Key Takeaways PAG reported Q2 EPS of $3.78, beating estimates and rising 4.7% year over year.Revenues fell 0.4% to $7.66B, missing forecasts due to lower auto retail performance.Truck and distribution segments posted revenue growth, offsetting weak auto unit sales.Penske Automotive Group (PAG) reported second-quarter 2025 adjusted earnings of $3.78 per share, which increased 4.7% year over year and beat the Zacks Consensus Estimate of $3.56. Better-than-expected results from the Retail Commercial Truck segm ...

Core Insights - Asbury Automotive (ABG) reported second-quarter 2025 adjusted earnings per share of $7.43, exceeding the Zacks Consensus Estimate of $6.82 and up from $6.40 in the previous year, driven by better-than-expected gross profits from vehicle sales [1][9] - Total revenues for the quarter were $4.37 billion, reflecting a nearly 3% year-over-year increase but falling short of the Zacks Consensus Estimate of $4.45 billion [1][9] Segment Performance - New vehicle revenues increased by 6% year over year to $2.30 billion, slightly missing the Zacks Consensus Estimate of $2.31 billion, attributed to lower-than-expected selling prices and unit sales [2] - Retail units sold in the new vehicle segment totaled 44,437, a 4% increase year over year, but below the consensus mark of 45,291 units [2] - The average selling price (ASP) for new vehicles was $51,846, up 2% year over year, but missed the consensus estimate of $52,011 [2] - Gross profit from new vehicles was $160 million, up 3% from the prior year and surpassing the Zacks Consensus Estimate of $148 million [2] - Used vehicle retail revenues declined by 3% year over year to $1.13 billion, missing the Zacks Consensus Estimate of $1.15 billion due to lower ASP and unit sales [3] - Retail used vehicle units sold totaled 36,233, down 6% year over year, lagging behind the consensus mark of 36,382 units [3] - The ASP for used vehicles was $31,171, up 3% year over year, but fell short of the consensus estimate of $31,207 [3] - Gross profit from used vehicles was $62.3 million, an 11% increase year over year, exceeding the Zacks Consensus Estimate of $57 million [3] - Revenues from the used vehicle wholesale business rose 11% to $156.3 million, beating the consensus estimate of $153 million [4] - Gross profit from the wholesale unit surged 43% to $6.6 million, surpassing the consensus mark of $2.72 million [4] - Net revenues from the finance and insurance business were $182 million, down 5% year over year and below the Zacks Consensus Estimate of $203 million [5] - Gross profit in this segment was $168.1 million, a 4% year-over-year decline, missing the Zacks Consensus Estimate of $170 million [5] - Revenues from the parts and service business reached $601.5 million, up from $580.9 million in the previous year but missing the Zacks Consensus Estimate of $625 million [6] - Gross profit from parts and service was $354.8 million, which lagged the consensus mark of $359 million but represented a 4% year-over-year increase [6] Financial Metrics - Selling, general & administrative expenses as a percentage of gross profit increased to 63.2%, a decrease of 198 basis points year over year [7] - As of June 30, 2025, the company had cash and cash equivalents of $54.8 million, down from $69.4 million as of December 31, 2024 [7] - Long-term debt stood at $3.05 billion as of June 30, 2025, down from $3.14 billion as of December 31, 2024 [7]

Financial Data and Key Metrics Changes - The company generated $4.4 billion in revenue, with a gross profit of $752 million and a gross profit margin of 17.2% [11] - Adjusted operating margin was 5.8%, and adjusted earnings per share (EPS) was $7.43, with adjusted EBITDA at $256 million [12][19] - Adjusted net income for the quarter was $146 million, with a non-cash deferral headwind of $0.43 per share due to TCA [19][20] Business Line Data and Key Metrics Changes - Same store revenue for new vehicles increased by 9% year over year, with units up by 7% and average gross profit per vehicle at $3,611 [12][12] - Used vehicle unit volume decreased by 4% year over year, with retail gross profit per unit at $17,290, marking the fourth quarter of sequential growth [13][14] - Parts and service gross profit increased by 7%, with a gross profit margin of 59.2% and a fixed absorption rate over 100% [16][17] Market Data and Key Metrics Changes - The same store new day supply was 59 days at the end of June, while the used day supply of inventory was 37 days [12][14] - The company noted strong demand in the second quarter, although a decline was observed as the quarter progressed due to tariff impacts [8] Company Strategy and Development Direction - The company is focused on integrating the Herb Chambers acquisition and optimizing its portfolio by divesting nine stores, which generated proceeds of $250 million to $270 million [11][25] - The transition to Techeon is a key investment aimed at improving operational efficiency and guest experience, with full conversion expected by 2027 [10][60] - The company aims to reduce leverage over the next 12 to 18 months while remaining opportunistic with share repurchases [11][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing the resilience of the automotive retail business despite potential headwinds from tariffs and market conditions [81][82] - The company anticipates that the second half of the year will depend heavily on tariff decisions and their impact on consumer pricing [8][19] Other Important Information - The average age of passenger cars on the road is 14.5 years, indicating a strong potential for service growth in the parts and service business [18] - The company has a transaction-adjusted net leverage ratio of 2.46 times, which is expected to be above the target range following the Chambers acquisition [23][24] Q&A Session Summary Question: Can you walk through the cadence of GPU and units as the quarter progressed? - Management noted that GPUs started strong but adjusted as the quarter progressed, with expectations for GPUs to fall into the $2,500 to $3,000 range [27][30] Question: What initiatives are keeping SG&A under control? - The focus is on productivity per employee and maintaining discipline on headcount, with some costs related to Techeon conversion impacting the SG&A numbers [34][35] Question: What opportunities for improvement exist with the Herb Chambers acquisition? - Management highlighted the luxury mix and market presence of Herb Chambers, indicating potential for operational efficiencies and improved metrics [39][41] Question: How does the company plan to maintain parts and service growth amid tougher comparisons? - Management expressed confidence in maintaining mid-single-digit growth in parts and service, despite anticipated headwinds from warranty work [42][45] Question: What is the strategy regarding used GPUs and inventory? - The strategy remains focused on maximizing gross profit rather than volume, with continuous assessment of market conditions [54][56] Question: What are the implementation costs for Techeon? - Implementation costs for Techeon were approximately $2 million in the quarter, split between duplication and third-party audit costs [62]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $7 billion, an increase of 8% year over year on both total and same store basis [12] - Adjusted net income rose to $209 million, up 29% from $163 million a year ago [15] - Adjusted EPS was $5.46 for the quarter, an increase of $1.47 or 37% from a year ago [15][8] - Same store gross profit increased by 10% year over year to $1.3 billion, with a gross profit margin of 18.3%, up 40 basis points from a year ago [13] Business Line Data and Key Metrics Changes - New vehicle sales increased by 8% year over year, with domestic segment sales up 19% [4][17] - Used vehicle gross profit increased by 13% year over year, with unit sales up 6% [5][21] - Customer financial services gross profit also increased by 13%, with finance penetration stable at around 75% [6][22] - After sales revenue grew by 12% year over year, with gross profit margins expanding by 100 basis points to record levels [28][29] Market Data and Key Metrics Changes - New vehicle unit volumes increased by 7% year over year, with hybrid sales up over 40% and battery electric sales up nearly 20% [17] - Used vehicle retail unit sales improved by 6% year over year, with stable average retail prices [20] - The company ended the quarter with 41,000 new vehicle units in inventory, representing 49 days of supply [18] Company Strategy and Development Direction - The company is focused on growth and efficiency across all business lines, with a strong emphasis on technician recruitment and retention [7][35] - There is a commitment to explore M&A opportunities to add scale and density in existing markets, while also returning capital to shareholders through share repurchases [32][34] - The company aims to leverage its broad portfolio of brands to cushion against potential new tariffs [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of 2025, despite some fluctuations in sales patterns due to tariff uncertainties [56][59] - The company expects to maintain market share and is encouraged by provisions in recent federal statutes that could stimulate vehicle purchases [11] - Management noted that the mobile service business, while facing challenges, has the potential to contribute positively to income as it matures [36][39] Other Important Information - The company completed its inaugural asset-backed securitization, which was oversubscribed, allowing for increased debt funding levels [26][27] - Adjusted free cash flow for the first half totaled $394 million, representing 100% of adjusted net income [30] - The company received $10 million in insurance recoveries related to the previous year's CDK outage, with expectations for more recoveries in 2025 [31] Q&A Session Summary Question: What kind of flexibility do you have regarding M&A opportunities? - Management indicated a cautious approach post-tariff announcement but noted an improvement in the M&A pipeline and a commitment to both M&A and share repurchases [45][46] Question: What are your thoughts on the consumer landscape and demand outlook? - Management believes there is still pent-up demand and expects stability in margins, despite potential fluctuations in sales patterns [56][58] Question: Can you provide an update on AutoNation USA and its strategy? - Management stated that growth will be more deliberate, focusing on density in markets to ensure success [82][84] Question: How do you see the competition in the used vehicle market? - Management acknowledged competition but emphasized the large market size and the company's small share, indicating plenty of growth opportunities [95][96] Question: Can you discuss the performance of AutoNation Finance? - Management highlighted that AutoNation Finance is driving growth and has a superior attach rate compared to other lenders, positively influencing overall business performance [101][105]

Core Insights - Sonic Automotive, Inc. (SAH) reported second-quarter 2025 adjusted earnings per share of $2.19, exceeding the Zacks Consensus Estimate of $1.63 and reflecting a 49% increase from the previous year [1] - Total revenues reached $3.66 billion, surpassing the Zacks Consensus Estimate by 0.44% and increasing from $3.45 billion in the same quarter last year [1] Revenue Breakdown - Consolidated revenues from new vehicle sales amounted to $1.7 billion, up 7% year over year; used vehicle sales were $1.18 billion, nearly flat; and wholesale vehicle sales totaled $83.3 million, up 17% [2] - Revenues from parts, service, and collision repair increased by 12% to $495.6 million, while finance, insurance, and other revenues rose 17% year over year to $202.1 million [2] Franchised Dealerships Segment - In the Franchised Dealerships segment, revenues from new vehicle sales were $1.66 billion (up 7% year over year), used vehicle sales were $745 million (up 2%), and wholesale vehicle sales were $57.8 million (up 19%) [3] - Parts, service, and collision repair revenues increased by 12% to $484.9 million, and finance, insurance, and other revenues rose 16% to $144.3 million [3] - Same-store revenues increased by 6% to over $3 billion, with same-store retail units of new and used vehicles totaling 52,451, up 1% from the same quarter of 2024 [3] EchoPark Segment - The EchoPark segment reported quarterly revenues of $508.6 million, down 2% year over year, with used vehicle sales contributing $427.4 million (down 5%), wholesale vehicle sales at $25.4 million (up 16%), and finance, insurance, and other revenues at $55.8 million (up 20%) [4] - The segment sold 16,742 used vehicles and 3,097 wholesale vehicles, reflecting a 1% and 19% increase year over year, respectively [4] Powersports Segment - In the Powersports segment, revenues from new vehicle sales totaled $26.9 million (up 24% year over year), used vehicle sales were $8.3 million (up 57%), while wholesale vehicle sales decreased to $0.3 million (down 67%) [5] - Parts, service, and collision repair revenues rose by 9% to $10.6 million, with finance, insurance, and other revenues at $2 million [5] - Same-store revenues increased by 12% to $42.2 million, with same-store retail units of new and used vehicles totaling 1,962, up 19% year over year [5] Financial Metrics - Selling, general, and administrative expenses decreased by 5% year over year to 68.5% of gross profit [6] - Cash and cash equivalents stood at $110.4 million as of June 30, 2025, up from $44 million as of December 31, 2024; long-term debt decreased to $1.47 billion from $1.51 billion over the same period [6] Dividend Announcement - Sonic Automotive increased its quarterly dividend by 9% to $0.38 per share, payable on October 15, 2025, to shareholders of record as of September 15 [7]

Financial Performance - Total revenue increased by 8% year-over-year, from $6480 million in 2Q 2024 to $6974 million in 2Q 2025[4] - Gross profit increased by 10% year-over-year, from $1163 million in 2Q 2024 to $1275 million in 2Q 2025[4] - Adjusted net income increased by 29% year-over-year, from $163 million in 2Q 2024 to $209 million in 2Q 2025[4] - Diluted adjusted EPS increased by 37% year-over-year, from $399 in 2Q 2024 to $546 in 2Q 2025[4] Sales Performance - New vehicle unit sales increased by 8% year-over-year on a same-store basis[3] - Used vehicle gross profit increased by 12% year-over-year on a same-store basis[3] - After-sales gross profit increased by 13% year-over-year on a same-store basis, with gross margin expansion greater than 100 bps[3] - AutoNation Finance originations increased by 100%[3] AutoNation Finance - AutoNation Finance originations increased from $395 million in 1H 2024 to $924 million in 1H 2025[13] - AutoNation Finance portfolio balance increased from $772 million in 1H 2024 to $1761 million in 1H 2025[14] - Penetration rate of AutoNation Finance reached 10% of units sold in 2Q 2025, up from 6% in 2Q 2024[15] Capital Allocation - Capital expenditures decreased by approximately 15% compared to 1H 2024[22] - The company repurchased over 15 million shares at an average price of $164[22] - Leverage ratio decreased to 233x, below the mid-point of the company's targeted range[22, 29]

Core Insights - AutoNation, Inc. reported second quarter 2025 revenue of $7.0 billion, an 8% increase year-over-year, while diluted EPS decreased to $2.26 from $3.20, and adjusted EPS rose to $5.46 from $3.99 [1][7][10] Financial Performance - Revenue for the second quarter of 2025 was $6,974.4 million, up from $6,480.4 million in the same period last year, reflecting an 8% increase [3][21] - Gross profit increased by 10% to $1,275.4 million from $1,163.1 million [3][21] - Operating income decreased by 21% to $217.6 million from $275.0 million [3][21] - Net income fell by 34% to $86.4 million compared to $130.2 million a year ago [3][21] - Adjusted operating income for the quarter was $369.3 million, a 16% increase from $318.5 million [4] - Adjusted net income rose by 29% to $209.2 million from $162.5 million [4] Segment Performance - Same-store revenue increased by 8% to $6.9 billion, driven by higher new vehicle unit sales and increased average selling prices [8][12] - New vehicle revenue was $3.4 billion, up 9%, while used vehicle revenue increased by 4% to $2.0 billion [8] - After-sales revenue grew by 12% to $1.2 billion, and customer financial services revenue rose by 13% to $363 million [8] - Same-store gross profit increased by 10% to $1.3 billion [8] Capital Allocation and Liquidity - Cash used in operating activities for the first half of 2025 was $230 million, with auto loans receivable net increasing by $695 million [5] - AutoNation repurchased 1.5 million shares for $254 million, with over $607 million remaining under its repurchase authorization [6] - As of June 30, 2025, AutoNation had $1.8 billion in liquidity, including $63 million in cash [9] Market Position and Strategy - The company experienced double-digit growth in customer financial services and after-sales, alongside improved new vehicle market share [2] - The successful completion of a $700 million asset-backed securitization for its auto loan portfolio at a fixed interest rate of 4.90% [9]

Core Insights - Sonic Automotive reported strong operational results for Q2 2025, with adjusted earnings per share of $2.19 and revenue of $3.7 billion, exceeding analyst expectations [1][2] - Despite positive operational data, the company recorded a net loss due to a significant non-cash impairment charge [1] - The quarter demonstrated solid segment trends, robust profit growth in key areas, and a higher dividend, although challenges related to costs and assets persist [1] Financial Performance - Adjusted EPS (Non-GAAP) was $2.19, surpassing the estimate of $1.63, and reflecting a 49% year-over-year increase [2] - Revenue reached $3.7 billion, slightly above the estimate of $3.68 billion, marking a 7% increase from $3.45 billion in Q2 2024 [2] - Gross profit was $602.2 million, up 12% from the previous year [2] - Adjusted EBITDA increased by 22% to $172.7 million [2] - EchoPark segment income saw a remarkable 679% increase to $10.9 million, despite a 2% decline in segment revenue [2][6] Business Model and Strategy - Sonic Automotive operates through three main segments: Franchised Dealerships, EchoPark, and Powersports [3] - The company emphasizes growth in luxury and used vehicle markets, supported by acquisitions and customer experience improvements [4] - Sonic's strategy includes expanding its store footprint, integrating new brands, and optimizing operational efficiency [4] Segment Performance - The Franchised Dealerships segment generated $3.1 billion in sales, a 7% increase, with segment income growing 74% to $91.6 million [5] - New vehicle unit sales rose by 5%, while used vehicle sales decreased by 4%, although profit per used vehicle improved by 3% [5] - The Powersports segment reported revenue of $48.1 million, but profits remained flat, with adjusted EBITDA down 13% [7] Recent Developments - Sonic completed the acquisition of four Jaguar Land Rover dealerships, expected to add approximately $500 million in annualized revenues [8] - The company raised its quarterly dividend by 9% to $0.38 per share, reflecting a commitment to capital return [10][12] Cost Management and Financial Position - SG&A as a percentage of gross profit improved to 68.5%, down from 72.9% a year ago, although absolute SG&A dollars increased by 5% [9] - The company ended the quarter with $210 million in cash and deposits, providing overall liquidity of $775 million [10] Future Outlook - Management did not provide specific financial guidance for the upcoming quarter or fiscal year, citing ongoing macroeconomic risks [11] - Investors are encouraged to monitor EchoPark's contribution to profit growth and the integration of newly acquired luxury dealerships [12]

Financial Performance & Segments - Sonic Automotive's total revenues were $1422 billion in FY 2024[8], a decrease of 1% compared to $1437 billion in FY 2023[71] - GAAP EPS was $618 in FY 2024[8], a 24% increase year-over-year[71] - Adjusted EPS was $681 in FY 2024[8] - Franchised Dealerships Segment revenues reached $119 billion in FY 2024[10] - EchoPark Segment revenues were $21 billion in FY 2024[10] - Powersports Segment revenues totaled $157 million in FY 2024[10] Franchised Dealerships Segment Strategy - Franchised Dealerships Segment adjusted EBITDA was $526 million in Q2 2025[19] - The company anticipates FY 2025 new vehicle GPU in the $2800 to $3200 per unit range[60] - The company anticipates used vehicle GPU in the $1300 to $1500 per unit range[60] EchoPark Segment Strategy - EchoPark Segment achieved an all-time record quarterly adjusted EBITDA in Q2 2025[44] - The company expects adjusted EBITDA between $50 million and $55 million for the EchoPark Segment in FY 2025[60]

Financial Data and Key Metrics Changes - The company generated $4.1 billion in revenue, with a gross profit of $724 million and a gross profit margin of 17.5% [12] - Adjusted operating margin was 5.8%, and adjusted earnings per share (EPS) was $6.82 [12] - Adjusted net income for Q1 2025 was $134 million, excluding certain non-cash items [21] - Adjusted SG&A as a percentage of gross profit was 64% [22] Business Line Data and Key Metrics Changes - Same store revenue for new vehicles was up 6% year over year, with units up 4% [14] - New average gross profit per vehicle was $3,449 [14] - Used vehicle unit volume was down 8% year over year, with used retail gross profit per unit at $15.87 [15] - Parts and service gross profit was up 5% for the quarter, with a gross profit margin of 58.3% [17] Market Data and Key Metrics Changes - Approximately 56% of new vehicle units sold in Q1 were produced in America, insulating them from tariffs [7] - The company experienced a wide range of approaches from OEMs regarding tariff impacts, making predictions challenging [7] Company Strategy and Development Direction - The company is focused on a disciplined growth strategy, highlighted by the pending acquisition of the Herb Chambers Automotive Group [10] - Plans to reduce leverage over the next 18 to 24 months following the acquisition [11] - The implementation of Techeon is expected to improve productivity and guest experience [9] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter faced challenges due to weather-related disruptions and tariff uncertainties [42] - The company remains optimistic about long-term growth, particularly in parts and service due to an aging vehicle fleet [19] - Management emphasized the importance of focusing on gross profit rather than volume during uncertain market conditions [42] Other Important Information - The company expects to close the Herb Chambers acquisition by the end of Q2 2025, pending OEM approval [10] - Free cash flow for Q1 2025 was $166 million, with liquidity at $964 million [25] Q&A Session Summary Question: Regarding TCA and tariff impacts - Management indicated that tariffs could slow down deferral impacts, affecting future earnings [30] Question: Integration of Techeon and SG&A savings - The rollout of Techeon is progressing well, with expectations of significant SG&A savings through reduced software costs and improved productivity [32] Question: Gross profit performance compared to peers - Management acknowledged weather impacts and emphasized a focus on maximizing returns rather than chasing volume [42] Question: Impact of tariffs on the Herb Chambers acquisition - The asset purchase agreement does not include a breakup fee for the company, and management sees no reason to walk away from the deal [50] Question: Front end gross outlook - Management believes the company is reaching a floor on front end gross, focusing on profitability rather than volume [56] Question: Parts and service growth outlook - Management maintains a mid-single-digit growth outlook for parts and service, with expectations of increased traffic as weather conditions improve [60] Question: Techeon and revenue opportunities - The integration of Techeon is expected to enhance communication and marketing efficiency, leading to potential revenue growth [66]