Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q2 2015 Earnings Presentation
44 slides from Sonic Automotive's earnings presentation, Jul 20, 2015
Slide 1: Q2 2015 Earnings Review
Q2 2015 EARNINGS REVIEW July 20, 2015 Exhibit 99.2
Slide 2: Forward-Looking Statements
2 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
Slide 3: Content
3 CONTENT • STRATEGIC FOCUS • FINANCIAL RESULTS • OPERATIONS REVIEW • SUMMARY AND OUTLOOK
Slide 4: Strategic Focus
4 STRATEGIC FOCUS 1. Growth • One Sonic-One Experience • EchoPark ® • Acquisitions & Open Points 2. Own Our Properties 3. Return Capital to Shareholders
Slide 5: Strategic Focus: EchoPark
STRATEGIC FOCUS EchoPark ® • Denver Market with three stores open and two additional planned openings in next 12 months • Currently acquiring property in another market which may include up to 10 stores
Slide 6: Strategic Focus: Acquisitions & Open Points
STRATEGIC FOCUS ACQUISITIONS & OPEN POINTS • Open Points Mercedes Benz in Dallas Market Operational in 2016 Audi in Pensacola Market Operational in 2016 Nissan in TN Market Operational in late 2016 / early 2017 • Exploring Acquisition and Open Point Opportunities in Other Markets
Slide 7: Strategic Focus: Own Our Properties
7 STRATEGIC FOCUS OWN OUR PROPERTIES 2007 2008 2011 2012 2013 2014 Q2 2015 Proj. 2017 0% 12% 18% 23% 31% 36% 37% 49% -
Slide 8: Strategic Focus: Return Capital to Shareholders
8 STRATEGIC FOCUS RETURN CAPITAL TO SHAREHOLDERS Shares (in thousands) Average Price / Share $ (in millions) • Unused Authorization of Approximately $ 65 million • Quarterly Dividend of $0.025 Per Share 2015 Activity $ 24.66 $ 14.8
Slide 9: Q2 2015 Financial Review
Q2 2015 FINANCIAL REVIEW
Slide 10: Franchise Dealerships
Q2 2015 FINANCIAL REVIEW FRANCHISE DEALERSHIPS
Slide 11: Adjusted Franchised Operations
ADJUSTED FRANCHISED OPERATIONS B/(W) than Q2 2014 11 Note – Continuing operations includes results of sold stores after March 31, 2014. (1) – Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts (amounts in millions, except per share data) Q2 2015 $ % Revenue $ 2
Slide 12: EchoPark
Q2 2015 FINANCIAL REVIEW ECHOPARK ®
Slide 13: EchoPark Q2 Results
EchoPark ® Q2 RESULTS 13 B/(W) than Q2 2014 (amounts in millions, except per share data) Q2 2015 $ Revenue $ 21.0 $21.0 Gross Profit $ 2.6 $ 2.6 Operating Profit ($ 3.8) ($ 0.5) Interest & Other ($ 0.3) ($ 0.3) Pre-tax Profit (Loss) ($ 4.1) ($ 0.9) Diluted EPS Impact ($.05) ($.01) Store Level (retai
Slide 14: Total Enterprise
Q2 2015 FINANCIAL REVIEW TOTAL ENTERPRISE
Slide 15: Adjusted Q2 2015 Results
15 ADJUSTED Q2 2015 RESULTS B/(W) than Q2 2014 Note – Continuing operations includes results of sold stores after March 31, 2014. (1) – Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts (amounts in millions, except per share data) Q2 2015 $ % Revenue $ 2,424 $
Slide 16: Revenue & Gross Profit
16 REVENUE & GROSS PROFIT Q2 2015 B/(W) than Q2 2014 (amounts in millions, except per share data) Q2 2015 $ % New Retail Revenue $ 1,286 $ 0.2% Used Retail Revenue $ $ 55 9.1% Fixed Operations Revenue $ 346 $ 17 5.2% F&I Revenue $ 82 $ 6 7.3% Total Revenue $ 2,424 $ 70 3.0% New Retail Gross $ 65 ($
Slide 17: Adjusted SG&A to Gross
17 ADJUSTED SG&A TO GROSS Note – Amounts are adjusted. See appendix for reconciliation of adjusted amounts to GAAP amounts 79.2% 79.2% Q2 2015 Q2 2014 4.3% 4.0% 47.2% 47.0% 7.3% 7.7% 20.4% 20.5% Advertising Comp Rent & Related Other
Slide 18: Adjusted and GAAP EPS Summary
18 (amounts in millions, except per share date) Q2 2015 Q2 2014 ADJUSTED AND GAAP EPS SUMMARY Continuing Operations Pre-Tax EPS Pre-Tax EPS Adjusted Franchised $42.4 $ 0.51 $ 42.2 $0.48 Adjusted EchoPark® ($4.1) ($0.05) ($ 3.2) ($ 0.04) Adjusted Total $ 38.3 $ 0.46 $39.0 $ 0.44 Adjustments: Impairme
Slide 19: Capital Spend
CAPITAL SPEND (amounts in millions) YTD Q2 2015 Estimated 2015 Note – Spending excludes the effect of franchise acquisitions. 19 Real Estate & Facility Related $ 58.7 $180.1 All Other Cap Ex 24.2 33.8 Subtotal $ 82.9 $ 213.9 Less: Mortgage Funding (1) (46.0) (110.4) Total Cash Used – Cap Ex $ 36.9 $
Slide 20: Liquidity
LIQUIDITY (amounts in millions) Q2 2015 Q4 2014 20 Cash $ 3.6 $ 4.2 Revolver Availability 144.2 165.6 Used floor plan availability 75.0 22.6 Floor plan deposit balance 54.0 57.5 Total $ 276.8 $ 249.9
Slide 21: Debt Covenants
DEBT COVENANTS Covenant Actual Q2 2015 Compliant with all Covenants 21 Liquidity Ratio >= 1.05 1.19 Fixed Charge Coverage Ratio >= 1.20 1.75 Total Lease Adjusted Leverage Ratio <= 5.50 4.24
Slide 22: Operations Review
OPERATIONS REVIEW
Slide 23: New Vehicle Retail Same Store
NEW VEHICLE RETAIL SAME STORE Q2 2015 Q2 2014 B/(W) 23 Volume 34,288 33,567 2.1% Selling Price $ 37,127 $ 36,861 0.7% Gross Margin % 5.1% 5.8% (70 bps) GPU $ 1,890 $ 2,127 ($ 238) Gross Profit $65 million $ 71 million (9.3%) SAAR (includes fleet) 17.1 million 16.5 million 3.6%
Slide 24: Used Vehicle Retail Same Store
USED VEHICLE RETAIL SAME STORE 24 Q2 2015 Q2 2014 B/(W) Retail Volume 28,973 27,397 5.8% Used Retail GPU $ 1,342 $ 1,338 $ 4 Used to New 0.84:1.00 0.82:1.00 0.02 Vehicles / store / month (97 stores) st time Averaging 100 units per store per month for an entire quarter!
Slide 25: Fixed Ops Same Store
FIXED OPS SAME STORE Q2 2015 B/(W) than Q2 2014 25 (amounts in millions) $ % Revenue $ 341 $ 22 7.0% Gross Profit $ 168 $ 13 8.5% (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Customer Pay Warranty Wholesale Parts Internal & Sublet 2.9% 31.7% 0.2% 6.9% YOY Gross % Change
Slide 26: Fixed Ops Same Store – Customer Pay
FIXED OPS SAME STORE – CUSTOMER PAY 26 + 1 Day - 1 Day (5.0%) (3.0%) (1.0%) 1.0% 3.0% 5.0% Jan Feb Mar Q1 Apr May Jun Q2 (2.0%) (3.7%) 2.0% (1.2%) 2.1% (3.7%) 10.5% 2.9% YOY Gross % Change
Slide 27: OSOE
OSOE
Slide 28: OSOE – Operational Metrics: New Retail Units
28 OSOE – Operational Metrics New Retail Units Upward Trend 182 167 182 153 200 257 237 314 273 73 93 108 100 83 121 117 123 117 86 77 114 108 84 111 110 132 93 40 30 34 30 35 53 53 38 36 39 23 39 32 28 35 35 29 35 0 50 100 150 200 250 300 350 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15
Slide 29: OSOE – Operational Metrics: Pre-Owned Retail Units
29 OSOE – Operational Metrics Pre-Owned Retail Units Upward Trend 122 108 125 117 122 142 143 160 186 96 86 75 91 90 109 95 120 120 74 61 78 78 78 90 78 107 104 37 26 48 34 36 47 52 53 65 67 60 68 63 57 58 72 66 79 0 20 40 60 80 100 120 140 160 180 200 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-1
Slide 30: OSOE – Next Steps
30 OSOE – NEXT STEPS 1. Continue to focus on inventory management and pricing 2. OSOE stores continue to improve across all areas of our business 3. We continue to learn and have excellent CSI and guest feedback 4. Begin rollout of technology – CRM, Desking tool and Appraisal tool effective 8/1/15 t
Slide 31: EchoPark
EchoPark ®
Slide 32: EchoPark – Total
EchoPark ® - Total 32 183 185 292 251 304 326 150 170 190 210 230 250 270 290 310 330 350 Jan Feb Mar Apr May June Retail Unit Sales Actual 1,039 1,331 1,636 804 1,228 1,877 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Jan Feb Mar Apr May June Gross Per Retail Unit Actual 829 926 901 924 87
Slide 33: Summary
Continue to grow sales across all revenue categories Pre-owned milestone achieved – believe we can continue to grow volumes per store Fixed operations growth showed strength in customer pay and warranty OSOE roll out to additional markets will include portions of the technology components Growth pla
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Slide 35: Appendix
Appendix 35
Slide 36: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 36 Consolidated Franchised Dealerships EchoPark® Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, 2015 2014 2015 2014 2015 2014 (In millions) SG&A Reconciliation: As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 37: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships EchoPark® Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, 2015 2014 2015 2014 2015 2014 (In millions) Operating Profit Reconciliation: As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 38: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 38 Consolidated Franchised Dealerships EchoPark® Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, 2015 2014 2015 2014 2015 2014 (In millions) SG&A Reconciliation: As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 39: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships EchoPark® Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, 2015 2014 2015 2014 2015 2014 (In millions) Operating Profit Reconciliation: As Reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 40: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Three Months Ended June 30, 2015 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Average Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Report
Slide 41: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Three Months Ended June 30, 2014 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Rep
Slide 42: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Six Months Ended June 30, 2015 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Repor
Slide 43: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Six Months Ended June 30, 2014 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Repor
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