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Tags:  online mortgages  fortune  finance  sheet  results  business  quarterly  forex  earning  management  balance  annual  statement  sonicautomotive  income 
Views:  65
Published:  November 18, 2011
 
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Slide 2: 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 not historical facts, but only predictions by our company and/or our company’s management. •These statements generally can be identified by lead-in words such as “believe,” “expect” “anticipate,” “intend,” “plan,” “foresee” and other similar words. Similarly, statements that describe our company’s objectives, plans or goals are also forward-looking statements. •You are cautioned that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Among others, factors that could materially adversely affect actual results and performance include those risk factors that are listed in Sonic Automotive’s Form 10-Q for the quarter ended June 30, 2008.
Slide 3: Third Quarter 2008 Earnings Review October 28, 2008
Slide 4: Sonic Automotive Q3 2008 Conference Call Topics Overview of the Quarter Vision & Strategy / Investment Principles Operational Priorities Financial Review Closing Comments
Slide 5: Building for the Long-Term The Quarter in Review External Operating Environment •Hurricane, credit, consumer confidence •SAAR Impairment Charges Internal Operating Environment •Realignment – team aligned, focused on generating revenue / cash
Slide 6: Building for the Long-Term Vision and Strategy • Our Vision – To Achieve Industry Leadership in Automotive Retailing • Our Strategy – Operational Excellence – Growth through Portfolio Enrichment
Slide 7: Building for the Long-Term Investment Principles • First Order – Stop Making Stupid Mistakes – Stop Friendly Fire • Principles – Guide decision making – Discipline to stick to them
Slide 8: Building for the Long-Term 2008 Strategic Focus •Acquire, Develop, and Retain  Top Talent •Launch Phase 1 of Best‐in‐ class automotive retail  training. Develop  Associates Well Run  Operations •Institutionalize Operational  Excellence •Standardize & Improve Sales &  Marketing processes •Leverage common systems and  centralize Grow the Business •Strengthen the Balance Sheet •Targeted Acquisitions & disposals •Optimize Cost Structure Valued  Customers •Deliver Industry Leading  Customer Experience •Differentiate through target  based Marketing & eCommerce  Web Infrastructure Sonic’s vision is to preserve the core automotive retail principles  that have driven its past success and at the same time leverage the opportunities of scale.
Slide 9: Operating Priorities Used Vehicle Strategy Phase III Web-Tail On-line Branding Virtual Lot Maximize Margin Improved Turns Increased Profitability Right inventory, Right Location, Right Price Market Shift to Consumer Control Phase II Trade Desk Optimizing Inventory Phase I Inventory Control Basic Process rollout Less Auction Activity Common Technology Process Standardization 5
Slide 10: Operating Priorities Fixed Operations Strategy en era tio n os Gr sP rof Phase III Technology Phase II Complete Q4 2009 ve nu eG ene it G Re Sales Training and Merchandising Phase I Standardized Menu Utilization and Pricing Structure Complete Q3 2009 rat ion Complete Q1 2009
Slide 11: Operating Priorities Internet Lead Strategy Fulfill the customer experience through disciplined Sales Process Dealership Sales Team Fixed Operations Used Vehicles New Vehicles Action Deliver the offer – buy here, buy now Online App’ts Right Inventory Video Search Engine Optimization Meet the Customer on Their Terms Traffic Generation Drive more traffic through more targeted marketing Build customer –friendly websites that create engagement Merchandising
Slide 12: Operating Priorities F&I – Same Store 1,080 $1,061 1,040 1,000 960 920 880 840 800 $1,028 $1,003 $985 $999 $983 $1,030 $990 Q1 '08 Q2 '08 2008 2007 Q3 '08 Last 3 Qtr
Slide 13: Operating Priorities Expense Management Dealership Reduced annual expenses by over $7.0 million which will begin to be realized in Q4 and moving forward Right size to new environment Headcount Region Restructured regional staff ($4.6m savings) Leverage of our staff’s expertise Compared to Q3 07 In terms of dollars down $2.8m or 16.2% In terms of gross profit 5.1% down 20bps Controlling Inventory New – 60.1 Used – 32.2 Parts – 36.4 Advertising Inventory Focus on Ad Effectiveness Internet Fixed Pre owned Reduce Floorplan expense Free up frozen cash Reduce bad debt
Slide 14: Geographic / Brand Review New Vehicle • California – – 30% of total new vehicle revenue Brand mix: 70% Luxury, 28% Mid-Line Imports and 2% Domestic • Texas – – 26% of total new vehicle revenue BMW, Chevrolet and Ford brands outpaced local market during the quarter. • Florida – 6% of total revenues, dependant on Cadillac • Brand Commentary – – – – Cadillac is difficult BMW/Mini – 22% of total new vehicle revenue • BMW gaining share in local markets; Mini sales up; Honda - 16% of total new vehicle revenue • Gaining or maintaining share in markets; 44% of unit volume comprised of CA dealerships Mercedes – 11% of total new vehicle revenue • Outperforming local markets – C Class, E Class sales good
Slide 15: Financial Performance (amounts in millions, except per share data) 2008 Actual (1) Revenue Gross Profit – Margin Operating Income – Amount – Margin Net Income – Continuing Operations – Total Operations EPS - Diluted – Continuing Operations – Total Operations $1,785 $286 16.0% 2008 Adjusted (1)(2) $1,785 $286 16.0% 2007 $2,112 $324 15.3% Better/ (Worse) ($327) ($38) (15.5%) (11.8%) 70bps (43.6%) 320bps (68.9%) (72.4%) (63.2%) (67.2%) $9 0.5% $44 2.5% $78 3.7% ($34) ($11.4) ($25.3) ($0.28) ($0.63) $9.6 $7.2 $0.25 $0.19 $30.9 $26.1 $0.68 $0.58 ($21.3) ($18.9) ($0.43) ($0.39) (1) – Includes estimated $0.08/diluted share loss associated with Hurricane Ike (2) - Excludes continuing ops and discontinued ops after tax charges of $21.0 million and $11.9 million, respectively
Slide 16: Discontinued Operations Amount After Taxes Loss from Operations Asset Impairments Lease Exit Accruals Loss on Disposal Subtotal Total Q3 2008 (000's) $ (2,011) (4,212) (7,649) (96) (11,957) $ (13,968) Non-Cash
Slide 17: Same Store Revenue Change – Q3 2008 $2,200 $2,000 $1,800 (millions) $1,600 $1,400 $1,200 Volume Rate: 12.6% Vol: 87.4% $2,088 ($224) ($28) ($7) ($11) ($72) $1,746 Volume $1,000 Prior Year New Retail Used Retail F&I Fixed Ops Rev Other* Current Year *The “Other” Category includes used wholesale and fleet revenue
Slide 18: SG&A Expenses as % of Gross Profit 93.8% 8.5% 74.2% 14.0% 7.7% 66.5% 71.3% Q3 2007 Q3 2008 Rent Hurricane & Q3 Charges All Other SG&A
Slide 19: Fixed Operations Same Store - Q3 2008 (1.0%) (4.0%) (2.8%) (3.8%) (7.0%) (7.3%) (10.0%) Customer Pay Warranty Total
Slide 20: Days Supply Sep-08 New Vehicles Domestic Luxury Import Overall Used Vehicles 66.0 63.0 50.7 60.1 32.2 Sept 08 Industry 73.4 67.4 64.7 69.4 Note: Industry truck days supply was 79 at the end of September, while car inventory was 60.
Slide 21: Capitalization Debt to Cap With Mortgages 42.4% 2.9% 46.3% 45.2% 4.5% 45.8% 6.9% 2.7% 39.5% 43.6% 40.7% 38.9% 57.6% 53.7% 54.8% 54.2% Q4 2007 Q1 2008 Q2 2008 Q3 2008 Equity Debt Mortgages
Slide 22: Liquidity – Revolver Availability June (mils) September (mils) Revolver Balance Revolver Availability Memo: Mortgage Funding $115 110 $76 $69 153 $115
Slide 23: Debt Covenants June September Covenants Current Ratio Fixed Charge Coverage Debt to EBITDA 1.18 1.72 0.94 1.23 1.65 0.82 >=1.15 >=1.20 <2.25 We are in full compliance with all debt covenants
Slide 24: Capital Spending Third Quarter (mils) Nine Months (mils) Capital Spending - property - traditional Total Mortgage Funding Secured in the Period $7 12 $19 $39 $70 52 $122 $57
Slide 25: Q4 Outlook Forecast Assumptions Revised Forecast Same Store Gross Margins: New Used Fixed Operations 6.5% 8.0% 49.7% Relatively Stable LIBOR Rate SAAR Q4 2008 Guidance 4.3% 12.0M $.10 - $.20
Slide 26: Summary • • We are controlling what we can – our ability to execute our operational priorities Q4 Outlook – New vehicle environment will continue to be very challenging, not looking for usual Holiday Push with Luxury. – New and Used gross margin pressure – Continued Challenging Economic and Capital Market Environments • Sticking to our strategy – – – – Generating Revenue Expense Control Cash & Spending Debt Reduction • We are building for the long-term – We are a Sales Organization that is made up of Ladies and Gentlemen who are Committed to Taking the High Road.

   
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