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sonic automotive SAHStephens20June20Conference20Presentation
 

sonic automotive SAHStephens20June20Conference20Presentation

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    sonic automotive SAHStephens20June20Conference20Presentation sonic automotive SAHStephens20June20Conference20Presentation Presentation Transcript

    • 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 March 31, 2008.
    • Sonic Automotive, Inc. Percent of Total Revenues • #298 among the North/West Division – 41.4% Fortune 500 • $8.3 Billion in Revenues • Brand and Geographic diversity – 168 franchises – 32 collision repair centers – 33 vehicle brands – 15 states – 26 metro markets South/East Division – 58.6% Major metro area served
    • Strategic Progression 2008 2004-2007 • Used Vehicle • Strategy – Expense Control - Advertising Phase II - Variable Comp • • F&I Strategy Store Financial Modeling • Leverage Reduction • • Digital Marketing Growth Initiatives - Pre-owned • Fixed Operations - F&I and Fixed Ops • Portfolio Enrichment • • Capital Allocation Regional Infrastructure • Corporate Infrastructure: •Associate Training - Treasury - Profit Analysis - Project Management • Refine Capital Allocation
    • Portfolio Enrichment Strategy • Actively manage brand portfolio to stay ahead of market trends Sonic Sales Mix of Select Brands (% of Total Revenue) FY 1999 FY 2007 23.2% 18.7% 13.5% 11.2% 9.5% 9.5% 9.5% 9.4% 7.9% 6.9% 6.8% 6.7% 6.7% 6.1% 3.8% 0.0% Honda Toyota Lexus BMW Mercedes Cadillac GM (excl. Ford Cadillac) Focus on brands with higher margins and higher growth potential
    • Geographic Brand Mix Percent of Total Revenues within Division Western 7% 33% 60% Eastern 27% 24% 49% CA Only 4% 29% 67% 0% 20% 40% 60% 80% 100% Domestic Import Luxury
    • Used Vehicle Strategy Phase III On-line Market Shift to Web-Tail Branding Consumer Virtual Lot Control Sonic “Auto Phase II – In Process Pilot” Maximize Margin Optimizing Volume Growth Trade Desk Inventory Increased Profitability Right inventory, Right Location, Right Price Phase I - Complete Basic Process rollout (best practices) Process Less Wholesale/Keep more trades Inventory Standardization Common Technology (S.I.M.S) Control
    • Used to New Ratio 70% 64% 65% 60% 55% 52% 48% 50% 47% 45% 40% 2005 2006 2007 Q1 2008
    • Used Vehicle Unit Trend 140,000 120,000 100,000 48% 48% 45% 45% 40% 80,000 60,000 60% 55% 55% 40,000 52% 52% 37% 20,000 63% - 2003 2004 2005 2006 2007 Q1 2008 Retail Units Wholesale Units Phase I Objectives: Phase II Objectives: • Getting the basics right • Trade desk • Retain more trades for retail • Improve pricing • Technology introduction • Getting the right inventory at the right place at the right price
    • Parts, Service and Collision Repair REVENUE GROSS MARGIN RATE ($ in millions) $1,191 50.5% $1,118 50.1% $1,009 49.1% 48.6% $907 48.3% $814 47.4% $733 $578 45.8% 2001 2002 2003 2004 2005 2006 2007 2001 2002 2003 2004 2005 2006 2007 Operating Initiatives  Grow service capacity in high margin brands  Continue to expand service stall capacity
    • Finance and Insurance Profit per Unit (excluding fleet sales) $1,078 $1,004 $953 $939 $929 $925 $938 2003 2004 2005 2006 2007 Q1 Continue training on Electronic Menu 2008 Focus on extended Service Agreements to Drive Product Penetration
    • Associate Training Initiative Sonic Learning and Sonic Training Certification Levels Development Strategy Written Communication: Reference material, self-study, career planning Video Learning – Role playing activities, specific job duty training Master Professional Web-Based Learning – Interactive course presentation Chartered Professional Live Training – Hands-on Certified Professional training, small group activities
    • Phase 1 Marketing Plan Search Drive more Search Engine Engine traffic Optimization - Advertising Marketing through more Organic targeted marketing Traffic Generation Build customer friendly websites that create engagement Merchandising Online Service Video Deliver the Appointment offer – buy here, Inventory Parts & Body buy now! Information shop Action Fulfill the customer experience through disciplined Sales Dealership Sales Team Process
    • Financial Strategy Prudent, Opportunistic Acquisition Growth Consistent Leverage and Balance Sheet Management Shift to Owning More Real Estate to Take Advantage of Lower Financing Rates Disciplined Capital Allocation and Capital Expenditures – Invest Money Where We Make Money
    • Financial Performance (amounts in millions, except per share data) YTD Q1 2007 2006 2008 2007 Revenue $8,337 $7,985 $1,901 $1,883 Gross Profit $1,291 $1,228 $306 $298 – Margin 15.5% 15.4% 16.1% 15.8% Operating Profit – Amount $296 $262 $55 $61 – Margin 3.6% 3.3% 2.9% 3.2% Net Income – Continuing Operations $114.8 $96.8 $18.0 $22.3 – Total Operations 95.5 81.1 14.2 20.0 EPS – Continuing Operations $2.54 $2.18 $0.44 $0.49 – Total Operations 2.13 1.85 0.35 0.44 (1) Includes Q2 2006 pretax charge of $27.6m. 7
    • Same Store Revenue Growth 11.5% Q1 2008 5.9% 0.7% (2.9%) (4.0%) (8.2%) FY 2007 (23.5%) New Used Fixed F&I Sub Total Wholesale Total 9.8% Operations 9.1% 3.0% 1.9% 0.9% (0.7%) (14.9%) New Used Fixed F&I Sub Total Wholesale Total Operations
    • SG&A Expenses as % of Gross Profit All Other SG&A Rent 79.3% 77.9% 77.9% 76.8% 76.3% 74.9% 6.0% 6.9% 8.4% 7.4% 8.0% 7.1% 66.8% 71.9% 68.8% (1) 66.8% 71.0% 68.9% 2003 2004 2005 2006 2007 Q1 2008 •Continued improvements in compensation and other operating expenses •Favorable brand mix should continue to improve this metric (1) Excludes Q2 non-cash charges
    • Capitalization Debt to Cap With Mortgages 42.4% 46.3% 46.3% 46.0% 2.9% 2.7% 5.0% 43.6% 39.4% 41.3% 39.5% 53.7% 53.7% 57.6% 60.6% 54.0% 2005 2006 2007 Act Q1 2008 Pro Forma Q1 2008 Equity Debt Mortgages