Sonic automotive misses earnings estimate, lowers guidance

Scott Smith, CEO of Sonic Automotive, at Sonic’s Charlotte headquarters.
Scott Smith, CEO of Sonic Automotive, at Sonic’s Charlotte headquarters. File photo

Charlotte-based Sonic Automotive Inc., one of the largest auto dealers in the country, announced third-quarter earnings of $18.1 million, or 40 cents per share, on Tuesday, lower than Wall Street estimates.

The company also adjusted its fourth-quarter estimates, according to a filing with the Securities and Exchange Commission.

Sonic reported third-quarter net income, adjusted for charges, of 47 cents per share. The company had projected earnings per share to be in the range of 52 to 54 cents in the third quarter.

Sonic lowered its earnings guidance range for the fourth quarter of 2016 to 59 cents to 69 cents and $1.95 to $2.05 for 2016. The company is currently expected to report earnings of 67 cents in the fourth quarter and $2.10 for the year.

Included in the reported amounts for the third quarter of 2016 is a net loss from operations related to the company’s EchoPark stores of $2.3 million, or 5 cents per diluted share.

The company reported in the quarter an all-time record of 30,933 used retail unit sales, up 1.5 percent over the prior year quarter; record fixed operations gross profit of $170.0 million, up 0.2 percent over the prior year quarter; and an all-time record quarterly gross profit from finance and insurance sales of $89.6 million, up 4.4 percent over the prior year quarter.

The finance and insurance department is one of the most important profit centers in any dealership.

Sonic’s EchoPark stores sold 1,458 units, up 58.5 percent from the prior year quarter. Sonic has five EchoPark stores in the Denver market, two of which opened in late June 2016.

The company said it expects that the EchoPark stores will continue to grow and mature, and it is focused on expansion in Denver.

Sonic said it will open another store in Denver by the end of this year and will also introduce the EchoPark brand in the Texas and Carolinas markets by 2017.

North Carolina Business News Wire reported on Aug. 24that founder and executive chairman Bruton Smith purchased an additional 50,000 shares in the company for more than $836,000.

The Charlotte-based company operates more than 100 dealerships in 14 states.

In afternoon trading, shares were down more than 5 percent at $16.93.

The complete third-quarter earnings report and press release can be found here.

This story is from the North Carolina Business News Wire, a service of UNC–Chapel Hill’s School of Media and Journalism