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)
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.”
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.
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.
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.
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.
About Darwin Automotive:
Darwin Automotive currently operates in all 50 states with over 6,300 dealerships subscribed to its programs and was recently recognized by Automotive News as a 2019 All-Star in Finance & Insurance. Darwin delivered 504,000 deals on its platform last month and is on track to deliver 6.5 million units for the year.