Sonic Automotive(US:SAH)2022-10-30 10:06Financial Data and Key Metrics Changes - Sonic Automotive achieved record third quarter revenues of $3.4 billion, up 12% year-over-year [7] - The company reported record gross profit of $581 million, an increase of 23% year-over-year [7] - Net income reached $87 million, translating to $2.23 per diluted share [7] Business Line Data and Key Metrics Changes - Franchised Dealerships segment revenues were $2.8 billion, up 18% from the prior year, with segment income increasing by 1% to $146 million [13] - EchoPark reported revenues of $608 million, down 8% year-over-year, but gross profit increased by 88% to $49 million [18] Market Data and Key Metrics Changes - New vehicle sales volume decreased year-over-year due to supply chain constraints, while used vehicle sales volume reflected industry trends amid affordability concerns [9][15] - The Franchised Dealerships segment had approximately 18 days supply of new vehicle inventory, unchanged from the previous quarter [16] Company Strategy and Development Direction - The company is focused on maintaining a strong balance sheet while pursuing strategic growth in both Franchised Dealerships and EchoPark [12][31] - EchoPark is expanding its distribution network and digital footprint, aiming to reach over 90% of the U.S. population by 2025 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term prospects despite current macroeconomic challenges, including rising interest rates and inflation [10][11] - The company plans to take a disciplined approach to growth, particularly in the EchoPark segment, while monitoring market conditions [40][44] Other Important Information - The Board of Directors approved an increase in the quarterly cash dividend to $0.28 per share [30] - The company repurchased approximately 3.1 million shares for about $151.5 million during the third quarter [27] Q&A Session Summary Question: Inventory restocking and market conditions - Management noted that supply chain issues persist, particularly for import brands, but expect improvements in inventory levels moving into 2023 [35][36] Question: Capital allocation and share repurchase strategy - The company maintains a balanced approach to capital allocation, focusing on share repurchases when the stock is undervalued while also considering M&A opportunities [60][63] Question: EchoPark's path to breakeven EBITDA - Management indicated that achieving breakeven will depend on volume increases and improved wholesale prices, with expectations for positive EBITDA by mid-2023 [66][70]