Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q3 2021 Earnings Presentation
46 slides from Sonic Automotive's earnings presentation, Oct 28, 2021
Slide 1: Sonic Automotive – Investor Presentation October 2021
® Sonic Automotive – Investor Presentation October 2021 Updated October 28, 2021
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: Company Overview
3 Company Overview
Slide 4: Sonic Automotive: Who We Are
4 ® Sonic Automotive: Who We Are QUICK FACTS (NYSE: SAH) a Fortune 500 Company and One of the Nation’s Largest Automotive Retailers 119 25+ 14 17 $9.8 Billion $1.4 Billion 93K New Vehicles Sold 159K Total Revenues Automotive Brands Locations Used Vehicles Sold States Collision Centers Gross Profit N
Slide 5: Investment Highlights
5 Investment Highlights Multiple Growth And Profit Drivers For Franchised Segment Unique, High Return EchoPark Business Model Broad Revenue Stream Diversification Complementary Relationship – Sonic Franchised And EchoPark Disciplined Capital Allocation To Accelerate EchoPark Growth Focused On Expens
Slide 6: Revenue Composition by Geography
6 Revenue Composition BY GEOGRAPHY TX 28% CA 26%CO 10% TN 7% FL 7% AL 6% NC 5% GA 3% VA 2% MD 2% SC 2% NV 2% Concentrated in Major Metro Markets Geographic Footprint, Revenue Streams and Brand Mix Offer Attractive Diversification Across the Automotive Retail Space Note: Percentages are Percent of To
Slide 7: Revenue Composition – Diversified Revenue Streams
7 Revenue Composition – Diversified Revenue Streams Note: Percentages are Percent of Total for FY 2020 5% 34% 13% 42% 39% 7%43% 17% Revenue Gross Profit New Vehicle Used Vehicle (Including Wholesale) Parts, Service & Collision Repair ("Fixed Operations") Finance & Insurance ("F&I") Brand Distributio
Slide 8: EchoPark Automotive – A Unique Growth Story
8 ® EchoPark Automotive – A Unique Growth Story Growing Nationwide Distribution Network Expected To Reach 90% Of Population By 2025 Unique, High Return Business Model High Quality 1 to 4-Year-Old Vehicles – Nearly New With Remaining Warranty Wide Reach – 30% of Guests Travel More Than 30 Minutes To
Slide 9: Franchised Dealerships and EchoPark: Complementary Relationship
9 Franchised Dealerships ® ® Complementary Relationship Between Segments • Thrives When New Vehicle Industry Is Healthy, Particularly Where Luxury Brands Are Strong • Diversified Revenue Streams • Relatively Low Fixed Costs And Multiple Strategic Levers • Further Growth Opportunities: Parts and Se
Slide 10: Strategic Direction
10 Strategic Direction • Continued Growth Opportunity In Parts & Service, F&I Per Unit • Ongoing Profitability Enhancement Through SG&A Expense Control, Inventory Management • Pursue Strategic Acquisition Opportunities As Market Evolves • Utilize Existing Infrastructure To Support Omnichannel Distri
Slide 11: EchoPark
11 EchoPark
Slide 12: EchoPark – Brand Promise
12 EchoPark – Brand Promise Up To 40% Below New Vehicle Price Up To $3,000 Below Used Vehicle Market Price High Quality, Low Mileage Vehicles Transparent Guest-Centric Experience New Car Feel Without The New Car Price Complete Purchase In Under An Hour Free CARFAX Report With Every Vehicle Buy & Sel
Slide 13: EchoPark – Developing Nationwide Distribution Network
13 EchoPark – Developing Nationwide Distribution Network 25% Population Coverage By End Of 2021 90% Population Coverage By 2025 Note: Future locations and U.S. population coverage are based on projections. Actual results may differ. See “Forward-Looking Statements.” Existing Retail Hub Existing Deli
Slide 14: EchoPark – Addressable Market Opportunity
14 EchoPark – Addressable Market Opportunity * Share Of Vehicles That Fit Model In Existing EchoPark Markets Target 90% Population Coverage By 2025 With Growing Nationwide Distribution Network Target 10% Market Share Already Achieving This Share* In Multiple Markets Priced Up to $3,000 Below Used Co
Slide 15: EchoPark – 5-Year Growth Forecast
15 EchoPark – 5-Year Growth Forecast 57,161 575,000 FY 2020 FY 2025E Retail Unit Sales Volume FY 2020 FY 2025E $1.4 $14.0 Total Revenues (In Billions) 58% CAGR $221.0 FY 2020 FY 2025E Pre-Tax Profit (Loss) (In Millions) ($1.1) $11.0 $261.0 FY 2020 FY 2025E EBITDA (In Millions) Growth Drivers • Expec
Slide 16: EchoPark – Modeled 4-Wall Economics At Maturity
16 EchoPark – Modeled 4-Wall Economics At Maturity (Modeled Metrics Assume 100% Maturity) Delivery Center Medium Retail Hub Large Retail Hub Average Monthly Retail Unit Volume 300 750 1,500 Average Vehicle Selling Price 20,500$ 20,500$ 20,500$ Total Annual Revenues 82,000,000$ 205,000,000$ 410,000,0
Slide 17: EchoPark – Delivery Center Model
17 EchoPark – Delivery Center Model Existing Retail Hub Example Delivery Center Market Coverage Opportunity Delivery Center Model • Utilize Nearby Retail Hub For Inventory Storage And Reconditioning (Asset Light Expansion) • Advertise Inventory Online In Surrounding Markets • Drive Incremental eComm
Slide 18: EchoPark – High Volume Model Drives Superior Returns
18 EchoPark – High Volume Model Drives Superior Returns Gross Profit Per Unit (“GPU”) Franchised Used EchoPark Better (Worse) Front-End Used Vehicle GPU $1,300 $(100) F&I GPU $1,800 $2,250 Parts and Service Reconditioning GPU $500 - Total Used-Related GPU $3,600 $2,150 ($1,450) Volume Differential F
Slide 19: EchoPark – Growth Path
19 EchoPark – Growth Path 212 660 881 920 764 941 1,136 1,585 1,685 1,673 2,049 2,400 4,496 5,518 7,459 7,698 8,762 11,051 12,587 13,206 12,676 13,986 13,207 15,127 14,841 19,670 21,261 21,255 $- $100 $200 $300 $400 $500 $600 $700 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 20
Slide 20: EchoPark – Adjusted EBITDA Trend
20 EchoPark – Adjusted EBITDA Trend ($2.8) ($1.1) ($3.4) ($2.2) ($3.0) ($2.1) $5.0 $4.8 $6.4 $5.3 $5.2 $5.6 $3.1 ($2.9) $6.2 ($9.4) ($28.5) $6.1 $6.2 $6.8 $4.8 $(0.3) $6.7 $(4.0) $(11.7) $(30.0) $(25.0) $(20.0) $(15.0) $(10.0) $(5.0) $- $5.0 $10.0 Adjusted EBITDA Less Impact of New Stores (In M illi
Slide 21: Franchised Dealerships
21 Franchised Dealerships
Slide 22: Franchised Dealerships
22 New & Used Vehicle Sales Parts & Service (P&S) Finance & Insurance (F&I) ® Franchised Dealerships Franchised Dealerships88 Brands, Luxury Weighted25+ Diversified Revenue Streams • New & Used Vehicle Sales • Parts Service (P S) • Finance & Insurance (F&I) Collision Repair Centers14 20 Major Metrop
Slide 23: Franchised Dealerships – Geographic Footprint
23 Franchised Dealerships – Geographic Footprint Diversified Geographic Market Platform 121 Stores, 25+ Brands, 16 Collision Repair Centers RFJ Auto Acquisition Expected To Close In December 2021 • Expect $3.2 Billion In Annualized Revenues • 33 Locations In 7 States, 16 New Vehicle Brands • Adds Si
Slide 24: Franchised Dealerships – Strategic Levers
24 Franchised Dealerships – Strategic Levers Multiple Growth Drivers Pursue Strategic Acquisitions Opportunities Grow Parts and Service Maximize F&I Penetration High Used Vehicle Volume Throughput Data-Driven Inventory Management Apply EchoPark Learnings Develop Omnichannel Platform SG&A Expense Dis
Slide 25: Omnichannel Strategy
25 Omnichannel Strategy
Slide 26: Full Omnichannel Infrastructure
26 Full Omnichannel Infrastructure Guest Experience Managers Centralized Appraisals, Inventory Sourcing, Pricing Centralized Call Support Centralized F&I Digital Interface People Proprietary Technology Centralized Marketing Develop & Launch eCommerce Platform B u y & S e l l Yo u r Wa y Proprietary
Slide 27: Buy & Sell Your Way
27 Buy & Sell Your Way • Complete A Traditional Vehicle Purchase Experience With A Modern, Technology- Enabled Approach • Can Be Completed In Under An Hour • Research Online, Utilize Chat, Text, Phone, Zoom To Reduce In-Person Process • Review And Select Insurance Products And Financing Options • In
Slide 28: Q3 2021 Financial Snapshot
28 Q3 2021 Financial Snapshot
Slide 29: Q3 2021 – Consolidated Continuing Operations
29 Q3 2021 – Consolidated Continuing Operations B/(W) than Q3 2020 (In millions, except per share data) Q3 2021 $ % Revenues $3,072.8 $524.3 20.6% Gross profit $472.0 $95.5 25.3% SG&A expenses $321.4 ($61.0) (23.5%) SG&A expenses as % of gross profit 68.1% 100 bps Earnings from continuing operations
Slide 30: Q3 2021 – Franchised Dealerships Segment
30 Q3 2021 – Franchised Dealerships Segment B/(W) than Q3 2020 (In millions, except unit and per unit data) Q3 2021 $ % Revenues $2,409.5 $246.0 11.4% Gross profit $446.2 $98.8 28.5% SG&A expenses $268.3 ($36.5) (15.7%) SG&A expenses as % of gross profit 60.1% 670 bps Segment income (loss) $145.1 $6
Slide 31: Q3 2021 – EchoPark Segment
31 Q3 2021 – EchoPark Segment B/(W) than Q3 2020 (In millions, except unit and per unit data) Q3 2021 $ % Revenues $663.3 $278.3 72.3% Gross profit $25.8 ($3.4) (11.6%) SG&A expenses $53.0 ($27.7) (109.7%) SG&A expenses as % of gross profit 205.4% NM Segment income (loss) ($32.9) ($33.1) NM Retail u
Slide 32: Strong Balance Sheet And Liquidity
32 Strong Balance Sheet And Liquidity September 30,2021 December 31,2020 (In Millions) Cash and cash equivalents 220.1$ 170.3$ Availability under the 2021 Revolving Credit Facility(1) 224.0 214.7 Availability under the 2019 Mortgage Facility 19.5 11.2 Availability under the 2020 Line Of Credit Facil
Slide 33: Capital Expenditure Discipline
33 Capital Expenditure Discipline Strict Capital Allocation Strategy Prioritizes Highest Return On Investment Actual YTD Q3 2021 Capital Expenditures Of $181.5 Million FY 2021E Includes Plans For 25 New EchoPark Locations In 2021 And Real Estate For 2022 Openings $181.2 $87.8 $89.3 $92.4 $170.0 $53.
Slide 34: Appendix
34 Appendix
Slide 35: Non-GAAP Reconciliation – Segment Income
35 Non-GAAP Reconciliation – Segment Income Franchised Dealerships Segment EchoPark Segment Consolidated (In millions, except unit data) Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Revenues 2,409.5$ 2,163.5$ 663.3$ 385.1$ 3,072.8$ 2,548.5$ Gross profit 446.2$ 347.4$ 25.8$ 29.2$ 472.0$ 376.6$ SG&
Slide 36: Non-GAAP Reconciliation – Earnings Per Share
36 Non-GAAP Reconciliation – Earnings Per Share Q3 2021 Q3 2020 (In thousands, except per share amounts) Weighted- Average Shares Amount Per Share Amount Weighted- Average Shares Amount Per Share Amount Diluted earnings (loss) and shares from continuing operations 43,285 84,691$ 1.96$ 44,577 59,988$
Slide 37: Non-GAAP Reconciliation – Adjusted EBITDA
37 Non-GAAP Reconciliation – Adjusted EBITDA Note – Balance Sheet Amounts Are As Of December 31 for the FY Then Ended. LTM Q3 2021 Amounts Are For The Twelve-Month Period Ended September 30, 2021. Balance Sheet Amounts For LTM Q3 2021 Are As Of September 30, 2021. (In thousands) FY 2017 FY 2018 FY 2
Slide 38: Non-GAAP Reconciliation – Adjusted EBITDA
38 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) (In thousands) Net Income (Loss) $ 113,845 $ 30,791 Provision For Income Taxes 36,97
Slide 39: Non-GAAP Reconciliation – Adjusted EBITDA
39 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 54,222 $ (199,333) Provision For Income Taxes 19,051 (44,200) In
Slide 40: Non-GAAP Reconciliation – Adjusted EBITDA
40 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 59,818 $ 29,010 Provision For Income Taxes 20,620 11,307 Income
Slide 41: Non-GAAP Reconciliation – Adjusted EBITDA
41 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ (199,333) $ 42,221 Provision For Income Taxes (44,200) 18,935 In
Slide 42: Non-GAAP Reconciliation – Adjusted EBITDA
42 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 29,010 $ 15,118 Provision For Income Taxes 11,307 7,262 Income (
Slide 43: Non-GAAP Reconciliation – Adjusted EBITDA
43 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 42,221 $ (2,194) Provision For Income Taxes 18,935 (1,910) Incom
Slide 44: Non-GAAP Reconciliation – Adjusted EBITDA
44 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 15,118 $ 19,440 Provision For Income Taxes 7,262 13,935 Income (
Slide 45: ® ®
® ®
Slide 46: Investor Relations Contacts
® Investor Relations Contacts: Sonic Automotive Inc. (NYSE: SAH) Danny Wieland, Vice President, Investor Relations & Financial Reporting ir@sonicautomotive.com (704) 927-3462 KCSA Strategic Communications David Hanover / Scott Eckstein sonic@kcsa.com (212) 896-1220