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» Sonic Automotive CEO Discusses Q4 2010 Results - Earnings Call Transcript
I would now like to introduce Mr. Scott Smith, Co-Founder and President of Sonic Automotive. Mr. Smith, you may begin your conference.Scott Smith Thank you. Good morning and welcome to Sonic Automotive’s fourth quarter earnings call. I’m Scott Smith, the company’s President and Co-Founder. Joining me on the call today are David Smith, the company’s Executive Vice President; Dave Cosper, our CFO; Jeff Dyke, our Executive Vice President of Operations; and Greg Young, our Vice President of Finance. I’ll start the call today with an overview of the quarter and I’ll turn the call over to Dave for his review of our financial results, followed by Jeff, with a look at our operating results. We’ll then have closing comments and open the call for your questions. We’ll turn to the slide, overall results. We are pleased to have wrapped up one of the strongest quarters in the company’s history. Our adjusted EPS from continuing operations was up 43% for the quarter to $0.43 per share and up 40% for the year at $1.39. These results were driven by strong growth in all lines of our business. New car retail volume is up 15% for the quarter compared to an industry growth of just 10%. Our dedicated focus on our playbooks has allowed us to consistently take market share and grow our new car business faster than the overall market recovery every quarter this year. This is the 11 th quarter in a row that we’re reporting double-digit growth in our pre-owned volume, that’s almost three years in a row. Our pre-owned playbook rollout strategy implementation over the last several years has proven that we can consistently grow our base business through the implementation of predictable, repeatable and sustainable processes. This volume growth in our vehicle business has generated growth in our parts and service departments, where revenues were up 2.5% for the quarter, 5% for the year, along with growth in our F&I business, which is up 19% for the quarter and 21% for the year. Our adjusted SG&A to gross profit declined 220 basis points in the quarter and the full year to 76.6% for Q4 and 78.2% for the full year.
I’m proud of our team and what they’ve accomplished this year. I’ve talked a lot in the past quarters regarding our focus on both our people and our culture and your seeing how the softer side of our strategy is consistently translating into the industry leading growth for our company.I’ll now turn the call over to Dave. Dave. Dave Cosper Good morning everyone. Scott mentioned we grew revenue in all parts of our business and this slide shows very clearly the leverage of increased sales on the bottom line. In the fourth quarter revenue was up 12%, operating profit was up 19% and adjusted profit after tax was up 46%. The story is essentially the same for the full year. Jeff will talk more about this later, but as the new vehicle industry recovers further and our execution gets even better, you can expect to see more of this favorable leverage. For the year adjusted earnings per share was $1.39, up 40% from 2010. Next slide please. This slide shows our SG&A performance and the leverage of increased sales, as well as the focus on our costs are shown here as well. Adjusted SG&A as a percent of growth was 76.6% for the quarter, an improvement of 220 basis points from the prior year. The same improvement was achieved for the full year. I’m pleased we are able to achieve these results as we are continuing to invest heavily in our people and our processes with training and technology. I’m very comfortable with the investments we are making, because the payback for both our people and the business is fast and it’s really showing up in our results. Next slide. This slide shows capital spending for 2011 and 2012 and both years are fairly investment years for us, with significant investment in property and buildings that we now own. Owning our property is one of our key priorities and this trends going to continue in the future. Read the rest of this transcript for free on seekingalpha.com