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
Slide 3: Third Quarter 2008 Earnings Review
Third Quarter 2008 Earnings Review October 28, 2008
Slide 4: Conference Call Topics
Sonic Automotive Q3 2008 Conference Call Topics Overview of the Quarter Vision & Strategy / Investment Principles Operational Priorities Financial Review Closing Comments
Slide 5: Building for the Long-Term: The Quarter in Review
Building for the Long-Term The Quarter in Review External Operating Environment • Hurricane, credit, consumer confidence • SAAR Impairment Charges Internal Operating Environment • Realignment – team aligned, focused on generating revenue / cash
Slide 6: Building for the Long-Term: Vision and Strategy
Building for the Long-Term Vision and Strategy • Our Vision – To Achieve Industry Leadership in Automotive Retailing • Our Strategy – Operational Excellence – Growth through Portfolio Enrichment
Slide 7: Building for the Long-Term: Investment Principles
• First Order – Stop Making Stupid Mistakes – Stop Friendly Fire • Principles – Guide decision making – Discipline to stick to them Building for the Long-Term Investment Principles
Slide 8: Sonic
Sonic)
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Slide 11: Operating Priorities: Used Vehicle Strategy
Maximize Margin Improved Turns Increased Profitability On-line Branding Virtual Lot Optimizing Inventory Market Shift to Consumer Control Basic Process rollout Less Auction Activity Common Technology Process Standardization Operating Priorities Used Vehicle Strategy Trade Desk Phase II Phase III Web
Slide 12: Operating Priorities: Fixed Operations Strategy
Phase II Sales Training and Merchandising Phase I Standardized Menu Utilization and Pricing Structure Phase III Technology Operating Priorities Fixed Operations Strategy Complete Q4 2009 Complete Q3 2009 Complete Q1 2009
Slide 13: Operating Priorities: Internet Lead Strategy
Build customer –friendly websites that create engagement Deliver the offer – buy here, buy now Online App’ts Right Inventory Video Fixed Operations Used Vehicles New Vehicles Drive more traffic through more targeted marketing Meet the Customer on Their Terms Fulfill the customer experience through d
Slide 14: Operating Priorities: F&I Same Store
$1,061 $1,028 $999 $1,030 $985 $1,003 $983 $990 Operating Priorities F&I – Same Store 1,000 1,040 1,080 Q1 '08 Q2 '08 Q3 '08 Last 3 Qtr 2008 2007
Slide 15: Operating Priorities: Expense Management
Operating Priorities Expense Management Inventory Advertising Headcount Controlling Inventory New – 60.1 Used – 32.2 Parts – 36.4 Reduce Floorplan expense Free up frozen cash Reduce bad debt Right size to new environment Compared to Q3 07 In terms of dollars down $2.8m or 16.2% In terms of gross pro
Slide 16: Geographic / Brand Review
Geographic / Brand Review New Vehicle • California – 30% of total new vehicle revenue – Brand mix: 70% Luxury, 28% Mid-Line Imports and 2% Domestic • Texas – 26% of total new vehicle revenue – BMW, Chevrolet and Ford brands outpaced local market during the quarter. • Florida – 6% of total revenues,
Slide 17: Financial Performance
Financial Performance ( amounts in millions, except per share data) (15.5%) (11.8%) (43.6%) (68.9%) (72.4%) (63.2%) (67.2%) 320bps 70bps (1) – Includes estimated $0.08/diluted share loss associated with Hurricane Ike (2) - Excludes continuing ops and discontinued ops after tax charges of $21.0 milli
Slide 18: Q3 2008 Discontinued Operations Amount After Taxes
Q3 2008 Amount After Taxes (000's) Loss from Operations (2,011) $ Asset Impairments (4,212) Lease Exit Accruals (7,649) Loss on Disposal (96) Subtotal (11,957) Total (13,968) $ Discontinued Operations Non-Cash
Slide 19: Same Store Revenue Change – Q3 2008
Same Store Revenue Change – Q3 2008 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 Prior Year New Retail Used Retail F&I Fixed Ops Rev Other* Current Year $2,088 ($224) ($28) ($7) ($11) ($72) $1,746 Volume Rate: 12.6% Vol: 87.4% Volume *The “Other” Category includes used wholesale and fleet revenu
Slide 20: SG&A Expenses as % of Gross Profit
14.0% 8.5% 71.3% 66.5% 7.7% Q3 2007 Q3 2008 Rent Hurricane & Q3 Charges All Other SG&A SG&A Expenses as % of Gross Profit 74.2% 93.8%
Slide 21: Fixed Operations Same Store – Q3 2008
Fixed Operations Same Store - Q3 2008 (2.8%) (7.3%) (3.8%) (10.0%) (7.0%) (4.0%) (1.0%) Customer Pay Warranty Total
Slide 22: Days Supply
Days Supply Sep-08 Sept 08 Industry New Vehicles Domestic 66.0 73.4 Luxury 63.0 67.4 Import 50.7 64.7 Overall 60.1 69.4 Used Vehicles 32.2 Note: Industry truck days supply was at the end of September, while car inventory was 60.
Slide 23: Capitalization
Capitalization 54.2% 54.8% 53.7% 57.6% 39.5% 43.6% 40.7% 38.9% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Equity Debt Mortgages 46.3% 45.2% Debt to Cap With Mortgages 2.7% 4.5% 6.9% 42.4% 45.8% 2.9%
Slide 24: Liquidity – Revolver Availability
Liquidity – Revolver Availability June September (mils) (mils) Revolver Balance $115 $69 Revolver Availability Memo: Mortgage Funding $76 $115
Slide 25: Debt Covenants
Debt Covenants June September Covenants Current Ratio 1.18 1.23 >=1.15 Fixed Charge Coverage 1.72 1.65 >=1.20 Debt to EBITDA 0.94 0.82 <2.25 We are in full compliance with all debt covenants
Slide 26: Capital Spending
Capital Spending Third Quarter Nine Months (mils) (mils) Capital Spending - property $7 $70 - traditional Total $19 $122 Mortgage Funding Secured in the Period $39 $57
Slide 27: Q4 Outlook
Q4 Outlook Forecast Assumptions Revised Forecast Same Store Gross Margins: New 6.5% Used 8.0% Fixed Operations 49.7% LIBOR Rate 4.3% SAAR 12.0M Q4 2008 Guidance $.10 - $.20 Relatively Stable
Slide 28: Summary
Summary • We are controlling what we can – our ability to execute our operational priorities • Q4 Outlook – New vehicle environment will continue to be very challenging, not looking for usual Holiday Push with Luxury. – New and Used gross margin pressure – Continued Challenging Economic and Capital
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