Sonic Automotive (SAH) Tops Q3 EPS by 11c, Revenues Beat

Sonic Automotive (NYSE: SAH) reported Q3 EPS of $0.66, $0.11 better than the analyst estimate of $0.55. Revenue for the quarter came in at $2.7 billion versus the consensus estimate of $2.58 billion.

• EchoPark revenues of $312.2 million during the third quarter of 2019, up 67.9% from the third quarter of 2018.
• EchoPark pre-tax profit improved $7.6 million, or 138.9%, to $2.1 million in the third quarter of 2019, compared to a pre-tax loss of $5.5 million in the third quarter of 2018.
• EchoPark generated Adjusted EBITDA* of $6.4 million in the third quarter of 2019, improving by $9.4 million from the third quarter of 2018.
• EchoPark retailed 13,206 pre-owned units during the third quarter of 2019, up 71.6% from the third quarter of 2018.
• Total Sonic consolidated continuing operations earnings per diluted share of $0.66 in the third quarter of 2019, compared to $0.36 in the third quarter of 2018, an 83.3% increase from the third quarter of 2018.
• Total Sonic consolidated all-time quarterly record pre-owned retail unit sales of 42,453 units in the third quarter of 2019.
• Total Sonic same store Fixed Operations gross profit increased $11.4 million in the third quarter of 2019, up 7.3% from the third quarter of 2018.
• Total Sonic consolidated all-time quarterly record F&I gross profit per retail unit of $1,771 in the third quarter of 2019, an increase of $266 per unit from the third quarter of 2018.
• Total Sonic consolidated all-time quarterly record F&I gross profit of $126.8 million in the third quarter of 2019, an increase of 29.3% from the third quarter of 2018.
• SG&A to gross profit ratio of 76.7% in the third quarter of 2019, an improvement of 350 basis points compared to the third quarter of 2018.

Commentary

David Smith, Sonic’s and EchoPark’s Chief Executive Officer, commented, “Our franchised stores and our EchoPark stores grew pre-tax income in the double and triple digits, respectively. The franchised stores segment increased pre-tax income in the third quarter of 2019 over the prior year quarter by $10.3 million, or 36.8%, while the EchoPark segment increased pre-tax income in the third quarter of 2019 over the prior year quarter by $7.6 million, or 138.9%.”

Mr. Smith continued, “Our operations teams delivered yet another outstanding quarter that resulted in an 83% improvement in earnings per diluted share from continuing operations compared to the third quarter of 2018. Our teams delivered a solid combination of gross profit growth and cost control. Consolidated gross profit grew 7.3% while our SG&A to gross profit ratio improved by 350 basis points. These results were achieved in spite of a challenging new vehicle sales environment where our new vehicle unit sales and related gross profit decreased by 2.8% and $6.3 million, respectively. Our pre-owned, Fixed Operations and F&I results during the quarter exceeded our expectations. We believe these favorable operating trends will continue into the fourth quarter.”

Jeff Dyke, Sonic’s and EchoPark’s President, commented, “Our EchoPark stores had another exceptional quarter. EchoPark grew revenues by 67.9%, gross profit by 107.2% and pre-tax income by 138.9%. As we continue to grow our top-line revenues, a greater amount of incremental gross profit flows through to the bottom line, demonstrating the significant earnings upside potential in this business over the long term. Our path to opening our next EchoPark market in Long Beach, California is becoming clearer and we anticipate an opening in the latter half of the fourth quarter of this year. We are excited to introduce the EchoPark brand to the California market and look forward to continuing to execute on our plans for EchoPark growth, omni-channel selling and other digital initiatives.”

For earnings history and earnings-related data on Sonic Automotive (SAH) click here.

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