Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q2 2007 Earnings Presentation
17 slides from Sonic Automotive's earnings presentation, Jul 31, 2007
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 Second Quarter 2007 Earnings Review
Sonic Automotive Second Quarter 2007 Earnings Review July 31, 2007
Slide 4: The Second Quarter in Review
The Second Quarter in Review • Gross margin at 15.6% and operating margin at 3.6% • Used vehicle process and F&I menu continue to produce sound results • SG&A as a percent of gross was 74.2% for the quarter -- a 30 bps improvement from a year ago • Two large luxury stores acquired in the quarter; on
Slide 5: Financial Performance
Financial Performance (amounts in millions, except per share data) Better/ (Worse) Revenue $2,090 $2,074 $16 Gross Profit $325 $312 $13 Operating Profit – Amount $75 $56 $19 – Margin 3.6% 2.7% Net Income – Continuing Operations $30.0 $17.8 $12.2 – Total Operations 26.4 12.2 14.2 EPS – Continuing Ope
Slide 6: Same Store Revenue Growth
Same Store Revenue Growth • Used and F&I processes driving improved performance in both areas • Service Capacity investment contributing to growth • As more used vehicles are retailed, wholesale volume is declining (1.2%) 3.4% 1.8% 3.7% 0.5% (17.6%) (0.6%) New Used Fixed Operations F&I* Sub Total Wh
Slide 7: Used Vehicles
Used Vehicles Progress Continues Q2 07 Q2 06 Better/ (Worse) Champion Stores Used to new ratio 0.52 0.48 0.04 Used retail volume 15,846 15,430 2.7% Total Sonic Used to new ratio 0.51 0.48 0.03 Used retail volume 18,186 17,866 1.8% Memo: Used to New Ratio - California 0.35 0.32 0.03 - Total Luxury 0.
Slide 8: F&I Per Unit
$59 F&I Per Unit $954 $996 $1,013 $800 $850 $900 $950 $1,000 $1,050 FY 2006* Q1 2007 Q2 2007 F&I $59 * excluding charges taken in Q2 2006
Slide 9: Fixed Operations
Fixed Operations Strong Customer Pay performance driving growth 9.7% (3.5%) 3.9% (5.0%) (3.0%) (1.0%) 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% Customer Pay Warranty Total Fixed Ops Revenue
Slide 10: Slide 10
Slide 11: Geographic / Brand Review
Geographic / Brand Review • California – 27% of total revenues – New vehicle volume and margins soft; used vehicle volume, Fixed Operations, and F&I up – Brand mix 39% Mid Line Imports • Florida – 8% of total revenues – Construction at our Toyota dealership hindering business – New volume a bit chal
Slide 12: Inventory Management
Inventory Management Days Supply June Jun-07 Industry New Vehicles Domestic (excluding Cadillac) 54.6 76.0 Luxury ( including Cadillac) 45.4 45.5 Import 49.0 49.5 Overall 49.7 62.2 Used Vehicles 38.3
Slide 13: Debt to Capital Ratio
Debt to Capital Ratio (1) (1) – Net of Cash 39.1% 41.2% 35-40% Q1 2007 Q2 2007 Target Two large luxury stores acquired in late Q2 • Sale of Cornerstone on track • Two mortgages in place; more coming • Reduced interest rate risk
Slide 14: Portfolio Enrichment Acquisitions
Land Rover/Jaguar North Houston Closed January 22 Mercedes-Benz of Calabasas Closed June 14 Assael BMW and MINI Closed June 18 Long Beach BMW and MINI Closing July 31 Total Annual Revenues: $528 million Portfolio Enrichment Acquisitions 55% 52% Before After Luxury % Total Revenue - 2007 run rate
Slide 15: Second Half Outlook
Second Half Outlook • Generally stable operating environment – Near term new vehicle softness offset by other opportunities – Stable margins and expense levels – Some early Q3 softness -- expect Q4 results to be stronger • Raising Continuing Ops. EPS target to $2.50 – $2.60 – Includes impact of anno
Slide 16: Summary
Summary • Execution of key initiatives continues – Used vehicles, fixed operations, F&I, Portfolio Enrichment, and eCommerce • Executing disciplined and prudent acquisition strategy -- targeting 10%-15% of revenue • Strategy is sound; team focused on delivering results • Top priority: Improved profi
Slide 17: Slide 17