Sonic Automotive(SAH)2025-04-24 20:01Sales Performance - The U.S. retail automotive industry's total new vehicle seasonally adjusted annual rate of unit sales volume increased by 8% to approximately 16.6 million vehicles for the three months ended March 31, 2025, compared to approximately 15.4 million vehicles for the same period in 2024[94]. - Same store retail new vehicle revenue increased by 13% during the three months ended March 31, 2025, driven by a 10% increase in retail new vehicle unit sales volume and a 2% increase in average selling price[97]. - Retail new vehicle unit sales increased by 11% to 29,075 units, while total new vehicle unit sales also rose by 11% to 29,458 units[120]. - Total combined retail new and used vehicle unit sales increased by 5% to 73,892 units in Q1 2025, up from 70,198 units in Q1 2024[130]. - Retail used vehicle revenue increased by 1% to $1,225.0 million, with unit sales rising by 2% to 44,817 units[122]. - Retail used vehicle unit sales decreased by 2% to 25,019, while acquisitions and other factors contributed an additional 422 unit sales[137]. Revenue Growth - Same store retail used vehicle revenue increased by 1% during the three months ended March 31, 2025, driven by a 3% increase in average selling prices, despite a 2% decrease in sales volume[98]. - Same store Fixed Operations revenue increased by 5% during the three months ended March 31, 2025, primarily due to increased service capacity and higher parts and labor costs[99]. - Retail new vehicle revenue increased by 14% to $1,656.3 million, while fleet new vehicle revenue rose by 13% to $22.1 million, resulting in total new vehicle revenue of $1,678.4 million, a 14% increase[120]. - Total revenue for Fixed Operations increased by 6% to $474.4 million in Q1 2025, up from $446.7 million in Q1 2024[127]. - Total revenue for the Franchised Dealerships Segment increased by approximately $27.5 million, or 6%, reaching $467.4 million for the three months ended March 31, 2025, compared to $439.9 million in 2024[142]. Profitability Metrics - Retail new vehicle gross profit per unit decreased by $643, or 17%, to $3,089 per unit during the three months ended March 31, 2025, primarily due to increased price competition[97]. - Total gross profit per new retail unit decreased by 17% to $3,075, while total gross profit per new unit decreased by 17% to $3,054[120]. - Fixed Operations gross margin increased by 220 basis points to 49% during the three months ended March 31, 2025, driven by an increase in warranty revenue contribution[109]. - Total gross profit for Fixed Operations increased by 7% to $240.6 million in Q1 2025, compared to $223.9 million in Q1 2024[127]. - Gross profit as a percentage of total revenue improved to 50.7% in Q1 2025, compared to 50.1% in Q1 2024[127]. Financial Position - Total available liquidity resources as of March 31, 2025, were $946.9 million, up from $861.6 million as of December 31, 2024[190]. - Net cash provided by operating activities was approximately $195.8 million for the three months ended March 31, 2025, compared to $70.1 million for the same period in 2024[200]. - Net cash used in investing activities was approximately $35.5 million for the three months ended March 31, 2025, down from $39.4 million in the same period in 2024[204]. - The total net outstanding balance of variable rate debt was $1.9 billion as of March 31, 2025[217]. - A cash dividend of $0.35 per share was approved for all outstanding shares of Class A and Class B Common Stock, with a total of approximately $338.8 million of net income and retained earnings free of restrictions as of March 31, 2025[199]. Operational Efficiency - The company aims to optimize service capacity and customer retention to increase Fixed Operations revenues over the long term[126]. - Same store wholesale vehicle revenue increased by 12% to $54.0 million, but gross profit worsened by 400% to $(1.0) million[140]. - Fixed Operations same store gross profit increased by 7% to $234.3 million, reflecting improved operational efficiency[141]. - Warranty revenue saw a significant increase of 34%, rising to $86.4 million from $64.5 million year-over-year[127]. - The gross profit margin for warranty services improved by 290 basis points to 62.5%[142]. Market Conditions - The company anticipates continued volatility in wholesale vehicle pricing and related gross profit, expecting a return to long-term normalized levels[123]. - The first quarter historically contributes less operating profit than the second and third quarters, with the fourth quarter typically contributing the highest operating profit[209]. - The U.S. retail new vehicle SAAR increased by 11% to 14.0 million vehicles, while the total new vehicle SAAR increased by 8% to 16.6 million vehicles[119]. Expenses and Costs - Total SG&A expenses for the three months ended March 31, 2025, were $380.3 million, a decrease of 3% from $392.2 million in the same period of 2024[177]. - Compensation expenses increased to $258.5 million, up 5% from $247.3 million, while advertising expenses rose to $23.8 million, a 7% increase from $22.3 million[177]. - Other SG&A expenses decreased by 23% to $87.8 million from $113.3 million, primarily due to a $30.0 million benefit from cyber insurance proceeds[179]. - Depreciation and amortization expenses increased by approximately $3.4 million, or 9%, during the three months ended March 31, 2025[182]. - Interest expense for new vehicle floor plans increased by $0.6 million, while the average interest rate applied decreased, offsetting $3.4 million of the net increase[184].