8-K
SONIC AUTOMOTIVE INC (SAH)
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 29, 2021
____________________________________
SONIC AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
____________________________________
Delaware
(State or other jurisdiction
of incorporation)
| 1-13395 | 56-2010790 | ||
|---|---|---|---|
| (Commission<br><br>File Number) | (IRS Employer<br><br>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)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A Common Stock, par value $0.01 per share | SAH | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On April 29, 2021, Sonic Automotive, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal first quarter ended March 31, 2021 (the “Earnings Press Release”). A copy of the Earnings 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 29, 2021, in the Earnings Press Release, the Company announced the approval of a quarterly cash dividend.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>No. | Description |
|---|---|
| 99.1 | Press Release of Sonic Automotive, Inc., dated April 29, 2021. |
| 99.2 | Earnings Call Presentation Materials. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed to be “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 to be 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.
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. | ||
|---|---|---|
| April 29, 2021 | By: | /s/ STEPHEN K. COSS |
| Stephen K. Coss | ||
| Senior Vice President and General Counsel |
Document
Exhibit 99.1
Sonic Automotive Reports Record First Quarter Revenues and Earnings Per Share
First Quarter Results Reflect All-Time Record EchoPark Revenues and Retail Unit Sales Volume and Strong Franchised Dealership Performance
CHARLOTTE, N.C. – April 29, 2021 – Sonic Automotive, Inc. (“Sonic” or the “Company”) (NYSE:SAH), one of the nation’s largest automotive retailers, today reported financial results for the first quarter ended March 31, 2021. The financial measures discussed below are results for the first quarter of 2021 with comparisons made to the first quarter of 2020, unless otherwise noted. Certain metrics are also compared to the first quarter of 2019 to exclude the effects of the onset of the COVID-19 pandemic on comparative results.
First Quarter Highlights
•Record first quarter revenues of $2.8 billion, up 20.7%, and record first quarter income from continuing operations before taxes of $72.6 million, compared to a loss before taxes of $243.2 million in the first quarter of 2020, which included a $268.0 million non-cash goodwill impairment charge (excluding the effect of this prior year goodwill impairment charge, pre-tax earnings increased 193.1%)
•Record first quarter reported earnings from continuing operations of $53.7 million ($1.23 per diluted share), compared to a loss of $199.1 million (loss of $4.67 per diluted share) and adjusted earnings from continuing operations* of $17.6 million ($0.40 per diluted share) in the first quarter of 2020
•Record first quarter selling, general and administrative (“SG&A”) expenses as a percentage of gross profit of 72.2%, a decrease of 830 basis points from 80.5% in the first quarter of 2020
•All-time record quarterly total Finance & Insurance (“F&I”) gross profit per retail unit of $2,045, up 8.5%
•Reported EchoPark results include:
◦All-time record quarterly EchoPark revenues of $507.1 million, up 52.9%
◦All-time record quarterly EchoPark retail sales volume of 19,670, up 40.6%
◦EchoPark pre-tax earnings of $2.0 million and Adjusted EBITDA* of $6.2 million
•Same store Franchised Dealerships Segment operating results include:
◦Revenues up 16.4%, gross profit up 11.1% (up 13.9% and 12.3%, respectively, compared to the first quarter of 2019)
◦New vehicle unit sales volume up 13.8% (up 7.5% compared to the first quarter of 2019); new vehicle gross profit per unit up 34.3%, to $2,831 (up 25.4% compared to the first quarter of 2019)
◦Retail used vehicle unit sales volume up 6.2% (up 8.6% compared to the first quarter of 2019); retail used vehicle gross profit per unit down 11.3%, to $1,111 (down 13.0% compared to the first quarter of 2019)
◦Parts, service and collision repair gross profit down 1.8% (up 0.1% compared to the first quarter of 2019); customer pay gross profit up 1.6% (up 6.8% compared to the first quarter of 2019); gross margin up 150 basis points, to 50.2% (up 180 basis points compared to the first quarter of 2019)
◦F&I gross profit up 18.7% (up 27.4% compared to the first quarter of 2019); reported Franchised Dealerships Segment F&I gross profit per retail unit of $1,910, up 8.5% (up 24.1% compared to the first quarter of 2019)
•Sonic’s Board of Directors approved a 20% increase to the Company’s quarterly cash dividend, to $0.12 per share, payable on July 15, 2021 to all stockholders of record on June 15, 2021
•Sonic’s Board of Directors increased the Company’s share repurchase authorization by $250.0 million, to a total of $277.3 million of available authorization
Commentary
David Smith, Sonic’s and EchoPark’s Chief Executive Officer, commented, “Fiscal 2020 was a record-setting year from an adjusted earnings perspective, and this momentum has continued into 2021, where we generated record first quarter revenues and earnings driven by strong performance in both our franchised dealerships and EchoPark segments. EchoPark continues to set new records, achieving better than projected all-time record quarterly revenues and retail sales volume. The first quarter results at both our franchised dealerships and EchoPark stores reflect a strong demand environment which has persisted into the second quarter of 2021 to date. We remain confident in our goal of more than doubling total revenues to $25.0 billion by 2025, while also substantially improving our expected profitability as we continue to apply the efficiencies we have realized over the past year.”
Jeff Dyke, Sonic’s and EchoPark’s President, commented, “We believe EchoPark’s swift growth demonstrates the long-term value proposition of this unique, pre-owned vehicle shopping concept, as a growing number of guests visit us in-store and online at EchoPark.com for the exceptional pricing, diverse inventory selection and guest-centric buying experience we offer. At the same time, we continue to develop our digital retail and delivery model, enabling consumers to purchase their next vehicle in an efficient way best tailored to their needs. With recent store openings in Phoenix, Arizona and Birmingham, Alabama, in addition to opening our latest delivery center in Charleston, South Carolina just last week, we remain committed to reaching a 140-point nationwide distribution
network by 2025, which we expect to retail over half a million pre-owned vehicles annually by that time. With our progress to date, we believe we are well on track to reach $14.0 billion in EchoPark revenues by 2025.”
Heath Byrd, Sonic’s and EchoPark’s Chief Financial Officer, commented, “During the first quarter, we continued our commitment to fundamentally improving operating efficiencies and managing expenses throughout our entire organization, reducing SG&A expenses as a percentage of gross profit by 830 basis points compared to the first quarter of 2020. At the same time, we took steps to further strengthen our balance sheet position by replacing our existing revolving and floor plan facilities with a new four-year, $1.8 billion revolving and floor plan credit facility. The credit facility was substantially oversubscribed, with strong support from both new and incumbent financial institutions. We are very pleased with this transaction, which has extended our debt maturities, improved our borrowing costs and increased our total available liquidity and floor plan capacity to facilitate our growth plans.”
*Adjusted earnings from continuing operations, adjusted earnings per diluted share from continuing operations and Adjusted EBITDA are non-GAAP financial measures. The tables included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Dividend
Sonic’s Board of Directors approved a quarterly cash dividend of $0.12 per share payable on July 15, 2021 to all stockholders of record on June 15, 2021.
First Quarter 2021 Earnings Conference Call
Senior management will hold a conference call on Thursday, April 29, 2021 at 11:00 A.M. (Eastern). Investor presentation and earnings press release materials will be accessible beginning the morning of the conference call on the Company’s website at ir.sonicautomotive.com.
To access the live webcast, please go to ir.sonicautomotive.com. For telephone access to this conference call, please register in advance using this link: http://www.directeventreg.com/registration/event/1090549. After registering, you will receive a confirmation email that includes dial-in numbers and unique conference call and registrant passcodes for entry. Registration remains available through the live call, however, to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call.
A conference call replay will be available one hour following the call for 14 days at ir.sonicautomotive.com.
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, North Carolina, is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.
About EchoPark Automotive
EchoPark Automotive is a growing operating segment within the Company that specializes in pre-owned vehicle sales and provides a unique guest experience unlike traditional used car stores. More information about EchoPark Automotive can be found at www.echopark.com.
Forward-Looking Statements
Included herein are forward-looking statements, including statements regarding anticipated future revenue levels, future profitability, projected SG&A expense levels, pre-owned vehicle sales projections and the opening of additional EchoPark points. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management’s views, including, without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, anticipated future growth in our EchoPark Segment, the success of our operational strategies, the rate and timing of overall economic expansion or contraction, the effect of the COVID-19 pandemic and related government-imposed restrictions on operations, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other reports and information filed with the Securities and Exchange Commission (the “SEC”). The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the SEC.
Non-GAAP Financial Measures
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted earnings from continuing operations, adjusted earnings per diluted share from continuing operations, and Adjusted EBITDA. As required by SEC rules, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the schedules included in this press release. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosures and provide a meaningful presentation of the Company’s results.
Company Contacts
Investor Inquiries:
Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400
Danny Wieland, Vice President, Investor Relations & Financial Reporting (704) 927-3462
ir@sonicautomotive.com
Press Inquiries:
Danielle DeVoren / Anthony Feldman
212-896-1272 / 347-487-6194
ddevoren@kcsa.com/afeldman@kcsa.com
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations - Consolidated
| Three Months Ended March 31, | Better / (Worse) | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | ||||
| (In thousands, except per share amounts) | ||||||
| Revenues: | ||||||
| New vehicles | $ | 1,156,317 | $ | 959,489 | 20.5 | % |
| Used vehicles | 1,090,097 | 850,052 | 28.2 | % | ||
| Wholesale vehicles | 74,809 | 48,543 | 54.1 | % | ||
| Total vehicles | 2,321,223 | 1,858,084 | 24.9 | % | ||
| Parts, service and collision repair | 320,914 | 334,680 | (4.1) | % | ||
| Finance, insurance and other, net | 144,661 | 115,292 | 25.5 | % | ||
| Total revenues | 2,786,798 | 2,308,056 | 20.7 | % | ||
| Cost of sales: | ||||||
| New vehicles | (1,086,852) | (914,074) | (18.9) | % | ||
| Used vehicles | (1,059,229) | (817,922) | (29.5) | % | ||
| Wholesale vehicles | (73,960) | (48,700) | (51.9) | % | ||
| Total vehicles | (2,220,041) | (1,780,696) | (24.7) | % | ||
| Parts, service and collision repair | (165,864) | (176,782) | 6.2 | % | ||
| Total cost of sales | (2,385,905) | (1,957,478) | (21.9) | % | ||
| Gross profit | 400,893 | 350,578 | 14.4 | % | ||
| Selling, general and administrative expenses | (289,356) | (282,156) | (2.6) | % | ||
| Impairment charges | — | (268,000) | 100.0 | % | ||
| Depreciation and amortization | (23,687) | (22,297) | (6.2) | % | ||
| Operating income (loss) | 87,850 | (221,875) | 139.6 | % | ||
| Other income (expense): | ||||||
| Interest expense, floor plan | (5,113) | (10,508) | 51.3 | % | ||
| Interest expense, other, net | (10,285) | (10,965) | 6.2 | % | ||
| Other income (expense), net | 101 | 100 | 1.0 | % | ||
| Total other income (expense) | (15,297) | (21,373) | 28.4 | % | ||
| Income (loss) from continuing operations before taxes | 72,553 | (243,248) | 129.8 | % | ||
| Provision for income taxes for continuing operations - benefit (expense) | (18,864) | 44,117 | (142.8) | % | ||
| Income (loss) from continuing operations | 53,689 | (199,131) | 127.0 | % | ||
| Discontinued operations: | ||||||
| Income (loss) from discontinued operations before taxes | 720 | (285) | 352.6 | % | ||
| Provision for income taxes for discontinued operations - benefit (expense) | (187) | 83 | (325.3) | % | ||
| Income (loss) from discontinued operations | 533 | (202) | 363.9 | % | ||
| Net income (loss) | $ | 54,222 | $ | (199,333) | 127.2 | % |
| Basic earnings (loss) per common share: | ||||||
| Earnings (loss) per share from continuing operations | $ | 1.29 | $ | (4.67) | 127.6 | % |
| Earnings (loss) per share from discontinued operations | 0.02 | (0.01) | 300.0 | % | ||
| Earnings (loss) per common share | $ | 1.31 | $ | (4.68) | 128.0 | % |
| Weighted-average common shares outstanding | 41,541 | 42,615 | 2.5 | % | ||
| Diluted earnings (loss) per common share: | ||||||
| Earnings (loss) per share from continuing operations | $ | 1.23 | $ | (4.67) | 126.3 | % |
| Earnings (loss) per share from discontinued operations | 0.02 | (0.01) | 300.0 | % | ||
| Earnings (loss) per common share | $ | 1.25 | $ | (4.68) | 126.7 | % |
| Weighted-average common shares outstanding | 43,542 | 42,615 | (2.2) | % | ||
| Dividends declared per common share | $ | 0.10 | $ | 0.10 | — | % |
Franchised Dealerships Segment - Reported
| Three Months Ended March 31, | Better / (Worse) | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | ||||
| (In thousands, except unit and per unit data) | ||||||
| Revenues: | ||||||
| New vehicles | $ | 1,156,317 | $ | 959,489 | 20.5 | % |
| Used vehicles | 661,534 | 566,888 | 16.7 | % | ||
| Wholesale vehicles | 56,204 | 42,440 | 32.4 | % | ||
| Total vehicles | 1,874,055 | 1,568,817 | 19.5 | % | ||
| Parts, service and collision repair | 308,077 | 324,501 | (5.1) | % | ||
| Finance, insurance and other, net | 97,525 | 83,029 | 17.5 | % | ||
| Total revenues | 2,279,657 | 1,976,347 | 15.3 | % | ||
| Gross Profit: | ||||||
| New vehicles | 69,465 | 45,415 | 53.0 | % | ||
| Used vehicles | 31,996 | 32,314 | (1.0) | % | ||
| Wholesale vehicles | 736 | (83) | 986.7 | % | ||
| Total vehicles | 102,197 | 77,646 | 31.6 | % | ||
| Parts, service and collision repair | 155,265 | 158,096 | (1.8) | % | ||
| Finance, insurance and other, net | 97,525 | 83,029 | 17.5 | % | ||
| Total gross profit | 354,987 | 318,771 | 11.4 | % | ||
| Selling, general and administrative expenses | (250,076) | (256,418) | 2.5 | % | ||
| Impairment charges | — | (268,000) | NM | |||
| Depreciation and amortization | (20,376) | (19,589) | (4.0) | % | ||
| Operating income (loss) | 84,535 | (225,236) | 137.5 | % | ||
| Other income (expense): | ||||||
| Interest expense, floor plan | (4,117) | (9,608) | 57.2 | % | ||
| Interest expense, other, net | (9,958) | (10,599) | 6.0 | % | ||
| Other income (expense), net | 83 | 99 | (16.2) | % | ||
| Total other income (expense) | (13,992) | (20,108) | 30.4 | % | ||
| Income (loss) before taxes | 70,543 | (245,344) | 128.8 | % | ||
| Add: impairment charges | — | 268,000 | NM | |||
| Segment income (loss) | $ | 70,543 | $ | 22,656 | 211.4 | % |
| Unit Sales Volume: | ||||||
| New vehicles | 24,358 | 21,724 | 12.1 | % | ||
| Used vehicles | 27,236 | 26,038 | 4.6 | % | ||
| Wholesale vehicles | 6,832 | 6,910 | (1.1) | % | ||
| Retail new & used vehicles | 51,594 | 47,762 | 8.0 | % | ||
| Used-to-New Ratio | 1.12 | 1.20 | (6.7) | % | ||
| Gross Profit Per Unit: | ||||||
| New vehicles | $ | 2,852 | $ | 2,091 | 36.4 | % |
| Used vehicles | $ | 1,175 | $ | 1,241 | (5.3) | % |
| Finance, insurance and other, net | $ | 1,910 | $ | 1,760 | 8.5 | % |
NM = Not Meaningful
Franchised Dealerships Segment - Same Store
| Three Months Ended March 31, | Better / (Worse) | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | ||||
| (In thousands, except unit and per unit data) | ||||||
| Revenues: | ||||||
| New vehicles | $ | 1,156,317 | $ | 950,589 | 21.6 | % |
| Used vehicles | 661,534 | 560,796 | 18.0 | % | ||
| Wholesale vehicles | 56,204 | 42,103 | 33.5 | % | ||
| Total vehicles | 1,874,055 | 1,553,488 | 20.6 | % | ||
| Parts, service and collision repair | 306,190 | 321,295 | (4.7) | % | ||
| Finance, insurance and other, net | 92,246 | 77,692 | 18.7 | % | ||
| Total revenues | $ | 2,272,491 | $ | 1,952,475 | 16.4 | % |
| Gross Profit: | ||||||
| New vehicles | $ | 68,956 | $ | 45,115 | 52.8 | % |
| Used vehicles | 30,273 | 32,141 | (5.8) | % | ||
| Wholesale vehicles | 736 | (49) | 1,602.0 | % | ||
| Total vehicles | 99,965 | 77,207 | 29.5 | % | ||
| Parts, service and collision repair | 153,682 | 156,465 | (1.8) | % | ||
| Finance, insurance and other, net | 92,246 | 77,692 | 18.7 | % | ||
| Total gross profit | $ | 345,893 | $ | 311,364 | 11.1 | % |
| Unit Sales Volume: | ||||||
| New vehicles | 24,358 | 21,410 | 13.8 | % | ||
| Used vehicles | 27,236 | 25,635 | 6.2 | % | ||
| Wholesale vehicles | 6,832 | 6,838 | (0.1) | % | ||
| Retail new & used vehicles | 51,594 | 47,045 | 9.7 | % | ||
| Used-to-New Ratio | 1.12 | 1.20 | (6.6) | % | ||
| Gross Profit Per Unit: | ||||||
| New vehicles | $ | 2,831 | $ | 2,107 | 34.4 | % |
| Used vehicles | $ | 1,112 | $ | 1,254 | (11.3) | % |
| Finance, insurance and other, net | $ | 1,807 | $ | 1,672 | 8.1 | % |
Note: All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.
EchoPark Segment - Reported
| Three Months Ended March 31, | Better / (Worse) | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | ||||
| (In thousands, except unit and per unit data) | ||||||
| Revenues: | ||||||
| Used vehicles | $ | 428,563 | $ | 283,164 | 51.3 | % |
| Wholesale vehicles | 18,605 | 6,103 | 204.9 | % | ||
| Total vehicles | 447,168 | 289,267 | 54.6 | % | ||
| Parts, service and collision repair | 12,837 | 10,179 | 26.1 | % | ||
| Finance, insurance and other, net | 47,136 | 32,263 | 46.1 | % | ||
| Total revenues | 507,141 | 331,709 | 52.9 | % | ||
| Gross Profit: | ||||||
| Used vehicles | (1,128) | (184) | (513.0) | % | ||
| Wholesale vehicles | 113 | (74) | 252.7 | % | ||
| Total vehicles | (1,015) | (258) | (293.4) | % | ||
| Parts, service and collision repair | (215) | (198) | (8.6) | % | ||
| Finance, insurance and other, net | 47,136 | 32,263 | 46.1 | % | ||
| Total gross profit | 45,906 | 31,807 | 44.3 | % | ||
| Selling, general and administrative expenses | (39,280) | (25,738) | (52.6) | % | ||
| Impairment charges | — | — | — | % | ||
| Depreciation and amortization | (3,311) | (2,708) | (22.3) | % | ||
| Operating income (loss) | 3,315 | 3,361 | (1.4) | % | ||
| Other income (expense): | ||||||
| Interest expense, floor plan | (996) | (900) | (10.7) | % | ||
| Interest expense, other, net | (327) | (366) | 10.7 | % | ||
| Other income (expense), net | 18 | 1 | 1,700.0 | % | ||
| Total other income (expense) | (1,305) | (1,265) | (3.2) | % | ||
| Income (loss) before taxes | 2,010 | 2,096 | (4.1) | % | ||
| Add: impairment charges | — | — | NM | |||
| Segment income (loss) | $ | 2,010 | $ | 2,096 | (4.1) | % |
| Unit Sales Volume: | ||||||
| Used vehicles | 19,670 | 13,986 | 40.6 | % | ||
| Wholesale vehicles | 2,861 | 1,765 | 62.1 | % | ||
| Gross Profit Per Unit: | ||||||
| Total used vehicle and F&I | $ | 2,339 | $ | 2,294 | 2.0 | % |
NM = Not Meaningful
EchoPark Segment - Same Market
| Three Months Ended March 31, | Better / (Worse) | |||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | ||||
| (In thousands, except unit and per unit data) | ||||||
| Revenues: | ||||||
| Used vehicles | $ | 333,577 | $ | 283,164 | 17.8 | % |
| Wholesale vehicles | 15,555 | 6,103 | 154.9 | % | ||
| Total vehicles | 349,132 | 289,267 | 20.7 | % | ||
| Parts, service and collision repair | 10,103 | 10,145 | (0.4) | % | ||
| Finance, insurance and other, net | 36,823 | 32,263 | 14.1 | % | ||
| Total revenues | $ | 396,058 | $ | 331,675 | 19.4 | % |
| Gross Profit: | ||||||
| Used vehicles | $ | (1,485) | $ | (184) | (707.1) | % |
| Wholesale vehicles | 122 | (74) | 264.9 | % | ||
| Total vehicles | (1,363) | (258) | (428.3) | % | ||
| Parts, service and collision repair | 7 | (197) | 103.6 | % | ||
| Finance, insurance and other, net | 36,823 | 32,263 | 14.1 | % | ||
| Total gross profit | $ | 35,467 | $ | 31,808 | 11.5 | % |
| Unit Sales Volume: | ||||||
| Used vehicles | 15,128 | 13,986 | 8.2 | % | ||
| Wholesale vehicles | 2,230 | 1,765 | 26.3 | % | ||
| Gross Profit Per Unit: | ||||||
| Total used vehicle and F&I | $ | 2,336 | $ | 2,294 | 1.8 | % |
Note: All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market's opening.
Selling, General and Administrative ("SG&A") Expenses - Consolidated
| Three Months Ended March 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | % Change | ||||||||
| (In thousands) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 188,492 | $ | 174,422 | $ | (14,070) | (8.1) | % | |||
| Advertising | 12,169 | 14,135 | 1,966 | 13.9 | % | ||||||
| Rent | 13,744 | 13,865 | 121 | 0.9 | % | ||||||
| Other | 74,951 | 79,734 | 4,783 | 6.0 | % | ||||||
| Total SG&A expenses | $ | 289,356 | $ | 282,156 | $ | (7,200) | (2.6) | % | |||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 289,356 | $ | 282,156 | $ | (7,200) | (2.6) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 47.0 | % | 49.8 | % | 280 | bps | |||||
| Advertising | 3.0 | % | 4.0 | % | 100 | bps | |||||
| Rent | 3.4 | % | 4.0 | % | 60 | bps | |||||
| Other | 18.8 | % | 22.7 | % | 390 | bps | |||||
| Total SG&A expenses as a % of gross profit | 72.2 | % | 80.5 | % | 830 | bps | |||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 72.2 | % | 80.5 | % | 830 | bps |
Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation
| Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Weighted-<br>Average<br>Shares | Amount | Per<br>Share<br>Amount | Weighted-<br>Average<br>Shares | Amount | Per<br>Share<br>Amount | |||||
| (In thousands, except per share amounts) | ||||||||||
| Diluted earnings (loss) and shares from continuing operations (1) | 43,542 | $ | 53,689 | $ | 1.23 | 42,615 | $ | (199,131) | $ | (4.67) |
| Pre-tax items of interest: | ||||||||||
| Impairment charges | $ | — | $ | 268,000 | ||||||
| Total pre-tax items of interest | $ | — | $ | 268,000 | ||||||
| Tax effect of above items | $ | — | $ | (51,295) | ||||||
| Adjusted diluted earnings (loss) and shares from continuing operations | 43,542 | $ | 53,689 | $ | 1.23 | 43,432 | $ | 17,574 | $ | 0.40 |
(1) Basic Weighted-Average Shares Used For Three Months Ended March 31, 2020 Due To Net Loss On GAAP Basis
Adjusted EBITDA - Non-GAAP Reconciliation
| Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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) | ||||||||||||||
| Income (loss) before taxes | $ | 70,543 | $ | 2,010 | $ | 720 | $ | 73,273 | $ | (245,344) | $ | 2,096 | $ | (285) | $ | (243,533) |
| Non-floor plan interest | 9,127 | 334 | — | 9,461 | 10,043 | 365 | — | 10,408 | ||||||||
| Depreciation and amortization | 21,206 | 3,304 | — | 24,510 | 20,144 | 2,708 | — | 22,852 | ||||||||
| Stock-based compensation expense | 3,485 | — | — | 3,485 | 2,427 | — | — | 2,427 | ||||||||
| Asset impairment charges | — | — | — | — | 268,000 | — | — | 268,000 | ||||||||
| Long-term compensation charges | — | 500 | — | 500 | — | — | — | — | ||||||||
| Loss (gain) on franchise and real estate disposals | (21) | 14 | — | (7) | — | — | — | — | ||||||||
| Adjusted EBITDA | $ | 104,340 | $ | 6,162 | $ | 720 | $ | 111,222 | $ | 55,270 | $ | 5,169 | $ | (285) | $ | 60,154 |
sah2021q1investorpresent
® Sonic Automotive – Investor Presentation April 2021 Updated April 29, 2021 Exhibit 99.2
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 business, the economy and other future conditions. These statements can generally be identified by lead-in words such as “may,” “will,” “should,” “could,” “believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,” “foresee” and other similar words or phrases. Statements that describe our Company’s objectives, plans or goals are also forward-looking statements. Examples of such forward-looking information we may be discussing in this presentation include, without limitation, the effects of COVID-19 on operations, our anticipated future new vehicle unit sales volume, revenues and profitability, our anticipated future used vehicle unit sales volume, revenues and profitability, our anticipated future parts, service and collision repair (“Fixed Operations”) gross profit, our anticipated expense reductions, long-term annual revenue and profitability targets, anticipated future growth capital expenditures and profitability in our EchoPark Segment, anticipated openings of new EchoPark stores, anticipated future performance and growth of our Franchised Dealerships Segment, anticipated liquidity positions, anticipated industry new vehicle sales volume, the implementation of growth and operating strategies, including acquisitions of dealerships and properties, the return of capital to stockholders, anticipated future success and impacts from the implementation of our strategic initiatives, and earnings per share expectations. You are cautioned that these forward-looking statements are not guarantees of future performance, involve risks and uncertainties and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties include, 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 expansion or contraction, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other reports and information filed with the Securities and Exchange Commission (the “SEC”). These forward-looking statements, risks, uncertainties and additional factors speak only as of the date of this presentation. We undertake no obligation to update any such statements, except as required under federal securities laws and the rules and regulations of the SEC.
3 Company Overview
4 ® Sonic Automotive: Who We Are QUICK FACTS (NYSE: SAH) a Fortune 500 Company and One of the Nation’s Largest Automotive Retailers 107 20+ 14 14 $9.8 Billion $1.4 Billion 93K New Vehicles Sold 159K Total Revenues Automotive Brands Locations Used Vehicles Sold States Collision Centers Gross Profit Note: Revenue, Gross Profit, New & Used Vehicles Sold are for FY 2020 Our Core Franchised Dealerships Segment is a Full-Service Automotive Retailer, Selling New and Used Vehicles, Arranging F&I Product Sales, and Providing Parts, Service and Collision Repair Our High Growth EchoPark Segment Offers a Unique Approach to Pre-Owned Vehicle and F&I Sales Below-Market Pricing with a No Haggle Purchase Experience Drives Industry-Leading Used Vehicle Volume Throughput
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 Expense Control And Strengthening The Balance Sheet Expect To Grow Total Revenue To $25 Billion By 2025 Note: Total revenue projection is estimate of future results. Actual results may differ. See “Forward-Looking Statements.”
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 Total Revenue for FY 2020
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 Distribution Note: Percentages are Percent of Total Revenue for FY 2020 Brand % of Revenue Franchise Brand % of Revenue BMW 22% Mercedes 11% Audi 6% Lexus 4% Land Rover 4% Porsche 3% Cadillac 2% MINI 1% Other Luxury (1) 2% Honda 11% Toyota 7% Hyundai 1% Volkswagen 1% Nissan <1% EchoPark 15% Non-Franchise 15% Ford 5% General Motors (2) 5% Luxury 55% 20%Import Domestic 10% (1) Includes Volvo, Jaguar, Acura and Infiniti (2) Includes Chevrolet, GMC and Buick Business Line Mix
8 ® EchoPark Automotive – A Unique Growth Story Expansion Plan For 140+ Point Distribution Network By 2025 Unique, High Return Business Model 1 to 4-Year-Old Vehicles - Nearly New With Remaining OEM Warranty 30% of Guests Travel More Than 30 Minutes To Shop Our Inventory Priced Up to $3,000 Below Market Pricing With Simplified, Easy Purchase Experience Focus On Pre-Owned Market – More Stable Than New Vehicle Market The New Car Alternative™ Price. Quality. Experience.
9 EchoPark – High Volume Model Drives Superior Returns Gross Profit Per Unit (“GPU”) Franchised Used EchoPark B (W) Front-End Used Vehicle GPU $1,300 $(100) F&I GPU $1,600 $2,250 Parts and Service Reconditioning GPU $500 - Total Used-Related GPU $3,400 $2,150 ($1,250) Volume Differential Factor x1 X5 Pro Forma Comparative Used-Related Gross Profit $3,400 $10,750 $7,350 Ultra-Low Pricing Attractive F&I High Volume Throughput May Yield Slightly Negative Front-End Gross Profit Per Unit Higher Penetration Rates On F&I Products vs. Sonic Franchised Stores 5X Volume Per Store Per Month vs. Sonic Franchised Stores Note: Amounts are estimates of future results used for comparative modeling purposes. Actual store results may differ.
10 Franchised Dealerships ® ® Complementary Relationship Between Segments • Thrives When New Vehicle Industry Is Healthy, Particularly Where Luxury Brands Are Strong • Diverse Revenue Streams • Relatively Low Fixed Costs And Multiple Operational Levers • Further Growth Opportunities: Parts and Service Business Used Vehicles F&I Penetration Expense Leverage • Strong Secular Growth Phase Due To: Focus On Recession-Resistant Pre-Owned Vehicle Market Below-Market Price Strategy Simplified, Easy Purchase Experience • If Pre-Owned Vehicle Valuations Decline, EchoPark Should: Benefit From Rapid Inventory Turns, Creating An Even Greater Pricing Advantage Over Competitors To Drive Additional Volume
11 Industry-Leading Used Vehicle Volume Throughput 82 108 Peer Average* Sonic Franchised (Q1 2021) * Peer Average Is Store Count As Of And Unit Sales For The Quarter Ended December 31, 2020 For GPI, And As Of And For The Quarter Ended March 31, 2021 For ABG, AN, LAD And PAG ** CarMax Data Is Store Count As Of And Unit Sales For The Quarter Ended February 28, 2021, EchoPark Data Includes Retail Hub Markets Open For At Least 12 Full Months Note: Data Source – Company Filings, Company Websites 310 456 CarMax** EchoPark** (Q1 2021) Utilize Highly Efficient Inventory Sourcing, Pricing And Selling Processes To Maximize Throughput Retail Used Vehicle Unit Sales Per Store Per Month 32% Higher Volume 47% Higher Volume
12 35 27 Peer Average* Sonic Franchised (March 31, 2021) * Peer Average Is As Of December 31, 2020 For GPI, And As Of March 31, 2021 For ABG, AN, LAD And PAG ** CarMax Data Is As Of February 28, 2021 Note: Data Source – Company Filings, Calculated Based On Reported Trailing Quarter Cost Of Sales If Not Explicitly Disclosed 62 40 CarMax** EchoPark (March 31, 2021) Low Inventory Days’ Supply Reduces Risk Of Fluctuations In Used Vehicle Valuations Data Analytics Tools Enable Accuracy, Consistency And Scalability Of Used Inventory Sourcing And Pricing Inventory Management Expertise Used Vehicle Inventory Days’ Supply
13 Strategic Direction • Drive New And Used Vehicle Profit Growth Through Multiple Channels (Traditional Sale Or Lease, Online Selling) • Continued Growth Opportunity In Parts & Service, F&I Per Unit • Ongoing Profitability Enhancement Through SG&A Expense Control, Inventory Management • Early-Stage Strong Secular Growth Phase • Profitability Inflection Point Expected By 2022 • 20 Retail Hub Locations And 3 Delivery Centers Open To Date • Projected To Add 25 New Locations Annually In 2021- 2025 • Accelerated Growth Plan For 140+ Point Distribution Network Expected To Deliver 575,000 Unit Sales And $14 Billion In Revenues Annually By 2025 • Strict Capital Allocation Strategy Prioritizes Highest Return on Investment • Strategically Deploy Capital To Accelerate EchoPark’s Already Strong Growth • Continue To Monitor Acquisition Opportunities As Market Evolves Franchised Dealerships EchoPark Capital Allocation Note: Profitability and revenue projection are estimates of future results. Actual results may differ. See “Forward-Looking Statements.”
14 EchoPark
15 EchoPark – Brand Promise Up To 40% Below New Vehicle Price Up To 10% Below Used Vehicle Market Price High Quality, Low Mileage Vehicle With Existing Warranty Transparent Guest-Centric Experience New Car Feel Without The New Car Price Complete Purchase In Under An Hour Zero Reported Accidents On CARFAX Buy & Sell Your Way – On-Site Or Online P r i c e . Q u a l i t y. E x p e r i e n c e . T h e F u l l O m n i - C h a n n e l O p t i o n
16 EchoPark – Developing Nationwide Distribution Network 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E 2 2 2 5 8 9 16 41 66 91 116 140+ Cumulative Locations By Year Large Retail Hub Medium Retail Hub Delivery Center Existing Retail Hub Existing Delivery Center Delivery Center Coverage Area Future Market Opportunities140+ Point Distribution Network By 2025 Note: Future location counts are based on projections. Actual results may differ. See “Forward-Looking Statements.”
17 EchoPark – Modeled 4-Wall Economics At Maturity (Modeled Metrics Assume 100% Maturity) Delivery Center Medium Retail Hub Large Retail Hub Average Monthly Retail Unit Volume 300 750 1,500 Average Vehicle Selling Price 20,500$ 20,500$ 20,500$ Total Annual Revenues 82,000,000$ 205,000,000$ 410,000,000$ Total Combined Gross Profit Per Unit Retailed ("GPU") 1,700$ 2,150$ 2,150$ Target SG&A Expenses as % of Gross Profit 65% 60% 60% Annual Pre-Tax Profit 2,100,000$ 7,200,000$ 14,400,000$ Average Compensation Per Employee (with Fringe) 68,000$ 78,000$ 78,000$ Total Headcount 7 105 170 Sales Experience Guide ("EG") Headcount N/A 25 50 Average Retail Unit Sales Per EG Per Month N/A 30 30 Target Inventory Days' Supply N/A 30 Days 30 Days Working Capital Investment -$ 15,000,000$ 31,000,000$ Inventory Floor Plan Financing -$ (15,000,000)$ (31,000,000)$ Capital Expenditures, Including Land (Varies By Market) $1-$2 Million $7-$12 Million $20-$25 Million Estimated Months to Breakeven 3-6 Months 6-9 Months 6-9 Months Estimated Years to Maturity 2 Years 4 Years 5 Years Pre-Tax Return On Investment 55%+ 35% - 50% 28% - 33% Note: Estimated average pre-tax losses of $1.5 to $2.0 million per new medium or large retail hub opening (~40% incurred in 3 months prior to opening, ~60% incurred post- opening prior to targeted breakeven). Pre-tax losses for new Delivery Center locations are expected to be approximately $0.2 million per location prior to targeted breakeven. Note: Amounts are estimates of future results used for comparative modeling purposes. Actual store results may differ. See “Forward-Looking Statements.”
18 EchoPark – Delivery Center Model Existing Retail Hub Example Delivery Center Market Coverage Opportunity Delivery Center Model • Utilize Existing Retail Hub For Inventory Storage And Reconditioning (Asset Light Expansion) • Advertise Inventory In Surrounding Markets • Drive Incremental eCommerce Sales In New Markets • Inspect & Buy Vehicles From Guests After Online Appraisal • Arrange Transport To EchoPark Delivery Center • Guest Picks Up Vehicle At EchoPark Delivery Center Near Their Home (Next-To-Last-Mile Delivery) Strategic Advantages • Quick Entry Into New Markets With Minimal Capital Expenditures Or Overhead Costs • Same Guest-Centric Purchase Experience And Convenience • Blend Of Brick And Mortar And eCommerce Distribution Network Creates Operating Leverage Delivery Center Locations • Greenville, SC (Opened July 2020) • Knoxville, TN (Opened December 2020) • Charleston, SC (Opened April 2021) • Expect To Open 20 Delivery Centers Annually From 2021-2025
19 EchoPark – 5-Year Accelerated 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) Rate Of Expansion • Expect to Open 25 Locations Per Year From 2021-2025 • ~20 Delivery Centers • ~5 Medium Or Large Retail Hubs • See 4-Wall Model On Prior Slide Total Addressable Market • ~20 Million 0-4 Year Old Vehicle Transactions Annually • Existing Stores Generate ~400,000 Unique Leads On An Annualized Basis • Rapid Expansion To Meet Current Demand And Considerable Upside Opportunity Note: Amounts are estimates of future results used for modeling purposes. Actual results may differ materially.
20 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 $- $100 $200 $300 $400 $500 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 (In M ill io ns ) Quarterly Retail Units Quarterly Revenue FY 2021 Retail Unit Volume Forecast Of 100,000-105,000 Units (75%-85% Growth Vs. FY 2020) 32.5% Sequential Unit Growth Outperformed Our Q1 2021 Forecast Volume Of 18,000-19,000 Units
21 EchoPark – Adjusted EBITDA Trend ($2,802) ($1,115) ($3,353) ($2,168) ($3,029) ($2,059) $4,957 $4,792 $6,352 $5,299 $5,169 $5,569 $3,149 ($2,921) $6,162 $6,093 $6,214 $6,831 $4,804 $(290) $6,719 $(4,000) $(2,000) $- $2,000 $4,000 $6,000 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Adjusted EBITDA Less Impact of New Stores (In T ho us an ds ) Newly Opened Store Losses and Future Store Pre-Opening Costs Expected To Reduce Adjusted EBITDA By $3.0-$3.5 Million Per Quarter Through 2021 Refer To Appendix For Calculation And Reconciliation of Adjusted EBITDA (A Non-GAAP Measure)
22 EchoPark – Market Maturity Comparison - 150 300 450 600 750 900 1,050 1,200 1,350 1,500 1,650 1,800 Denver/Colorado Springs Dallas San Antonio Charlotte Houston Long Beach Tampa Nashville Atlanta Syracuse Baltimore-Laurel Phoenix Greenville Delivery Center Knoxville Delivery Center Average Monthly Retail Unit Volume Q1 2021 Q1 2020 Newer Markets Continue to Grow In Line With Forecast Model >5 Years In Market >5 Years In Market 3+ Years In Market 2+ Years In Market 2+ Years In Market 1+ Year In Market Market Opened April 2020 Market Opened October 2020 Market Opened December 2020 Market Opened December 2020 Market Opened February 2021 Market Opened February 2021 Market Opened July 2020 Market Opened December 2020
23 Franchised Dealerships
24 New & Used Vehicle Sales Parts & Service (P&S) Finance & Insurance (F&I) ® Franchised Dealerships Franchised Dealerships84 Brands, Luxury Weighted20+ New & hicle Sales Parts & r i (P&S) Finance & Insurance (F&I) Collision Repair Centers14 20 Major Metropolitan Markets Focused On Inventory Mix and Attractive Pricing to Drive Growth and Profitability
25 Franchised Dealerships – Geographic Footprint Platforms in Major Metro Markets 84 Stores, 20+ Brands, 14 Collision Repair Centers
26 Franchised Dealerships – Strategic Levers Multiple Growth Drivers Divest Underperforming or Capital-Intensive Stores Grow Parts and Service Maximize F&I Penetration Used Vehicle Volume Throughput Inventory Sourcing Apply EchoPark Learnings Omni-Channel Platform SG&A Expense Discipline Acquire Potential High Return Stores
27 Omni-Channel Strategy
28 Full Omni-Channel 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 Ability to Buy a Car A to Z Online or Any Step In Between Utilize SIMS, Python Analytics, Robotic Process Automation, Hyper-Intelligence Technology ON-SITE ONLINE S ea m le ss to th e G ue st
29 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 • Includes Online Trade-In Appraisal And Firm Purchase Offer • Complete A Full eCommerce Transaction In Minutes • Test Drive And Finalize Purchase At Franchised Dealership, EchoPark Retail Hub Or EchoPark Delivery Center Buy & Sell Your Way Start Online, Finish On-Site Or Buy Completely Online Buy On-Site • Our Blend Of Brick And Mortar And eCommerce Strategies Allows Guests To Choose Their Preferred Buying Approach • A Flexible, Guest- Centric Experience With Options • Will Be Seamless To The Guest, Regardless of Which Path They Choose Represents ~10% Of Q1 2021 Vehicle Sales Transactions
30 Q1 2021 Financial Snapshot
31 Q1 2021 – Consolidated Continuing Operations B/(W) than Q1 2020 (In millions, except per share data) Q1 2021 $ % Revenues $2,786.8 $478.7 20.7% Gross profit $400.9 $50.3 14.4% SG&A expenses $289.4 ($7.2) (2.6%) SG&A expenses as % of gross profit 72.2% 830 bps Earnings from continuing operations before taxes $72.6 $315.8 129.8% Continuing Ops: Net income $53.7 $252.8 127.0% Diluted earnings per share $1.23 $5.90 126.3% Refer to Appendix for Calculation of Adjusted Results and Reconciliation of Non-GAAP Measures Excluding The Effect Of A $268.0 Million Non-Cash Goodwill Impairment Charge In Q1 2020, Adjusted Earnings From Continuing Operations Before Taxes Increased 193% And Adjusted EPS Increased 208%, From $0.40 In Q1 2020
32 Strong Balance Sheet And Liquidity March 31, 2021 December 31, 2020 (In Millions) Cash and cash equivalents 77.2$ 170.3$ Availability under the 2016 Revolving Credit Facility 218.8 214.7 Availability under our used vehicle floor plan facilities(1) - - Availability under the 2019 Mortgage Facility 14.0 11.2 Availability under the 2020 Line Of Credit Facility 54.1 57.0 Floor plan deposit balance 70.8 73.2 Total available liquidity resources 434.9$ 526.4$ Covenant Requirement* March 31, 2021 December 31, 2020 Liquidity ratio >= 1.05 1.15 1.18 Fixed charge coverage ratio >= 1.20 2.32 2.07 Total lease adjusted leverage ratio <= 5.75 2.47 2.79 Net debt to Adjusted EBITDA ratio(2) 1.34 1.29 * As Defined In The 2016 Revolving Credit Facility and 2019 Mortgage Facility (1) During Q2 2020 Sonic Converted Its Used Vehicle Floor Plan Facilities From A Borrowing Base To A VIN-Specific Floor Plan Line. The Availability Under This Line Was $19.2 Million And $34.6 Million As Of March 31, 2021 and December 31, 2020, Respectively. (2) Refer To Appendix For Calculation And Reconciliation of Adjusted EBITDA (A Non-GAAP Measure) and Net Debt To Adjusted EBITDA Ratio (A Non-GAAP Measure)
33 Capital Expenditure Discipline Strict Capital Allocation Strategy Prioritizes Highest Return On Investment Actual YTD Q1 2021 Capital Expenditures Of $67.7 Million FY 2021E Includes Plans For 25 New EchoPark Locations $181.2 $87.8 $89.3 $92.4 $100.0 $53.0 $75.8 $36.3 $34.8 $75.0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E Gross Capital Expenditures (In Millions) Franchise EchoPark
34 Appendix
35 Non-GAAP Reconciliation – Earnings Per Share Q1 2021 Q1 2020 (In thousands, except per share amounts) Weighted- Average Shares Amount Per Share Amount Weighted- Average Shares Amount Per Share Amount Diluted earnings (loss) and shares from continuing operations(1) 43,542 53,689$ 1.23$ 42,615 (199,131)$ (4.67)$ Pre-tax items of interest: Impairment charges -$ 268,000$ Total pre-tax items of interest -$ 268,000$ Tax effect of above items - (51,295) Adjusted diluted earnings (loss) and shares from continuing operations 43,542 53,689$ 1.23$ 43,432 17,574$ 0.40$ (1) Basic Weighted-Average Shares Used For Q1 2020 Due To Net Loss On GAAP Basis
36 Non-GAAP Reconciliation – Segment Income Franchised Dealerships Segment EchoPark Segment Consolidated (In millions, except unit data) Q1 2021 Q1 2020 Q1 2021 Q1 2020 Q1 2021 Q1 2020 Revenues 2,279.7$ 1,976.3$ 507.1$ 331.7$ 2,786.8$ 2,308.1$ Gross profit 355.0$ 318.8$ 45.9$ 31.8$ 400.9$ 350.6$ SG&A expenses 250.1$ 256.4$ 39.3$ 25.7$ 289.4$ 282.2$ Segment income 70.5$ 22.7$ 2.0$ 2.1$ 72.5$ 24.8$ Impairment charges - (268.0) - - - (268.0) Earnings (loss) from continuing operations before taxes 70.5$ (245.3)$ 2.0$ 2.1$ 72.5$ (243.2)$ Adjusted earnings (loss) from continuing operations before taxes 70.5$ 22.7$ 2.0$ 2.1$ 72.5$ 24.8$ Impairment charges - (268.0) - - - (268.0) Earnings (loss) from continuing operations before taxes 70.5$ (245.3)$ 2.0$ 2.1$ 72.5$ (243.2)$ Adjusted net income (loss) from continuing operations 53.7$ 17.6$ Impairment charges (before taxes) - (268.0) Tax effect of items of interest and non-recurring tax items - 51.3 Net income (loss) from continuing operations 53.7$ (199.1)$ New vehicle unit sales volume 24,358 21,724 - - 24,358 21,724 Retail used vehicle unit sales volume 27,236 26,038 19,670 13,986 46,906 40,024 Note: Segment Income (Loss) Defined As Earnings (Loss) From Continuing Operations Before Taxes And Impairment Charges
37 Non-GAAP Reconciliation – Adjusted EBITDA (In thousands) FY 2017 FY 2018 FY 2019 FY 2020 LTM Q1 2021 Net Income (Loss) 92,983$ 51,650$ 144,137$ (49,349)$ 202,170$ Provision For Income Taxes 13,198 22,645 54,954 12,983 78,870 Income (Loss) Before Taxes 106,181$ 74,295$ 199,091$ (36,366)$ 281,040$ Non-Floor Plan Interest 50,531 52,049 50,475 38,672 37,726 Depreciation and Amortization 92,127 96,652 95,646 93,922 95,578 Stock-Based Compensation Expense 11,119 11,853 10,797 11,704 12,761 Loss (Gain) On Exit Of Leased Dealerships 2,157 1,709 (170) - - Impairment Charges 9,394 29,514 20,768 270,017 2,017 Loss (Gain) On Debt Extinguishment 14,607 - 6,690 - - Long-Term Compensation Charges - 32,522 - - - Loss (Gain) on Franchise and Real Estate Disposals (9,980) (39,307) (74,812) (8,247) (8,265) Adjusted EBITDA 276,136$ 259,287$ 308,485$ 369,702$ 420,857$ Long-Term Debt (Including Current Portion) 1,024,703$ 945,083$ 706,886$ 720,066$ 711,897$ Cash and Equivalents (6,352) (5,854) (29,103) (170,313) (77,233) Floor Plan Deposit Balance (3,000) - - (73,180) (70,788) Net Debt 1,015,351$ 939,229$ 677,783$ 476,573$ 563,876$ Net Debt To Adjusted EBITDA Ratio 3.68 3.62 2.20 1.29 1.34 Note – Balance Sheet Amounts Are As Of December 31 for the FY Then Ended. LTM Q1 2021 Amounts Are For The Twelve-Month Period Ended March 31, 2021. Balance Sheet Amounts For LTM Q1 2021 Are As Of March 31, 2021.
38 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) Income (Loss) Before Taxes $ 70,543 $ 2,010 $ 720 $ 73,273 $ (245,344) $ 2,096 $ (285) $ (243,533) Non-Floor Plan Interest 9,127 334 - 9,461 10,043 365 - 10,408 Depreciation And Amortization 21,206 3,304 - 24,510 20,144 2,708 - 22,852 Stock-Based Compensation Expense 3,485 - - 3,485 2,427 - - 2,427 Impairment Charges - - - - 268,000 - - 268,000 Long-Term Compensation Charges - 500 - 500 - - - - Gain On Franchise And Real Estate Disposals (21) 14 - (7) - - - - Adjusted EBITDA $ 104,340 $ 6,162 $ 720 $ 111,222 $ 55,270 $ 5,169 $ (285) $ 60,154 Q1 2021 Q1 2020 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 59,376 $ 46,307 Provision For Income Taxes 30,208 14,703 Income (Loss) Before Taxes $ 90,611 $ (833) $ (194) $ 89,584 $ 75,466 $ (14,518) $ 62 $ 61,010 Non-Floor Plan Interest 8,963 201 - 9,164 12,335 435 - 12,770 Depreciation And Amortization 21,167 2,863 - 24,030 20,972 2,765 - 23,737 Stock-Based Compensation Expense 3,152 - - 3,152 2,690 - - 2,690 Impairment Charges 1,158 - - 1,158 1,075 16,617 - 17,692 Loss On Debt Extinguishment - - - - 6,690 - - 6,690 Gain On Franchise And Real Estate Disposals (821) (5,152) - (5,973) (29,242) - - (29,242) Adjusted EBITDA $ 124,230 $ (2,921) $ (194) $ 121,115 $ 89,986 $ 5,299 $ 62 $ 95,347 Q4 2020 Q4 2019
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) $ 59,818 $ 29,010 Provision For Income Taxes 20,620 11,307 Income (Loss) Before Taxes $ 80,434 $ 239 $ (235) $ 80,438 $ 38,417 $ 2,123 $ (223) $ 40,317 Non-Floor Plan Interest 9,781 147 - 9,928 12,011 402 - 12,413 Depreciation And Amortization 21,004 2,763 - 23,767 21,561 2,703 - 24,264 Stock-Based Compensation Expense 3,153 - - 3,153 2,681 - - 2,681 Impairment Charges 26 - - 26 - 1,124 - 1,124 Gain On Franchise Disposals (3,388) - - (3,388) 823 - - 823 Adjusted EBITDA $ 111,010 $ 3,149 $ (235) $ 113,924 $ 75,493 $ 6,352 $ (223) $ 81,622 Q3 2020 Q3 2019 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 30,791 $ 26,599 Provision For Income Taxes 6,353 10,009 Income (Loss) Before Taxes $ 34,856 $ 2,577 $ (289) $ 37,144 $ 35,129 $ 1,693 $ (213) $ 36,608 Non-Floor Plan Interest 8,938 234 - 9,172 12,599 431 - 13,030 Depreciation And Amortization 20,514 2,758 - 23,272 21,736 2,668 - 24,404 Stock-Based Compensation Expense 2,971 - - 2,971 2,612 - - 2,612 Impairment Charges 833 - - 833 - - - - Gain On Franchise Disposals 1,117 - - 1,117 356 - - 356 Adjusted EBITDA $ 69,229 $ 5,569 $ (289) $ 74,509 $ 72,432 $ 4,792 $ (213) $ 77,010 Q2 2020 Q2 2019
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) $ (199,333) $ 42,221 Provision For Income Taxes (44,200) 18,935 Income (Loss) Before Taxes $ (245,344) $ 2,096 $ (285) $ (243,533) $ 61,156 $ 180 $ (180) $ 61,156 Non-Floor Plan Interest 10,043 365 - 10,408 11,829 433 - 12,262 Depreciation And Amortization 20,144 2,708 - 22,852 20,824 2,418 - 23,242 Stock-Based Compensation Expense 2,427 - - 2,427 2,814 - - 2,814 Loss (Gain) On Exit Of Leased Dealerships - - - - (170) - - (170) Impairment Charges 268,000 - - 268,000 26 1,926 - 1,952 Gain On Franchise Disposals - - - - (46,750) - - (46,750) Adjusted EBITDA $ 55,270 $ 5,169 $ (285) $ 60,154 $ 49,729 $ 4,957 $ (180) $ 54,506 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 46,307 $ 21,821 Provision For Income Taxes 14,703 9,150 Income (Loss) Before Taxes $ 75,466 $ (14,518) $ 62 $ 61,010 $ 37,388 $ (6,196) $ (221) $ 30,971 Non-Floor Plan Interest 12,335 435 - 12,770 12,902 423 89 13,414 Depreciation And Amortization 20,972 2,765 - 23,737 21,086 2,211 - 23,297 Stock-Based Compensation Expense 2,690 - - 2,690 1,264 - - 1,264 Loss (Gain) On Exit Of Leased Dealerships - - - - (1,080) 3 89 (988) Impairment Charges 1,075 16,617 - 17,692 14,053 1,500 - 15,553 Loss On Debt Extinguishment 6,690 - - 6,690 - - - - Gain On Franchise Disposals (29,242) - - (29,242) (158) - - (158) Adjusted EBITDA $ 89,986 $ 5,299 $ 62 $ 95,347 $ 85,455 $ (2,059) $ (43) $ 83,353 Q4 2019 Q4 2018 Q1 2020 Q1 2019
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) $ 29,010 $ 15,118 Provision For Income Taxes 11,307 7,262 Income (Loss) Before Taxes $ 38,417 $ 2,123 $ (223) $ 40,317 $ 28,087 $ (5,455) $ (252) $ 22,380 Non-Floor Plan Interest 12,011 402 - 12,413 12,279 423 98 12,800 Depreciation And Amortization 21,561 2,703 - 24,264 22,140 1,999 - 24,139 Stock-Based Compensation Expense 2,681 - - 2,681 4,578 - - 4,578 Loss (Gain) On Exit Of Leased Dealerships - - - - 24 4 103 131 Impairment Charges - 1,124 - 1,124 - - - - Gain On Franchise Disposals 823 - - 823 88 - - 88 Adjusted EBITDA $ 75,493 $ 6,352 $ (223) $ 81,622 $ 67,196 $ (3,029) $ (51) $ 64,116 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 26,599 $ 16,905 Provision For Income Taxes 10,009 8,142 Income (Loss) Before Taxes $ 35,129 $ 1,693 $ (213) $ 36,608 $ 53,176 $ (27,832) $ (297) $ 25,047 Non-Floor Plan Interest 12,599 431 - 13,030 12,349 406 106 12,861 Depreciation And Amortization 21,736 2,668 - 24,404 22,801 1,919 - 24,720 Stock-Based Compensation Expense 2,612 - - 2,612 3,049 - - 3,049 Loss (Gain) On Exit Of Leased Dealerships - - - - (2,618) 6 106 (2,506) Impairment Charges - - - - 10,317 - - 10,317 Long-Term Compensation Charges - - - - - 23,333 - 23,333 Gain On Franchise Disposals 356 - - 356 (38,047) - - (38,047) Adjusted EBITDA $ 72,432 $ 4,792 $ (213) $ 77,010 $ 61,027 $ (2,168) $ (85) $ 58,774 Q3 2019 Q3 2018 Q2 2019 Q2 2018
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) $ 42,221 $ (2,194) Provision For Income Taxes 18,935 (1,910) Income (Loss) Before Taxes $ 61,156 $ 180 $ (180) $ 61,156 $ 10,830 $ (14,686) $ (248) $ (4,104) Non-Floor Plan Interest 11,829 433 - 12,262 12,469 389 115 12,973 Depreciation And Amortization 20,824 2,418 - 23,242 22,830 1,666 - 24,496 Stock-Based Compensation Expense 2,814 - - 2,814 2,962 - - 2,962 Loss (Gain) On Exit Of Leased Dealerships (170) - - (170) 4,955 7 109 5,071 Impairment Charges 26 1,926 - 1,952 3,561 82 - 3,643 Long-Term Compensation Charges - - - - - 9,189 - 9,189 Gain On Franchise Disposals (46,750) - - (46,750) (1,190) - - (1,190) Adjusted EBITDA $ 49,729 $ 4,957 $ (180) $ 54,506 $ 56,417 $ (3,353) $ (24) $ 53,040 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 21,821 $ 61,952 Provision For Income Taxes 9,150 (8,399) Income (Loss) Before Taxes $ 37,388 $ (6,196) $ (221) $ 30,971 $ 57,822 $ (3,976) $ (293) $ 53,553 Non-Floor Plan Interest 12,902 423 89 13,414 12,449 276 123 12,848 Depreciation And Amortization 21,086 2,211 - 23,297 22,639 1,314 - 23,953 Stock-Based Compensation Expense 1,264 - - 1,264 2,217 - - 2,217 Loss (Gain) On Exit Of Leased Dealerships (1,080) 3 89 (988) 23 - 118 141 Impairment Charges 14,053 1,500 - 15,553 6,079 - - 6,079 Long-Term Compensation Charges - - - - - 1,271 - 1,271 Gain On Franchise Disposals (158) - - (158) (1,507) - (6) (1,513) Adjusted EBITDA $ 85,455 $ (2,059) $ (43) $ 83,353 $ 99,722 $ (1,115) $ (58) $ 98,549 Q1 2019 Q1 2018 Q4 2018 Q4 2017
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) $ 15,118 $ 19,440 Provision For Income Taxes 7,262 13,935 Income (Loss) Before Taxes $ 28,087 $ (5,455) $ (252) $ 22,380 $ 38,228 $ (4,372) $ (481) $ 33,375 Non-Floor Plan Interest 12,279 423 98 12,800 12,126 253 132 12,511 Depreciation And Amortization 22,140 1,999 - 24,139 22,179 1,317 - 23,496 Stock-Based Compensation Expense 4,578 - - 4,578 3,179 - - 3,179 Loss (Gain) On Exit Of Leased Dealerships 24 4 103 131 (173) - 362 189 Impairment Charges - - - - 200 - - 200 Gain On Franchise Disposals 88 - - 88 (8,490) - - (8,490) Adjusted EBITDA $ 67,196 $ (3,029) $ (51) $ 64,116 $ 67,249 $ (2,802) $ 13 $ 64,460 Q3 2018 Q3 2017
® 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