sonic automotive SAHStephens20June20Conference20Presentation
1.
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 March 31, 2008.
3. 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
4. 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
5. 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
6. 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
7. 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
8. Used to New Ratio
70%
64%
65%
60%
55% 52%
48%
50% 47%
45%
40%
2005 2006 2007 Q1 2008
9. 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
10. 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
11. 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
12. 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
13. 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
14. 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
16. 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
17. 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
18. 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
