SAH Sonic Automotive Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 21, 2015

 

 

SONIC AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction

of incorporation)

 

1-13395		56-2010790
(Commission File Number)		(IRS Employer Identification No.)

 

4401 Colwick Road Charlotte, North Carolina		28211
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (704) 566-2400

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On April 21, 2015, Sonic Automotive, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal first quarter ended March 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and a copy of the earnings call presentation materials is attached hereto as Exhibit 99.2.

 

Item 7.01.

Regulation FD Disclosure.

On April 21, 2015, the Company issued a press release announcing the approval of a quarterly cash dividend. A copy of the press release is attached hereto as Exhibit 99.3.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

The information in this Form 8-K, including the exhibits attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				SONIC AUTOMOTIVE, INC.
Date: April 21, 2015				By:		/s/ Stephen K. Coss
						Stephen K. Coss
						Senior Vice President and General Counsel

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INDEX TO EXHIBITS

 

Exhibit No.		Description
99.1		Press release of Sonic Automotive, Inc., dated April 21, 2015, reporting Sonic Automotive, Inc.’s financial results for the fiscal first quarter ended March 31, 2015
99.2		Earnings call presentation materials
99.3		Press release of Sonic Automotive, Inc., dated April 21, 2015, reporting quarterly cash dividend

Exhibit 99.1

FOR IMMEDIATE RELEASE

Sonic Automotive, Inc. Reports Record Gross Profit

Retailed Record Number of New and Pre-Owned Units

First Quarter 2015 Results

 

•

Record Q1 new retail units of 31,334, up 4.3%, over the prior year quarter

 

•

Record Q1 pre-owned units and gross profit of 28,135 and $40.8 million, respectively

 

•

Record Q1 fixed operations gross profit of $156.4 million, up 2.8% over the prior year quarter

 

•

Record Q1 total gross profit of $335.0 million, up 1.8% over the prior year quarter

 

•

EchoPark® stores retail 660 units

CHARLOTTE, N.C. – April 21, 2015 – Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported adjusted net income from continuing operations for the first quarter of 2015 of $18.8 million, or $0.37 per diluted share. Included in these adjusted amounts are pre-tax expenses of $4.9 million, or $0.06 per diluted share, related to the Company’s EchoPark^® initiative and $3.8 million, or $0.05 per diluted share, related to its One Sonic-One Experience initiative.

Net income from continuing operations for the first quarter of 2014 was $20.0 million, or $0.38 per diluted share. Included in these amounts are pre-tax expenses of $1.7 million, or $0.02 per diluted share, related to the Company’s EchoPark^® initiative and $2.1 million, or $0.02 per diluted share, related to its One Sonic-One Experience initiative.

On a GAAP basis, net income from continuing operations and related diluted earnings per share for the first quarter 2015 were $14.4 million and $0.28 per share, respectively. There were no adjustments in the first quarter of 2014. See the accompanying tables for details of quarterly adjustments.

Jeff Dyke, Sonic’s EVP of Operations, stated, “We had another solid record setting quarter! Our One Sonic-One Experience stores are making great progress. Our first store that adopted the process, Town & Country Toyota, has gained more than 600 basis points of market share in each of the last two months year-over-year, is tracking to do the same again in April, and has experienced steady growth in profitability. More exciting is the remaining Charlotte stores are following in the same path giving us great confidence that we are on the right track. While the change has been significant, the results from a share and guest satisfaction perspective are adding to our resolve that the decisions we have made to enhance our guest experience are right on target. We are also equally excited about EchoPark^®! We sold 660 units for the quarter, just under 300 units in the month of March, and have grown the business rapidly. These results are a direct reflection of our business plan, our team’s depth of experience, our unmatched guest experience and a response from our customer base that confirms what we were trying to accomplish. As these two strategies come to life, we look for the Sonic Brand to become a household name in the retail world beyond automotive driven by an unmatched customer experience. None of this would be possible without the extraordinary effort of our remarkable team – many thanks to them! We look forward to continued success in the coming years.”

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B. Scott Smith, Sonic’s President, remarked, “We have made a lot of progress in the first quarter of the year. Our Charlotte stores have migrated to our One Sonic-One Experience platform and we now have three EchoPark^® retail operating locations in Denver, with progress made to open an additional location by the end of 2015. We are very pleased with how our associates and customers are embracing the technologies and improved transaction processes. Although there is still a lot of work to be done to ensure the long-term sustainability of these initiatives, the cornerstones have been set and we look forward to building upon these in the future.”

First Quarter Earnings Conference Call

Senior management will host a conference call today at 11:00 A.M. (Eastern) to discuss the quarter’s results. To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com, then click on “Our Company,” then “Investor Relations,” then “Webcasts & Presentations.”

Presentation materials for the conference call can be accessed on the Company’s website at www.sonicautomotive.com by clicking on the “Investor Relations” tab under “Our Company” and choosing “Webcasts & Presentations.”

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

Domestic: 1.877.450.3867

International: 1.706.643.0958

Conference ID: 20767539

A conference call replay will be available one hour following the call for seven days and can be accessed by calling:

Domestic: 1.855.859.2056

International: 1.404.537.3406

Conference ID: 20767539

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements with respect to anticipated future success and impacts from the implementation of our planned customer experience and stand-alone pre-owned store initiatives. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management’s view, including without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company’s annual report on Form 10-K for the year ending December 31, 2014. The Company does not undertake any obligation to update forward-looking information.

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###

 

Contact:

Heath Byrd, Chief Financial Officer (704) 566-2400

C.G. Saffer, Vice President and Chief Accounting Officer (704) 566-2439

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

 

		Three Months Ended March 31,
		2015				2014
		(In thousands, except per share and unit data)
Revenues:
New retail vehicles		$	1,190,215			$	1,112,291
Fleet vehicles			12,108				34,329
Total new vehicles			1,202,323				1,146,620
Used vehicles			593,742				559,816
Wholesale vehicles			41,656				41,598
Total vehicles			1,837,721				1,748,034
Parts, service and collision repair			323,194				318,771
Finance, insurance and other, net			74,600				69,581
Total revenues			2,235,515				2,136,386
Gross profit			334,959				329,000
Selling, general and administrative expenses			(270,862	)			(263,973	)
Impairment charges			(6,192	)			(3	)
Depreciation and amortization			(16,409	)			(14,381	)
Operating income (loss)			41,496				50,643
Other income (expense):
Interest expense, floor plan			(4,778	)			(4,689	)
Interest expense, other, net			(13,219	)			(13,818	)
Other income (expense), net			90				97
Total other income (expense)			(17,907	)			(18,410	)
Income (loss) from continuing operations before taxes			23,589				32,233
Provision for income taxes - benefit (expense)			(9,200	)			(12,249	)
Income (loss) from continuing operations			14,389				19,984
Income (loss) from discontinued operations			(422	)			(598	)
Net income (loss)		$	13,967			$	19,386
Diluted earnings (loss) per common share:
Earnings (loss) per share from continuing operations		$	0.28			$	0.38
Earnings (loss) per share from discontinued operations			(0.01	)			(0.02	)
Earnings (loss) per common share		$	0.27			$	0.36
Weighted average common shares outstanding			51,403				52,946
Gross Margin Data (Continuing Operations):
New retail vehicles			5.3	%			5.9	%
Fleet vehicles			(0.6	%)			2.6	%
Total new vehicles			5.3	%			5.8	%
Used vehicles			6.9	%			7.3	%
Wholesale vehicles			(0.5	%)			(0.2	%)
Parts, service and collision repair			48.4	%			47.7	%
Finance, insurance and other			100.0	%			100.0	%
Overall gross margin			15.0	%			15.4	%
SG&A Expenses (Continuing Operations):
Compensation		$	161,858			$	157,154
Advertising			15,332				14,119
Rent			18,254				18,535
Other			75,418				74,165
Total SG&A expenses		$	270,862			$	263,973
SG&A expenses as % of gross profit			80.9	%			80.2	%
Operating Margin %			1.9	%			2.4	%
Unit Data (Continuing Operations):
New retail units			31,334				30,029
Fleet units			355				1,102
Total new units			31,689				31,131
Used units			28,135				27,657
Wholesale units			7,777				7,380

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Per Share Data

 

		Three Months Ended March 31, 2015
						Income (Loss) From Continuing Operations								Income (Loss) From Discontinued Average								Net Income (Loss)
		Weighted Average Shares				Amount				Per Share Amount				Amount				Per Share Amount				Amount				Per Share Amount
		(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares			50,854			$	14,389							$	(422	)						$	13,967
Effect of participating securities:
Non-vested restricted stock and stock units							(5	)							—								(5	)
Basic earnings (loss) and shares			50,854			$	14,384			$	0.28			$	(422	)		$	(0.01	)		$	13,962			$	0.27
Effect of dilutive securities:
Stock compensation plans			549
Diluted earnings (loss) and shares			51,403			$	14,384			$	0.28			$	(422	)		$	(0.01	)		$	13,962			$	0.27
Adjustments (net of tax):
Impairment charges						$	3,777			$	0.07				—			$	—			$	3,777			$	0.07
Other							634				0.02				—				—				634				0.02
Total adjustments						$	4,411			$	0.09			$	—			$	—			$	4,411			$	0.09
Adjusted:
Earnings (loss) and
Diluted earnings (loss) per share (1)						$	18,800			$	0.37			$	(422	)		$	(0.01	)		$	18,378			$	0.36

 

(1)	Expenses attributable to the EchoPark® initiative were $0.06 per fully diluted share in the three months ended March 31, 2015.

 

		Three Months Ended March 31, 2014
						Income (Loss) From Continuing Operations								Income (Loss) From Discontinued Operations								Net Income (Loss)
		Weighted Average Shares				Amount				Per Share Amount				Amount				Per Share Amount				Amount				Per Share Amount
		(In thousands, except per share amounts)
Reported:
Earnings (loss) and shares			52,418			$	19,984							$	(598	)						$	19,386
Effect of participating securities:
Non-vested restricted stock and stock units							(63	)							—								(63	)
Basic earnings (loss) and shares			52,418			$	19,921			$	0.38			$	(598	)		$	(0.01	)		$	19,323			$	0.37
Effect of dilutive securities:
Stock compensation plans			528
Diluted earnings (loss) and shares (2)			52,946			$	19,921			$	0.38			$	(598	)		$	(0.02	)		$	19,323			$	0.36

 

(2)	Expenses attributable to the EchoPark® initiative were $0.02 per fully diluted share in the three months ended March 31, 2014.

 

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

New Vehicles

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except units and per unit data)
Reported:
Revenue		$	1,202,323			$	1,146,620			$	55,703				4.9	%
Gross profit		$	63,350			$	66,673			$	(3,323	)			(5.0	%)
Unit sales			31,689				31,131				558				1.8	%
Revenue per unit		$	37,941			$	36,832			$	1,109				3.0	%
Gross profit per unit		$	1,999			$	2,142			$	(143	)			(6.7	%)
Gross profit as a % of revenue			5.3	%			5.8	%			(50	)  bps
		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except units and per unit data)
Same Store:
Revenue		$	1,190,252			$	1,110,066			$	80,186				7.2	%
Gross profit		$	62,438			$	64,632			$	(2,194	)			(3.4	%)
Unit sales			31,336				30,082				1,254				4.2	%
Revenue per unit		$	37,984			$	36,901			$	1,083				2.9	%
Gross profit per unit		$	1,993			$	2,149			$	(156	)			(7.3	%)
Gross profit as a % of revenue			5.2	%			5.8	%			(60	)  bps

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Used Vehicles

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except units and per unit data)
Reported:
Revenue		$	593,742			$	559,816			$	33,926				6.1	%
Gross profit		$	40,844			$	40,693			$	151				0.4	%
Unit sales			28,135				27,657				478				1.7	%
Revenue per unit		$	21,103			$	20,241			$	862				4.3	%
Gross profit per unit		$	1,452			$	1,471			$	(19	)			(1.3	%)
Gross profit as a % of revenue			6.9	%			7.3	%			(40	)  bps
		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except units and per unit data)
Same Store:
Revenue		$	572,759			$	537,639			$	35,120				6.5	%
Gross profit		$	40,013			$	39,286			$	727				1.9	%
Unit sales			27,079				26,601				478				1.8	%
Revenue per unit		$	21,151			$	20,211			$	940				4.7	%
Gross profit per unit		$	1,478			$	1,477			$	1				0.1	%
Gross profit as a % of revenue			7.0	%			7.3	%			(30	)  bps

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Wholesale Vehicles

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except units and per unit data)
Reported:
Revenue		$	41,656			$	41,598			$	58				0.1	%
Gross profit (loss)		$	(210	)		$	(93	)		$	(117	)			(125.8	%)
Unit sales			7,777				7,380				397				5.4	%
Revenue per unit		$	5,356			$	5,637			$	(281	)			(5.0	%)
Gross profit (loss) per unit		$	(27	)		$	(13	)		$	(14	)			(107.7	%)
Gross profit (loss) as a % of revenue			(0.5	%)			(0.2	%)			(30	)  bps
		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except units and per unit data)
Same Store:
Revenue		$	40,773			$	40,246			$	527				1.3	%
Gross profit (loss)		$	(186	)		$	(23	)		$	(163	)			(708.7	%)
Unit sales			7,523				7,145				378				5.3	%
Revenue per unit		$	5,420			$	5,633			$	(213	)			(3.8	%)
Gross profit (loss) per unit		$	(25	)		$	(3	)		$	(22	)			(733.3	%)
Gross profit (loss) as a % of revenue			(0.5	%)			(0.1	%)			(40	)  bps

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Parts, Service and Collision Repair (“Fixed Operations”)

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands)
Reported:
Revenue
Customer pay		$	137,623			$	141,121			$	(3,498	)			(2.5	%)
Warranty			53,498				46,591				6,907				14.8	%
Wholesale parts			45,012				47,944				(2,932	)			(6.1	%)
Internal, sublet and other			87,061				83,115				3,946				4.7	%
Total		$	323,194			$	318,771			$	4,423				1.4	%
Gross profit
Customer pay		$	75,678			$	77,999			$	(2,321	)			(3.0	%)
Warranty			29,760				25,238				4,522				17.9	%
Wholesale parts			8,138				8,161				(23	)			(0.3	%)
Internal, sublet and other			42,799				40,748				2,051				5.0	%
Total		$	156,375			$	152,146			$	4,229				2.8	%
Gross profit as a % of revenue
Customer pay			55.0	%			55.3	%			(30	)  bps
Warranty			55.6	%			54.2	%			140	bps
Wholesale parts			18.1	%			17.0	%			110	bps
Internal, sublet and other			49.2	%			49.0	%			20	bps
Total			48.4	%			47.7	%			70	bps

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Parts, Service and Collision Repair (“Fixed Operations”)

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands)
Same Store:
Revenue
Customer pay		$	135,768			$	136,486			$	(718	)			(0.5	%)
Warranty			52,971				44,774				8,197				18.3	%
Wholesale parts			44,580				46,667				(2,087	)			(4.5	%)
Internal, sublet and other			84,956				80,559				4,397				5.5	%
Total		$	318,275			$	308,486			$	9,789				3.2	%
Gross profit
Customer pay		$	74,689			$	75,558			$	(869	)			(1.2	%)
Warranty			29,457				24,269				5,188				21.4	%
Wholesale parts			8,052				7,907				145				1.8	%
Internal, sublet and other			41,809				39,145				2,664				6.8	%
Total		$	154,007			$	146,879			$	7,128				4.9	%
Gross profit as a % of revenue
Customer pay			55.0	%			55.4	%			(40	)  bps
Warranty			55.6	%			54.2	%			140	bps
Wholesale parts			18.1	%			16.9	%			120	bps
Internal, sublet and other			49.2	%			48.6	%			60	bps
Total			48.4	%			47.6	%			80	bps

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Finance, Insurance and Other, Net (“F&I”)

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except per unit data)
Reported:
Revenue		$	74,600			$	69,581			$	5,019				7.2	%
Gross profit per retail unit (excludes fleet)		$	1,254			$	1,206			$	48				4.0	%
		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands, except per unit data)
Same Store:
Revenue		$	73,129			$	67,182			$	5,947				8.9	%
Gross profit per retail unit (excludes fleet)		$	1,260			$	1,209			$	51				4.2	%

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Sonic Automotive, Inc.

Results of Operations (Unaudited)

 

Selling, General and Administrative (“SG&A”) Expenses

 

		Three Months Ended March 31,								Better / (Worse)
		2015				2014				Change				% Change
		(In thousands)
Reported:
Compensation		$	161,858			$	157,154			$	(4,704	)			(3.0	%)
Advertising			15,332				14,119				(1,213	)			(8.6	%)
Rent			18,254				18,535				281				1.5	%
Other			75,418				74,165				(1,253	)			(1.7	%)
Total		$	270,862			$	263,973			$	(6,889	)			(2.6	%)
SG&A expenses as a % of gross profit
Compensation			48.3	%			47.8	%			(50	)  bps
Advertising			4.6	%			4.3	%			(30	)  bps
Rent			5.4	%			5.6	%			20	bps
Other			22.6	%			22.5	%			(10	)  bps
Total			80.9	%			80.2	%			(70	)  bps

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Exhibit 99.3

FOR IMMEDIATE RELEASE

SONIC AUTOMOTIVE, INC. DECLARES QUARTERLY CASH DIVIDEND

CHARLOTTE, N.C. – April 21, 2015 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that its Board of Directors approved a quarterly dividend of $0.025 per share payable in cash for stockholders of record on June 15, 2015. The dividend will be payable on July 15, 2015.

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.

Included herein is a forward-looking statement pertaining to an anticipated cash dividend to shareholders. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management’s view, including without limitation, economic conditions in the markets in which we operate, new and used vehicle sales volume, the success of our operational strategies and the risk factors described in the Company’s annual report on Form 10-K for the year ending December 31, 2014. The Company does not undertake any obligation to update forward-looking information.

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Contact:

Heath Byrd, Chief Financial Officer (704) 566-2400

C.G. Saffer, Vice President and Chief Accounting Officer (704) 566-2439