Business Wire | Oct 29, 2020 06:55AM EDT

Sonic Automotive Reports All-Time Record Third Quarter Earnings

Oct. 29, 2020

CHARLOTTE, N.C.--(BUSINESS WIRE)--Oct. 29, 2020--Sonic Automotive, Inc.("Sonic" or the "Company") (NYSE:SAH), one of the nation's largest automotive retailers, today reported financial results for the third quarter ended September 30, 2020.

Third Quarter Highlights

* All-time record earnings per diluted share from continuing operations of $1.35 for the third quarter of 2020, an increase of 105% compared to $0.66 for the third quarter of 2019 (included in the results for the third quarter of 2020 is a pre-tax gain of $3.2 million, or $0.06 per share, related to franchise disposals) * Selling, general and administrative ("SG&A") expenses as a percentage of gross profit were 68.3% for the third quarter of 2020, compared to 76.7% for the third quarter of 2019 (results for the third quarter of 2020 include an 80 basis point benefit related to a gain on franchise disposals) * Total Sonic consolidated third quarter 2020 revenues of $2.5 billion and gross profit of $376.6 million * All-time record EchoPark quarterly revenues of $385.1 million, up 23.3% from the third quarter of 2019 * All-time record EchoPark quarterly retail sales volume of 15,127 units, up 14.5% from the third quarter of 2019 * Same store Franchised Dealerships Segment operating results for the third quarter of 2020, compared to the third quarter of 2019: Revenues down 5.6%, gross profit up 1.5% New vehicle unit sales volume down 14.6%; new vehicle gross profit per unit up 38.4%, to $2,607 Retail used vehicle unit sales volume down 4.6%; retail used vehicle gross profit per unit up 3.9%, to $1,307 Parts, service and collision repair gross profit down 3.9%, customer pay gross profit down 0.9%; gross margin up 130 basis points, to 49.2% Finance and insurance ("F&I") gross profit down 1.4%; total Franchised Dealerships Segment F&I gross profit per retail unit of $1,810, up 10.0%

Commentary

Jeff Dyke, Sonic's and EchoPark's President, commented, "Our third quarter results demonstrate the strength and resilience of our business model, driving the highest third quarter profit in our Company's history. All business lines saw sequential improvement from the second quarter, with a combination of increasing consumer demand and enhanced operating efficiency and profitability as a result of the strategic actions our team took early in the pandemic. We believe the third quarter marks an inflection point in our Company's path to more than double its total revenues and dramatically increase profitability in the next five years. We remain committed to providing our guests with an industry-leading vehicle purchase experience, offering a variety of options across the omni-channel spectrum to suit each individual's needs. We continue to enhance our e-commerce platform to offer our guests a fully-integrated online and on-site sales experience at both our franchised dealership websites and EchoPark.com, further supporting the long-term growth plans for our business."

Mr. Dyke continued, "We are very pleased with our franchised dealerships' performance during the quarter, which reflects steadily increasing automotive retail consumer demand and the extraordinary dedication of our teammates to continue to deliver exceptional results despite the challenges of the pandemic. As importantly, EchoPark achieved all-time record retail sales volume in the quarter, selling over 15,000 units at our 12 existing locations. Our guests continue to see incredible value in the inventory selection, pricing, and buying experience that EchoPark offers and we remain focused on accelerating the expansion of this brand nationally. Our recent EchoPark expansion in Greenville, South Carolina, Houston, Texas, and Nashville, Tennessee, plus expected new openings by year end in Plano, Texas and Atlanta, Georgia, continue to drive toward a 140-point nationwide distribution network, expected to retail over half a million pre-owned vehicles annually by 2025."

Heath Byrd, Sonic's and EchoPark's Chief Financial Officer, commented, "We have continued to increase operating efficiency at both our franchised dealerships and EchoPark stores, driving improved profitability throughout our operations. Total SG&A expenses for the third quarter were down $39.7 million, or 13.4%, year-over-year, while SG&A expenses as a percentage of gross profit were 68.3%, down 840 basis points from the year-ago quarter. Due to our ongoing cost-management initiatives, we are now a much leaner, more efficient organization than we were prior to the COVID-19 pandemic."

Third Quarter 2020 Operational Summary

For the third quarter of 2020, Sonic's consolidated total revenues were $2.5 billion, down 5.7% compared to the third quarter of 2019 and up 20.7% sequentially from the second quarter of 2020. EchoPark Segment revenues were $385.1 million for the third quarter of 2020, representing a 23.3% increase from the third quarter of 2019 and a 22.1% increase sequentially from the second quarter of 2020. Franchised Dealerships Segment revenues were $2.2 billion for the third quarter of 2020, representing a 9.5% decrease from the third quarter of 2019 and a 20.4% increase sequentially from $1.8 billion in the second quarter of 2020.

Adjusted SG&A expenses as a percentage of gross profit (a non-GAAP measure) for the third quarter of 2020 were 69.1%, a decrease of 760 basis points compared to the third quarter of 2019, due primarily to ongoing cost-control measures consistent with the Company's stated goal of approximately $84.0 million in permanent SG&A expense reductions annually.

Net income from continuing operations for the third quarter of 2020 was $60.0 million, or $1.35 per diluted share, compared to $29.2 million, or $0.66 per diluted share, for the third quarter of 2019. Adjusted net income from continuing operations (a non-GAAP measure) for the third quarter of 2020 was $57.7 million, or $1.29 per diluted share. Comparatively, adjusted net income from continuing operations (a non-GAAP measure) for the third quarter of 2019 was $29.2 million, or $0.66 per diluted share.

Dividend

Sonic's Board of Directors approved a quarterly cash dividend of $0.10 per share payable on January 15, 2021 to all stockholders of record on December 15, 2020.

Third Quarter 2020 Earnings Conference Call

Senior management will host a conference call on Thursday, October 29, 2020 at 11:00 A.M. (Eastern) to discuss the quarter's results. To access the live broadcast of the call over the Internet, please go to ir.sonicautomotive.com. The conference call will also be available live by dialing in 15 minutes prior to the start of the call at:

Domestic: (833) 519-1243 International: (914) 800-3816 Conference ID: 2553839

A conference call replay will be available one hour following the call for 14 days and can be accessed by calling:

Domestic: (855) 859-2056 International: (404) 537-3406 Conference ID: 2553839

Investor presentation and earnings press release materials for the Company's earnings conference call will be accessible beginning the morning of the conference call on the Company's website 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, 2019, the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 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 net income from continuing operations, adjusted earnings per diluted share from continuing operations, adjusted SG&A expenses, and adjusted SG&A expenses as a percentage of gross profit. 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.

Sonic Automotive, Inc.

Results of Operations (Unaudited)

Results ofOperations -Consolidated

Three Months Ended Better / Nine Months Ended Better / September 30, (Worse) September 30, (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except per share amounts)

Revenues:

New vehicles $ 1,098,302 $ 1,258,018 (12.7) % $ 2,957,794 $ 3,529,106 (16.2) %

Used vehicles 946,028 914,272 3.5 % 2,604,957 2,620,264 (0.6) %

Wholesale 56,502 51,542 9.6 % 138,221 156,351 (11.6) %vehicles

Total vehicles 2,100,832 2,223,832 (5.5) % 5,700,972 6,305,721 (9.6) %

Parts, serviceand collision 320,929 352,047 (8.8) % 914,667 1,048,789 (12.8) %repair

Finance,insurance and 126,784 126,841 - % 352,848 351,429 0.4 %other, net

Total revenues 2,548,545 2,702,720 (5.7) % 6,968,487 7,705,939 (9.6) %

Cost of Sales:

New vehicles (1,035,624) (1,202,710) 13.9 % (2,804,314) (3,363,603) 16.6 %

Used vehicles (917,993) (877,444) (4.6) % (2,517,421) (2,509,699) (0.3) %

Wholesale (53,958) (52,648) (2.5) % (136,260) (159,437) 14.5 %vehicles

Total vehicles (2,007,575) (2,132,802) 5.9 % (5,457,995) (6,032,739) 9.5 %

Parts, serviceand collision (164,403) (183,107) 10.2 % (475,964) (546,067) 12.8 %repair

Total cost of (2,171,978) (2,315,909) 6.2 % (5,933,959) (6,578,806) 9.8 %sales

Gross profit 376,567 386,811 (2.6) % 1,034,528 1,127,133 (8.2) %

Selling, generaland (257,174) (296,826) 13.4 % (769,688) (838,453) 8.2 %administrativeexpenses

Impairment (26) (1,124) 97.7 % (268,859) (3,076) (8,640.5) %charges

Depreciation and (22,934) (23,665) 3.1 % (67,879) (70,120) 3.2 %amortization

Operating income 96,433 65,196 47.9 % (71,898) 215,484 (133.4) %(loss)

Other income (expense):

Interestexpense, floor (4,999) (11,638) 57.0 % (21,821) (37,382) 41.6 %plan

Interestexpense, other, (10,762) (13,013) 17.3 % (31,523) (39,494) 20.2 %net

Other income 1 (5) 120.0 % 100 90 (11.1) %(expense), net

Total other (15,760) (24,656) 36.1 % (53,244) (76,786) 30.7 %income (expense)

Income (loss)from continuing 80,673 40,540 99.0 % (125,142) 138,698 (190.2) %operationsbefore taxes

Provision forincome taxes forcontinuing (20,685) (11,372) (81.9) % 16,995 (40,430) 142.0 %operations -benefit(expense)

Income (loss)from continuing 59,988 29,168 105.7 % (108,147) 98,268 (210.1) %operations

Discontinued operations:

Income (loss)fromdiscontinued (234) (223) (4.9) % (808) (616) (31.2) %operationsbefore taxes

Provision forincome taxes fordiscontinued 64 65 (1.5) % 231 179 29.1 %operations -benefit(expense)

Income (loss)from (170) (158) (7.6) % (577) (437) (32.0) %discontinuedoperations

Net income $ 59,818 $ 29,010 106.2 % $ (108,724) $ 97,831 (211.1) %(loss)

Basic earnings(loss) per common share:

Earnings (loss)per share from $ 1.41 $ 0.68 107.4 % $ (2.53) $ 2.28 (211.0) %continuingoperations

Earnings (loss)per share from - (0.01) 100.0 % (0.02) (0.01) (100.0) %discontinuedoperations

Earnings (loss) $ 1.41 $ 0.67 110.4 % $ (2.55) $ 2.27 (212.3) %per common share

Weighted-averagecommon shares 42,510 43,078 1.3 % 42,687 42,995 0.7 %outstanding

Diluted earnings(loss) per common share:

Earnings (loss)per share from $ 1.35 $ 0.66 104.5 % $ (2.53) $ 2.26 (211.9) %continuingoperations

Earnings (loss)per share from (0.01) - (100.0) % (0.02) (0.01) (100.0) %discontinuedoperations

Earnings (loss) $ 1.34 $ 0.66 103.0 % $ (2.55) $ 2.25 (213.3) %per common share

Weighted-averagecommon shares 44,577 44,203 (0.8) % 42,687 43,456 1.8 %outstanding

Dividendsdeclared per $ 0.10 $ 0.10 - % $ 0.30 $ 0.30 - %common share

Franchised Dealerships Segment - Reported

Three Months EndedSeptember 30,

Better / (Worse)

Nine Months EndedSeptember 30,

Better / (Worse)

2020

2019

% Change

2020

2019

% Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles

$

1,098,302

$

1,258,018

(12.7)

%

$

2,957,794

$

3,529,106

(16.2)

%

Used vehicles

615,565

648,006

(5.0)

%

1,718,151

1,889,045

(9.0)

%

Wholesale vehicles

48,526

44,517

9.0

%

119,474

140,770

(15.1)

%

Total vehicles

1,762,393

1,950,541

(9.6)

%

4,795,419

5,558,921

(13.7)

%

Parts, service and collision repair

310,035

343,820

(9.8)

%

886,534

1,027,382

(13.7)

%

Finance, insurance and other, net

91,035

96,142

(5.3)

%

254,465

266,171

(4.4)

%

Total revenues

2,163,463

2,390,503

(9.5)

%

5,936,418

6,852,474

(13.4)

%

Gross Profit:

New vehicles

62,678

55,308

13.3

%

153,480

165,503

(7.3)

%

Used vehicles

34,385

37,623

(8.6)

%

97,114

111,815

(13.1)

%

Wholesale vehicles

2,556

(971)

363.2

%

2,116

(2,845)

174.4

%

Total vehicles

99,619

91,960

8.3

%

252,710

274,473

(7.9)

%

Parts, service and collision repair

156,711

169,158

(7.4)

%

439,272

503,311

(12.7)

%

Finance, insurance and other, net

91,035

96,142

(5.3)

%

254,465

266,171

(4.4)

%

Total gross profit

347,365

357,260

(2.8)

%

946,447

1,043,955

(9.3)

%

Selling, general and administrative expenses

(231,882)

(274,585)

15.6

%

(697,796)

(773,915)

9.8

%

Impairment charges

(26)

-

(100.0)

%

(268,859)

(26)

NM

Depreciation and amortization

(20,170)

(20,967)

3.8

%

(59,654)

(62,348)

4.3

%

Operating income (loss)

95,287

61,708

54.4

%

(79,862)

207,666

(138.5)

%

Other income (expense):

Interest expense, floor plan

(4,234)

(10,679)

60.4

%

(19,517)

(34,781)

43.9

%

Interest expense, other, net

(10,615)

(12,607)

15.8

%

(30,771)

(38,214)

19.5

%

Other income (expense), net

(4)

(5)

20.0

%

96

29

231.0

%

Total other income (expense)

(14,853)

(23,291)

36.2

%

(50,192)

(72,966)

31.2

%

Income (loss) before taxes

80,434

38,417

109.4

%

(130,054)

134,700

(196.6)

%

Add: impairment charges

26

-

NM

268,859

26

NM

Segment income (loss)

$

80,460

$

38,417

109.4

%

$

138,805

$

134,727

3.0

%

Unit Sales Volume:

New vehicles

24,100

30,147

(20.1)

%

65,715

83,540

(21.3)

%

Used vehicles

26,363

29,247

(9.9)

%

76,374

85,530

(10.7)

%

Wholesale vehicles

6,679

7,123

(6.2)

%

18,416

22,231

(17.2)

%

Retail new & used vehicles

50,463

59,394

(15.0)

%

142,089

169,070

(16.0)

%

Used:New Ratio

1.09

0.97

12.8

%

1.16

1.02

13.5

%

Gross Profit Per Unit:

New vehicles

$

2,601

$

1,835

41.7

%

$

2,336

$

1,981

17.9

%

Used vehicles

$

1,304

$

1,286

1.4

%

$

1,272

$

1,307

(2.7)

%

Finance, insurance and other, net

$

1,810

$

1,645

10.0

%

$

1,802

$

1,590

13.3

%

NM = Not Meaningful

FranchisedDealershipsSegment -Reported

Three Months Ended Better / Nine Months Ended Better / September 30, (Worse) September 30, (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles $ 1,098,302 $ 1,258,018 (12.7) % $ 2,957,794 $ 3,529,106 (16.2) %

Used vehicles 615,565 648,006 (5.0) % 1,718,151 1,889,045 (9.0) %

Wholesale 48,526 44,517 9.0 % 119,474 140,770 (15.1) %vehicles

Total vehicles 1,762,393 1,950,541 (9.6) % 4,795,419 5,558,921 (13.7) %

Parts, serviceand collision 310,035 343,820 (9.8) % 886,534 1,027,382 (13.7) %repair

Finance,insurance and 91,035 96,142 (5.3) % 254,465 266,171 (4.4) %other, net

Total revenues 2,163,463 2,390,503 (9.5) % 5,936,418 6,852,474 (13.4) %

Gross Profit:

New vehicles 62,678 55,308 13.3 % 153,480 165,503 (7.3) %

Used vehicles 34,385 37,623 (8.6) % 97,114 111,815 (13.1) %

Wholesale 2,556 (971) 363.2 % 2,116 (2,845) 174.4 %vehicles

Total vehicles 99,619 91,960 8.3 % 252,710 274,473 (7.9) %

Parts, serviceand collision 156,711 169,158 (7.4) % 439,272 503,311 (12.7) %repair

Finance,insurance and 91,035 96,142 (5.3) % 254,465 266,171 (4.4) %other, net

Total gross 347,365 357,260 (2.8) % 946,447 1,043,955 (9.3) %profit

Selling, generaland (231,882) (274,585) 15.6 % (697,796) (773,915) 9.8 %administrativeexpenses

Impairment (26) - (100.0) % (268,859) (26) NM charges

Depreciation and (20,170) (20,967) 3.8 % (59,654) (62,348) 4.3 %amortization

Operating income 95,287 61,708 54.4 % (79,862) 207,666 (138.5) %(loss)

Other income (expense):

Interestexpense, floor (4,234) (10,679) 60.4 % (19,517) (34,781) 43.9 %plan

Interestexpense, other, (10,615) (12,607) 15.8 % (30,771) (38,214) 19.5 %net

Other income (4) (5) 20.0 % 96 29 231.0 %(expense), net

Total other (14,853) (23,291) 36.2 % (50,192) (72,966) 31.2 %income (expense)

Income (loss) 80,434 38,417 109.4 % (130,054) 134,700 (196.6) %before taxes

Add: impairment 26 - NM 268,859 26 NM charges

Segment income $ 80,460 $ 38,417 109.4 % $ 138,805 $ 134,727 3.0 %(loss)



Unit Sales Volume:

New vehicles 24,100 30,147 (20.1) % 65,715 83,540 (21.3) %

Used vehicles 26,363 29,247 (9.9) % 76,374 85,530 (10.7) %

Wholesale 6,679 7,123 (6.2) % 18,416 22,231 (17.2) %vehicles

Retail new & 50,463 59,394 (15.0) % 142,089 169,070 (16.0) %used vehicles

Used:New Ratio 1.09 0.97 12.8 % 1.16 1.02 13.5 %



Gross Profit Per Unit:

New vehicles $ 2,601 $ 1,835 41.7 % $ 2,336 $ 1,981 17.9 %

Used vehicles $ 1,304 $ 1,286 1.4 % $ 1,272 $ 1,307 (2.7) %

Finance,insurance and $ 1,810 $ 1,645 10.0 % $ 1,802 $ 1,590 13.3 %other, net

NM = NotMeaningful

Franchised Dealerships Segment - Same Store

Three Months EndedSeptember 30,

Better / (Worse)

Nine Months EndedSeptember 30,

Better / (Worse)

2020

2019

% Change

2020

2019

% Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles

$

1,092,360

$

1,194,486

(8.5)

%

$

2,937,057

$

3,329,926

(11.8)

%

Used vehicles

613,097

620,278

(1.2)

%

1,706,949

1,795,833

(4.9)

%

Wholesale vehicles

48,326

42,880

12.7

%

118,744

134,038

(11.4)

%

Total vehicles

1,753,783

1,857,644

(5.6)

%

4,762,750

5,259,797

(9.4)

%

Parts, service and collision repair

308,385

331,247

(6.9)

%

878,191

981,967

(10.6)

%

Finance, insurance and other, net

85,971

87,185

(1.4)

%

238,328

241,483

(1.3)

%

Total revenues

$

2,148,139

$

2,276,076

(5.6)

%

$

5,879,269

$

6,483,247

(9.3)

%

Gross Profit:

New vehicles

$

62,237

$

52,657

18.2

%

$

151,250

$

157,799

(4.2)

%

Used vehicles

34,261

34,592

(1.0)

%

93,234

101,886

(8.5)

%

Wholesale vehicles

2,676

(786)

440.5

%

2,331

(2,150)

208.4

%

Total vehicles

99,174

86,463

14.7

%

246,815

257,535

(4.2)

%

Parts, service and collision repair

156,446

162,779

(3.9)

%

435,484

479,904

(9.3)

%

Finance, insurance and other, net

85,971

87,185

(1.4)

%

238,328

241,483

(1.3)

%

Total gross profit

$

341,591

$

336,427

1.5

%

$

920,627

$

978,922

(6.0)

%

Unit Sales Volume:

New vehicles

23,875

27,971

(14.6)

%

64,955

76,653

(15.3)

%

Used vehicles

26,216

27,490

(4.6)

%

75,678

79,571

(4.9)

%

Wholesale vehicles

6,638

6,545

1.4

%

18,271

20,274

(9.9)

%

Retail new & used vehicles

50,091

55,461

(9.7)

%

140,633

156,224

(10.0)

%

Used:New Ratio

1.10

0.98

11.7

%

1.17

1.04

12.2

%

Gross Profit Per Unit:

New vehicles

$

2,607

$

1,883

38.4

%

$

2,329

$

2,059

13.1

%

Used vehicles

$

1,307

$

1,258

3.9

%

$

1,232

$

1,280

(3.8)

%

Finance, insurance and other, net

$

1,722

$

1,600

7.6

%

$

1,706

$

1,563

9.1

%

FranchisedDealershipsSegment -Same Store

Three Months Ended Better / Nine Months Ended Better / September 30, (Worse) September 30, (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles $ 1,092,360 $ 1,194,486 (8.5) % $ 2,937,057 $ 3,329,926 (11.8) %

Used vehicles 613,097 620,278 (1.2) % 1,706,949 1,795,833 (4.9) %

Wholesale 48,326 42,880 12.7 % 118,744 134,038 (11.4) %vehicles

Total 1,753,783 1,857,644 (5.6) % 4,762,750 5,259,797 (9.4) %vehicles

Parts,service and 308,385 331,247 (6.9) % 878,191 981,967 (10.6) %collisionrepair

Finance,insurance and 85,971 87,185 (1.4) % 238,328 241,483 (1.3) %other, net

Total $ 2,148,139 $ 2,276,076 (5.6) % $ 5,879,269 $ 6,483,247 (9.3) %revenues

Gross Profit:

New vehicles $ 62,237 $ 52,657 18.2 % $ 151,250 $ 157,799 (4.2) %

Used vehicles 34,261 34,592 (1.0) % 93,234 101,886 (8.5) %

Wholesale 2,676 (786) 440.5 % 2,331 (2,150) 208.4 %vehicles

Total 99,174 86,463 14.7 % 246,815 257,535 (4.2) %vehicles

Parts,service and 156,446 162,779 (3.9) % 435,484 479,904 (9.3) %collisionrepair

Finance,insurance and 85,971 87,185 (1.4) % 238,328 241,483 (1.3) %other, net

Total gross $ 341,591 $ 336,427 1.5 % $ 920,627 $ 978,922 (6.0) %profit



Unit Sales Volume:

New vehicles 23,875 27,971 (14.6) % 64,955 76,653 (15.3) %

Used vehicles 26,216 27,490 (4.6) % 75,678 79,571 (4.9) %

Wholesale 6,638 6,545 1.4 % 18,271 20,274 (9.9) %vehicles

Retail new & 50,091 55,461 (9.7) % 140,633 156,224 (10.0) %used vehicles

Used:New 1.10 0.98 11.7 % 1.17 1.04 12.2 %Ratio



Gross Profit Per Unit:

New vehicles $ 2,607 $ 1,883 38.4 % $ 2,329 $ 2,059 13.1 %

Used vehicles $ 1,307 $ 1,258 3.9 % $ 1,232 $ 1,280 (3.8) %

Finance,insurance and $ 1,722 $ 1,600 7.6 % $ 1,706 $ 1,563 9.1 %other, net

EchoPark Segment - Reported

Three Months EndedSeptember 30,

Better / (Worse)

Nine Months EndedSeptember 30,

Better / (Worse)

2020

2019

% Change

2020

2019

% Change

(In thousands, except unit and per unit data)

Revenues:

Used vehicles

$

330,463

$

266,266

24.1

%

$

886,806

$

731,219

21.3

%

Wholesale vehicles

7,976

7,025

13.5

%

18,747

15,581

20.3

%

Total vehicles

338,439

273,291

23.8

%

905,553

746,800

21.3

%

Parts, service and collision repair

10,894

8,227

32.4

%

28,133

21,407

31.4

%

Finance, insurance and other, net

35,749

30,699

16.5

%

98,383

85,258

15.4

%

Total revenues

385,082

312,217

23.3

%

1,032,069

853,465

20.9

%

Gross Profit:

Used vehicles

(6,350)

(795)

(698.7)

%

(9,578)

(1,250)

(666.2)

%

Wholesale vehicles

(12)

(135)

91.1

%

(155)

(241)

35.7

%

Total vehicles

(6,362)

(930)

584.1

%

(9,733)

(1,491)

552.8

%

Parts, service and collision repair

(185)

(218)

15.1

%

(569)

(589)

3.4

%

Finance, insurance and other, net

35,749

30,699

16.5

%

98,383

85,258

15.4

%

Total gross profit

29,202

29,551

(1.2)

%

88,081

83,178

5.9

%

Selling, general and administrative expenses

(25,292)

(22,241)

(13.7)

%

(71,892)

(64,538)

(11.4)

%

Impairment charges

-

(1,124)

100.0

%

-

(3,050)

100.0

%

Depreciation and amortization

(2,764)

(2,698)

(2.4)

%

(8,225)

(7,772)

(5.8)

%

Operating income (loss)

1,146

3,488

(67.1)

%

7,964

7,818

1.9

%

Other income (expense):

Interest expense, floor plan

(765)

(959)

20.2

%

(2,304)

(2,601)

11.4

%

Interest expense, other, net

(147)

(406)

63.8

%

(752)

(1,280)

41.3

%

Other income (expense), net

5

-

100.0

%

4

61

(93.4)

%

Total other income (expense)

(907)

(1,365)

33.6

%

(3,052)

(3,820)

20.1

%

Income (loss) before taxes

239

2,123

(88.7)

%

4,912

3,998

22.9

%

Add: impairment charges

-

(1,124)

NM

-

(3,050)

NM

Segment income (loss)

$

239

$

3,247

(92.6)

%

$

4,912

$

7,047

(30.3)

%

Unit Sales Volume:

Used vehicles

15,127

13,206

14.5

%

42,320

36,844

14.9

%

Wholesale vehicles

1,955

1,838

6.4

%

5,174

4,023

28.6

%

Gross Profit Per Unit:

Total used vehicle and F&I

$

1,943

$

2,264

(14.2)

%

$

2,098

$

2,280

(8.0)

%

NM = Not Meaningful

EchoPark Segment- Reported

Three Months Ended Better / Nine Months Ended Better / September 30, (Worse) September 30, (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except unit and per unit data)

Revenues:

Used vehicles $ 330,463 $ 266,266 24.1 % $ 886,806 $ 731,219 21.3 %

Wholesale 7,976 7,025 13.5 % 18,747 15,581 20.3 %vehicles

Total vehicles 338,439 273,291 23.8 % 905,553 746,800 21.3 %

Parts, serviceand collision 10,894 8,227 32.4 % 28,133 21,407 31.4 %repair

Finance,insurance and 35,749 30,699 16.5 % 98,383 85,258 15.4 %other, net

Total revenues 385,082 312,217 23.3 % 1,032,069 853,465 20.9 %

Gross Profit:

Used vehicles (6,350) (795) (698.7) % (9,578) (1,250) (666.2) %

Wholesale (12) (135) 91.1 % (155) (241) 35.7 %vehicles

Total vehicles (6,362) (930) 584.1 % (9,733) (1,491) 552.8 %

Parts, serviceand collision (185) (218) 15.1 % (569) (589) 3.4 %repair

Finance,insurance and 35,749 30,699 16.5 % 98,383 85,258 15.4 %other, net

Total gross 29,202 29,551 (1.2) % 88,081 83,178 5.9 %profit

Selling, generaland (25,292) (22,241) (13.7) % (71,892) (64,538) (11.4) %administrativeexpenses

Impairment - (1,124) 100.0 % - (3,050) 100.0 %charges

Depreciation and (2,764) (2,698) (2.4) % (8,225) (7,772) (5.8) %amortization

Operating income 1,146 3,488 (67.1) % 7,964 7,818 1.9 %(loss)

Other income (expense):

Interestexpense, floor (765) (959) 20.2 % (2,304) (2,601) 11.4 %plan

Interestexpense, other, (147) (406) 63.8 % (752) (1,280) 41.3 %net

Other income 5 - 100.0 % 4 61 (93.4) %(expense), net

Total other (907) (1,365) 33.6 % (3,052) (3,820) 20.1 %income (expense)

Income (loss) 239 2,123 (88.7) % 4,912 3,998 22.9 %before taxes

Add: impairment - (1,124) NM - (3,050) NM charges

Segment income $ 239 $ 3,247 (92.6) % $ 4,912 $ 7,047 (30.3) %(loss)



Unit Sales Volume:

Used vehicles 15,127 13,206 14.5 % 42,320 36,844 14.9 %

Wholesale 1,955 1,838 6.4 % 5,174 4,023 28.6 %vehicles



Gross Profit Per Unit:

Total used $ 1,943 $ 2,264 (14.2) % $ 2,098 $ 2,280 (8.0) %vehicle and F&I

NM = NotMeaningful

EchoPark Segment - Same Store

Three Months EndedSeptember 30,

Better / (Worse)

Nine Months EndedSeptember 30,

Better / (Worse)

2020

2019

% Change

2020

2019

% Change

(In thousands, except unit and per unit data)

Revenues:

Used vehicles

$

281,959

$

266,266

5.9

%

$

790,302

$

731,219

8.1

%

Wholesale vehicles

7,195

7,025

2.4

%

17,418

15,581

11.8

%

Total vehicles

289,154

273,291

5.8

%

807,720

746,800

8.2

%

Parts, service and collision repair

9,673

8,227

17.6

%

25,524

21,407

19.2

%

Finance, insurance and other, net

30,523

30,588

(0.2)

%

87,796

84,840

3.5

%

Total revenues

$

329,350

$

312,106

5.5

%

$

921,040

$

853,047

8.0

%

Gross Profit:

Used vehicles

$

(7,365)

$

(2,501)

(194.5)

%

$

(13,197)

$

(5,222)

(152.7)

%

Wholesale vehicles

(17)

(135)

87.4

%

(156)

(240)

35.0

%

Total vehicles

(7,382)

(2,636)

180.0

%

(13,353)

(5,462)

144.5

%

Parts, service and collision repair

(95)

(218)

56.4

%

(395)

(568)

30.5

%

Finance, insurance and other, net

30,523

30,588

(0.2)

%

87,796

84,840

3.5

%

Total gross profit

$

23,046

$

27,734

(16.9)

%

$

74,048

$

78,810

(6.0)

%

Unit Sales Volume:

Used vehicles

12,869

13,206

(2.6)

%

37,652

36,844

2.2

%

Wholesale vehicles

1,720

1,838

(6.4)

%

4,715

4,023

17.2

%

Gross Profit Per Unit:

Total used vehicle and F&I

$

1,800

$

2,127

(15.4)

%

$

1,981

$

2,161

(8.3)

%

EchoParkSegment -Same Store

Three Months Ended Better / Nine Months Ended Better / September 30, (Worse) September 30, (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except unit and per unit data)

Revenues:

Used $ 281,959 $ 266,266 5.9 % $ 790,302 $ 731,219 8.1 %vehicles

Wholesale 7,195 7,025 2.4 % 17,418 15,581 11.8 %vehicles

Total 289,154 273,291 5.8 % 807,720 746,800 8.2 %vehicles

Parts,service and 9,673 8,227 17.6 % 25,524 21,407 19.2 %collisionrepair

Finance,insurance 30,523 30,588 (0.2) % 87,796 84,840 3.5 %and other,net

Total $ 329,350 $ 312,106 5.5 % $ 921,040 $ 853,047 8.0 %revenues

Gross Profit:

Used $ (7,365) $ (2,501) (194.5) % $ (13,197) $ (5,222) (152.7) %vehicles

Wholesale (17) (135) 87.4 % (156) (240) 35.0 %vehicles

Total (7,382) (2,636) 180.0 % (13,353) (5,462) 144.5 %vehicles

Parts,service and (95) (218) 56.4 % (395) (568) 30.5 %collisionrepair

Finance,insurance 30,523 30,588 (0.2) % 87,796 84,840 3.5 %and other,net

Total gross $ 23,046 $ 27,734 (16.9) % $ 74,048 $ 78,810 (6.0) %profit



Unit Sales Volume:

Used 12,869 13,206 (2.6) % 37,652 36,844 2.2 %vehicles

Wholesale 1,720 1,838 (6.4) % 4,715 4,023 17.2 %vehicles



GrossProfit Per Unit:

Total usedvehicle and $ 1,800 $ 2,127 (15.4) % $ 1,981 $ 2,161 (8.3) %F&I

Selling, General and Administrative ("SG&A") Expenses - Consolidated

Three Months Ended September 30,

Better / (Worse)

2020

2019

Change

% Change

(In thousands)

Reported:

Compensation

$

169,097

$

184,089

$

14,992

8.1

%

Advertising

9,455

15,856

6,401

40.4

%

Rent

13,846

12,721

(1,125)

(8.8)

%

Other

64,776

84,160

19,384

23.0

%

Total SG&A expenses

$

257,174

$

296,826

$

39,652

13.4

%

Items of interest:

Gain (loss) on franchise disposals

$

3,150

$

-

Total SG&A adjustments

$

3,150

$

-

Adjusted:

Total adjusted SG&A expenses

$

260,324

$

296,826

$

36,502

12.3

%

Reported:

SG&A expenses as a % of gross profit:

Compensation

44.9

%

47.6

%

270

bps

Advertising

2.5

%

4.1

%

160

bps

Rent

3.7

%

3.3

%

(40)

bps

Other

17.2

%

21.7

%

450

bps

Total SG&A expenses as a % of gross profit

68.3

%

76.7

%

840

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

69.1

%

76.7

%

760

bps

Selling, General and Administrative ("SG&A") Expenses - Consolidated

Three Months Ended Better / (Worse) September 30,

2020 2019 Change % Change

(In thousands)

Reported:

Compensation $ 169,097 $ 184,089 $ 14,992 8.1 %

Advertising 9,455 15,856 6,401 40.4 %

Rent 13,846 12,721 (1,125) (8.8) %

Other 64,776 84,160 19,384 23.0 %

Total SG&A expenses $ 257,174 $ 296,826 $ 39,652 13.4 %

Items of interest:

Gain (loss) on franchise $ 3,150 $ - disposals

Total SG&A adjustments $ 3,150 $ -

Adjusted:

Total adjusted SG&A expenses $ 260,324 $ 296,826 $ 36,502 12.3 %



Reported:

SG&A expenses as a % of gross profit:

Compensation 44.9 % 47.6 % 270 bps

Advertising 2.5 % 4.1 % 160 bps

Rent 3.7 % 3.3 % (40) bps

Other 17.2 % 21.7 % 450 bps

Total SG&A expenses as a % of 68.3 % 76.7 % 840 bpsgross profit

Items of interest:

Gain (loss) on franchise 0.8 % - % disposals

Total effect of adjustments 0.8 % - %

Adjusted:

Total adjusted SG&A expenses as a 69.1 % 76.7 % 760 bps% of gross profit

Selling, General and Administrative ("SG&A") Expenses - Consolidated

Nine Months Ended September 30,

Better / (Worse)

2020

2019

Change

% Change

(In thousands)

Reported:

Compensation

$

483,784

$

549,470

$

65,686

12.0

%

Advertising

31,677

46,308

14,631

31.6

%

Rent

40,934

41,308

374

0.9

%

Other

213,293

201,367

(11,926)

(5.9)

%

Total SG&A expenses

$

769,688

$

838,453

$

68,765

8.2

%

Items of interest:

Gain (loss) on franchise disposals

$

3,150

$

46,680

Executive transition costs

-

(6,264)

Total SG&A adjustments

$

3,150

$

40,416

Adjusted:

Total adjusted SG&A expenses

$

772,838

$

878,869

$

106,031

12.1

%

Reported:

SG&A expenses as a % of gross profit:

Compensation

46.8

%

48.7

%

190

bps

Advertising

3.1

%

4.1

%

100

bps

Rent

4.0

%

3.7

%

(30)

bps

Other

20.5

%

17.9

%

(260)

bps

Total SG&A expenses as a % of gross profit

74.4

%

74.4

%

-

bps

Items of interest:

Gain (loss) on franchise disposals

0.3

%

4.2

%

Executive transition costs

-

%

(0.6)

%

Total effect of adjustments

0.3

%

3.6

%

Adjusted:

Total adjusted SG&A expenses as a % of gross profit

74.7

%

78.0

%

330

bps

Selling, General and Administrative ("SG&A") Expenses - Consolidated

Nine Months Ended Better / (Worse) September 30,

2020 2019 Change % Change

(In thousands)

Reported:

Compensation $ 483,784 $ 549,470 $ 65,686 12.0 %

Advertising 31,677 46,308 14,631 31.6 %

Rent 40,934 41,308 374 0.9 %

Other 213,293 201,367 (11,926) (5.9) %

Total SG&A expenses $ 769,688 $ 838,453 $ 68,765 8.2 %

Items of interest:

Gain (loss) on franchise $ 3,150 $ 46,680 disposals

Executive transition costs - (6,264)

Total SG&A adjustments $ 3,150 $ 40,416

Adjusted:

Total adjusted SG&A expenses $ 772,838 $ 878,869 $ 106,031 12.1 %



Reported:

SG&A expenses as a % of gross profit:

Compensation 46.8 % 48.7 % 190 bps

Advertising 3.1 % 4.1 % 100 bps

Rent 4.0 % 3.7 % (30) bps

Other 20.5 % 17.9 % (260) bps

Total SG&A expenses as a % of 74.4 % 74.4 % - bpsgross profit

Items of interest:

Gain (loss) on franchise 0.3 % 4.2 % disposals

Executive transition costs - % (0.6) %

Total effect of adjustments 0.3 % 3.6 %

Adjusted:

Total adjusted SG&A expenses as a 74.7 % 78.0 % 330 bps% of gross profit

Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Weighted-AverageShares

Amount

PerShareAmount

Weighted-AverageShares

Amount

PerShareAmount

(In thousands, except per share amounts)

Diluted earnings (loss) and shares from continuing operations

44,577

$

59,988

$

1.35

44,203

$

29,168

$

0.66

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

44,577

$

57,665

$

1.29

44,203

$

29,168

$

0.66

Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation

Three Months Ended September Three Months Ended September 30, 2020 30, 2019

Weighted- Per Weighted- Per Average Amount Share Average Amount Share Shares Amount Shares Amount

(In thousands, except per share amounts)

Dilutedearnings (loss)and shares from 44,577 $ 59,988 $ 1.35 44,203 $ 29,168 $ 0.66continuingoperations^

Pre-tax items of interest:

(Gain) loss onfranchise $ (3,150 ) $ - disposals

Total pre-taxitems of $ (3,150 ) $ - interest

Tax effect of $ 827 $ - above items

Adjusteddilutedearnings (loss) 44,577 $ 57,665 $ 1.29 44,203 $ 29,168 $ 0.66and shares fromcontinuingoperations

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Weighted-AverageShares

Amount

PerShareAmount

Weighted-AverageShares

Amount

PerShareAmount

(In thousands, except per share amounts)

Diluted earnings (loss) and shares from continuing operations (1)

42,687

$

(108,147

)

$

(2.53

)

43,456

$

98,268

$

2.26

Pre-tax items of interest:

(Gain) loss on franchise disposals

$

(3,150

)

$

(46,680

)

Executive transition costs

-

6,264

Impairment charges

268,000

1,926

Total pre-tax items of interest

$

264,850

$

(38,490

)

Tax effect of above items

$

(53,643

)

$

12,902

Adjusted diluted earnings (loss) and shares from continuing operations

43,864

$

103,060

$

2.35

43,456

$

72,680

$

1.67

(1) Basic Weighted-Average Shares Used For Nine Months Ended September 30, 2020 Due To Net Loss On GAAP Basis

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005128/en/

CONTACT: Investor Inquiries: Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400 Danny Wieland, Investor Relations (704) 927-3462 ir@sonicautomotive.com

CONTACT: Press Inquiries: Danielle DeVoren / Anthony Feldman 212-896-1272 / 347-487-6194 ddevoren@kcsa.com / afeldman@kcsa.com