Sonic Automotive, Inc. ( SAH) Q3 2011 Earnings Conference Call October 25, 2011 11:00 ET Executives Scott Smith – President and Co-Founder Dave Cosper – Chief Financial Officer Jeff Dyke – Executive Vice President, Operations Analysts Mike Kimlat – JPMorgan Rick Nelson – Stephens Scott Stember – Sidoti Colin Langan – UBS John Murphy – Bank of America/Merrill Lynch Presentation Operator
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Scott Smith – President and Co-FounderThank you, (Brook). It’s actually Scott Smith. Good morning everybody. Welcome to Sonic Automotive’s third quarter 2011 earnings call. I am Scott Smith, the company’s President and Co-Founder. Joining me on the call today are Dave Cosper, our CFO; Mr. Jeff Dyke, our Executive Vice President of Operations; Greg Young, our Vice President of Finance; and the company’s Vice President, David Smith. I’ll start the call today with an overview of the quarter after which I will turn it over to Dave for his review of our financial results followed by Jeff with an outlook of our operating results. We’ll then open the call to your questions. With that please turn to the first slide. Overall results, our third quarter results reflected the continuing recovery in the retail automotive sector combined with our focus on being predictable, repeatable, and sustainable. Our EPS from continuing operations was $0.33 per share compared to $0.25 with prior year quarter saw strong growth across all of our business volumes. Our new vehicle volume was up 8% over Q3 last year which again outpaced the industry growth. Our used volume grew 16% over the prior year quarter. With 10 consecutive quarters of double-digit growth, you’ve proven our ability to consistently grow this core piece of our business through difficult economic and pricing cycles. Our parts and service business continues to grow steadily with revenues up 5% over third quarter of last year despite having one less service day in the current period. SG&A as a percentage of gross profit at 78.8% was 150 basis point improvement over the third quarter last year. As we continue to leverage our cost, the strong growth profit dollar growth. Our result this quarter continued to reflect the hard work that our teams put into executing a predictable repeatable and sustainable strategic plans and operating playbooks.
As a result, our earnings this quarter and our expectations is fairly stable fourth quarter operating environment we are increasing our full year continuing operators, earnings per share expectation to a range of a $1.33 to $1.37 per share.With that, I’ll turn the call over to Dave to provide more color on the financials. Dave Cosper – Chief Financial Officer Thank you, Scott and good morning everyone. As Scott mentioned, we grew revenue of 13% in the quarter, operating profit improved 15%, and with our continued improvement in our interest cost we grew after-tax profit by 39%, EPS was $0.33 for the quarter up 32% from last year. We remained focus on our three priorities of growing our base business, owning our property, and reducing our debt. We’re making good progress on all fronts. During the quarter, we retired the remaining $43 million of our (indiscernible) and that have been the key one of ours. Also as Jeff will discuss our operating performance continues to improve in all fronts and the view of this performance and the improved Japanese product availability. We are increasing our earnings guidance for the year to a $0.33 to a $0.37 per share. Next slide please. SG&A as a percent of growth were 78.8% for the quarter down from 80.3% last year. We continue to see leverage from our ability to grow revenue and gross while controlling expenses. This is frankly particularly pleasing as we are investing much more in technology and training to support our team even greater growth in the future. Next slide. The slide shows our capital spending for 2011, which is projected at $84 million net of mortgage proceeds. And as you can see the majority of spending was in the first nine months of the year. This was driven heavily by the purchase of five stores in the first quarter that had been least and spending to complete a luxury store in California. With that, I’ll turn the call over to Jeff. Jeff Dyke – Executive Vice President, Operations Read the rest of this transcript for free on seekingalpha.com