Sonic Automotive, Inc. · NYSE:SAH
Sonic Automotive — Q4 2006 Earnings Presentation
19 slides from Sonic Automotive's earnings presentation, Feb 27, 2007
Slide 1: Exhibit 99.2
Exhibit 99.2
Slide 2: Cautionary Notice Regarding Forward-Looking Statements
Cautionary Notice Regarding Forward-Looking Statements • This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. • These forward-looking statements are n
Slide 3: Sonic Automotive Fourth Quarter 2006 Earnings Review
Sonic Automotive Fourth Quarter 2006 Earnings Review February 27, 2007
Slide 4: The Quarter in Review
The Quarter in Review • Total revenue increased $119 million, or 6.5%. Same store revenue increased 2.7% driven by improvement in all retail lines • Combined luxury and import brands were 84% of total revenue. Luxury brands comprised a record 54% of total revenue • SG&A as a percent of gross profit
Slide 5: Financial Performance
Financial Performance (amounts in millions, except per share data) Better/ (Worse) Revenue $1,958 $1,839 $119 Gross Profit $305 $286 $19 Operating Profit – Amount $74 $66 $8 – Margin 3.8% 3.6% Net Income – Continuing Operations $28.4 $26.7 $1.7 – Total Operations 23.2 20.9 2.3 EPS – Continuing Opera
Slide 6: 2006 Earnings Perspective
2006 Earnings Perspective Strong financial performance, despite headwinds – Rising interest rates – Limited acquisitions Earnings per Share Original Guidance $2.40 - $2.50 Mid-Point $2.45 Less Stock Options Expense (0.08) Total $2.37 Actual Earnings $2.22 Second Quarter Charges 0.27 Total $2.49
Slide 7: Portfolio Enrichment
Portfolio Enrichment 19% 17% 50% 51% 31% 32% YTD 2005 YTD 2006 Domestic Luxury Import Percent of Total Revenue 17% 16% 53% 54% 30% 30% Q4 2005 Q4 2006 Domestic Luxury Import
Slide 8: Same Store Revenue Growth
Same Store Revenue Growth • Solid performance across all business units • Vehicle sales continue to outpace the industry 4.3% 3.4% (15.9%) 3.1% 4.4% 2.7% New Retail Used Wholesale Fixed Operations F&I Total
Slide 9: Same Store Used Car Comparison
Same Store Used Car Comparison th Quarter 2006 Domestic Luxury (incl. Cadillac) Imports Margin 11.5% 8.3% 12.2% Used to New Ratio 0.78 0.43 0.38 Gross Per Unit $1,725 $2,228 $1,757 California All Other Stores Margin 8.3% 10.6% Used to New Ratio 0.28 0.56 Process Total Same Store Retail Volume Change
Slide 10: SG&A Expenses as % of Gross Profit
SG&A Expenses as % of Gross Profit FY 2003 FY 2004 FY 2005 Q4 2006 All Other SG&A Rent 6.0% 71.9% 8.0% 6.9% 7.3% 70.9% 68.8% 65.9% 77.9% 77.8% 76.1% 73.9% Fixed Absorption - 81.6% 83.2% 85.0% 91.1%
Slide 11: Inventory Management
Inventory Management Days Supply Dec-06 Dec-05 Dec-06 Industry New Vehicles Domestic (excluding Cadillac) Luxury (including Cadillac) Import Overall Used Vehicles Parts
Slide 12: Capitalization
60.5% 54.0% 53.8% 53.2% 46.8% 46.2% 46.0% 39.5% Capitalization 100% Debt Equity ****Achieved 40% Target For Debt-To-Capital**** 100% 100% 100%
Slide 13: Projection Assumptions
• Same store sales growth – Low single digits across most business lines – Slightly higher in fixed operations • Gross margins – New vehicle margins relatively stable – Used vehicle margins stabilizing to up slightly – Fixed operations margins continuing improvement • Expense levels – Operating impr
Slide 14: LIBOR Rate Comparison
LIBOR Rate Comparison 4.25 4.50 4.75 5.00 5.25 5.50 2006 Actual 2007 Estimate Average 2006 March June December September January 2007 Projection Average 2006
Slide 15: Share Count
Share Count Actual Forecast * Basic Weighted Average Shares 42,336 43,144 Stock Option Plans 2002 Convertibles 2,776 2,776 2005 Convertibles 1,604 Fully Diluted Weighted Average Shares 46,265 48,400 * 2007 Forecast assumes average price of $31.88 compared to an average price of $24.83 in 2006.
Slide 16: Facility Investments
• BMW of Fairfax Service Center • Lexus of Rockville • BMW of Chattanooga • Mercedes Benz of Fort Myers • Rockville Porsche/Audi • Momentum Porsche • Concord Toyota Facility Investments Facility Investments Spend money where you make money Focus on High Margin Business – Service Capacity and Luxury/
Slide 17: 2007 Earnings Outlook - Perspective
2007 Earnings Outlook - Perspective (Continuing Operations) - Continued strong operational performance - Investment in High-Margin Business segments - Actual Share count up slightly; fully diluted share count up nearly 5% Earnings per Share 2006 Actual $2.22 Second Quarter Charges 0.27 Subtotal $2.4
Slide 18: Summary
Summary • Strong operating and financial performance in 2006 • Execution of key initiatives continues • Used vehicles, fixed operations, and F&I are growth opportunities • Disciplined and prudent acquisitions – targeting 10%-15% of revenue • Strategy is sound; team focused on delivering results • To
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