CHARLOTTE, N.C., July 28, 2017 /PRNewswire/ -- Sonic Automotive, Inc. (NYSE: SAH), one of the nation's largest automotive retailers, today reported financial results for the second quarter of 2017.

Second Quarter 2017 Results & Announcements

• EchoPark stores retailed 2,049 units, up 80.4% over the prior year quarter
• Accelerated expansion of an additional 15 EchoPark stores by the end of 2018
• Record Q2 pre-owned units of 30,536 contributing gross profit of $40.0 million
• All-time record quarterly fixed operations gross profit of $173.1 million, up 2.9% over the prior year quarter
• Record Q2 F&I gross profit and gross profit per retail unit of $86.9 million and $1,379, respectively
• Record Q2 total gross profit of $360.6 million, up 2.1% over the prior year quarter
• Repurchased 1.2 million Class A shares (approximately 2.6% of outstanding stock) for $22.0 million and declared $0.05/share dividend
• GAAP continuing operations net income of $12.3 million with EPS of $0.27 per diluted share
• Adjusted continuing operations net income of $17.9 million with adjusted EPS of $0.40 per diluted share

GAAP Basis

Net income from continuing operations for the second quarter of 2017 was $12.3 million, or $0.27 per diluted share. These results include charges related to fixed asset impairments, weather-related physical damage costs, legal matters, and charges associated with closing and relocating stores.  Also included in the GAAP reported amounts for the second quarter of 2017 is a net after-tax loss from operations related to EchoPark of $4.7 million, or $0.11 per diluted share.

Comparatively, net income from continuing operations for the second quarter of 2016 was $23.0 million, or $0.50 per diluted share.  Included in the GAAP reported amounts for the second quarter of 2016 is a net after-tax loss from operations related to EchoPark of $2.0 million, or $0.04 per diluted share.

Adjusted Basis

Adjusted net income from continuing operations and related earnings per diluted share are non-GAAP financial measures.  The schedules included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Adjusted net income from continuing operations for the second quarter of 2017 was $17.9 million, or $0.40 per diluted share.  There were no adjustments in the second quarter of 2016.  The adjustments in the 2017 quarterly period relate to fixed asset impairments, weather-related physical damage costs, legal matters, and charges associated with closing and relocating stores.

Commentary

Jeff Dyke, Sonic's EVP of Operations, stated, "Given our performance at EchoPark, we are accelerating our expansion into the Carolinas, Florida, Georgia and Texas markets.  Our Colorado stores were cash flow positive in the quarter.  Currently, we have more than 15 locations in the aforementioned markets that will break ground in 2017 and 2018." 

"The new vehicle retail sales environment continues to be challenging in Houston and across certain brands.  Our exposure to BMW, coupled with economic conditions in Houston's energy corridor, pressured sales and profitability in the second quarter.  On a same store basis, our new vehicle unit sales declined 3.0% compared to the prior year quarter.  This decline was slightly higher than the overall SAAR decline of 2.9%.  Other parts of the business, however, continue to experience growth.  We were able to grow used vehicle, fixed operations and F&I (finance and insurance) gross profit during the quarter which is a testament to the dealer operating model.  In addition, our operations and financial management teams have been busy during the quarter adjusting our cost structure in various areas to compensate for increased competition that has pressured margins.  We expect this highly competitive retail landscape to continue and possibly intensify over the next several quarters as dealers balance volume and gross per unit expectations." 

B. Scott Smith, the Company's Chief Executive Officer, noted, "Our activities in the quarter continue to support our long-term growth strategies. During the second quarter, we opened our new open point Audi store in Pensacola, Florida and our sixth EchoPark store in Colorado.  We believe these investments will offer strong earning streams as the underlying businesses mature.  Year to date, we also invested approximately $30 million returning capital to stockholders through dividends and share repurchases.  Our facilities teams have been extremely busy as well, evidenced by the $121 million invested in capital expenditures during the first half of 2017.  We are committed to offering the best customer buying experience in the industry, which includes state of the art facilities at both our franchised dealerships and EchoPark stores."

"Based on results experienced in the first half of the year and our forecast for the remainder of 2017, we are updating our earnings guidance.  We currently project adjusted diluted earnings per share from continuing operations for 2017 to be between $1.85 and $1.95 per share ($1.49 and $1.59 per diluted share, on an unadjusted GAAP basis).  This range includes the effect of projected EchoPark results and expansion.  We are also now projecting an adjusted loss related to EchoPark for 2017 of between $0.29 and $0.33 per diluted share ($0.32 and $0.36 per diluted share, on an unadjusted GAAP basis).  We will have additional comments on our guidance in our earnings call later today."

Dividend

Sonic's Board of Directors approved a quarterly dividend of $0.05 per share payable in cash for stockholders of record on September 15, 2017.  The dividend will be payable on October 13, 2017. 

Second Quarter 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 go to: www.sonicautomotive.com, then click on "Our Company," then "Investor Relations," then "Earnings Conference Calls."

Presentation materials for the conference call can be accessed on the Company's website at www.sonicautomotive.com by clicking on the "Investor Relations" tab under "Our Company" and choosing "Webcasts & Presentations."

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:

Domestic: 1.877.450.3867
International: 1.706.643.0958
Conference ID: 48697046

A conference call replay will be available one hour following the call for seven days and can be accessed by calling:

Domestic: 1.855.859.2056
International: 1.404.537.3406
Conference ID: 48697046

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation's largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com. More information about EchoPark Automotive can be found at www.echopark.com.

Forward Looking Statements

Included herein are forward-looking statements, including statements with respect to our 2017 earnings expectations, our long-term strategy, the anticipated expansion of our EchoPark business and our franchised dealerships, and our expectation that the highly competitive retail landscape will continue and possibly intensify over the next several quarters.  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, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.  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 Securities and Exchange Commission (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 adjusted net income from continuing operations and related earnings per diluted share, which exclude certain items disclosed in the attached financial tables.  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 disclosure, provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations.