Business Wire | Jul 30, 2020 06:55AM EDT

Sonic Automotive Reports 2nd Quarter 2020 EPS Growth

Jul. 30, 2020

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

Second Quarter Highlights

* Earnings per diluted share from continuing operations of $0.71 for the second quarter of 2020, compared to $0.62 for the second quarter of 2019 (included in the results for the second quarter of 2020 is a non-recurring tax benefit of $3.2 million, or $0.07 per share) * SG&A expenses as a percentage of gross profit were 74.9% for the second quarter of 2020, compared to 77.2% for the second quarter of 2019, a 230-basis point improvement (total SG&A expenses for the second quarter of 2020 decreased $64.2 million, or 22%, compared to the second quarter of 2019) * Total Sonic consolidated second quarter 2020 revenues of $2.1 billion and gross profit of $307.4 million * EchoPark second quarter 2020 revenues of $315.3 million, up 8% from the second quarter of 2019 * EchoPark second quarter 2020 retail sales volume of 13,207 units, up 5% from the second quarter of 2019 * EchoPark segment income of $2.6 million, up 52% from the second quarter of 2019 * Same store Franchised Dealerships Segment operating results for the second quarter of 2020, compared to the second quarter of 2019: Revenues down 19%, gross profit down 19% New vehicle unit sales volume down 25%; new vehicle gross profit per unit up 9%, to $2,218 Retail used vehicle unit sales volume down 12%; retail used vehicle gross profit per unit down 14%, to $1,122 Parts, service and collision repair gross profit down 24%; customer pay gross profit down 16% Finance and insurance ("F&I") gross profit down 8% (all-time record quarterly F&I gross profit per retail unit of $1,946, up 14%, on a total Sonic consolidated basis)

Commentary

David Smith, Sonic's and EchoPark's Chief Executive Officer, commented, "Our second quarter results reflect not only a dramatic operating improvement since the onset of COVID-19, but also an all-time record monthly profit in June. The record-setting momentum we saw during the month of June has continued throughout July to date."

Mr. Smith continued, "We continue to offer our guests a transparent, guest-centric vehicle purchase experience, meeting their individual needs by offering an integrated online and on-site sales experience. To enable guests to choose their preferred buying approach, we are proud to announce an historic strategic partnership with Cox Automotive and Darwin Automotive to develop a first of its kind proprietary e-commerce platform and user interface. This digital retailing partnership will accelerate our EchoPark expansion plans and elevate the online retail guest experience on our franchised dealership websites and EchoPark.com beginning in the fourth quarter of 2020."

Jeff Dyke, Sonic's and EchoPark's President, commented, "I am extremely proud of the way our team has responded to the challenges of the past few months and the positive impact they have had on our business. EchoPark has continued to see a v-shaped recovery in sales volume and improved profitability, surpassing our original pre-pandemic forecasts for the month of June. For the second quarter, EchoPark segment income increased 52%, demonstrating the leverage and profit potential of this model. Based on the significant success of EchoPark, we are accelerating EchoPark's expansion. We expect EchoPark to sell over half a million vehicles annually by 2025, through a 140-point nationwide distribution network and expanded e-commerce capabilities, generating incremental revenue in excess of $10 billion annually."

Heath Byrd, Sonic's and EchoPark's Chief Financial Officer, commented, "We continue to manage expenses and capital expenditure levels in the short term to bolster our financial flexibility and address the challenges of COVID-19. These actions have been extremely successful in improving operational efficiencies and enhancing our overall profitability. Longer term, we remain committed to increasing revenues and maximizing profitability through further expansion of EchoPark, strategic growth of our franchised dealerships and more aggressive pursuit of new avenues for sales growth through omni-channel selling, including online, on-site and hybrid channels. In addition, we remain committed to reducing SG&A expenses by $84 million annualized, on a go-forward basis, as compared to pre-COVID-19 levels."

Financial Position

As of June 30, 2020, Sonic's total available liquidity increased to $455.1 million, up from $311.5 million as of March 31, 2020. Sonic's liquidity as of June 30, 2020 consists of $115.7 million of cash on hand, $83.9 million of floor plan deposit balances and $255.5 million of availability under our credit facilities. From a debt perspective, Sonic has no significant near-term debt maturities.

Dividend

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

Outlook

Sonic expects to provide the next mid-quarter update to its 2020 outlook during the week of September 14th. The COVID-19 pandemic could impact both our outlook and future results depending on its continued evolution.

Second Quarter 2020 Earnings Conference Call

Senior management will host a conference call today at 11:00 A.M. (Eastern) to discuss the quarter's results. To access the live broadcast of the call over the Internet, 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: 8236339

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: 8236339

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 an 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. 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, anticipated future growth in our EchoPark Segment, expected incremental EchoPark revenues, anticipated future EchoPark unit sales volume, expected SG&A expense reductions, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, anticipated liquidity position, expected future capital expenditures, 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, Quarterly Report on Form 10-Q for the quarter ended March 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 segment income. As required by SEC rules, the Company provides reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. 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 of Operations - Consolidated

Three Months Ended June 30, Better / Six Months Ended June 30, Better / (Worse) (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except per share amounts)

Revenues:

New vehicles $ 900,003 $ 1,204,754 (25.3 ) $ 1,859,492 $ 2,271,088 (18.1 ) % %

Used vehicles 808,877 885,627 (8.7 ) 1,658,930 1,705,992 (2.8 ) % %

Wholesale 33,175 50,039 (33.7 ) 81,718 104,810 (22.0 )vehicles % %

Total vehicles 1,742,055 2,140,420 (18.6 ) 3,600,140 4,081,890 (11.8 ) % %

Parts, service ) )and collision 259,058 355,312 (27.1 % 593,738 696,742 (14.8 %repair

Finance, )insurance and 110,773 118,349 (6.4 % 226,064 224,587 0.7 %other, net

Total revenues 2,111,886 2,614,081 (19.2 ) 4,419,942 5,003,219 (11.7 ) % %

Cost of Sales:

New vehicles (854,617 ) (1,148,354 ) 25.6 % (1,768,690 ) (2,160,892 ) 18.2 %

Used vehicles (781,506 ) (848,898 ) 7.9 % (1,599,428 ) (1,632,256 ) 2.0 %

Wholesale (33,601 ) (50,752 ) 33.8 % (82,303 ) (106,789 ) 22.9 %vehicles

Total vehicles (1,669,724 ) (2,048,004 ) 18.5 % (3,450,421 ) (3,899,937 ) 11.5 %

Parts, serviceand collision (134,779 ) (184,766 ) 27.1 % (311,560 ) (362,960 ) 14.2 %repair

Total cost of (1,804,503 ) (2,232,770 ) 19.2 % (3,761,981 ) (4,262,897 ) 11.8 %sales

Gross profit 307,383 381,311 (19.4 ) 657,961 740,322 (11.1 ) % %

Selling, generaland (230,359 ) (294,532 ) 21.8 % (512,515 ) (541,626 ) 5.4 %administrativeexpenses

Impairment (833 ) - (100.0 ) (268,833 ) (1,952 ) (13,672.2 )charges % %

Depreciation and (22,647 ) (23,806 ) 4.9 % (44,944 ) (46,456 ) 3.3 %amortization

Operating income 53,544 62,973 (15.0 ) (168,331 ) 150,288 (212.0 )(loss) % %

Other income (expense):

Interestexpense, floor (6,314 ) (12,518 ) 49.6 % (16,822 ) (25,744 ) 34.7 %plan

Interestexpense, other, (9,797 ) (13,628 ) 28.1 % (20,762 ) (26,481 ) 21.6 %net

Other income - (5 ) 100.0 % 100 95 (5.3 )(expense), net %

Total other (16,111 ) (26,151 ) 38.4 % (37,484 ) (52,130 ) 28.1 %income (expense)

Income (loss)from continuing 37,433 36,822 1.7 % (205,815 ) 98,158 (309.7 )operations %before taxes

Provision forincome taxes forcontinuing (6,437 ) (10,071 ) 36.1 % 37,680 (29,058 ) 229.7 %operations -benefit(expense)

Income (loss) )from continuing 30,996 26,751 15.9 % (168,135 ) 69,100 (343.3 %operations

Discontinued operations:

Income (loss)from ) )discontinued (289 ) (213 ) (35.7 % (573 ) (393 ) (45.8 %operationsbefore taxes

Provision forincome taxes fordiscontinued 84 61 37.7 % 166 114 45.6 %operations -benefit(expense)

Income (loss)from (205 ) (152 ) (34.9 ) (407 ) (279 ) (45.9 )discontinued % %operations

Net income $ 30,791 $ 26,599 15.8 % $ (168,542 ) $ 68,821 (344.9 )(loss) %

Basic earnings(loss) per common share:

Earnings (loss)per share from $ 0.72 $ 0.62 16.1 % $ (3.93 ) $ 1.61 (344.1 )continuing %operations

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

Earnings (loss) $ 0.72 $ 0.62 16.1 % $ (3.94 ) $ 1.60 (346.3 )per common share %

Weighted-averagecommon shares 42,940 43,066 0.3 % 42,779 42,953 0.4 %outstanding

Diluted earnings(loss) per common share:

Earnings (loss)per share from $ 0.71 $ 0.62 14.5 % $ (3.93 ) $ 1.60 (345.6 )continuing %operations

Earnings (loss)per share from - (0.01 ) 100.0 % (0.01 ) - (100.0 )discontinued %operations

Earnings (loss) $ 0.71 $ 0.61 16.4 % $ (3.94 ) $ 1.60 (346.3 )per common share %

Weighted-average )common shares 43,575 43,230 (0.8 % 42,779 43,060 0.7 %outstanding

Dividendsdeclared per $ 0.10 $ 0.10 - % $ 0.20 $ 0.20 - %common share

Franchised Dealerships Segment - Reported

Three Months Ended June 30, Better / Six Months Ended June 30, Better / (Worse) (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except unit and per unit data)

Revenues:

New vehicles $ 900,003 $ 1,204,754 (25.3 ) $ 1,859,492 $ 2,271,088 (18.1 ) % %

Used vehicles 535,699 637,090 (15.9 ) 1,102,587 1,241,039 (11.2 ) % %

Wholesale 28,509 43,720 (34.8 ) 70,948 96,253 (26.3 )vehicles % %

Total vehicles 1,464,211 1,885,564 (22.3 ) 3,033,027 3,608,380 (15.9 ) % %

Parts, service ) )and collision 251,998 347,337 (27.4 % 576,499 683,563 (15.7 %repair

Finance, ) )insurance and 80,401 89,507 (10.2 % 163,429 170,028 (3.9 %other, net

Total revenues 1,796,610 2,322,408 (22.6 ) 3,772,955 4,461,971 (15.4 ) % %

Gross Profit:

New vehicles 45,386 56,400 (19.5 ) 90,802 110,196 (17.6 ) % %

Used vehicles 30,416 37,454 (18.8 ) 62,730 74,191 (15.4 ) % %

Wholesale (357 ) (670 ) 46.7 % (440 ) (1,874 ) 76.5 %vehicles

Total vehicles 75,445 93,184 (19.0 ) 153,092 182,513 (16.1 ) % %

Parts, service ) )and collision 124,466 170,707 (27.1 % 282,562 334,154 (15.4 %repair

Finance, ) )insurance and 80,401 89,507 (10.2 % 163,429 170,028 (3.9 %other, net

Total gross 280,312 353,398 (20.7 ) 599,083 686,695 (12.8 )profit % %

Selling,general and (209,496 ) (272,331 ) 23.1 % (465,914 ) (499,330 ) 6.7 %administrativeexpenses

Impairment (833 ) - (100.0 ) (268,833 ) (26 ) NMcharges %

Depreciationand (19,895 ) (21,144 ) 5.9 % (39,484 ) (41,381 ) 4.6 %amortization

Operating 50,088 59,923 (16.4 ) (175,148 ) 145,958 (220.0 )income (loss) % %

Other income (expense):

Interestexpense, floor (5,675 ) (11,597 ) 51.1 % (15,283 ) (24,102 ) 36.6 %plan

Interestexpense, (9,557 ) (13,192 ) 27.6 % (20,156 ) (25,606 ) 21.3 %other, net

Other income - (5 ) 100.0 % 100 34 194.1 %(expense), net

Total otherincome (15,232 ) (24,794 ) 38.6 % (35,339 ) (49,674 ) 28.9 %(expense)

Income (loss) 34,856 35,129 (0.8 ) (210,487 ) 96,284 (318.6 )before taxes % %

Add: )impairment 833 - (100.0 % 268,833 26 NMcharges

Segment income $ 35,689 $ 35,129 (1.6 ) $ 58,346 $ 96,310 (39.4 )(loss) % %



Unit Sales Volume:

New vehicles 19,891 28,196 (29.5 ) 41,615 53,393 (22.1 ) % %

Used vehicles 23,973 28,871 (17.0 ) 50,011 56,283 (11.1 ) % %

Wholesale 4,827 6,960 (30.6 ) 11,737 15,108 (22.3 )vehicles % %

Retail new & 43,864 57,067 (23.1 ) 91,626 109,676 (16.5 )used vehicles % %

Used:New Ratio 1.21 1.02 17.7 % 1.20 1.05 14.0 %



Gross Profit Per Unit:

New vehicles $ 2,282 $ 2,000 14.1 % $ 2,182 $ 2,064 5.7 %

Used vehicles $ 1,269 $ 1,297 (2.2 ) $ 1,254 $ 1,318 (4.9 ) % %

Finance,insurance and $ 1,839 $ 1,581 16.3 % $ 1,798 $ 1,561 15.2 %other, net

NM = Not Meaningful

Franchised Dealerships Segment - Same Store

Better Better Three Months Ended June 30, / Six Months Ended June 30, / (Worse) (Worse)

2020 2019 % 2020 2019 % Change Change

(In thousands, except unit and per unit data)

Revenues:

New $ 899,655 $ 1,150,601 (21.8 ) $ 1,857,489 $ 2,155,333 (13.8 )vehicles % %

Used 535,252 609,567 (12.2 ) 1,099,852 1,183,279 (7.1 )vehicles % %

Wholesale 28,407 41,795 (32.0 ) 70,720 91,383 (22.6 )vehicles % %

Total 1,463,314 1,801,963 (18.8 ) 3,028,061 3,429,995 (11.7 )vehicles % %

Parts,service ) )and 252,330 334,300 (24.5 % 576,297 653,890 (11.9 %collisionrepair

Finance,insurance ) )and 75,558 82,399 (8.3 % 154,149 155,819 (1.1 %other,net

Total $ 1,791,202 $ 2,218,662 (19.3 ) $ 3,758,507 $ 4,239,704 (11.3 )revenues % %

Gross Profit:

New $ 44,111 $ 53,834 (18.1 ) $ 89,519 $ 105,455 (15.1 )vehicles % %

Used 26,874 35,182 (23.6 ) 59,153 67,640 (12.5 )vehicles % %

Wholesale (317 ) (421 ) 24.7 % (375 ) (1,421 ) 73.6 %vehicles

Total 70,668 88,595 (20.2 ) 148,297 171,674 (13.6 )vehicles % %

Parts,service ) )and 124,019 164,061 (24.4 % 281,803 318,774 (11.6 %collisionrepair

Finance,insurance ) )and 75,558 82,399 (8.3 % 154,149 155,819 (1.1 %other,net

Total ) )gross $ 270,245 $ 335,055 (19.3 % $ 584,249 $ 646,267 (9.6 %profit



UnitSales Volume:

New 19,884 26,359 (24.6 ) 41,575 49,450 (15.9 )vehicles % %

Used 23,949 27,110 (11.7 ) 49,871 52,601 (5.2 )vehicles % %

Wholesale 4,811 6,362 (24.4 ) 11,703 13,807 (15.2 )vehicles % %

Retailnew & 43,833 53,469 (18.0 ) 91,446 102,051 (10.4 )used % %vehicles

Used:New 1.20 1.03 17.1 % 1.20 1.06 12.8 %Ratio



GrossProfit Per Unit:

New $ 2,218 $ 2,042 8.6 % $ 2,153 $ 2,133 0.9 %vehicles

Used $ 1,122 $ 1,298 (13.6 ) $ 1,186 $ 1,286 (7.8 )vehicles % %

Finance,insuranceand $ 1,730 $ 1,554 11.3 % $ 1,699 $ 1,538 10.5 %other,net

EchoPark Segment - Reported

Three Months Ended June Better / Six Months Ended June 30, Better / 30, (Worse) (Worse)

2020 2019 % Change 2020 2019 % Change

(In thousands, except unit and per unit data)

Revenues:

Used vehicles $ 273,178 $ 248,537 9.9 % $ 556,343 $ 464,953 19.7 %

Wholesale 4,666 6,319 (26.2 ) 10,770 8,557 25.9 %vehicles %

Total vehicles 277,844 254,856 9.0 % 567,113 473,510 19.8 %

Parts, service )and collision 7,060 7,975 (11.5 % 17,239 13,179 30.8 %repair

Finance,insurance and 30,372 28,842 5.3 % 62,635 54,559 14.8 %other, net

Total revenues 315,276 291,673 8.1 % 646,987 541,248 19.5 %

Gross Profit:

Used vehicles (3,045 ) (725 ) (320.0 ) (3,228 ) (455 ) (609.5 ) % %

Wholesale (70 ) (42 ) (60.5 ) (146 ) (105 ) (38.1 )vehicles % %

Total vehicles (3,115 ) (767 ) 306.1 % (3,374 ) (560 ) 502.5 %

Parts, service ) )and collision (186 ) (162 ) (14.8 % (383 ) (372 ) (3.0 %repair

Finance,insurance and 30,372 28,842 5.3 % 62,635 54,559 14.8 %other, net

Total gross 27,071 27,913 (3.0 ) 58,878 53,627 9.8 %profit %

Selling,general and (20,863 ) (22,201 ) 6.0 % (46,601 ) (42,296 ) (10.2 )administrative %expenses

Impairment - - - % - (1,926 ) 100.0 %charges

Depreciation ) )and (2,752 ) (2,662 ) (3.4 % (5,460 ) (5,075 ) (7.6 %amortization

Operating 3,456 3,050 13.3 % 6,817 4,330 57.4 %income (loss)

Other income (expense):

Interestexpense, floor (639 ) (921 ) 30.6 % (1,539 ) (1,642 ) 6.3 %plan

Interestexpense, (240 ) (436 ) 45.0 % (606 ) (875 ) 30.7 %other, net

Other income - - - % - 61 (100.0 )(expense), net %

Total otherincome (879 ) (1,357 ) 35.2 % (2,145 ) (2,456 ) 12.7 %(expense)

Income (loss) 2,577 1,693 52.2 % 4,672 1,874 149.3 %before taxes

Add:impairment - - - % - (1,926 ) 100.0 %charges

Segment income $ 2,577 $ 1,693 52.2 % $ 4,672 $ 3,800 22.9 %(loss)



Unit Sales Volume:

Used vehicles 13,207 12,587 4.9 % 27,193 23,638 15.0 %

Wholesale 1,454 1,686 4.8 % 3,219 2,185 47.3 %vehicles



Gross Profit Per Unit:

Total used ) )vehicle and F& $ 2,069 $ 2,234 (7.4 % $ 2,185 $ 2,289 (4.5 %I

EchoPark Segment - Same Store

Three Months Ended June Better Better / 30, / Six Months Ended June 30, (Worse) (Worse)

2020 2019 % 2020 2019 % Change Change

(In thousands, except unit and per unit data)

Revenues:

Used $ 243,043 $ 248,536 (2.2 ) $ 508,343 $ 464,953 9.3 %vehicles %

Wholesale 4,349 6,320 (31.2 ) 10,223 8,556 19.5 %vehicles %

Total 247,392 254,856 (2.9 ) 518,566 473,509 9.5 %vehicles %

Parts,service )and 6,277 7,974 (21.3 % 15,852 13,179 20.3 %collisionrepair

Finance,insurance )and 27,049 28,605 (5.4 % 57,273 54,252 5.6 %other,net

Total $ 280,718 $ 291,435 (3.7 ) $ 591,691 $ 540,940 9.4 %revenues %

Gross Profit:

Used $ (3,988 ) $ (2,464 ) (61.9 ) $ (5,832 ) $ (2,721 ) (114.3 )vehicles % %

Wholesale (69 ) (42 ) (64.3 ) (139 ) (105 ) (32.4 )vehicles % %

Total (4,057 ) (2,506 ) 61.9 % (5,971 ) (2,826 ) 111.3 %vehicles

Parts,serviceand (141 ) (141 ) - % (299 ) (351 ) 14.8 %collisionrepair

Finance,insurance )and 27,049 28,605 (5.4 % 57,273 54,252 5.6 %other,net

Total ) )gross $ 22,851 $ 25,958 (12.0 % $ 51,003 $ 51,075 (0.1 %profit



UnitSales Volume:

Used 11,716 12,587 (6.9 ) 24,783 23,638 4.8 %vehicles %

Wholesale 1,319 1,686 (21.8 ) 2,995 2,185 37.1 %vehicles %



GrossProfit Per Unit:

Totalused $ 1,968 $ 2,077 (5.2 ) $ 2,076 $ 2,180 (4.8 )vehicle % %and F&I

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

Three Months Ended June Better / (Worse) 30,

2020 2019 Change % Change

(In thousands)

Reported:

Compensation $ 140,266 $ 181,197 $ 40,931 22.6 %

Advertising 8,087 15,402 7,315 47.5 %

Rent 13,223 13,336 113 0.8 %

Other 68,783 84,597 15,814 18.7 %

Total SG&A expenses $ 230,359 $ 294,532 $ 64,173 21.8 %



Reported:

SG&A expenses as a % of gross profit:

Compensation 45.6 % 47.5 % 190 bps

Advertising 2.6 % 4.0 % 140 bps

Rent 4.3 % 3.5 % (80 ) bps

Other 22.4 % 22.2 % (20 ) bps

Total SG&A expenses as a % of 74.9 % 77.2 % 230 bpsgross profit



Six Months Ended June 30, Better / (Worse)

2020 2019 Change % Change

(In thousands)

Reported:

Compensation $ 314,688 $ 365,381 $ 50,693 13.9 %

Advertising 22,222 30,453 8,231 27.0 %

Rent 27,088 28,586 1,498 5.2 %

Other 148,517 117,206 (31,311 ) (26.7 ) %

Total SG&A expenses $ 512,515 $ 541,626 $ 29,111 5.4 %



Reported:

SG&A expenses as a % of gross profit:

Compensation 47.8 % 49.4 % 160 bps

Advertising 3.4 % 4.1 % 70 bps

Rent 4.1 % 3.9 % (20 ) bps

Other 22.6 % 15.8 % (680 ) bps

Total SG&A expenses as a % of 77.9 % 73.2 % (470 ) bpsgross profit

View source version on businesswire.com: https://www.businesswire.com/news/home/20200730005144/en/

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

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