Sonic Automotive(US:SAH)2025-02-19 21:01Business Operations - The company operates 18 EchoPark stores across 10 states, aiming to enhance its distribution network to reach 90% of the U.S. population at maturity[25]. - The company focuses on providing a high-quality guest experience, with customer satisfaction metrics influencing dealership incentives and management compensation[27]. - The company has developed standardized operating processes documented in operating playbooks to enhance guest experience and drive profit growth[31]. - The company aims to grow its profitable parts and service business by increasing service capacity and focusing on guest experience[37]. - The competitive landscape includes competition from both local dealerships and online services, with pricing and customer experience being key competitive factors[45]. Financial Performance - Approximately 86% of the company's total new vehicle revenue in 2024 was generated by luxury and mid-line import dealerships, which typically have higher operating margins[32]. - In 2024, the company repurchased approximately 0.6 million shares of its Class A Common Stock for approximately $34.4 million, with a remaining share repurchase authorization of approximately $252.3 million[29]. - The supply of late-model used vehicles in 2024 was affected by shortfalls in new vehicle manufacturing during the COVID-19 pandemic, with approximately 291.1 million light vehicles in operation in the U.S. as of December 31, 2024[44]. - The company emphasizes increasing sales of higher-margin products and services, including finance, insurance, and aftermarket products, to withstand economic cycles[36]. - The company believes that certified pre-owned vehicles will increase sales volume and enhance Fixed Operations business over the long term[38]. Employee Relations - The company had approximately 10,800 employees as of December 31, 2024[62]. - The company offers a company-wide minimum wage of $15 per hour for all hourly employees[65]. - Approximately 230 associates are represented by a labor union, primarily service technicians in northern California[62]. - The company provides competitive compensation and employee benefits to attract and retain skilled labor[63]. Financial Instruments and Interest Rates - The total outstanding balance of variable rate instruments was approximately $2.0 billion as of December 31, 2024[371]. - A 100 basis point decrease in interest rates would have reduced interest expense by approximately $19.9 million, while a 100 basis point increase would have resulted in approximately $18.2 million of additional interest expense for the 12 months ended December 31, 2024[371]. - As of December 31, 2024, the average rate on outstanding fixed rate debt was 4.66%[376]. - The company has interest rate cap agreements with a notional amount of $500 million, maturing on February 26, 2025[372]. - The fair value of the interest rate cap position was $0.0 million at December 31, 2024[372]. Environmental Compliance - The company has no known material environmental liabilities and believes compliance with governmental regulations will not have a material adverse effect on operations[56].