Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q3 2006 Earnings Presentation
15 slides from Sonic Automotive's earnings presentation, Oct 31, 2006
Slide 1: Exhibit 99.2
Exhibit 99.2
Slide 2: Cautionary Notice Regarding Forward-Looking Statements
Cautionary Notice Regarding Forward-Looking Statements • This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. • These forward-looking statements are n
Slide 3: Sonic Automotive Third Quarter 2006 Earnings Review
Sonic Automotive Third Quarter 2006 Earnings Review October 31, 2006
Slide 4: The Quarter in Review
The Quarter in Review • Total revenue increased $144 million, or 7.5%. Same store revenue increased 2.8% driven by a used vehicle sales increase of 4.7% and fixed operations growth of 5.1% • Brand mix continues to drive results – Luxury near 50% of total revenues – Combined luxury and import brands
Slide 5: Financial Performance
Financial Performance Better/(Worse) (amounts in millions, except per share data) Than 2005 Revenue $2,068 $144 Gross Profit $317 $26 Operating Profit $75 $8 Net Income – Continuing Operations $29.1 $0.5 – Total Operations 28.6 1.8 EPS – Continuing Operations $0.66 * $0.01 – Total Operations 0.65 0.
Slide 6: Financial Performance
Financial Performance Better/(Worse) (amounts in millions) Than 2005 Revenue $2,068 7.5% Gross Profit $317 8.9% - Margin 15.3% 20 bps Operating Profit $75 11.8% - Margin 3.6% 10 bps Interest Expense $26 (27.6%) Net Income - Continuing Operations $29 1.8% Q3 • Operating performance is very strong Rev
Slide 7: Same Store Revenue Growth
Same Store Revenue Growth • Solid results overall driven by strong used vehicle and fixed operations performance • Sonic’s new vehicle same store results continue to outperform the industry 2.9% 4.7% (8.7%) 5.1% 4.4% 2.8% New Used Wholesale Fixed Operations F&I Total
Slide 8: Used Vehicles
Used Vehicles Sonic vs. Franchised 1.4Pts 8.4Pts 18.7Pts 25.6Pts 0.0 10.0 20.0 30.0 Q1 06 Q2 06 Q3 06 Sonic vs. Franchised Industry data provided by CNW Market Research Year over Year Retail Volume Change Q1 Q2 Q3 Same Store - Program n/a 22.7% 25.2% 6.0% Total Same Store 4.5% 3.8% 12.2% 2.2% Nat'l
Slide 9: Parts, Service and Collision Repair
$728 $830 $413 $585 $646 $528 46.8% 49.9% 49.5% 49.1% 49.5% 48.1% REVENUE ($ in millions) 9 Months Ended Each Year GROSS MARGIN RATE 9 Months Ended Each Year Parts, Service and Collision Repair • Consistent and improving performance • Grow service capacity in high margin brands • Continue to expand
Slide 10: SG&A Expenses as % of Gross Profit
SG&A Expenses as % of Gross Profit All Other SG&A Rent 6.0% 71.9% 7.9% •Continued improvements in compensation and other operating expenses •Favorable brand mix should continue to improve this metric •Continue to reduce our controllable expense – Operating improvements are gaining traction 6.9% 7.3%
Slide 11: Inventory Management
Inventory Management Days Supply Sep-06 Sep-05 Dec-05 Sep-06 Industry New Vehicles Domestic (excluding Cadillac) Luxury (including Cadillac) Import Overall Used Vehicles Parts
Slide 12: Capitalization
57.7% 55.6% 54.0% 53.8% 53.2% 60.0% 46.8% 46.2% 46.0% 44.4% 42.3% 40.0% Capitalization Q1 2006 Q2 2006 Q3 2006 100% 100% 100% 100% 100% 100% Debt Equity ****Achieved 40% Target For Debt-To-Capital****
Slide 13: Portfolio Enrichment
Portfolio Enrichment • Portfolio enrichment continues, driven by our acquisition strategy and strong growth in luxury and import sales. YTD Sept YTD Sept % of Total Revenues Luxury and Import 69% 72% Cadillac 10% 10% Subtotal 79% 82% Other Domestic 20% 17% Non-Franchised 1% 1% Total 100% 100% Memo:
Slide 14: Summary
Summary • Core operating trends remain strong – Continue our used vehicle sales initiative – Stall capacity and best practices should drive fixed operations growth • Brand mix continues to drive improvements, especially in the higher margin segments of the business • Expense reduction trends continu
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