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): October 28, 2021
____________________________________
SONIC AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
____________________________________
Delaware
(State or other jurisdiction
of incorporation)1-1339556-2010790(CommissionFile Number)(IRS EmployerIdentification 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 October 28, 2021, Sonic Automotive, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal third quarter ended September 30, 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 October 28, 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 October 28, 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. | ||
|---|---|---|
| October 28, 2021 | By: | /s/ STEPHEN K. COSS |
| Stephen K. Coss | ||
| Senior Vice President and General Counsel |
Document
Exhibit 99.1
Sonic Automotive Reports Record Third Quarter Revenues and Earnings Per Share
Fifth Consecutive Quarter of Record EchoPark Revenues, Up 72% Year-Over-Year
Pending Acquisition of RFJ Auto Expected to Add $3.2 Billion in Annualized Revenues
Recently Amended Credit Facilities and Senior Notes Issuance Extend Runway for Further Growth
CHARLOTTE, N.C. – October 28, 2021 – Sonic Automotive, Inc. (“Sonic Automotive,” “Sonic” or the “Company”) (NYSE:SAH), one of the nation’s largest automotive retailers, today reported financial results for the third quarter and nine months ended September 30, 2021.
Key Highlights
•Record third quarter revenues of $3.1 billion, up 20.6% year-over-year
•Record third quarter income from continuing operations before taxes of $112.2 million, up 39.1% year-over-year
•Record third quarter earnings from continuing operations of $84.7 million ($1.96 per diluted share)
•Record third quarter selling, general and administrative (“SG&A”) expenses as a percentage of gross profit of 68.1% (60.1% on a Franchised Dealerships Segment basis, a decrease of 670 basis points year-over-year)
•All-time record quarterly total Finance & Insurance (“F&I”) gross profit per retail unit of $2,349, up 21.2% year-over-year
•All-time record quarterly EchoPark revenues of $663.3 million, up 72.3% year-over-year
•Sonic announced a definitive agreement to acquire RFJ Auto Partners, Inc. (“RFJ Auto”), a top-15 U.S. dealer group by total revenues, which is expected to add $3.2 billion in revenues on an annualized basis
•During the third quarter, Sonic repurchased 0.5 million shares of Class A Common Stock for an aggregate purchase price of $24.8 million
•In October, the Company amended its credit facilities to increase revolver and floor plan commitments from $1.8 billion to $2.95 billion, in addition to completing an upsized offering of $1.15 billion aggregate principal amount of unsecured senior notes due 2029 and 2031 at a blended rate of 4.73%, with expected use of net proceeds to fund the acquisition of RFJ Auto, the redemption of outstanding notes, and for general corporate purposes, including the repayment of debt
Commentary
David Smith, Chief Executive Officer of Sonic and EchoPark, commented, “I am extremely proud of our team for delivering continued year-over-year growth, in particular against a backdrop of industry-wide inventory headwinds and supply chain disruptions. Our results highlight the operating efficiency of our model, the unwavering dedication of our teammates, and our disciplined focus on driving growth across our franchised dealerships and EchoPark segments. After meeting with much of the RFJ Auto team in recent weeks, we are excited to welcome them into the Sonic family and are grateful for the support of our manufacturer and banking partners for their roles in facilitating this acquisition, which puts us on track to exceed our previously-stated goal of $25 billion in total revenues by 2025. Together, I’m confident that we will continue to strengthen the guest-centric culture that is essential to our brand and the success of our business.”
“I’d like to echo that sentiment by recognizing our manufacturer partners and the entire RFJ Auto team for creating the opportunity for this acquisition, which will launch us forward into the next phase of our company’s growth plan,” said Jeff Dyke, President of Sonic and EchoPark. “As we continue to expand our EchoPark distribution and digital network, adding six locations in four new states since the second quarter, we are well-positioned to achieve our goals of 25% U.S. population coverage by the end of 2021 and 90% U.S. population coverage by 2025. Further supporting our commitment to EchoPark, we recently announced the appointment of Dino Bernacchi as Chief Marketing Officer and Thien Truong as Chief Revenue Officer for EchoPark. With their extensive expertise and diverse backgrounds, they will be instrumental additions in executing the long-term EchoPark strategy.”
Heath Byrd, Chief Financial Officer of Sonic and EchoPark, added, “We recently announced an amendment to our credit facilities, increasing total capacity to $2.95 billion, and capitalized on favorable market conditions and an upgraded corporate credit rating by issuing $1.15 billion of unsecured senior notes. This extends our debt maturities, refinances existing debt at a lower cost of capital and provides funding for the pending acquisition of RFJ Auto. I’d like to thank our lender partners and bondholders for recognizing the strength of our balance sheet and favorable operating outlook, which position us to continue to opportunistically evaluate strategic
acquisitions, allocate capital to our EchoPark expansion plans and return capital to stockholders through our dividend and share repurchase programs.”
Third Quarter Financial Highlights
The financial measures discussed below are results for the third quarter of 2021 with comparisons made to the third quarter of 2020, unless otherwise noted. Certain metrics are also compared to the third quarter of 2019 to exclude the effects of the onset of the COVID-19 pandemic on comparative results.
•Record third quarter revenues of $3.1 billion, up 20.6% year-over-year (up 13.7% compared to the third quarter of 2019), and record third quarter income from continuing operations before taxes of $112.2 million, up 39.1% year-over-year (up 176.9% compared to the third quarter of 2019)
•Record third quarter earnings from continuing operations of $84.7 million ($1.96 per diluted share), compared to third quarter 2020 reported earnings from continuing operations of $60.0 million ($1.35 per diluted share) and adjusted earnings from continuing operations* of $57.7 million ($1.29 per diluted share)
•Record third quarter SG&A expenses as a percentage of gross profit of 68.1%, a 20 basis point decrease from 68.3% in the third quarter of 2020 (a 100 basis point decrease from adjusted SG&A expenses as a percentage of gross profit* of 69.1% in the third quarter of 2020, which excludes a $3.2 million gain on disposal of franchises and real estate)
•All-time record quarterly total F&I gross profit per retail unit of $2.349, up 21.2% year-over-year
•Franchised Dealerships Segment operating results include:
◦Same store revenues up 11.3%, gross profit up 27.2% (up 5.19% and 30.0%, respectively, compared to the third quarter of 2019)
◦Same store new vehicle unit sales volume down 5.1% (down 19.0% compared to the third quarter of 2019); same store new vehicle gross profit per unit up 93.2%, to $5,051 (up 168.4% compared to the third quarter of 2019)
◦Same store retail used vehicle unit sales volume down 0.3% (down 11.4% compared to the third quarter of 2019); same store retail used vehicle gross profit per unit up 31.9%, to $1,835 (up 45.8% compared to the third quarter of 2019)
◦Same store parts, service and collision repair gross profit up 9.0% (up 4.5% compared to the third quarter of 2019); same store customer pay gross profit up 21.3% (up 19.9% compared to the third quarter of 2019); same store gross margin down 40 basis points, to 50.2% (up 110 basis points compared to the third quarter of 2019)
◦Same store F&I gross profit up 20.8% (up 19.1% compared to the third quarter of 2019); all-time record reported Franchised Dealerships Segment F&I gross profit per retail unit of $2,303, up 27.2% (up 39.9% compared to the third quarter of 2019)
◦Record third quarter Franchised Dealerships Segment SG&A expenses as a percentage of gross profit of 60.1%, a 670 basis point decrease from 66.8% in the third quarter of 2020 (a decrease of 1,680 basis points from 76.9% in the third quarter of 2019)
◦Franchised dealerships new vehicle inventory of approximately 2,400 units, or 10 days’ supply, and used vehicle inventory of approximately 8,200 units, or 27 days’ supply
•EchoPark Segment operating results include:
◦All-time record quarterly EchoPark revenues of $663.3 million, up 72.3% year-over-year (up 112.5% compared to the third quarter of 2019)
◦Record third quarter EchoPark retail used vehicle unit sales volume of 21,255, up 40.5% year-over-year (up 60.9% compared to the third quarter of 2019)
◦EchoPark market share increase of 110 basis points, to 3.7% of the 1-4-year old vehicle segment in our current markets
◦EchoPark pre-tax loss of $32.9 million and Adjusted EBITDA* loss of $28.5 million (including market expansion-related losses of $18.0 million and $16.8 million, respectively)
◦EchoPark loss reflects expansion-related losses and the effect of strategic price management to grow top line sales and market share amidst temporary used market pricing inversion
◦EchoPark used vehicle inventory of approximately 9,800 units, or 41 days’ supply
* Please refer to discussion of Non-GAAP Financial Measures below.
Acquisition of RFJ Auto
The Company recently announced that it entered into a definitive agreement to acquire RFJ Auto. With 33 locations in seven states and a portfolio of 16 automotive brands, the transaction will add six incremental states to Sonic’s geographic coverage and five additional brands to its portfolio, including the highest volume Chrysler Dodge Jeep RAM dealer in the world in Dave Smith Motors. RFJ Auto generated $2.8 billion in annual revenues in 2020, making it a top-15 U.S. dealer group by total revenues. This acquisition, which is anticipated to close in December 2021, represents one of the largest transactions in automotive retail history and is expected to propel Sonic Automotive into the top-five largest dealer groups in the U.S. as measured by total revenues. The transaction is expected to add $3.2 billion in annualized revenues, representing incremental revenues above the Company’s previously stated target of $25 billion in total revenues by 2025.
EchoPark Strategic Alternatives Review
As previously announced, Sonic’s Board of Directors, working together with Lazard and Kirkland & Ellis LLP as financial and legal advisors, respectively, is conducting a review to evaluate potential strategic alternatives for its EchoPark business. The Company is considering a full range of potential alternatives with respect to its EchoPark business. No timetable has been established for the completion of the review, and the review may not result in any transaction. The Company does not intend to disclose further developments with respect to its review process unless and until its Board approves a specific action or otherwise concludes the review.
Dividend
Sonic’s Board of Directors approved a quarterly cash dividend of $0.12 per share payable on January 14, 2022 to all stockholders of record on December 15, 2021.
Third Quarter 2021 Earnings Conference Call
Senior management will hold a conference call today at 11:00 A.M. (Eastern).
Investor presentation and earnings press release materials will be accessible beginning prior to the conference call on the Company’s website at ir.sonicautomotive.com.
To access the live webcast of the conference call, please go to ir.sonicautomotive.com.
For telephone access to this conference call, please register in advance using this link:
https://www.incommglobalevents.com/registration/q4inc/8939/sonic-automotive-inc-q3-2021-earnings-conference-call/
After registering, you will receive a confirmation that includes dial-in numbers and a unique conference call access code and PIN 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 beginning two hours 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 on a quest to become the most valuable automotive retailer and service brand in America. Our Company culture thrives on creating, innovating, and providing industry-leading guest experiences, driven by strategic investments in technology, teammates, and ideas that ultimately fulfill ownership dreams, enrich lives, and deliver happiness to our guests and teammates. As one of the largest automotive retailers in America, we are committed to delivering on this goal while pursuing expansive growth and taking progressive measures to be the leader in this category. Our new platforms, programs, and people are set to drive the next generation of automotive experiences. More information about Sonic Automotive can be found at www.sonicautomotive.com and ir.sonicautomotive.com.
About EchoPark Automotive
EchoPark Automotive is one of the fastest growing and most comprehensive retailers of nearly new pre-owned vehicles in America today. Our rapid growth plan is expected to bring our unique business model to 90% of the U.S. population by 2025, utilizing one of the most innovative technology-enabled sales strategies in our industry. Our approach provides a personalized and proven guest-centric buying process that consistently delivers award winning guest experiences and superior value to car buyers nationwide, with savings of up to $3,000 versus the competition. We believe EchoPark is on pace to become the #1 retailer in the nearly new pre-owned vehicle market by 2025, and is already making its mark by earning the 2021 Consumer Satisfaction Award from DealerRater, expanding its Owner Experience Centers, developing an all-new digital ecommerce platform and focusing on growing its brand nationwide. EchoPark’s mission is in its name: Every Car deserves a Happy Owner. This drives the car buying experience for guests and differentiates EchoPark from the competition. 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 acquisitions, expected future revenue from acquisitions, future revenue levels, future profitability, the opening of additional EchoPark markets, and future population coverage. 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 closing and integration of the RFJ Auto acquisition, 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, adjusted SG&A expenses as a percentage of gross profit, 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 / Joshua Greenwald
212-896-1272 / 646-379-7971
ddevoren@kcsa.com/jgreenwald@kcsa.com
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations - Consolidated
| Three Months Ended <br>September 30, | Better / (Worse) | Nine Months Ended <br>September 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except per share amounts) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 1,146,922 | $ | 1,098,302 | 4.4 | % | $ | 3,766,133 | $ | 2,957,794 | 27.3 | % |
| Used vehicles | 1,309,492 | 946,028 | 38.4 | % | 3,666,286 | 2,604,957 | 40.7 | % | ||||
| Wholesale vehicles | 97,087 | 56,502 | 71.8 | % | 256,701 | 138,221 | 85.7 | % | ||||
| Total vehicles | 2,553,501 | 2,100,832 | 21.5 | % | 7,689,120 | 5,700,972 | 34.9 | % | ||||
| Parts, service and collision repair | 355,227 | 320,929 | 10.7 | % | 1,036,736 | 914,667 | 13.3 | % | ||||
| Finance, insurance and other, net | 164,084 | 126,784 | 29.4 | % | 486,000 | 352,848 | 37.7 | % | ||||
| Total revenues | 3,072,812 | 2,548,545 | 20.6 | % | 9,211,856 | 6,968,487 | 32.2 | % | ||||
| Cost of sales: | ||||||||||||
| New vehicles | (1,031,476) | (1,035,624) | 0.4 | % | (3,462,795) | (2,804,314) | (23.5) | % | ||||
| Used vehicles | (1,289,772) | (917,993) | (40.5) | % | (3,580,944) | (2,517,421) | (42.2) | % | ||||
| Wholesale vehicles | (95,832) | (53,958) | (77.6) | % | (250,072) | (136,260) | (83.5) | % | ||||
| Total vehicles | (2,417,080) | (2,007,575) | (20.4) | % | (7,293,811) | (5,457,995) | (33.6) | % | ||||
| Parts, service and collision repair | (183,713) | (164,403) | (11.7) | % | (534,325) | (475,964) | (12.3) | % | ||||
| Total cost of sales | (2,600,793) | (2,171,978) | (19.7) | % | (7,828,136) | (5,933,959) | (31.9) | % | ||||
| Gross profit | 472,019 | 376,567 | 25.3 | % | 1,383,720 | 1,034,528 | 33.8 | % | ||||
| Selling, general and administrative expenses | (321,373) | (257,174) | (25.0) | % | (931,349) | (769,688) | (21.0) | % | ||||
| Impairment charges | — | (26) | 100.0 | % | — | (268,859) | 100.0 | % | ||||
| Depreciation and amortization | (25,239) | (22,934) | (10.1) | % | (73,687) | (67,879) | (8.6) | % | ||||
| Operating income (loss) | 125,407 | 96,433 | 30.0 | % | 378,684 | (71,898) | 626.7 | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (3,340) | (4,999) | 33.2 | % | (12,781) | (21,821) | 41.4 | % | ||||
| Interest expense, other, net | (9,817) | (10,762) | 8.8 | % | (30,180) | (31,523) | 4.3 | % | ||||
| Other income (expense), net | — | 1 | (100.0) | % | 100 | 100 | — | % | ||||
| Total other income (expense) | (13,157) | (15,760) | 16.5 | % | (42,861) | (53,244) | 19.5 | % | ||||
| Income (loss) from continuing operations before taxes | 112,250 | 80,673 | 39.1 | % | 335,823 | (125,142) | 368.4 | % | ||||
| Provision for income taxes for continuing operations - benefit (expense) | (27,559) | (20,685) | (33.2) | % | (83,452) | 16,995 | (591.0) | % | ||||
| Income (loss) from continuing operations | 84,691 | 59,988 | 41.2 | % | 252,371 | (108,147) | 333.4 | % | ||||
| Discontinued operations: | ||||||||||||
| Income (loss) from discontinued operations before taxes | (275) | (234) | (17.5) | % | 241 | (808) | 129.8 | % | ||||
| Provision for income taxes for discontinued operations - benefit (expense) | 69 | 64 | 7.8 | % | (60) | 231 | (126.0) | % | ||||
| Income (loss) from discontinued operations | (206) | (170) | (21.2) | % | 181 | (577) | 131.4 | % | ||||
| Net income (loss) | $ | 84,485 | $ | 59,818 | 41.2 | % | $ | 252,552 | $ | (108,724) | 332.3 | % |
| Basic earnings (loss) per common share: | ||||||||||||
| Earnings (loss) per share from continuing operations | $ | 2.04 | $ | 1.41 | 44.7 | % | $ | 6.07 | $ | (2.53) | 339.9 | % |
| Earnings (loss) per share from discontinued operations | (0.01) | — | (100.0) | % | 0.01 | (0.02) | 150.0 | % | ||||
| Earnings (loss) per common share | $ | 2.03 | $ | 1.41 | 44.0 | % | $ | 6.08 | $ | (2.55) | 338.4 | % |
| Weighted-average common shares outstanding | 41,561 | 42,510 | 2.2 | % | 41,561 | 42,687 | 2.6 | % | ||||
| Diluted earnings (loss) per common share: | ||||||||||||
| Earnings (loss) per share from continuing operations | $ | 1.96 | $ | 1.35 | 45.2 | % | $ | 5.81 | $ | (2.53) | 329.6 | % |
| Earnings (loss) per share from discontinued operations | (0.01) | (0.01) | — | % | 0.01 | (0.02) | 150.0 | % | ||||
| Earnings (loss) per common share | $ | 1.95 | $ | 1.34 | 45.5 | % | $ | 5.82 | $ | (2.55) | 328.2 | % |
| Weighted-average common shares outstanding | 43,285 | 44,577 | 2.9 | % | 43,416 | 42,687 | (1.7) | % | ||||
| Dividends declared per common share | $ | 0.12 | $ | 0.10 | 20.0 | % | $ | 0.34 | $ | 0.30 | 13.3 | % |
Franchised Dealerships Segment - Reported
| Three Months Ended September 30, | Better / (Worse) | Nine Months Ended September 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 1,143,416 | $ | 1,098,302 | 4.1 | % | $ | 3,761,718 | $ | 2,957,794 | 27.2 | % |
| Used vehicles | 750,263 | 615,565 | 21.9 | % | 2,173,322 | 1,718,151 | 26.5 | % | ||||
| Wholesale vehicles | 64,052 | 48,526 | 32.0 | % | 183,212 | 119,474 | 53.3 | % | ||||
| Total vehicles | 1,957,731 | 1,762,393 | 11.1 | % | 6,118,252 | 4,795,419 | 27.6 | % | ||||
| Parts, service and collision repair | 339,930 | 310,035 | 9.6 | % | 994,125 | 886,534 | 12.1 | % | ||||
| Finance, insurance and other, net | 111,808 | 91,035 | 22.8 | % | 333,394 | 254,465 | 31.0 | % | ||||
| Total revenues | 2,409,469 | 2,163,463 | 11.4 | % | 7,445,771 | 5,936,418 | 25.4 | % | ||||
| Gross Profit: | ||||||||||||
| New vehicles | 115,204 | 62,678 | 83.8 | % | 302,994 | 153,480 | 97.4 | % | ||||
| Used vehicles | 50,104 | 34,385 | 45.7 | % | 137,321 | 97,114 | 41.4 | % | ||||
| Wholesale vehicles | (1,986) | 2,556 | (177.7) | % | 186 | 2,116 | (91.2) | % | ||||
| Total vehicles | 163,322 | 99,619 | 63.9 | % | 440,501 | 252,710 | 74.3 | % | ||||
| Parts, service and collision repair | 171,064 | 156,711 | 9.2 | % | 501,908 | 439,272 | 14.3 | % | ||||
| Finance, insurance and other, net | 111,808 | 91,035 | 22.8 | % | 333,394 | 254,465 | 31.0 | % | ||||
| Total gross profit | 446,194 | 347,365 | 28.5 | % | 1,275,803 | 946,447 | 34.8 | % | ||||
| Selling, general and administrative expenses | (268,337) | (231,882) | (15.7) | % | (794,123) | (697,796) | (13.8) | % | ||||
| Impairment charges | — | (26) | NM | — | (268,859) | NM | ||||||
| Depreciation and amortization | (21,266) | (20,170) | (5.4) | % | (62,258) | (59,654) | (4.4) | % | ||||
| Operating income (loss) | 156,591 | 95,287 | 64.3 | % | 419,422 | (79,862) | 625.2 | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (1,973) | (4,234) | 53.4 | % | (9,243) | (19,517) | 52.6 | % | ||||
| Interest expense, other, net | (9,477) | (10,615) | 10.7 | % | (29,158) | (30,771) | 5.2 | % | ||||
| Other income (expense), net | (4) | (4) | — | % | 73 | 96 | (24.0) | % | ||||
| Total other income (expense) | (11,454) | (14,853) | 22.9 | % | (38,328) | (50,192) | 23.6 | % | ||||
| Income (loss) before taxes | 145,137 | 80,434 | 80.4 | % | 381,094 | (130,054) | 393.0 | % | ||||
| Add: impairment charges | — | 26 | NM | — | 268,859 | NM | ||||||
| Segment income (loss) | $ | 145,137 | $ | 80,460 | 80.4 | % | $ | 381,094 | $ | 138,805 | 174.6 | % |
| Unit Sales Volume: | ||||||||||||
| New vehicles | 22,791 | 24,100 | (5.4) | % | 77,637 | 65,715 | 18.1 | % | ||||
| Used vehicles | 26,274 | 26,363 | (0.3) | % | 82,060 | 76,374 | 7.4 | % | ||||
| Wholesale vehicles | 6,119 | 6,679 | (8.4) | % | 19,704 | 18,416 | 7.0 | % | ||||
| Retail new & used vehicles | 48,554 | 50,297 | (3.5) | % | 158,400 | 141,188 | 12.2 | % | ||||
| Used-to-New Ratio | 1.15 | 1.09 | 5.4 | % | 1.06 | 1.16 | (9.1) | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| New vehicles | $ | 5,055 | $ | 2,601 | 94.3 | % | $ | 3,903 | $ | 2,336 | 67.1 | % |
| Used vehicles | $ | 1,907 | $ | 1,304 | 46.2 | % | $ | 1,673 | $ | 1,272 | 31.5 | % |
| Finance, insurance and other, net | $ | 2,303 | $ | 1,810 | 27.2 | % | $ | 2,105 | $ | 1,802 | 16.8 | % |
NM = Not Meaningful
Franchised Dealerships Segment - Same Store
| Three Months Ended September 30, | Better / (Worse) | Nine Months Ended September 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 1,137,465 | $ | 1,091,592 | 4.2 | % | $ | 3,755,766 | $ | 2,935,140 | 28.0 | % |
| Used vehicles | 745,754 | 612,363 | 21.8 | % | 2,168,814 | 1,704,494 | 27.2 | % | ||||
| Wholesale vehicles | 63,886 | 48,290 | 32.3 | % | 183,047 | 118,629 | 54.3 | % | ||||
| Total vehicles | 1,947,105 | 1,752,245 | 11.1 | % | 6,107,627 | 4,758,263 | 28.4 | % | ||||
| Parts, service and collision repair | 338,141 | 307,614 | 9.9 | % | 992,291 | 874,636 | 13.5 | % | ||||
| Finance, insurance and other, net | 103,746 | 85,911 | 20.8 | % | 312,649 | 238,125 | 31.3 | % | ||||
| Total revenues | 2,388,992 | 2,145,770 | 11.3 | % | 7,412,567 | 5,871,024 | 26.3 | % | ||||
| Gross Profit: | ||||||||||||
| New vehicles | 114,308 | 62,360 | 83.3 | % | 301,616 | 152,487 | 97.8 | % | ||||
| Used vehicles | 47,860 | 36,411 | 31.4 | % | 137,158 | 101,259 | 35.5 | % | ||||
| Wholesale vehicles | 770 | 2,686 | (71.3) | % | 5,705 | 2,348 | 143.0 | % | ||||
| Total vehicles | 162,938 | 101,457 | 60.6 | % | 444,479 | 256,094 | 73.6 | % | ||||
| Parts, service and collision repair | 169,700 | 155,682 | 9.0 | % | 499,714 | 433,629 | 15.2 | % | ||||
| Finance, insurance and other, net | 103,746 | 85,911 | 20.8 | % | 312,649 | 238,125 | 31.3 | % | ||||
| Total gross profit | $ | 436,384 | $ | 343,050 | 27.2 | % | $ | 1,256,842 | $ | 927,848 | 35.5 | % |
| Unit Sales Volume: | ||||||||||||
| New vehicles | 22,631 | 23,852 | (5.1) | % | 77,477 | 64,893 | 19.4 | % | ||||
| Used vehicles | 26,084 | 26,168 | (0.3) | % | 81,870 | 75,504 | 8.4 | % | ||||
| Wholesale vehicles | 6,095 | 6,630 | (8.1) | % | 19,680 | 18,241 | 7.9 | % | ||||
| Retail new & used vehicles | 48,204 | 49,854 | (3.3) | % | 158,050 | 139,496 | 13.3 | % | ||||
| Used-to-New Ratio | 1.15 | 1.10 | 5.1 | % | 1.06 | 1.16 | (9.2) | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| New vehicles | $ | 5,051 | $ | 2,614 | 93.2 | % | $ | 3,893 | $ | 2,350 | 65.7 | % |
| Used vehicles | $ | 1,835 | $ | 1,391 | 31.9 | % | $ | 1,675 | $ | 1,341 | 24.9 | % |
| Finance, insurance and other, net | $ | 2,152 | $ | 1,723 | 24.9 | % | $ | 1,978 | $ | 1,707 | 15.9 | % |
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 September 30, | Better / (Worse) | Nine Months Ended September 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 3,506 | $ | — | 100.0 | % | $ | 4,415 | $ | — | 100.0 | % |
| Used vehicles | 559,229 | 330,463 | 69.2 | % | 1,492,964 | 886,806 | 68.4 | % | ||||
| Wholesale vehicles | 33,035 | 7,976 | 314.2 | % | 73,489 | 18,747 | 292.0 | % | ||||
| Total vehicles | 595,770 | 338,439 | 76.0 | % | 1,570,868 | 905,553 | 73.5 | % | ||||
| Parts, service and collision repair | 15,297 | 10,894 | 40.4 | % | 42,611 | 28,133 | 51.5 | % | ||||
| Finance, insurance and other, net | 52,276 | 35,749 | 46.2 | % | 152,606 | 98,383 | 55.1 | % | ||||
| Total revenues | 663,343 | 385,082 | 72.3 | % | 1,766,085 | 1,032,069 | 71.1 | % | ||||
| Gross Profit: | ||||||||||||
| New vehicles | 243 | — | 100.0 | % | 343 | — | 100.0 | % | ||||
| Used vehicles | (30,384) | (6,350) | (378.5) | % | (51,979) | (9,578) | (442.7) | % | ||||
| Wholesale vehicles | 3,241 | (12) | NM | 6,443 | (155) | NM | ||||||
| Total vehicles | (26,900) | (6,362) | (322.8) | % | (45,193) | (9,733) | (364.3) | % | ||||
| Parts, service and collision repair | 449 | (185) | 342.7 | % | 504 | (569) | 188.4 | % | ||||
| Finance, insurance and other, net | 52,276 | 35,749 | 46.2 | % | 152,606 | 98,383 | 55.1 | % | ||||
| Total gross profit | 25,825 | 29,202 | (11.6) | % | 107,917 | 88,081 | 22.5 | % | ||||
| Selling, general and administrative expenses | (53,036) | (25,292) | (109.7) | % | (137,226) | (71,892) | (90.9) | % | ||||
| Impairment charges | — | — | — | % | — | — | — | % | ||||
| Depreciation and amortization | (3,973) | (2,764) | (43.7) | % | (11,429) | (8,225) | (39.0) | % | ||||
| Operating income (loss) | (31,184) | 1,146 | (2,821.1) | % | (40,738) | 7,964 | (611.5) | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (1,367) | (765) | (78.7) | % | (3,538) | (2,304) | (53.6) | % | ||||
| Interest expense, other, net | (340) | (147) | (131.3) | % | (1,022) | (752) | (35.9) | % | ||||
| Other income (expense), net | 4 | 5 | (20.0) | % | 27 | 4 | 575.0 | % | ||||
| Total other income (expense) | (1,703) | (907) | (87.8) | % | (4,533) | (3,052) | (48.5) | % | ||||
| Income (loss) before taxes | (32,887) | 239 | NM | (45,271) | 4,912 | NM | ||||||
| Add: impairment charges | — | — | NM | — | — | NM | ||||||
| Segment income (loss) | $ | (32,887) | $ | 239 | NM | $ | (45,271) | $ | 4,912 | NM | ||
| Unit Sales Volume: | ||||||||||||
| New vehicles | 55 | — | 100.0 | % | 69 | — | 100.0 | % | ||||
| Used vehicles | 21,255 | 15,127 | 40.5 | % | 62,186 | 42,320 | 46.9 | % | ||||
| Wholesale vehicles | 3,492 | 1,955 | 78.6 | % | 9,231 | 5,174 | 78.4 | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Total used vehicle and F&I | $ | 1,030 | $ | 1,943 | (47.0) | % | $ | 1,618 | $ | 2,098 | (22.9) | % |
NM = Not Meaningful
EchoPark Segment - Same Market
| Three Months Ended September 30, | Better / (Worse) | Nine Months Ended September 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| Used vehicles | $ | 400,050 | $ | 330,520 | 21.0 | % | $ | 1,139,032 | $ | 886,873 | 28.4 | % |
| Wholesale vehicles | 24,186 | 7,977 | 203.2 | % | 55,275 | 18,747 | 194.8 | % | ||||
| Total vehicles | 424,236 | 338,497 | 25.3 | % | 1,194,307 | 905,620 | 31.9 | % | ||||
| Parts, service and collision repair | 11,866 | 10,858 | 9.3 | % | 33,714 | 28,064 | 20.1 | % | ||||
| Finance, insurance and other, net | 37,045 | 35,669 | 3.9 | % | 116,003 | 98,099 | 18.3 | % | ||||
| Total revenues | 473,147 | 385,024 | 22.9 | % | 1,344,024 | 1,031,783 | 30.3 | % | ||||
| Gross Profit: | ||||||||||||
| Used vehicles | (20,015) | (12,115) | (65.2) | % | (38,344) | (22,818) | (68.0) | % | ||||
| Wholesale vehicles | 2,328 | (13) | NM | 4,768 | (157) | NM | ||||||
| Total vehicles | (17,687) | (12,128) | (45.8) | % | (33,576) | (22,975) | (46.1) | % | ||||
| Parts, service and collision repair | 593 | (168) | 453.0 | % | 947 | (553) | 271.2 | % | ||||
| Finance, insurance and other, net | 37,045 | 35,669 | 3.9 | % | 116,003 | 98,099 | 18.3 | % | ||||
| Total gross profit | $ | 19,951 | $ | 23,373 | (14.6) | % | $ | 83,374 | $ | 74,571 | 11.8 | % |
| Unit Sales Volume: | ||||||||||||
| Used vehicles | 14,828 | 15,127 | (2.0) | % | 46,864 | 42,320 | 10.7 | % | ||||
| Wholesale vehicles | 2,226 | 1,955 | 13.9 | % | 6,386 | 5,174 | 23.4 | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Total used vehicle and F&I | $ | 1,149 | $ | 1,557 | (26.2) | % | $ | 1,657 | $ | 1,779 | (6.9) | % |
NM = Not Meaningful
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 September 30, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | % Change | ||||||||
| (In thousands) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 206,205 | $ | 169,097 | $ | (37,108) | (21.9) | % | |||
| Advertising | 16,715 | 9,455 | (7,260) | (76.8) | % | ||||||
| Rent | 13,781 | 13,846 | 65 | 0.5 | % | ||||||
| Other | 84,672 | 64,776 | (19,896) | (30.7) | % | ||||||
| Total SG&A expenses | $ | 321,373 | $ | 257,174 | $ | (64,199) | (25.0) | % | |||
| Items of interest: | |||||||||||
| Gain (loss) on franchise disposals | $ | — | $ | 3,150 | |||||||
| Total SG&A adjustments | $ | — | $ | 3,150 | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 321,373 | $ | 260,324 | $ | (61,049) | (23.5) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 43.7 | % | 44.9 | % | 120 | bps | |||||
| Advertising | 3.5 | % | 2.5 | % | (100) | bps | |||||
| Rent | 2.9 | % | 3.7 | % | 80 | bps | |||||
| Other | 18.0 | % | 17.2 | % | (80) | bps | |||||
| Total SG&A expenses as a % of gross profit | 68.1 | % | 68.3 | % | 20 | bps | |||||
| Items of interest: | |||||||||||
| Gain (loss) on franchise disposals | — | % | 0.8 | % | |||||||
| Total effect of adjustments | — | % | 0.8 | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 68.1 | % | 69.1 | % | 100 | bps |
Selling, General and Administrative ("SG&A") Expenses - Consolidated
| Nine Months Ended September 30, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | % Change | ||||||||
| (In thousands) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 608,539 | $ | 483,784 | $ | (124,755) | (25.8) | % | |||
| Advertising | 44,229 | 31,677 | (12,552) | (39.6) | % | ||||||
| Rent | 41,190 | 40,934 | (256) | (0.6) | % | ||||||
| Other | 237,391 | 213,293 | (24,098) | (11.3) | % | ||||||
| Total SG&A expenses | $ | 931,349 | $ | 769,688 | $ | (161,661) | (21.0) | % | |||
| Items of interest: | |||||||||||
| Gain (loss) on franchise disposals | $ | — | $ | 3,150 | |||||||
| Total SG&A adjustments | $ | — | $ | 3,150 | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 931,349 | $ | 772,838 | $ | (158,511) | (20.5) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 44.0 | % | 46.8 | % | 280 | bps | |||||
| Advertising | 3.2 | % | 3.1 | % | (10) | bps | |||||
| Rent | 3.0 | % | 4.0 | % | 100 | bps | |||||
| Other | 17.1 | % | 20.5 | % | 340 | bps | |||||
| Total SG&A expenses as a % of gross profit | 67.3 | % | 74.4 | % | 710 | bps | |||||
| Items of interest: | |||||||||||
| Gain (loss) on franchise disposals | — | % | 0.3 | % | |||||||
| Total effect of adjustments | — | % | 0.3 | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 67.3 | % | 74.7 | % | 740 | bps |
Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 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 | 43,285 | $ | 84,691 | $ | 1.96 | 44,577 | $ | 59,988 | $ | 1.35 |
| Pre-tax items of interest: | ||||||||||
| (Gain) loss on franchise disposals | $ | — | $ | (3,150) | ||||||
| Total pre-tax items of interest | $ | — | $ | (3,150) | ||||||
| Tax effect of above items | — | 827 | ||||||||
| Adjusted diluted earnings (loss) and shares from continuing operations | 43,285 | $ | 84,691 | $ | 1.96 | 44,577 | $ | 57,665 | $ | 1.29 |
| Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 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) | 43,416 | $ | 252,371 | $ | 5.81 | 42,687 | $ | (108,147) | $ | (2.53) |
| Pre-tax items of interest: | ||||||||||
| (Gain) loss on franchise disposals | $ | — | $ | (3,150) | ||||||
| Impairment charges | — | 268,000 | ||||||||
| Total pre-tax items of interest | $ | — | $ | 264,850 | ||||||
| Tax effect of above items | — | (53,643) | ||||||||
| Adjusted diluted earnings (loss) and shares from continuing operations | 43,416 | $ | 252,371 | $ | 5.81 | 43,864 | $ | 103,060 | $ | 2.35 |
(1) Basic weighted-average shares used for nine months ended September 30, 2020 due to net loss on GAAP basis.
Adjusted EBITDA - Non-GAAP Reconciliation
| Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | |||||||||
| (In thousands) | ||||||||||||||||
| Net income (loss) | $ | 84,485 | $ | 59,818 | ||||||||||||
| Provision for income taxes | 27,490 | 20,620 | ||||||||||||||
| Income (loss) before taxes | $ | 145,138 | $ | (32,888) | $ | (275) | $ | 111,975 | $ | 80,434 | $ | 239 | $ | (235) | $ | 80,438 |
| Non-floor plan interest | 8,799 | 333 | — | 9,132 | 9,781 | 147 | — | 9,928 | ||||||||
| Depreciation and amortization | 21,943 | 3,980 | — | 25,923 | 21,004 | 2,763 | — | 23,767 | ||||||||
| Stock-based compensation expense | 3,681 | — | — | 3,681 | 3,153 | — | — | 3,153 | ||||||||
| Asset impairment charges | — | — | — | — | 26 | — | — | 26 | ||||||||
| Long-term compensation charges | — | 500 | — | 500 | — | — | — | — | ||||||||
| Loss (gain) on franchise and real estate disposals | (12) | (423) | — | (435) | (3,388) | — | (3,388) | |||||||||
| Adjusted EBITDA | $ | 179,549 | $ | (28,498) | $ | (275) | $ | 150,776 | $ | 111,010 | $ | 3,149 | $ | (235) | $ | 113,924 |
| Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | |||||||||
| (In thousands) | ||||||||||||||||
| Net income (loss) | $ | 252,552 | $ | (108,724) | ||||||||||||
| Provision for income taxes | 83,512 | (17,226) | ||||||||||||||
| Income (loss) before taxes | $ | 381,094 | $ | (45,271) | $ | 241 | $ | 336,064 | $ | (130,054) | $ | 4,912 | $ | (808) | $ | (125,950) |
| Non-floor plan interest | 26,821 | 1,015 | — | 27,836 | 28,762 | 746 | — | 29,508 | ||||||||
| Depreciation & amortization | 64,593 | 11,436 | — | 76,029 | 61,662 | 8,229 | — | 69,891 | ||||||||
| Stock-based compensation expense | 11,155 | — | — | 11,155 | 8,551 | — | — | 8,551 | ||||||||
| Asset impairment charges | — | — | — | — | 268,859 | — | — | 268,859 | ||||||||
| Long-term compensation charges | — | 1,500 | — | 1,500 | — | — | — | — | ||||||||
| Loss (gain) on franchise and real estate disposals | (433) | (432) | — | (865) | (2,271) | — | — | (2,271) | ||||||||
| Adjusted EBITDA | $ | 483,230 | $ | (31,752) | $ | 241 | $ | 451,719 | $ | 235,509 | $ | 13,887 | $ | (808) | $ | 248,588 |
q320218kexhibit992
® Sonic Automotive – Investor Presentation October 2021 Updated October 28, 2021
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, profitability and pricing expectations in our EchoPark Segment, anticipated openings of new EchoPark stores, anticipated future EchoPark population coverage, anticipated future EchoPark revenue and unit sales volume, 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, anticipated future acquisition synergies, the closing and integration of the RFJ Auto acquisition, 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 119 25+ 14 17 $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 Retail Business With Strategic Growth Levers Across Multiple Business Lines with a Diversified Brand Portfolio 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 Maintaining Strong 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.” * Excludes $3.2 billion in annualized revenues from acquisition of RFJ Auto Partners expected to close in December 2021.
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 * Based On 2020 U.S. Census Bureau Data 3rd Fastest Growing State* Pandemic Recovery Has Lagged Other Markets – Near-Term Potential Upside
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 Majority Of Gross Profit Driven By Stable Business Lines
8 ® EchoPark Automotive – A Unique Growth Story Growing Nationwide Distribution Network Expected To Reach 90% Of Population By 2025 Unique, High Return Business Model High Quality 1 to 4-Year-Old Vehicles – Nearly New With Remaining Warranty Wide Reach – 30% of Guests Travel More Than 30 Minutes To Shop Our Inventory Priced Up To $3,000 Below Market With Simplified, Easy Purchase Experience Focus On Pre-Owned Market – Larger & More Stable Than New Vehicle Market The New Car Alternative™ Price. Quality. Experience.
9 Franchised Dealerships ® ® Complementary Relationship Between Segments • Thrives When New Vehicle Industry Is Healthy, Particularly Where Luxury Brands Are Strong • Diversified Revenue Streams • Relatively Low Fixed Costs And Multiple Strategic Levers • Further Growth Opportunities: Parts and Service Business Used Vehicles F&I Penetration Expense Leverage Strategic Acquisitions • Strong Secular Growth Phase Due To: Focus On Recession-Resistant Pre-Owned Vehicle Market Below-Market Pricing Strategy Simplified, Easy Purchase Experience • In A Declining Pre-Owned Vehicle Price Environment, EchoPark Should: Benefit From Rapid Inventory Turns, Creating An Even Greater Pricing Advantage Over Competitors To Drive Additional Unit Sales Volume
10 Strategic Direction • Continued Growth Opportunity In Parts & Service, F&I Per Unit • Ongoing Profitability Enhancement Through SG&A Expense Control, Inventory Management • Pursue Strategic Acquisition Opportunities As Market Evolves • Utilize Existing Infrastructure To Support Omnichannel Distribution Network • Early-Stage Strong Secular Growth Phase • Expect 25% Population Coverage By End Of 2021, 90% Coverage By 2025 • Quarterly Profitability Inflection Expected In Late 2022 • Nationwide Distribution Network Expected To Deliver 575,000 Unit Sales And $14 Billion In Revenues Annually By 2025 • Addressable Market Opportunity Of 2 Million Vehicles • Invest In Proprietary Digital Retail Platform To Accelerate Growth • Focus On Guest Experience To Drive Market Share Gains • Balanced Capital Allocation Strategy Prioritizes Highest Return on Investment • Return Of Capital To Shareholders Via Dividend And Share Repurchase Program Franchised Dealerships EchoParkStrategic Drivers Note: Profitability and revenue projection are estimates of future results. Actual results may differ. See “Forward-Looking Statements.”
11 EchoPark
12 EchoPark – Brand Promise Up To 40% Below New Vehicle Price Up To $3,000 Below Used Vehicle Market Price High Quality, Low Mileage Vehicles Transparent Guest-Centric Experience New Car Feel Without The New Car Price Complete Purchase In Under An Hour Free CARFAX Report With Every Vehicle 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 . L o w C o s t O m n i c h a n n e l M o d e l
13 EchoPark – Developing Nationwide Distribution Network 25% Population Coverage By End Of 2021 90% Population Coverage By 2025 Note: Future locations and U.S. population coverage are based on projections. Actual results may differ. See “Forward-Looking Statements.” Existing Retail Hub Existing Delivery Center Delivery Center Coverage Area Future Market Opportunities
14 EchoPark – Addressable Market Opportunity * Share Of Vehicles That Fit Model In Existing EchoPark Markets Target 90% Population Coverage By 2025 With Growing Nationwide Distribution Network Target 10% Market Share Already Achieving This Share* In Multiple Markets Priced Up to $3,000 Below Used Competes On Price vs. 5 to 6-Year-Old Vehicles, Consumer Can Buy Newer Vehicle For Same Price Priced Up To 40% Below New Converts Prospective New Car Buyers 2 MILLION Opportunity 15+ MILLION 1–4-Year-Old Vehicles 6+ MILLION 5–6-Year- Old Vehicles 13+ MILLION New Vehicles 4% Q3 2021 Average Market Share* – Up 110 Basis Points From Q3 2020 Annual Retail Vehicle Sales Volume
15 EchoPark – 5-Year 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 $261.0 FY 2020 FY 2025E EBITDA (In Millions) Growth Drivers • Expect to Open ~25 Locations Per Year From 2021-2025 • ~20 Delivery Centers, ~5 Medium Or Large Retail Hubs • See 4-Wall Model On Next Slide • Existing Markets Generate ~400,000 Unique Leads On An Annualized Basis • Expect To Cover 25% Of U.S. Population By End Of 2021, 90% By 2025 • Population Coverage, Market Density Growth And Continued Market Share Gains Drive Long-Term Opportunity To Achieve 2 Million Retail Unit Sales Annually Note: Amounts are estimates of future results used for modeling purposes. Actual results may differ materially.
16 EchoPark – Modeled 4-Wall Economics At Maturity (Modeled Metrics Assume 100% Maturity) Delivery Center Medium Retail Hub Large Retail Hub Average Monthly Retail Unit Volume 300 750 1,500 Average Vehicle Selling Price 20,500$ 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 Expected 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 in normal used vehicle pricing environment (Approximately ~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.”
17 EchoPark – Delivery Center Model Existing Retail Hub Example Delivery Center Market Coverage Opportunity Delivery Center Model • Utilize Nearby Retail Hub For Inventory Storage And Reconditioning (Asset Light Expansion) • Advertise Inventory Online In Surrounding Markets • Drive Incremental eCommerce Sales In New Markets • Inspect & Buy Vehicles From Guests After Online Appraisal And Firm Purchase Offer • Arrange Vehicle Transport To Delivery Center • Guest Picks Up Vehicle At EchoPark Delivery Center Nearest Their Home (i.e. Next-To-Last-Mile Delivery) Strategic Advantages • Accelerates 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 Markets • Expect To Open 3 To 4 Delivery Centers Per Retail Hub • Target Adjacent Secondary Markets Or Large Markets Where Traditional Dealership Real Estate Is Unavailable Or Cost Prohibitive
18 EchoPark – High Volume Model Drives Superior Returns Gross Profit Per Unit (“GPU”) Franchised Used EchoPark Better (Worse) Front-End Used Vehicle GPU $1,300 $(100) F&I GPU $1,800 $2,250 Parts and Service Reconditioning GPU $500 - Total Used-Related GPU $3,600 $2,150 ($1,450) Volume Differential Factor x1 X5 Pro Forma Comparative Used-Related Gross Profit $3,600 $10,750 $7,150 Ultra-Low Pricing Attractive F&I High Volume Throughput Below-Market Pricing Drives High Customer Lead Volume Higher Penetration Rates On F&I Products vs. Industry Average 5X Volume Throughput Per Retail Hub vs. Sonic Franchised Stores Note: Amounts are estimates of future results used for comparative modeling purposes. Actual results may differ.
19 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 21,261 21,255 $- $100 $200 $300 $400 $500 $600 $700 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 Q2 2021 Q3 2021 (In M illi on s) Quarterly Retail Units Quarterly Revenue Updated Retail Unit Volume Forecast: FY 2021 78,000 – 80,000 Units Price Adjustments To Address Ongoing Challenges In Wholesale Price Environment Reduced Unit Volume Targets For FY 2021
20 EchoPark – Adjusted EBITDA Trend ($2.8) ($1.1) ($3.4) ($2.2) ($3.0) ($2.1) $5.0 $4.8 $6.4 $5.3 $5.2 $5.6 $3.1 ($2.9) $6.2 ($9.4) ($28.5) $6.1 $6.2 $6.8 $4.8 $(0.3) $6.7 $(4.0) $(11.7) $(30.0) $(25.0) $(20.0) $(15.0) $(10.0) $(5.0) $- $5.0 $10.0 Adjusted EBITDA Less Impact of New Stores (In M illi on s) Adjusted Pricing And Volume During Q3 2021 To Mitigate Effects of Wholesale Price Increases On EBITDA Losses Resulting In Month-Over-Month Improvements Throughout Q3 2021 Refer To Appendix For Calculation And Reconciliation of Adjusted EBITDA (A Non-GAAP Measure) Newly Opened Store Losses and Future Store Pre-Opening Costs Expected To Reduce Adjusted EBITDA By $12-$14 Million Annually, Before Impact Of Used Vehicle Market Price Conditions On GPU Adjusted EBITDA by Month Jul 2021 Aug 2021 Sep 2021 Q3 2021 Total EchoPark $(12.6) $ (9.5) $ (6.4) $ (28.5) Impact of Stores Open <12 Months $ (6.9) $ (6.2) $ (3.7) $ (16.8) Excluding New Store Impact $ (5.7) $ (3.3) $ (2.7) $ (11.7)
21 Franchised Dealerships
22 New & Used Vehicle Sales Parts & Service (P&S) Finance & Insurance (F&I) ® Franchised Dealerships Franchised Dealerships88 Brands, Luxury Weighted25+ Diversified Revenue Streams • New & Used Vehicle Sales • Parts Service (P S) • Finance & Insurance (F&I) Collision Repair Centers14 20 Major Metropolitan Markets Stable Business With Organic And Acquisition Growth Opportunities Resilient And Flexible Business Model Through Economic Cycles
23 Franchised Dealerships – Geographic Footprint Diversified Geographic Market Platform 121 Stores, 25+ Brands, 16 Collision Repair Centers RFJ Auto Acquisition Expected To Close In December 2021 • Expect $3.2 Billion In Annualized Revenues • 33 Locations In 7 States, 16 New Vehicle Brands • Adds Six New States, 5 New Brands To Portfolio RFJ Auto Markets Note: Store, Brand and Collision Center Counts Include RFJ Auto Acquisition
24 Franchised Dealerships – Strategic Levers Multiple Growth Drivers Pursue Strategic Acquisitions Opportunities Grow Parts and Service Maximize F&I Penetration High Used Vehicle Volume Throughput Data-Driven Inventory Management Apply EchoPark Learnings Develop Omnichannel Platform SG&A Expense Discipline Realize Synergies From Acquisitions
25 Omnichannel Strategy
26 Full Omnichannel 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 Se am le ss G ue st E xp er ie nc e
27 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 • Conveniently 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 Q3 2021 Vehicle Sales Transactions
28 Q3 2021 Financial Snapshot
29 Q3 2021 – Consolidated Continuing Operations B/(W) than Q3 2020 (In millions, except per share data) Q3 2021 $ % Revenues $3,072.8 $524.3 20.6% Gross profit $472.0 $95.5 25.3% SG&A expenses $321.4 ($61.0) (23.5%) SG&A expenses as % of gross profit 68.1% 100 bps Earnings from continuing operations before taxes $112.2 $34.7 44.8% Continuing Ops: Net income $84.7 $27.0 46.9% Diluted earnings per share $1.96 $0.61 45.2% Excluding The Effect Of A $3.2 Million Gain On Disposal Of Franchises In Q3 2020, Q3 2021 Diluted EPS From Continuing Operations Increased 51.9% Refer to Appendix for Reconciliation of Non-GAAP Financial Measures
30 Q3 2021 – Franchised Dealerships Segment B/(W) than Q3 2020 (In millions, except unit and per unit data) Q3 2021 $ % Revenues $2,409.5 $246.0 11.4% Gross profit $446.2 $98.8 28.5% SG&A expenses $268.3 ($36.5) (15.7%) SG&A expenses as % of gross profit 60.1% 670 bps Segment income (loss) $145.1 $64.7 80.4% New vehicle unit sales volume 22,791 (1,309) (5.4%) Retail used vehicle unit sales volume 26,274 (89) (0.3%) New vehicle gross profit per unit $5,055 $2,454 94.4% Retail used vehicle gross profit per unit $1,907 $603 46.2% F&I gross profit per unit retailed $2,303 $493 27.2% Excluding The Effect Of A $3.2 Million Gain On Disposal Of Franchises In Q3 2020, Q3 2021 SG&A Expenses As % Of Gross Profit Decreased 760 Basis Points Refer to Appendix for Reconciliation Of Segment Income (Loss) And Non-GAAP Financial Measures
31 Q3 2021 – EchoPark Segment B/(W) than Q3 2020 (In millions, except unit and per unit data) Q3 2021 $ % Revenues $663.3 $278.3 72.3% Gross profit $25.8 ($3.4) (11.6%) SG&A expenses $53.0 ($27.7) (109.7%) SG&A expenses as % of gross profit 205.4% NM Segment income (loss) ($32.9) ($33.1) NM Retail used vehicle unit sales volume 21,255 6,128 40.5% Total combined gross profit per unit retailed $1,030 ($914) (47.0%) Q3 2021 Segment Income (Loss) Includes Market Expansion-Related Losses of $18.0 Million All-Time Record Quarterly Revenue Adjusted Pricing Strategy To Mitigate GPU Compression Amid Ongoing Challenges In Wholesale Market Pricing, Resulting In Lower Unit Sales Volume Refer to Appendix for Reconciliation Of Segment Income (Loss)
32 Strong Balance Sheet And Liquidity September 30,2021 December 31,2020 (In Millions) Cash and cash equivalents 220.1$ 170.3$ Availability under the 2021 Revolving Credit Facility(1) 224.0 214.7 Availability under the 2019 Mortgage Facility 19.5 11.2 Availability under the 2020 Line Of Credit Facility(2) 54.1 57.0 Floor plan deposit balance 100.0 73.2 Total available liquidity resources 617.7$ 526.4$ Covenant Requirement* September 30,2021 December 31,2020 Liquidity ratio >= 1.05 1.19 1.18 Fixed charge coverage ratio >= 1.20 2.58 2.07 Total lease adjusted leverage ratio <= 5.75 1.28 2.78 Net debt to Adjusted EBITDA ratio(3) 0.65 1.29 * As Defined In The 2021 Revolving Credit Facility and 2019 Mortgage Facility (1) Balance As Of December 31, 2020 Was Under The 2016 Revolving Credit Facility (2) Subsequent To September 30, 2021 The 2020 Line Of Credit Facility Was Terminated By Sonic (3) 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) In October 2021, Sonic Amended Its 2021 Credit Facilities To Increase Total Revolver And Floor Plan Capacity To $2.95 Billion
33 Capital Expenditure Discipline Strict Capital Allocation Strategy Prioritizes Highest Return On Investment Actual YTD Q3 2021 Capital Expenditures Of $181.5 Million FY 2021E Includes Plans For 25 New EchoPark Locations In 2021 And Real Estate For 2022 Openings $181.2 $87.8 $89.3 $92.4 $170.0 $53.0 $75.8 $36.3 $34.8 $125.0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E* Gross Capital Expenditures (In Millions) Franchised EchoPark * Excludes RFJ Auto Real Estate Capital Expenditures Of Approximately $122M
34 Appendix
35 Non-GAAP Reconciliation – Segment Income Franchised Dealerships Segment EchoPark Segment Consolidated (In millions, except unit data) Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Revenues 2,409.5$ 2,163.5$ 663.3$ 385.1$ 3,072.8$ 2,548.5$ Gross profit 446.2$ 347.4$ 25.8$ 29.2$ 472.0$ 376.6$ SG&A expenses 268.3$ 231.9$ 53.0$ 25.3$ 321.4$ 257.2$ Segment income 145.1$ 80.5$ (32.9)$ 0.2$ 112.2$ 80.7$ Impairment charges - - - - - - Earnings (loss) from continuing operations before taxes 145.1$ 80.5$ (32.9)$ 0.2$ 112.2$ 80.7$ Adjusted net income (loss) from continuing operations 84.7$ 57.7$ Gain on franchise and real estate disposals (before taxes) - 3.2 Tax effect of items of interest and non-recurring tax items - (0.9) Net income (loss) from continuing operations 84.7$ 60.0$ New vehicle unit sales volume 22,791 24,100 55 - 22,846 24,100 Retail used vehicle unit sales volume 26,274 26,363 21,255 15,127 47,529 41,490 Note: Segment Income (Loss) Defined As Earnings (Loss) From Continuing Operations Before Taxes And Impairment Charges
36 Non-GAAP Reconciliation – Earnings Per Share Q3 2021 Q3 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 43,285 84,691$ 1.96$ 44,577 59,988$ 1.35$ Pre-tax items of interest: Gain on franchise and real estate disposals -$ (3,150)$ Total pre-tax items of interest -$ (3,150)$ Tax effect of above items - 827 Adjusted diluted earnings (loss) and shares from continuing operations 43,285 84,691$ 1.96$ 44,577 57,665$ 1.29$
37 Non-GAAP Reconciliation – Adjusted EBITDA Note – Balance Sheet Amounts Are As Of December 31 for the FY Then Ended. LTM Q3 2021 Amounts Are For The Twelve-Month Period Ended September 30, 2021. Balance Sheet Amounts For LTM Q3 2021 Are As Of September 30, 2021. (In thousands) FY 2017 FY 2018 FY 2019 FY 2020 LTM Q3 2021 Net Income (Loss) 92,983$ 51,650$ 144,137$ (51,385)$ 309,891$ Provision For Income Taxes 13,198 22,645 54,954 15,619 116,358 Income (Loss) Before Taxes 106,181$ 74,295$ 199,091$ (35,766)$ 426,249$ Non-Floor Plan Interest 50,531 52,049 50,475 38,672 37,000 Depreciation and Amortization 92,127 96,652 95,646 93,922 100,059 Stock-Based Compensation Expense 11,119 11,853 10,797 11,704 14,307 Loss (Gain) On Exit Of Leased Dealerships 2,157 1,709 (170) - - Impairment Charges 9,394 29,514 20,768 270,017 1,158 Loss (Gain) On Debt Extinguishment 14,607 - 6,690 - - Long-Term Compensation Charges - 32,522 - - 1,500 Loss (Gain) on Franchise and Real Estate Disposals (9,980) (39,307) (74,812) (8,247) (6,838) Adjusted EBITDA 276,136$ 259,287$ 308,485$ 370,302$ 573,435$ Long-Term Debt (Including Current Portion) 1,024,703$ 945,083$ 706,886$ 720,066$ 691,157$ Cash and Equivalents (6,352) (5,854) (29,103) (170,313) (220,082) Floor Plan Deposit Balance (3,000) - - (73,180) (100,000) Net Debt 1,015,351$ 939,229$ 677,783$ 476,573$ 371,075$ Net Debt To Adjusted EBITDA Ratio 3.68 3.62 2.20 1.29 0.65
38 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) (In thousands) Net Income (Loss) $ 113,845 $ 30,791 Provision For Income Taxes 36,972 6,353 Income (Loss) Before Taxes $ 165,415 $ (14,394) $ (204) $ 150,817 $ 34,856 $ 2,577 $ (289) $ 37,144 Non-Floor Plan Interest 8,895 348 - 9,243 8,938 234 - 9,172 Depreciation And Amortization 21,444 4,152 - 25,596 20,514 2,758 - 23,272 Stock-Based Compensation Expense 3,989 - - 3,989 2,971 - - 2,971 Impairment Charges - - - - 833 - - 833 Long-Term Compensation Charges - 500 - 500 - - - - Gain On Franchise And Real Estate Disposals (400) (23) - (423) 1,117 - - 1,117 Adjusted EBITDA $ 199,343 $ (9,417) $ (204) $ 189,722 $ 69,229 $ 5,569 $ (289) $ 74,509 Q2 2021 Q2 2020 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) (In thousands) Net Income (Loss) $ 84,485 $ 59,818 Provision For Income Taxes 27,490 20,620 Income (Loss) Before Taxes $ 145,138 $ (32,888) $ (275) $ 111,975 $ 80,434 $ 239 $ (235) $ 80,438 Non-Floor Plan Interest 8,799 333 - 9,132 9,781 147 - 9,928 Depreciation And Amortization 21,943 3,980 - 25,923 21,004 2,763 - 23,767 Stock-Based Compensation Expense 3,681 - - 3,681 3,153 - - 3,153 Impairment Charges - - - - 26 - - 26 Long-Term Compensation Charges - 500 - 500 - - - - Gain On Franchise And Real Estate Disposals (12) (423) - (435) (3,388) - - (3,388) Adjusted EBITDA $ 179,549 $ (28,498) $ (275) $ 150,776 $ 111,010 $ 3,149 $ (235) $ 113,924 Q3 2021 Q3 2020
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) $ 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) $ 57,339 $ 46,307 Provision For Income Taxes 32,845 14,703 Income (Loss) Before Taxes $ 90,611 $ (833) $ 406 $ 90,184 $ 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) $ 406 $ 121,715 $ 89,986 $ 5,299 $ 62 $ 95,347 Q4 2020 Q4 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) $ 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
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) $ (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
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) $ 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
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) $ 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
44 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
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® 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