service Acquire Potential High Maximize Return Stores F&I Penetration Divest Multiple Growth Underperforming Used Vehicle or Capital-Intensive Drivers Volume Stores Throughput SG&A Expense Inventory Discipline Sourcing Omni-Channel Apply Platf
Slide 31: Q3 2020 Financial Snapshot
Q3 2020 Financial Snapshot 31
Slide 32: Q3 2020 – Consolidated Continuing Operations
Q3 2020 – Consolidated Continuing Operations Better/(Worse) than Q3 2019 (In millions, except per share data) Q3 2020 $ % Revenues $2,548.5 ($154.2) (5.7%) Gross profit $376.6 ($10.2) (2.6%) SG&A expenses(1) $257.2 $39.7 13.4% SG&A expenses as % of gross profit(1) 68.3% 840 bps Earnings from continu
Slide 33: Q3 2020 – Consolidated SG&A Expenses As % Of Gross Profit
Q3 2020 – Consolidated SG&A Expenses As % Of Gross Profit Expect To Reduce SG&A Expenses By Approximately $84 Million Annualized On Go- Forward Basis At 17 Million SAAR Levels, Compared To Pre-COVID-19 Levels 840 bps Better 68.3% 76.7% 21.7% 17.2% 3.3% 3.7% 47.6% 44.9% 2.5% 4.1% Q3 2020 Q3 2019 Adve
Slide 34: Strong Balance Sheet And Liquidity
Strong Balance Sheet And Liquidity September 30, 2020 December 31, 2019 (In Millions) Cash and cash equivalents $ 125.7 $ 29.1 Availability under the 2016 Revolving Credit Facility 189.1 230.7 Availability under our used vehicle floor plan facilities(1) - 17.1 Availability under the 2019 Mortgage Fa
Slide 35: Capital Expenditure Discipline
Capital Expenditure Discipline Gross Capital Expenditures (In Millions) $234.2 $163.6 $125.6 $137.8 $84.7 FY 2017 FY 2018 FY 2019 FY 2020E FY 2020E (Less Mortgage Proceeds) Strict Capital Allocation Strategy Prioritizes Highest Return On Investment Actual YTD Q3 2020 Gross Capital Expenditures Of $9
Slide 36: Appendix
APPENDIX 36
Slide 37: Non-GAAP Reconciliation – Segment Income
Non-GAAP Reconciliation – Segment Income Franchised Dealerships EchoPark Segment Segment Consolidated (In millions, except unit data) Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Revenues $ 2,163.5 $ 2,390.5 $ 385.1 $ 312.2 $ 2,548.5 $ 2,702.7 Gross profit $ 347.4 $ 357.3 $ 29.2 $ 29.6 $ 376.6 $
Slide 38: Non-GAAP Reconciliation – Adjusted Earnings Per Share
Non-GAAP Reconciliation – Adjusted Earnings Per Share Q3 2020 Q3 2019 Weighted- Per Weighted- Per Average Share Average Share (In thousands, except per share amounts) Shares Amount Amount Shares Amount Amount Diluted earnings (loss) and shares from continuing operations 44,577 $ 59,988 $ 1.35 44,203
Slide 39: Non-GAAP Reconciliation – Adjusted SG&A Expenses
Non-GAAP Reconciliation – Adjusted SG&A Expenses Better / (Worse) Q3 2020 Q3 2019 Change % Change Reported : (In thousands) 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 $
Slide 40: Non-GAAP Reconciliation – Adjusted EBITDA LTM
Non-GAAP Reconciliation – Adjusted EBITDA LTM* (In thousands) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Q3 2020 Net Income (Loss) $ 86,311 $ 93,193 $ 92,983 $ 51,650 $ 144,137 $ (62,418) Provision For Income Taxes 55,962 59,899 13,198 22,645 54,954 (2,522) Income (Loss) Before Taxes $ 142,273 $ 153,09
Slide 41: Non-GAAP Reconciliation – Adjusted EBITDA Q3 2020 / Q3 2019
Non-GAAP Reconciliation – Adjusted EBITDA Q3 2020 Q3 2019 Franchised Franchised Dealerships EchoPark Discontinued Dealerships EchoPark Discontinued Segment Segment Operations Total Segment Segment Operations Total (In thousands) (In thousands) Net Income (Loss) $ 59,818 $ 29,010 Provision For Income
Slide 42: Non-GAAP Reconciliation – Adjusted EBITDA Q1 2020 / Q1 2019
Non-GAAP Reconciliation – Adjusted EBITDA Q1 2020 Q1 2019 Franchised Franchised Dealerships EchoPark Discontinued Dealerships EchoPark Discontinued Segment Segment Operations Total Segment Segment Operations Total (In thousands) Net Income (Loss) $ (199,333) $ 42,221 Provision For Income Taxes (44,2
Slide 43: Non-GAAP Reconciliation – Adjusted EBITDA Q3 2019 / Q3 2018
Non-GAAP Reconciliation – Adjusted EBITDA Q3 2019 Q3 2018 Franchised Franchised Dealerships EchoPark Discontinued Dealerships EchoPark Discontinued Segment Segment Operations Total Segment Segment Operations Total (In thousands) Net Income (Loss) $ 29,010 $ 15,118 Provision For Income Taxes 11,307 7
Slide 44: Non-GAAP Reconciliation – Adjusted EBITDA Q1 2019 / Q1 2018
Non-GAAP Reconciliation – Adjusted EBITDA Q1 2019 Q1 2018 Franchised Franchised Dealerships EchoPark Discontinued Dealerships EchoPark Discontinued Segment Segment Operations Total Segment Segment Operations Total (In thousands) Net Income (Loss) $ 42,221 $ (2,194) Provision For Income Taxes 18,935
Slide 45: Non-GAAP Reconciliation – Adjusted EBITDA Q3 2018 / Q3 2017
Non-GAAP Reconciliation – Adjusted EBITDA Q3 2018 Q3 2017 Franchised Franchised Dealerships EchoPark Discontinued Dealerships EchoPark Discontinued Segment Segment Operations Total Segment Segment Operations Total (In thousands) Net Income (Loss) $ 15,118 $ 19,440 Provision For Income Taxes 7,262 13
Slide 46: Relative Change In Wholesale Price & Retail Price
Relative Change In Wholesale Price & Retail Price 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% Average Wholesale Price Average Retail Price 46
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Slide 48: Investor Relations Contact
Investor Relations Contact: Sonic Automotive Inc. (NYSE: SAH) KCSA Strategic Communications Danny Wieland, Director of Financial Reporting David Hanover / Scott Eckstein ir@sonicautomotive.com sonic@kcsa.com (704) 927-3462 (212) 896-1220
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