Sonic Automotive(US:SAH)2022-07-28 22:08Financial Data and Key Metrics Changes - Sonic Automotive achieved record quarterly revenues of $3.7 billion, a 9% increase year-over-year, with net income of $94.8 million or $2.33 per diluted share. Adjusted net income, excluding a one-time charge, was $99.2 million or $2.45 per diluted share [6][27] - The company ended the second quarter with $755 million in available liquidity, including $453 million in cash and floor plan deposits [25] Business Line Data and Key Metrics Changes - Franchised Dealerships segment revenues were $3 billion, up 8% year-over-year, while segment income decreased by 2% to $162.1 million. Adjusted EBITDA for this segment was $216.3 million, up 9% [9] - EchoPark reported record quarterly revenues of $665.6 million, a 12% increase from the prior year, but retail sales volume decreased by 22% year-over-year to 16,608 units [15] Market Data and Key Metrics Changes - Same-store basis for franchised dealerships showed a 12% decrease in revenues year-over-year, with a 20% decrease in industry new vehicle volume due to production constraints [10][12] - Same-store retail new vehicle gross profit per unit increased by 77% year-over-year to $6,905, despite a 33% decrease in same-store retail new vehicle unit sales volume [13] Company Strategy and Development Direction - The company is focused on maintaining strong liquidity and balance sheet position while identifying cost management measures and balancing growth plans amid macroeconomic challenges [7][9] - EchoPark is expanding strategically, aiming for 50% U.S. population coverage by the end of the year and 90% by 2025, while also enhancing its e-commerce platform [16][18] Management's Comments on Operating Environment and Future Outlook - Management noted persistent consumer demand despite macroeconomic headwinds and emphasized the importance of adaptability in achieving growth and profitability targets [8][28] - The company expects improvements in EchoPark's profitability in the second half of the year, with a return to breakeven or profitability anticipated in early 2023 [20][58] Other Important Information - The company repurchased approximately 1.4 million shares for $59.4 million during the second quarter, with a total of 5% of shares outstanding repurchased year-to-date [26] - The Board of Directors increased the share repurchase authorization by $500 million, totaling $633 million in remaining authorization, and approved a quarterly cash dividend of $0.25 per share [27] Q&A Session Summary Question: What is the current state of EchoPark's unit sales and demand? - Management confirmed that demand remains strong, but supply constraints have led to a pullback in unit sales. The transition to 5-plus-year-old vehicles is expected to improve results [34][36] Question: What is the expected trajectory for EchoPark's EBITDA? - Management anticipates that EchoPark will see reduced losses in the third quarter and expects to reach breakeven or profitability in the first or second quarter of 2023, depending on inventory availability [56][58] Question: How is the company addressing parts and services growth? - Management highlighted strong growth in fixed operations, with an 11% increase in customer pay gross profit, and emphasized the importance of brand mix in performance [65][67]