Sonic Automotive Inc.'s (SAH) first-quarter profit more than doubled on strong vehicle sales, especially for used cars. But the profit fell short of analysts' expectations.
The improved results are the latest sign a recovery is underway in the auto-retailing business after a disastrous 2009, when vehicle sales plunged and both General Motors Co. and Chrysler Group LLC were reorganized in bankruptcy court. Last week, larger peer AutoNation Inc. (AN), reported a strong rise in first-quarter profit.
"The quarter got off to a slow start as our stores came out of a very strong December and as we continued investing in our associates, but profitability improved dramatically as we progressed through the quarter," said President B. Scott Smith.
The third-largest U.S. auto-dealership chain behind AutoNation and Penske Automotive Group Inc. (PAG) posted a profit of $4.2 million, or 8 cents a share, up from $1.7 million, or 4 cents a share, a year earlier. Excluding debt-refinancing activities and mark-to-market adjustments on interest rate swaps, Sonic's adjusted earnings from continuing operations rose to 14 cents from 10 cents.
Revenue grew 13% to $1.56 billion.
Analysts surveyed by Thomson Reuters expected a profit of 19 cents on revenue of $1.48 billion.
Gross margin narrowed to 17.2% from 18%.
Same-store revenue for the company's new vehicles improved 11%, and grew 29% for used cars.
Shares of Sonic, which operates predominately in the Southeast, West and Southwest, closed at $13.09 Monday and were inactive premarket.
-By John Kell, Dow Jones Newswires; 212-416-2480; email@example.com