Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q2 2018 Earnings Presentation
44 slides from Sonic Automotive's earnings presentation, Jul 27, 2018
Slide 1: Q2 2018 Investor Presentation
Exhibit 99.2 Q2 2018 Investor Presentation
Slide 2: Forward-Looking Statements
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 bu
Slide 3: Content
CONTENT • COMPANY OVERVIEW • FINANCIAL & OPERATIONS REVIEW • OUTLOOK 3
Slide 4: Company Overview
COMPANY OVERVIEW Samnic) EchoPark
Slide 5: Overview – Franchised Geographic
OVERVIEW – FRANCHISED GEOGRAPHIC Headquartered in Charlotte, NC 96 Stores, 23 Brands, 15 Collision Repair Centers 5 Platforms in Major Metro Markets
Slide 6: Overview – EchoPark Geographic - CO
OVERVIEW – ECHOPARK GEOGRAPHIC - CO • Have purchased property in the following markets (some are under construction): o Dallas/Ft. Worth o San Antonio o Houston o Austin o Carolinas Colorado Springs - Opened Q2 2017 6
Slide 7: Overview – EchoPark Geographic - TX
OVERVIEW – ECHOPARK GEOGRAPHIC - TX • Grand Prairie Location – • West San Antonio Location Relocated driversselect Opened in Q4 2017 Operation (purchased in • New Braunfels Location Q3 2017) Opened in Q1 2018 7
Slide 8: Overview - Geographic
OVERVIEW - GEOGRAPHIC NV MD 2% 3% SC 2% OH VA 3% 3% NC 4% CA GA 3% 30% CO Concentration 7% in Major Metro AL Markets 5% FL 6% TN TX 7% 26% 8 Note: Percentages are percent of total revenue for FY 2017.
Slide 9: Overview – Brand Composition
OVERVIEW – BRAND COMPOSITION New Retail Revenue & Other Lux Revenue streams Overall Revenue Mix 7% VW Land Rover and brand mix offer 2% 3% BMW attractive Other Non-Lux diversification across 3% 20% the automotive retail space. Cadillac 3% F&I GM Fixed 4% 4% Ops 14% Audi 6% New Pre- 54% Owned Honda 2
Slide 10: Q2 2018 Financial Review Franchised Segment
Q2 2018 FINANCIAL REVIEW FRANCHISED SEGMENT 10
Slide 11: Franchised Segment Q2 2018 Results
FRANCHISED SEGMENT Q2 2018 RESULTS B/(W) than Q2 2017 (1) (amounts in millions, except per share data) Q2 2018 (1) $ % Revenue $2,326 ($31) (1.3%) Gross Profit $348 ($7) (2.1%) SG&A $276 $3 1.0% SG&A as % of Gross 79.2% (80) bps Depreciation $22 ($1) (6.9%) Operating Profit $50 ($6) (10.8%) Interest
Slide 12: New Vehicle SAAR
NEW VEHICLE SAAR 19.0 18.5 YTD 2018 – 17.1M 18.5 Full Year 2017 – 17.2M 18.0 17.8 17.5 17.5 17.4 17.0 17.0 17.0 17.0 17.0 16.5 16.5 16.4 16.0 15.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 2018 Forecast 12
Slide 13: New Vehicle SAAR - Retail
NEW VEHICLE SAAR - RETAIL 16.0 15.5 YTD 2018 – 13.5M 15.5 Full Year 2017 – 13.9M 15.0 14.9 14.5 14.0 13.8 13.4 13.5 13.2 13.3 13.0 12.5 12.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2018 13
Slide 14: New Vehicle Same Store - Franchised
NEW VEHICLE SAME STORE - FRANCHISED Q2 2018 Q2 2017 B/(W) New Volume 30,314 30,749 (1.4%) Selling Price$ 40,209 $ 39,003 3.1% Gross Margin % 4.7% 5.1% (40) bps GPU$ 1,877 $ 1,975 $ (97) Gross Profit (millions)$ 56.9 $ 60.7 (6.3%) SAAR (millions) 17.2 16.6 3.6% New Units Apr May Jun Total 2018 9,553
Slide 15: New Vehicle – Gross, Unit & GPU Trend
NEW VEHICLE – GROSS, UNIT & GPU TREND Continuing Operations - Franchised Gross $ (in millions) Units $2,132 $2,070 $2,078 $1,909 $1,950 $1,911 $1,925 $1,857 $1,886 $1,866 $1,855 $1,745 $1,730 $78 $74 $74 $66 $65 $65 $66 $62 $63 37,493 $58 $58 $57 36,531 $57 35,856 36,054 34,963 35,562 35,489 33,782
Slide 16: Days Supply
DAYS SUPPLY 80 70 71 68 66 60 50 52 52 40 37 38 36 39 35 34 35 36 31 30 29 20 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 New Used Parts 16
Slide 17: Used Vehicle Retail
USED VEHICLE RETAIL Franchised – Same Store Q2 2018 Q2 2017 B/(W) Retail Volume 27,879 26,478 5.3% GPU$ 1,337 $ 1,305 $ 32 Used to New 92% 86% 600 bps Vehicles/Store/Month (95 stores) 98 93 5 Front End Gross and F&I (in millions) Apr May Jun Total 2018$ 24.8 $ 25.9 $ 27.4 $ 78.2 2017 23.6 24.4 23.0
Slide 18: F&I – Gross & PUR Trend
F&I – GROSS & PUR TREND Franchised – Same Store Gross $ (in millions) GPU$ $85 $78 $1,466 $1,376 Q2 2018 Q2 2017 18
Slide 19: Fixed Ops
FIXED OPS Franchised – Same Store Q2 2018 Q2 2017 B/(W) Revenue$ 340 $ 339 0.1% Gross Profit$ 165 $ 162 2.0% 19
Slide 20: Q2 2018 Financial Review Pre-Owned Segment
Q2 2018 FINANCIAL REVIEW PRE-OWNED SEGMENT 20
Slide 21: Pre-Owned Segment Q2 2018 Results
PRE-OWNED SEGMENT Q2 2018 RESULTS B/(W) than Q2 2017 (1) (amounts in millions, except per share, unit and per unit data) Q2 2018 (1) $ % Revenue $180.2 $131.1 267.3% Gross Profit $14.5 $9.2 172.2% SG&A $16.1 ($7.1) (79.8%) SG&A as % of Gross 110.8% 5,700 bps Operating Profit ($3.5) $1.4 29.4% Intere
Slide 22: Q2 2018 Financial Review Total Enterprise
Q2 2018 FINANCIAL REVIEW TOTAL ENTERPRISE 22
Slide 23: Consolidated Q2 2018 Results
CONSOLIDATED Q2 2018 RESULTS B/(W) than Q2 2017 (1) (amounts in millions, except per share data) Q2 2018 (1) $ % Revenue $2,506 $100 4.2% Gross Profit $362 $2 0.5% SG&A $292 ($4) (1.5%) SG&A as % of Gross 80.5% (80) bps Depreciation $24 ($2) (9.3%) Operating Profit $47 ($5) (9.1%) Interest & Other (
Slide 24: Q2 2018 Revenue & Gross Profit
Q2 2018 REVENUE & GROSS PROFIT B/(W) than Q2 2017 (amounts in millions, except unit and per unit data) Q2 2018 $ % New Revenue $1,239 ($36) (2.9%) Used Retail Revenue $763 $121 18.8% Fixed Operations Revenue $347 ($14) (4.0%) F&I Revenue $104 $17 19.8% Total Revenue $2,506 $100 4.2% New Gross $57 ($
Slide 25: Q2 2018 Revenue & Gross Profit – Same Store
Q2 2018 REVENUE & GROSS PROFIT – SAME STORE B/(W) than Q2 2017 (amounts in millions, except unit and per unit data) Q2 2018 $ % New Revenue $1,219 $20 1.6% Used Retail Revenue $654 $53 8.9% Fixed Operations Revenue $341 ($1) (0.2%) F&I Revenue $89 $10 12.3% Total Revenue $2,352 $94 4.1% New Gross $5
Slide 26: Q2 2018 Adjusted SG&A to Gross
Q2 2018 ADJUSTED SG&A TO GROSS 80.5% 79.7% 23.4% 22.9% 4.5% 5.0% 48.1% 47.5% 4.5% 4.3% Q2 2018(1) Q2 2017 (1) Advertising Comp Rent Other (1) – Q2 2018 and Q2 2017 are adjusted for items discussed in appendix 26
Slide 27: Q2 2018 Interest Expense
Q2 2018 INTEREST EXPENSE B/(W) than Q2 2017 (amounts in millions) Q2 2018 $ % Floor Plan Interest Expense $12 ($3) (30.6%) Interest Expense, Other $13 ($1) (4.8%) Total Interest Expense $25 ($3) (15.6%) Floor Plan Higher Due to Rate Increases 27
Slide 28: 2018 Capex
2018 CAPEX YTD Estimated (amounts in millions) Q1 2018 Q2 2018 2018 2018 Real Estate & Facility Related$ 60.4 $ 29.4 $ 89.8 $ 151.8 All Other Cap Ex 5.3 4.5 9.8 23.7 Subtotal$ 65.7 $ 33.9 $ 99.6 $ 175.6 Less: Mortgages (21.0) (0.1) (21.1) (35.2) Total Cash Used - Cap Ex$ 44.8 $ 33.8 $ 78.5 $ 140.4 2
Slide 29: Debt Covenants
DEBT COVENANTS Covenant Q2 2018 Liquidity Ratio >= 1.05 1.14 Fixed Charge Coverage Ratio >= 1.20 1.43 Total Lease Adjusted Leverage Ratio <= 5.75 5.05 Compliant with all Covenants 29
Slide 30: Adjusted EBITDA
ADJUSTED EBITDA LTM Q2 (amounts in thousands) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net Income $ 31,548 $ 89,929 $ 76,254 $ 89,101 $ 81,618 $ 97,217 $ 86,311 $ 93,193 $ 92,983 $ 96,103 Non-Floorplan Interest 67,735 68,604 63,576 58,453 55,356 52,269 49,524 48,034 50,531 51,194 Depreciati
Slide 31: Share Repurchases
SHARE REPURCHASES (000's) (000's) (000's) Shares $/Share $ Availability EOY - 2017 $ 107,686 Q1 Activity 1,152 $ 20.35 $ 23,449 (23,449) Q2 Activity - - - - Total 2018 Activity 1,152 $ 20.35 $ 23,449 $ 84,237 31
Slide 32: Appendix
APPENDIX Samnic) EchoPark
Slide 33: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Three Months Ended June 30, 2018 Three Months Ended June 30, 2017 Continuing Operations Continuing Operations Franchised Pre-Owned Franchised Pre-Owned Dealerships Stores Consolidated Dealerships Stores Consolidated Reported: Diluted earnings (loss) per share . . . . . . . .
Slide 34: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 Continuing Operations Continuing Operations Franchised Pre-Owned Franchised Pre-Owned Dealerships Stores Consolidated Dealerships Stores Consolidated Reported: Diluted earnings (loss) per share . . . . . . . . . .
Slide 35: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, Continuing Operations 2018 2017 2018 2017 2018 2017 (In millions) Reported: SG&A expenses . . . . . . . . . . . . . . . . . . . . . . . .
Slide 36: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, Continuing Operations 2018 2017 2018 2017 2018 2017 (In millions) Reported: Operating income . . . . . . . . . . . . . . . . . . . . . . .
Slide 37: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, Continuing Operations 2018 2017 2018 2017 2018 2017 (In millions) Reported: SG&A expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 38: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, Continuing Operations 2018 2017 2018 2017 2018 2017 (In millions) Reported: Operating income . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 39: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Consolidated Consolidated Three Months Ended Six Months Ended June 30, June 30, Continuing Operations 2018 2017 2018 2017 (In millions) (In millions) Reported: Interest Expense - Other. . . . . . . . . . . . . . . . . . . . . . . . . $ 13.4 $ 12.8 $ 26.8 $ 26.2 Adjustments:
Slide 40: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Three Months Ended June 30, 2018 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 41: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Three Months Ended June 30, 2017 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, 2018 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, 2017 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 44: Sonic Automotive EchoPark
Sonic) EchoPark AUTOMOTIVE