Sonic Automotive(SAH) - 2021 Q2 - Quarterly Report

Uncertainty of Forward-Looking Statements and Information Forward-Looking Statements Disclaimer This section serves as a cautionary statement, indicating that the report contains forward-looking statements based on current estimates and assumptions, which involve risks and uncertainties - Forward-looking statements are identified by words such as 'may,' 'will,' 'should,' 'could,' 'believe,' 'expect,' 'estimate,' 'anticipate,' 'intend,' 'plan,' 'foresee'[6] - Actual results could differ materially from projections due to various risks, including new and used vehicle sales, financing for EchoPark expansion, manufacturer reputation, regulatory changes, supply chain disruptions (e.g., semiconductors due to COVID-19), economic conditions, competition, and the severity of the COVID-19 pandemic[7][9] PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Sonic Automotive, Inc., including statements of operations, comprehensive operations, balance sheets, stockholders' equity, and cash flows, along with accompanying notes - Interim financial statements are unaudited and do not include all information required for complete financial statements; operating results for interim periods are not necessarily indicative of full fiscal year results[25] Condensed Consolidated Statements of Operations Net income for the three months ended June 30, 2021, increased by 269.7% YoY, and for the six months ended June 30, 2021, it swung from a loss to a profit, indicating a strong recovery from the prior year's pandemic impact | Metric | 3 Months Ended June 30, 2021 (in thousands) | 3 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | | :--------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Total revenues | $3,352,246 | $2,111,886 | $6,139,043 | $4,419,942 | | Gross profit | $510,808 | $307,383 | $911,701 | $657,961 | | Operating income (loss) | $165,427 | $53,544 | $253,277 | $(168,331) | | Net income (loss) | $113,845 | $30,791 | $168,067 | $(168,542) | | Basic earnings (loss) per common share | $2.74 | $0.72 | $4.04 | $(3.94) | | Diluted earnings (loss) per common share | $2.63 | $0.71 | $3.87 | $(3.94) | - Net income for the three months ended June 30, 2021, increased by 269.7% YoY, and for the six months ended June 30, 2021, it swung from a loss to a profit, indicating a strong recovery from the prior year's pandemic impact[14] Condensed Consolidated Statements of Comprehensive Operations This section details the company's comprehensive income (loss), including net income and other comprehensive income (loss) components, for the three and six months ended June 30, 2021 and 2020 | Metric | 3 Months Ended June 30, 2021 (in thousands) | 3 Months Ended June 30, 2020 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net income (loss) | $113,845 | $30,791 | $168,067 | $(168,542) | | Other comprehensive income (loss) | $347 | $(255) | $590 | $(527) | | Comprehensive income (loss) | $114,192 | $30,536 | $168,657 | $(169,069) | - Other comprehensive income (loss) saw a positive change in 2021, primarily due to changes in the fair value of interest rate cap agreements, contrasting with a loss in 2020[16] Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2021, and December 31, 2020 | Metric | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Total Assets | $3,656,345 | $3,745,993 | | Total Current Assets | $1,719,374 | $1,882,567 | | Inventories | $1,016,566 | $1,247,254 | | Total Liabilities | $2,709,991 | $2,931,188 | | Total Current Liabilities | $1,635,802 | $1,831,413 | | Notes payable - floor plan - trade | $32,778 | $585,225 | | Notes payable - floor plan - non-trade | $1,053,325 | $739,019 | | Total Stockholders' Equity | $946,354 | $814,805 | - Inventories decreased by $230.7 million from December 31, 2020, to June 30, 2021, reflecting low new vehicle inventory levels due to supply chain disruptions[19][29] - Stockholders' equity increased by $131.5 million, primarily driven by retained earnings growth[19] Condensed Consolidated Statements of Stockholders' Equity This section outlines the changes in stockholders' equity, including retained earnings, treasury stock, and stock compensation plans, from December 31, 2020, to June 30, 2021 | Metric | Balance at Dec 31, 2020 (in thousands) | Balance at Jun 30, 2021 (in thousands) | Change (in thousands) | | :------------------------------------------ | :------------------------------------- | :------------------------------------- | :-------------------- | | Total Stockholders' Equity | $814,805 | $946,354 | $131,549 | | Retained earnings | $721,770 | $880,704 | $158,934 | | Treasury stock, at cost | $(671,725) | $(713,938) | $(42,213) | | Shares awarded under stock compensation plans | N/A | N/A | $6,765 | | Dividends paid (Class A & B) | N/A | N/A | $(9,133) | - The company repurchased approximately $42.2 million in treasury stock during the six months ended June 30, 2021[21] Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 | Metric | 6 Months Ended June 30, 2021 (in thousands) | 6 Months Ended June 30, 2020 (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net cash provided by (used in) operating activities | $(34,658) | $227,748 | | Net cash provided by (used in) investing activities | $(129,149) | $(62,456) | | Net cash provided by (used in) financing activities | $233,111 | $(78,671) | | Net increase (decrease) in cash and cash equivalents | $69,304 | $86,621 | | Cash and cash equivalents, end of period | $239,617 | $115,724 | -