Sonic Automotive Inc.'s record revenue, along with higher profits in same-store new- and used-vehicles sales and record F&I gross profit per retail unit, helped boost its fourth-quarter earnings.
Net income from continuing operations more than doubled to $46.3 million for the nation's fifth-largest new-vehicle retailer. Revenue jumped 6.8 percent to $2.75 billion, as each part of the business posted gains except for wholesale vehicles.
When adjusted for unusual items, Sonic's net income from continuing operations increased 51 percent to $115.79 million. Adjustments excluded gains on the sale of franchises, plus executive transition, franchise impairment and debt charges. Sonic's 2018 adjusted net income from continuing operations was $76.91 million when it had adjustments for the sale of franchises, charges for legal and storm damage, long-term compensation and franchise impairment, executive transition costs and lease exit adjustments.
"Our 2019 performance was exceptional, with record-breaking consolidated total revenues and earnings per diluted share from continuing operations," Sonic CEO David Smith said in a statement Wednesday. "This was led by tremendous year-over-year annual revenue growth of 66 percent at EchoPark, our specialty pre-owned vehicle stores, as well as strong performance from our franchised dealerships."
Sonic's results didn't impress Wall Street. Sonic shares fell 9.2 percent in morning trading to $28.05.
Sonic's standalone used-vehicle EchoPark business reached revenues of $1.2 billion in 2019, including $308.6 million in the fourth quarter, up 52 percent. EchoPark sales grew 45 percent to 12,676 units in the fourth quarter, and the division posted income of $2.1 million compared with a loss a year earlier.
In the fourth quarter, Sonic opened its ninth EchoPark store and first in California in Signal Hill. Sonic plans to open three EchoPark stores this year.
During 2019, Sonic sold 10 franchised dealerships.
"Taking into consideration EchoPark's growth trajectory and the continued strength of our franchised dealerships, 2020 marks the beginning of our march towards our long-term goal of achieving $20 billion in total annual revenues this decade," Smith said in a statement.
Records: Fourth-quarter earnings per diluted share from continuing operations of $1.04, fourth-quarter revenue, fourth-quarter gross profit of $393.9 million and all-time quarterly F&I gross profit per unit of $1,809 in the fourth quarter. Full-year earnings per diluted share from continuing operations of $3.31, full-year revenue, full-year gross profit of $1.5 billion and F&I gross profit per unit of $1,743.
Sales: New-vehicle sales slid 2.4 percent to 30,591. Total used-vehicle sales including EchoPark stores jumped 13 percent to 39,775. Used-vehicle sales at Sonic's franchised stores increased 2.8 percent to 27,099.
Same-store sales: New-vehicle sales on a same-store basis rose 7.5 percent to 30,018. Fourth-quarter new light-vehicle sales across the nation fell 1.8 percent, according to the Automotive News Data Center. Total used-vehicle sales on a same-store basis increased 15 percent to 37,174. Used-vehicle sales on a same-store basis at Sonic's franchised stores jumped 9.7 percent to 26,566.
Full-year results: Revenue rose 5.1 percent to $10.45 billion. Net income from continuing operations nearly tripled to $144.5 million.
Sonic, of Charlotte, N.C., ranks No. 5 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 122,717 new vehicles in 2018. It retailed 139,605 used vehicles for the same period, ranking it No. 6 on Automotive News' list of the top 100 dealership groups in used-vehicle sales.
