Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q3 2014 Earnings Presentation
33 slides from Sonic Automotive's earnings presentation, Oct 21, 2014
Slide 1: Q3 2014 Earnings Review
Q3 2014 EARNINGS REVIEW October 21, 2014 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 • QUARTER IN REVIEW • FINANCIAL RESULTS • OPERATIONS RECAP • SUMMARY AND OUTLOOK
Slide 4: Strategic Focus
4 STRATEGIC FOCUS 1. Growth • Grow The Base Business • One Sonic-One Experience • EchoPark ® • Acquisitions & Open Points 2. Own Our Properties 3. Return Capital to Shareholders
Slide 5: Strategic Focus: One Sonic-One Experience
STRATEGIC FOCUS ONE SONIC-ONE EXPERIENCE 5 • Goals – 1 Associate, 1 Price, 1 Hour – Improve Transparency; Increase Trust – Operational Efficiencies • Pilot Store Underway • 24 Month Implementation Result - Increase Market Share and Customer Retention
Slide 6: Strategic Focus: One Sonic-One Experience
6 STRATEGIC FOCUS ONE SONIC-ONE EXPERIENCE • Speed Up the Transaction – No Negotiation • Reduce Paperwork – Electronic Signature • One Associate One Guest – Technology Driven – Training Supported • Reduce Headcount Through Attrition – Creates Significant Cost Savings • Create Trust & Transparency –
Slide 7: Strategic Focus: EchoPark
STRATEGIC FOCUS EchoPark ® Hub Opens November 3 2 Neighborhood Stores Open Late Nov & Dec
Slide 8: Strategic Focus: Acquisitions & Open Points
STRATEGIC FOCUS ACQUISITIONS & OPEN POINTS • Purchased Two Franchises, Jaguar (Q1) & Nissan (Q3) during 2014 Estimated Annual Revenues of $55 million • Open Points Nissan in TN Market Exploring Opportunities in Other Markets
Slide 9: Strategic Focus: Own Our Properties
9 STRATEGIC FOCUS OWN OUR PROPERTIES 2007 2008 2010 2011 2012 2013 Proj. - 2017 0% 12% 14% 18% 23% 31% 45%
Slide 10: Strategic Focus: Return Capital to Shareholders
10 STRATEGIC FOCUS RETURN CAPITAL TO SHAREHOLDERS • Unused Authorization of Approximately $ 93 million • Quarterly Dividend of $0.025 Per Share Shares (in thousands) Average Price / Share $ (in millions) 2014 Activity 1,668 $ 23.70 $ 39.5
Slide 11: Q3 2014 Financial Review
Q3 2014 FINANCIAL REVIEW
Slide 12: Q3 2014 Adjusted Results
Q3 2014 ADJUSTED RESULTS 12 (1) See Appendix for reconciliation to reported GAAP amounts. B/(W) than Q3 2013 (amounts in millions, except per share data) Q3 2014 $ % Revenue $ 2,356 $ 113 5% Gross Profit $ 341 $ 15 5% Operating Profit $ 56 ($ 2) (3%) Interest & Other ($ 17) $ 2 9% Continuing Ops: Pr
Slide 13: EPS Adjustments
EPS ADJUSTMENTS 13 (1) See Appendix for reconciliation to reported GAAP amounts. (amounts in millions, except per share date) Q3 2014 Q3 2013 Pre Tax EPS Pre Tax EPS Unadjusted EPS $ 0.47 $ 0.46 Storm Damage $ 2.2 $ 0.03 $ 0.0 $ 0.00 Gain on Disposal ($3.2) ($ 0.04) $ 0.0 $ 0.00 Impairment $0.2 $ 0.
Slide 14: Strategic Initiative Impact on EPS
STRATEGIC INITIATIVE IMPACT ON EPS 14 (amounts in millions, except per share date) Q3 2014 (1) See Appendix for reconciliation to reported GAAP amounts. Pre-Tax EPS Adjusted (1) $ 0.46 EchoPark® $ 3.6 $ 0.05 One Sonic-One Experience $ 3.1 $ 0.04 Centralization of Business Office $ 0.7 $ 0.01 Excludi
Slide 15: Total Gross
TOTAL GROSS 15 $ 341 M $ 326 M $69 $72 $40 $36 $155 $149 $77 $69 New Used F&I Fixed Q3 2014 Q3 2013
Slide 16: SG&A to Gross
SG&A TO GROSS 16 78.1% 79.4% (1) See Appendix for reconciliation to reported GAAP amounts. 4.1% 4.3% 47.8% 46.5% 5.3% 5.8% 22.2% 21.5% Advertising Comp Rent Other Q3 2014 Adjusted (1) Q3 2013
Slide 17: Strategic Initiative Impact on SG&A
STRATEGIC INITIATIVE IMPACT ON SG&A 17 (amounts in millions, except per share date) Q3 2014 (1) See Appendix for reconciliation to reported GAAP amounts. Pre-Tax SG&A % Adjusted (1) 79.4% EchoPark® $ 3.6 1.1% One Sonic-One Experience $ 3.1 0.9% Centralization of Business Office $ 0.7 0.2% Excluding
Slide 18: Strategic Initiative Spend
STRATEGIC INITIATIVE SPEND 18 (in millions) Actual YTD Q3 2014 Estimated FY 2014 EchoPark® $ 8.6 $ 12.0 One Sonic-One Experience $ 6.6 $ 10.0 Centralization of Business Office $ 1.0 $ 3.0
Slide 19: Capital Spend
CAPITAL SPEND (amounts in millions) YTD Q3 2014 ESTIMATED 2014 Note – Spending excludes the effect of franchise acquisitions. 19 Real Estate Acquisitions $ 12.3 $ 39.6 All Other Cap Ex 77.7 143.4 Subtotal $ 90.0 $ 183.0 Less: Mortgage Funding (40.4) (40.4) Total Cash Used – Cap Ex $ 49.6 $ 142.6
Slide 20: Liquidity
LIQUIDITY 20 (amounts in millions) Q3 2014 Q4 2013 Cash $ 1.7 $3.0 Revolver Availability 105.2 126.0 Used floor plan availability 46.6 27.1 Floor plan deposit balance 107.5 65.0 Total $ 261.0 $221.1
Slide 21: Debt Covenants
DEBT COVENANTS Covenant Actual Q3 2014 21 Compliant with all Covenants Liquidity Ratio >= 1.05 1.22 Fixed Charge Coverage Ratio >= 1.20 1.74 Total Lease Adjusted Leverage Ratio <= 5.50 4.14
Slide 22: Operations Review
OPERATIONS REVIEW
Slide 23: New Vehicle Retail
NEW VEHICLE RETAIL Same Store Q3 2014 Q3 2013 B/(W) 23 Revenue $ 1,295 million $ 1,193 million 8.5% Volume 35,970 33,541 7.2% Selling Price $ 35,999 $ 35,579 1.2% Gross Margin % 5.2% 5.8% (60 bps) GPU $ 1,881 $ 2,074 ($ 193) Gross Profit $ 68 million $ 70 million (2.7%) SAAR (includes fleet) 16.7 mi
Slide 24: Used Vehicle Retail
USED VEHICLE RETAIL Same Store Q3 2014 Q3 2013 B/(W) 24 * - Includes Front-End Gross Plus F&I Related Gross and Fixed Operations Related Gross Revenue $ 569 million $ 544 million 4.6% Retail Volume 27,000 26,953 0.2% Used Retail GPU $ 1,504 $ 1,413 $ 92 Used Related Retail Gross* $ 86 million $ 80 m
Slide 25: Fixed Ops
FIXED OPS SAME STORE Q3 2014 B/(W) than Q3 2013 25 QTD YOY Gross Profit Change Breakdown: • Customer Pay Up 3.1% • Whsl. Parts Up 1.8% • Internal & Sublet Up 5.3% • Warranty Up 8.9% (amounts in millions) 2014 $ % Revenue $ 318 $ 16 5.3% Gross Profit $ 152 $ 6 4.4%
Slide 26: Strategic Focus: One Sonic-One Experience
26 STRATEGIC FOCUS ONE SONIC-ONE EXPERIENCE Units and 2014 Market Share % 13.1% 14.6% 18.0% 20.8% 153 177 209 124 148 181 271 226 June July August September 2013 Units 2014 Units
Slide 27: Summary
SUMMARY
Slide 28: Summary
Posted All-Time Record Quarterly New Retail Unit Sales and Q3 Total Gross Profit One Sonic-One Experience Meets Initial Expectations – Will Begin Roll-Out to Charlotte Market Echopark ® Opens in Q4 Anticipate Significant Cap Exp Spending in Q4 Related to Property Acquisitions and Construction Share
Slide 29: Slide 29
Slide 30: Appendix
Appendix 30
Slide 31: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 31
Slide 32: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS 32
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