Q Investor Presentation

Transcription

1 Q Investor Presentation

2 FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These statements relate to future events, are not historical facts and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These statements can generally be identified by lead-in words such as believe, expect, anticipate, intend, plan, foresee, may, will and other similar words. Statements that describe our Company s objectives, plans or goals are also forward-looking statements. Examples of such forward-looking information we may be discussing in this presentation include, without limitation, earnings expectations, anticipated 2017 industry new vehicle sales volume, the implementation of growth and operating strategies, including acquisitions of dealerships and properties, the development of open points and stand-alone pre-owned stores, the return of capital to stockholders, anticipated future success and impacts from the implementation of our strategic initiatives and earnings per share expectations. You are cautioned that these forward-looking statements are not guarantees of future performance, involve risks and uncertainties and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties include, without limitation, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company s Annual Report on Form 10-K for the year ended December 31, These forward-looking statements, risks, uncertainties and additional factors speak only as of the date of this presentation. We undertake no obligation to update any such statements, except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission. 2

3 CONTENT COMPANY OVERVIEW STRATEGIC FOCUS FINANCIAL REVIEW OPERATIONS REVIEW SUMMARY & OUTLOOK 3

4 4 COMPANY OVERVIEW

5 OVERVIEW FRANCHISED GEOGRAPHIC 5 Headquartered in Charlotte, NC 104 Stores, 25 Brands, 18 Collision Repair Centers Platforms in Major Metro Markets

6 OVERVIEW ECHOPARK GEOGRAPHIC Have purchased property in the following markets (some are under construction): o Dallas/Ft. Worth o San Antonio o Houston o Austin o Carolinas In Process of Converting Jacksonville AutoMatch Store Also have property in Savannah, GA that is being developed. Colorado Springs - Opened Q

7 OVERVIEW - GEOGRAPHIC OH 3% NC 3% GA 4% CO 5% AL 5% FL 6% VA 3% MD 3% SC 2% TN 7% NV 2% Other 1% EP - CO 1% Concentration in Major Metro Markets TX 25% CA 30% 7 Note: Percentages are percent of total revenue for FY 2016.

8 OVERVIEW BRAND COMPOSITION New Retail Revenue & Overall Revenue Mix Cadillac 3% GM 5% VW Land Rover 2% 3% Other Non-Lux 3% Other Lux 7% Fixed Ops 15% F&I 3% BMW 20% Revenue streams and brand mix offer attractive diversification across the automotive retail space. Audi 5% Ford 7% Pre- Owned 28% New 54% Honda 17% Lexus 6% Mercedes 11% Toyota 11% Note: Percentages are for FY

9 9 STRATEGIC FOCUS

10 STRATEGIC FOCUS 1. Growth EchoPark One Sonic-One Experience Acquisitions & Open Points 2. Own Our Properties 3. Return Capital to Stockholders Share Repurchases Dividends 10

11 STRATEGIC FOCUS EchoPark EP Revenue o FY 2016 revenue of $129M o 68% YOY revenue growth Six Locations Open In Colorado Thornton Hub Centennial Highlands Ranch Littleton Stapleton Colorado Springs Texas Expansion Expect openings in 2017/2018 Florida AutoMatch Transition Acquiring Property in the Carolinas Expect openings in

12 STRATEGIC FOCUS One Sonic-One Experience (OSOE) Goals 1 Associate, 1 Price, 1 Hour Improve Transparency; Increase Trust Operational Efficiencies Grow Market Share Feed Fixed Operations Technology Being Introduced into Additional Markets (Charlotte was Pilot) CRM, Desking & Appraisal 12

13 STRATEGIC FOCUS Acquisitions & Open Points Open Points Mercedes-Benz in Dallas Market Estimated Annual Revenues >$100M Operational in Q Nissan in TN Market Estimated Annual Revenues >$30M Operational in Q Audi in Pensacola Market Estimated Annual Revenues >$50M Operational in Q Exploring Acquisition and Open Point Opportunities in Other Markets 13

14 STRATEGIC FOCUS Own Our Properties % of Properties Owned 36% 39% 41% 44% 31% 23% 18% 12% 0% Est 2018 Increased Equity in Properties to $281M in

15 SHARE REPURCHASES (000's) (000's) (000's) Shares $/Share $ Availability EOY $ 45,033 Q1 Activity 178 $ $ 3,996 (3,996) Additional BOD Authorization 100,000 Q2 Activity 1,183 $ ,951 (21,951) Q3 Activity 667 $ ,399 (11,399) Total 2017 Activity 2,027 $ $ 37,347 $ 107,686 Quarterly Dividend at $0.05/Share in Q1, Q2 & Q3 of 2017 Acquired 11.2% of OS in 2016, 4.5% of OS in 2017 YTD New Share Count = 43.2M Down from High of 53.2M (Dec 2012) Dividends Declared of $9.1M in

16 STRATEGIC FOCUS Return Capital to Stockholders OUTSTANDING SHARE COUNT (in millions) Q Note Balances are amounts outstanding at the end of the applicable period. These amounts exclude the effect of share dilution from convertible notes and equity grants outstanding. 16

17 Q Financial Review FRANCHISED DEALERSHIPS 17

18 Q RESULTS Franchised Dealerships B/(W) than Q (1) (amounts in millions, except per share data) Q (1) $ % Revenue $2,449 ($66) (2.6%) Gross Profit $356 $2 0.6% SG&A $280 ($2) (0.8%) SG&A as % of Gross 78.4% (20) bps Depreciation $21 ($3) (13.3%) Operating Profit $56 ($3) (4.7%) Interest & Other ($21) ($2) (11.2%) Pre-tax $34 ($5) (12.5%) Diluted EPS $0.47 ($0.06) (11.3%) (1) Q & Q results are adjusted See appendix for reconciliation to GAAP amounts. 18

19 Q Financial Review PRE-OWNED STORES 19

20 Q RESULTS Pre-Owned Stores B/(W) than Q (1) (amount s in millions, except per share, unit and per unit dat a) Q (1) $ % Revenue $57 $ % Gross Profit $6 $2 32.5% SG&A $9 ($2) (24.6%) SG&A as % of Gross 145.2% 910 bps Operating Profit ($4) ($1) (13.9%) Interest & Other ($1) ($0) (15.5%) Pre-tax ($5) ($1) (14.1%) Diluted EPS ($0.07) ($0.01) (16.7%) Retail Units 2, % GPU $830 ($267) (24.3%) F&I ($/unit) $1,077 $10 1.0% (1) Q & Q results are adjusted See appendix for reconciliation to GAAP amounts. 20

21 ECHOPARK - COLORADO STORES Q (amounts in thousands, except unit and per unit data) Colorado Stores Retail Units 2,007 Used GPU $ 935 F&I GPU $ 1,033 Total Gross $ 5,409 Pre-tax $ (989) Cash Flow $

22 Q Financial Review TOTAL ENTERPRISE 22

23 Q RESULTS Total Enterprise B/(W) than Q (1) (amounts in millions, except per share data) Q (1) $ % Revenue $2,506 ($52) (2.0%) Gross Profit $363 $4 1.0% SG&A $289 ($4) (1.4%) SG&A as % of Gross 79.6% (40) bps Depreciation $23 ($3) (13.8%) Operating Profit $51 ($3) (6.0%) Interest & Other ($22) ($2) (11.3%) Continuing Ops: Profit (after tax) $17 ($4) (17.9%) Diluted EPS $ 0.40 $ (0.07) (14.9%) (1) Q & Q results are adjusted See appendix for reconciliation to GAAP amounts. 23

24 Q REVENUE & GROSS PROFIT B/(W) than Q (amounts in millions, except unit and per unit data) Q $ % New Retail Revenue $1,345 ($20) (1.5%) Used Retail Revenue $660 ($1) (0.2%) Fixed Operations Revenue $348 ($14) (3.9%) F&I Revenue $93 $3 3.7% Total Revenue $2,506 ($52) (2.0%) New Retail Gross $66 $4 6.4% - Units 35,117 (598) (1.7%) - GPU $1,889 $ % Used Retail Gross $39 ($0) (1.2%) - Units 30,841 (92) (0.3%) - GPU $1,269 ($12) (0.9%) F&I Gross $93 $3 3.7% - GPU $1,408 $64 4.7% Fixed Operations Gross $168 ($2) (1.4%) Total Gross $363 $4 1.0% 24

25 Q ADJUSTED (1) SG&A TO GROSS 79.6% 79.2% 22.8% 22.3% 4.9% 5.0% 47.5% 47.7% 4.4% 4.2% Q Q Advertising Comp Rent Other (1) Q & Q results are adjusted See appendix for reconciliation to GAAP amounts. 25

26 Q INTEREST EXPENSE B/(W) than Q (amounts in millions) Q $ % Floor Plan Interest Expense $9 ($2) (33.1%) Interest Expense, Other $13 ($0) (0.1%) Total Interest Expense $22 ($2) (11.3%) Floor Plan Higher Due to Rate Increases 26

27 2017 CAP EX YTD Estimated (amounts in millions) Q Real Estate & Facility Related $ $ All Other Cap Ex Subtotal $ $ Less: Mortgages (38.4) (55.0) Total Cash Used - Cap Ex $ $

28 DEBT COVENANTS Covenant Q Liquidity Ratio >= Fixed Charge Coverage Ratio >= Total Lease Adjusted Leverage Ratio <=

29 29 Q Operations Review

30 NEW VEHICLE RETAIL Same Store Franchised Dealerships Q Q B/(W) Retail Volume 34,696 35,306 (1.7%) Selling Price $ 38,357 $ 38,394 (0.1%) Gross Margin % 4.8% 4.6% 20 bps GPU $ 1,856 $ 1,761 $ 96 Gross Profit (in millions) $ 64.4 $ % SAAR (in millions) (2.3%) Retail Units Jul Aug Sep Total ,292 10,792 12,612 34, ,629 12,295 11,382 35,306 B/(W) (337) (1,503) 1,230 (610) 30

31 NEW VEHICLE SAAR YTD M Full Year M Full Year M 3rd QTR Down 2.3% Sept SAAR driven by Houston Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

32 NEW VEHICLE GROSS & UNIT TREND Continuing Operations Franchised Dealerships Gross $ (in millions) Units $69 $79 $63 $65 $66 $74 $58 $66 $62 $74 $58 $63 $66 36,301 34,755 31,334 34,676 36,891 35,228 30,156 33,229 35,715 35,188 29,870 32,466 35,117 Q Q Q Q Q Q Q Q Q Q Q Q Q

33 NEW VEHICLE GROSS PER UNIT Continuing Operations Franchised Dealerships $1,899 $2,261 $2,024 $1,873 $1,777 $2,106 $1,936 $1,978 $1,746 $2,102 $1,958 $1,950 $1,889 Q Q Q Q Q Q Q Q Q Q Q Q Q GPU Lift From Houston Stores Contributed to Q3 Results 33

34 VEHICLE DAYS SUPPLY Days Q Q Q Q Q Q Q Q Q Q New Used 34

35 USED VEHICLE RETAIL Franchised Dealerships Same Store: Q Q B/(W) Retail Volume 27,988 29,054 (3.7%) GPU $ 1,245 $ 1,243 $ 2 Used to New 81% 82% (100) bps Vehicles/Store/Mth (102 stores) (3) Continuing: Q Q B/(W) Retail Volume 28,441 29,348 (3.1%) GPU $ 1,306 $ 1,291 $ 15 Used to New 81% 82% (100) bps Vehicles/Store/Mth (104/96 stores) (4) 35

36 USED VEHICLE GROSS TREND Continuing Operations Franchised Dealerships ($ s in millions) Used Related Gross $* YOY Incremental Gross $97 $94 $93 $92 $96 $94 $99 $97 $96 $6 $5 $3 $6 $5 $0 $0 ($1) ($7) Q Q Q Q Q Q Q Q Q * - Used Related Gross = (Used Gross + F&I + Reconditioning) 36

37 USED VEHICLE GROSS CONTRIBUTION Continuing Operations Franchised Dealerships Front End Gross and F&I (in millions) Jul Aug Sep Total 2017 $ 25.7 $ 23.2 $ 28.6 $ B/(W) $ (0.4) $ (3.0) $ 3.4 $ (0.0) 37

38 F&I GROSS & PUR TREND Continuing Operations Franchised Dealerships Gross $ (in millions) GPU $ $85 $83 $1,279 $1,324 $88 $80 $83 $86 $1,366 $1,349 $1,351 $1,357 $81 $85 $1,385 $1,391 $90 $1,420 Q Q Q Q Q Q Q Q Q

39 FIXED OPERATIONS GROSS TREND Continuing Operations Franchised Dealerships ($ s in millions) $169 $168 $165 $167 $169 $169 $168 $172 $166 Q Q Q Q Q Q Q Q Q One Less Fixed Day in Addition to Hurricane Disruption 39

40 FIXED OPERATIONS Franchised Dealerships (amounts in millions) Continuing: Q Q B/(W) Revenue $ 344 $ 359 (4.0%) Gross Profit $ 166 $ 169 (1.6%) Same Store: Q Q B/(W) Revenue $ 341 $ 356 (4.1%) Gross Profit $ 164 $ 167 (1.6%) One Less Selling Day + Hurricane Effects 40

41 SUMMARY & OUTLOOK o EchoPark Continues Expansion Ramp up for 2018 Additional 10 Stores by the End of 2018 San Antonio Dallas / Fort Worth Houston Austin Carolinas Georgia o Houston Region Expected to Have Higher Repair and Replace Through Q o Continuing to Challenge Cost Structure to Gain Efficiencies o Used Vehicle Valuations Fairly Consistent - Slight Margin Pressure o Fixed Operations Stable Expect Growth to Continue Lost Days From Hurricanes o Update of Earnings Guidance: Projected Adjusted Diluted EPS from Continuing Ops for 2017 of $ $1.95 Per Share ($1.55 to $1.65, on a GAAP basis) Range Includes Effect of Projected EchoPark Results and Expansion 41

42 APPENDIX

43 NON-GAAP RECONCILIATIONS (amounts in thousands) Net Income $ 31,548 $ 89,929 $ 76,254 $ 89,101 $ 81,618 $ 97,217 $ 86,311 $ 93,193 Non-Floorplan Interest 67,735 68,604 63,576 58,453 55,356 52,269 49,524 48,034 Depreciation & Amortization 57,036 45,827 51,164 52,616 58,139 62,161 72,130 81,034 Income Taxes (53,900) (19,745) 46,907 47,648 43,386 62,346 55,962 59,899 Stock Comp 1,931 2,814 3,698 5,160 7,208 7,675 9,814 11,165 Lease Exit 33,013 4,266 4,384 4,286 2, ,848 1,386 Impairment 30, , ,872 6,594 17,955 8,063 Loss (Gain) on Debt Extinguishment 6,745 7,665 1,107 19,713 28, (6) Loss (Gain) on Dealership Disposal 102 (2,615) 386 (10,343) 457 (11,279) (2,748) 48 Adjusted EBITDA $ 174,248 $ 196,994 $ 248,627 $ 267,584 $ 287,189 $ 277,285 $ 290,796 $ 302,816 43

44 NON-GAAP RECONCILIATIONS Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Continuing Operations Continuing Operations Franchised Dealerships Pre-Owned Stores Consolidated Franchised Dealerships Pre-Owned Stores Consolidated Reported: Diluted earnings (loss) per share $ 0.52 $ (0.07) $ 0.45 $ 0.48 $ (0.06) $ 0.42 Adjustments (net of income taxes): Impairment charges Storm damage (0.03) - (0.03) Legal and other accruals Gain on disposal (0.10) - (0.10) Effect of adjustments, net of income taxes (0.05) - (0.05) Adjusted: Diluted earnings (loss) per share $ 0.47 $ (0.07) $ 0.40 $ 0.53 $ (0.06) $ 0.47 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 Continuing Operations Continuing Operations Franchised Dealerships Pre-Owned Stores Consolidated Franchised Dealerships Pre-Owned Stores Consolidated Reported: Diluted earnings (loss) per share $ 0.97 $ (0.25) $ 0.72 $ 1.37 $ (0.15) $ 1.22 Adjustments (net of income taxes): Impairment charges Storm damage Legal and other accruals Lease exit adjustments Gain on disposal (0.12) - (0.12) Loss on debt extinguishment Effect of adjustments, net of income taxes Adjusted: Diluted earnings (loss) per share $ 1.23 $ (0.21) $ 1.02 $ 1.50 $ (0.15) $

45 NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Three Months Ended Three Months Ended Three Months Ended September 30, September 30, September 30, Continuing Operations (In millions) Reported: SG&A expenses $ $ $ $ $ 9.0 $ 7.2 Adjustments: Storm damage (3.0) 2.4 (3.0) Legal and other accruals (1.1) - (1.1) Lease exit adjustments Total SG&A adjustments Adjusted: SG&A expenses $ $ $ $ $ 9.0 $ 7.2 Reported: SG&A expenses as % of gross profit % 78.6% 77.1% 77.6% NM NM Adjustments: Storm damage (0.8%) 0.6% (0.8%) 0.6% - - Legal and other accruals (0.3%) - (0.3%) Lease exit adjustments % - 2.4% Total SG&A adjustments % 0.6% 1.3% 0.6% - - Adjusted: SG&A expenses as % of gross profit % 79.2% 78.4% 78.2% NM NM NM = Not meaningful 45

46 NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Three Months Ended Three Months Ended Three Months Ended September 30, September 30, September 30, Continuing Operations (In millions) Reported: Operating income $ 55.8 $ 50.9 $ 60.0 $ 54.6 $ (4.2) $ (3.7) Adjustments (before income taxes): SG&A expenses (4.5) (2.4) (4.5) (2.4) - - Impairment charges Total adjustments before taxes (4.4) 3.7 (4.4) Adjusted: Operating income $ 51.4 $ 54.6 $ 55.6 $ 58.3 $ (4.2) $ (3.7) Reported: Income (loss) from continuing operations before taxes..... $ 33.9 $ 31.3 $ 38.7 $ 35.5 $ (4.8) $ (4.2) Adjustments (before income taxes): SG&A expenses (4.5) (2.4) (4.5) (2.4) - - Impairment charges Total adjustments before taxes (4.4) 3.7 (4.4) Adjusted: Income (loss) from continuing operations before taxes..... $ 29.5 $ 35.0 $ 34.3 $ 39.2 $ (4.8) $ (4.2) Reported: Income (loss) from continuing operations $ 19.7 $ 19.0 Adjustments (net of income taxes): SG&A expenses (2.7) (1.5) Impairment charges Total adjustments, net of income taxes (2.3) 2.2 Adjusted: Income (loss) from continuing operations $ 17.4 $

47 NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Nine Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, Continuing Operations (In millions) Reported: SG&A expenses $ $ $ $ $ 27.2 $ 18.5 Adjustments: Storm damage (10.0) (3.7) (10.0) (3.7) - - Legal and other accruals (0.7) - (0.7) Gain on disposal Lease exit adjustments (1.0) - (0.4) - (0.6) - Total SG&A adjustments (3.2) (3.7) (2.6) (3.7) (0.6) - Adjusted: SG&A expenses $ $ $ $ $ 26.6 $ 18.5 Reported: SG&A expenses as % of gross profit % 79.8% 79.7% 78.9% NM NM Adjustments: Storm damage (0.9%) (0.4%) (0.9%) (0.4%) - - Legal and other accruals (0.1%) - (0.1%) Gain on disposal % - 0.8% Lease exit adjustments (0.1%) - (0.1%) Total SG&A adjustments (0.3%) (0.4%) (0.3%) (0.4%) - - Adjusted: SG&A expenses as % of gross profit % 79.4% 79.4% 78.5% NM NM NM = Not meaningful 47

48 NON-GAAP RECONCILIATIONS Consolidated Franchised Dealerships Pre-Owned Stores Nine Months Ended Nine Months Ended Nine Months Ended September 30, September 30, September 30, Continuing Operations (In millions) Reported: Operating income $ $ $ $ $ (16.5) $ (9.9) Adjustments (before income taxes): SG&A expenses Impairment charges Total adjustments before taxes Adjusted: Operating income $ $ $ $ $ (14.2) $ (9.9) Reported: Income (loss) from continuing operations before taxes..... $ 54.3 $ 93.0 $ 72.4 $ $ (18.1) $ (11.1) Adjustments (before income taxes): SG&A expenses Impairment charges Loss on debt extinguishment Total adjustments before taxes Adjusted: Income (loss) from continuing operations before taxes..... $ 76.1 $ $ 91.9 $ $ (15.8) $ (11.1) Reported: Income (loss) from continuing operations $ 32.0 $ 56.5 Adjustments (net of income taxes): SG&A expenses Impairment charges Loss on debt extinguishment Total adjustments, net of income taxes Adjusted: Income (loss) from continuing operations $ 45.6 $

49 NON-GAAP RECONCILIATIONS Three Months Ended September 30, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Reported: Earnings (loss) and shares ,496 $ 19,730 $ (290) $ 19,440 Effect of participating securities: Non-vested restricted stock (18) - (18) Basic earnings (loss) and shares ,496 $ 19,712 $ 0.45 $ (290) $ - $ 19,422 $ 0.45 Effect of dilutive securities: Stock compensation plans Diluted earnings (loss) and shares ,811 $ 19,712 $ 0.45 $ (290) $ (0.01) $ 19,422 $ 0.44 Adjustments: Impairment charges $ 198 $ - $ 198 Storm damage ,971-2,971 Legal and other accruals Gain on disposal (8,489) - (8,489) Total adjustments before taxes (4,361) - (4,361) Income tax effect of adjustments ,065-2,065 Effect of adjustments net of income taxes... $ (2,296) $ (0.05) $ - $ - $ (2,296) $ (0.05) Adjusted: Earnings (loss) and diluted earnings (loss) per share (1) $ 17,434 $ 0.40 $ (290) $ (0.01) $ 17,144 $ 0.39 (1) Net loss attributable to Pre-Owned Stores operations was $0.07 per fully diluted share in the three months ended September 30,

50 NON-GAAP RECONCILIATIONS Three Months Ended September 30, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Reported: Earnings (loss) and shares ,118 $ 18,969 $ (858) $ 18,111 Effect of participating securities: Non-vested restricted stock (11) - (11) Basic earnings (loss) and shares ,118 $ 18,958 $ 0.42 $ (858) $ (0.02) $ 18,100 $ 0.40 Effect of dilutive securities: Stock compensation plans Diluted earnings (loss) and shares ,354 $ 18,958 $ 0.42 $ (858) $ (0.02) $ 18,100 $ 0.40 Adjustments: Impairment charges $ 6,089 $ - $ 6,089 Storm damage (2,341) 1,000 (1,341) Total adjustments before taxes ,748 1,000 4,748 Income tax effect of adjustments (1,473) (390) (1,863) Effect of adjustments, net of income taxes.. $ 2,275 $ 0.05 $ 610 $ 0.01 $ 2,885 $ 0.06 Adjusted: Earnings (loss) and diluted earnings (loss) per share (2) $ 21,244 $ 0.47 $ (248) $ (0.01) $ 20,996 $ 0.46 (2) Net loss attributable to Pre-Owned Stores operations was $0.06 per fully diluted share in the three months ended September 30,

51 NON-GAAP RECONCILIATIONS Nine Months Ended September 30, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Reported: Earnings (loss) and shares ,281 $ 32,024 $ (993) $ 31,031 Effect of participating securities: Non-vested restricted stock (28) - (28) Basic earnings (loss) and shares ,281 $ 31,996 $ 0.72 $ (993) $ (0.02) $ 31,003 $ 0.70 Effect of dilutive securities: Stock compensation plans Diluted earnings (loss) and shares ,585 $ 31,996 $ 0.72 $ (993) $ (0.02) $ 31,003 $ 0.70 Adjustments: Impairment charges $ 3,313 $ - $ 3,313 Storm damage ,971-9,971 Legal and other accruals Lease exit adjustments Gain on disposal (8,489) - (8,489) Loss on debt extinguishment ,268-15,268 Total adjustments before taxes ,865-21,865 Income tax effect of adjustments (8,229) - (8,229) Effect of adjustments, net of income taxes.. $ 13,636 $ 0.30 $ - $ - $ 13,636 $ 0.30 Adjusted: Earnings (loss) and diluted earnings (loss) per share (3) $ 45,660 $ 1.02 $ (993) $ (0.02) $ 44,667 $ 1.00 (3) Net loss attributable to Pre-Owned Stores operations was $0.21 per fully diluted share in the nine months ended September 30,

52 NON-GAAP RECONCILIATIONS Nine Months Ended September 30, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Operations Operations Net Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Reported: Earnings (loss) and shares ,930 $ 56,475 $ (918) $ 55,557 Effect of participating securities: Non-vested restricted stock (31) - (31) Basic earnings (loss) and shares ,930 $ 56,444 $ 1.23 $ (918) $ (0.02) $ 55,526 $ 1.21 Effect of dilutive securities: Stock compensation plans Diluted earnings (loss) and shares ,130 $ 56,444 $ 1.22 $ (918) $ (0.02) $ 55,526 $ 1.20 Adjustments: Impairment charges $ 6,089 $ - $ 6,089 Storm damage , ,179 Total adjustments before taxes , ,268 Income tax effect of adjustments (3,818) (187) (4,005) Effect of adjustments, net of income taxes.. $ 5,973 $ 0.13 $ 290 $ 0.01 $ 6,263 $ 0.14 Adjusted: Earnings (loss) and diluted earnings (loss) per share (4) $ 62,448 $ 1.35 $ (628) $ (0.01) $ 61,820 $ 1.34 (4) Net loss attributable to Pre-Owned Stores operations was $0.15 per fully diluted share in the nine months ended September 30,

53 NON-GAAP RECONCILIATION OF GUIDANCE Year Ending December 31, 2017 From To GAAP: Expected earnings per diluted share from continuing operations $ 1.55 $ 1.65 Adjustments: Gain on disposal (0.12) (0.12) Impairment charges Storm damage Legal and other accruals Lease exit adjustments Loss on debt extinguishment Adjusted: Expected earnings per diluted share from continuing operations $ 1.85 $