Sonic Automotive, Inc. · NYSE:SAH

Sonic Automotive — Q1 2014 Earnings Presentation

23 slides from Sonic Automotive's earnings presentation, Apr 22, 2014

  1. Slide 1: Q1 2014 Earnings Review

    Q1 2014 EARNINGS REVIEW April 22, 2014

  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

  3. Slide 3: Content

    CONTENT STRATEGIC FOCUS QUARTER IN REVIEW FINANCIAL RESULTS OPERATIONS RECAP SUMMARY AND OUTLOOK

  4. Slide 4: Strategic Focus

    STRATEGIC FOCUS 1. Growth Grow The Base Business Once Sonic One Experience Acquisitions & Open Points Pre-Owned Specialty Stores 2. Own Our Properties 3. Return Capital to Shareholders

  5. Slide 5: Strategic Focus: One-Sonic One-Experience

    STRATEGIC FOCUS ONE-SONIC ONE-EXPERIENCE Goals 1 Associate, 1 Price, 1 Hour Improve Transparency; Increase Trust Operational Efficiencies Pilot Store in July 2014 18 Month Implementation Result—Increase Market Share and Customer Retention

  6. Slide 6: Strategic Focus: Pre-Owned Stores

    STRATEGIC FOCUS PRE-OWNED STORES Break Ground Hiring & Training Marketing & Advertising Opening Q1 Q2 Q3 Q4

  7. Slide 7: Strategic Focus: Own Our Properties

    Cap Rates on Leased Properties Range from 8% -10% Mortgage Rates Range from 4-6% Enable Easier Investment Decisions when Considering Manufacturer Mandated Facility Modifications Strengthens the Balance Sheet Over Time STRATEGIC FOCUS OWN OUR PROPERTIES 2007 2008 2010 2011 2012 2013 Proj. 2017

  8. Slide 8: Strategic Focus: Return Capital to Shareholders

    STRATEGIC FOCUS RETURN CAPITAL TO SHAREHOLDERS Unused authorization of approximately $ 124.1 million Quarterly dividend of $0.025 per share Shares (in thousands) Average Price / Share $ (in millions) Q1 2014 Activity 377 $22.21 $8.4

  9. Slide 9: Q1 2014 Financial Review

    Q1 2014 FINANCIAL REVIEW

  10. Slide 10: Q1 2014 Results

    Q1 2014 RESULTS B/(W) than Q1 2013 (amounts in millions, except per share data) Q1 2014 $ % Revenue $ 2,136 $ 53 3% Gross Profit $ 329 $ 16 5% Operating Profit $ 51 ($ 4) (8%) Interest & Other ($ 18) $ 1 5% Continuing Ops: Profit (after tax) $ 20 ($ 2) (8%) Diluted EPS $ 0.38 ($ 0.03) (7%) SG&A as %

  11. Slide 11: EPS

    EPS B/(W) than Q1 2013 (amounts in millions) Q1 2014 $ % Diluted EPS $ 0.38 ($ 0.03) (7.3%) Weather $ 0.02 $ 0.02 Pre-Owned Initiative $ 0.02 $ 0.01 Adjusted EPS $ 0.42 $ 0.00 0.0%

  12. Slide 12: Gross Profit Mix: Q1 2014 vs Q1 2013

    Q1 2013 = New * Used * F&I ~ Fixed

  13. Slide 13: SG&A Breakdown: Q1 2014 vs Q1 2013

    Qi2014 Q1 2013 © Advertising ~ Comp *Rent * Other Ss 2B =

  14. Slide 14: Capital Spend

    CAPITAL SPEND (amounts in millions) Q1 2014 ESTIMATED Real Estate Acquisitions $ 3.3 $ 32.6 All Other Cap Ex 18.3 160.3 Subtotal $ 21.6 $ 192.9 Less: Mortgage Funding (40.4) (40.4) Total Cash Used – Cap Ex ($ 18.8) $ 152.5 Note – Spending excludes the effect of franchise acquisitions.

  15. Slide 15: Liquidity

    LIQUIDITY Q1 2014 Q4 2013 Cash $2.1 $3.0 Revolver Availability 117.8 126.0 Used floor plan availability 60.3 27.1 Floor plan deposit balance 75.0 65.0 Total $255.2 $221.1

  16. Slide 16: Debt Covenants

    DEBT COVENANTS Covenant Actual Q1 Liquidity Ratio >= 1.05 1.20 Fixed Charge Coverage Ratio >= 1.20 1.89 Total Lease Adjusted Leverage Ratio <= 5.50 4.08 Compliant with all Covenants

  17. Slide 17: Operations Review

    OPERATIONS _—_ ‘ REVIEW Ki

  18. Slide 18: New Vehicle Retail

    NEW VEHICLE RETAIL Q1 2014 Q1 2013 B/(W) Volume 30,029 30,590 (1.8%) Selling Price $ 37,041 $ 35,996 2.9% Gross Margin % 5.9% 5.9% 0 bps GPU $ 2,191 $ 2,132 $ 58 Gross Profit $ 66 million $ 65 million 0.8% SAAR (includes fleet) 15.6 million 15.3 million 2.0%

  19. Slide 19: Used Vehicle Retail

    USED VEHICLE RETAIL Q1 2014 Q1 2013 B/(W) Revenue $560 million $526 million 6.4% Retail Volume 27,657 26,469 4.5% Used Retail GPU $ 1,471 $ 1,437 $ 35 Used Related Retail Gross* $ 90 million $ 83 million $ 7 million Used to New 0.92 : 1 0.87 : 1 0.05 Vehicles / store / month 90 88 2 * - Includes fro

  20. Slide 20: Fixed Ops

    FIXED OPS Q1 2014 B/(W) than 2013 (amounts in millions) 2014 $ % Revenue $ 319 $ 22 7.5% Gross Profit $ 152 $ 8 5.5% QTD YOY Gross Profit Change Breakdown: • Customer Pay Up 5.2% • Whsl. Parts Up 7.1% • Internal & Sublet Up 6.8% • Warranty Up 5.6%

  21. Slide 21: Summary

    SUMMARY

  22. Slide 22: Summary

    Business environment continues to be favorable to retail automotive Posted all-time record pre-owned sales volumes producing record Q1 pre-owned gross profits Fixed operations continues to benefit from 0-5 year units in operation increasing Expect market share gains and customer retention from One-S

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