Sonic Automotive(US:SAH)2025-02-13 01:39Financial Data and Key Metrics Changes - GAAP EPS for Q4 2024 was $1.67, while adjusted EPS was $1.51, representing a 7% decrease year over year [11] - Consolidated total revenues reached an all-time quarterly record, up 9% year over year, with consolidated gross profit growing by 6% and adjusted EBITDA increasing by 5% [11] Business Line Data and Key Metrics Changes - Franchise dealership segment generated record quarterly revenues of $3.4 billion, up 12% year over year, driven by a 13% increase in new retail volume and a 5% increase in used retail volume [12] - Fixed operations gross profit and F&I gross profit set all-time quarterly records, increasing by 12% and 14% year over year, respectively [13] - EchoPark segment reported revenues of $506 million, down 9% from the prior year, but gross profit increased by 14% to $49 million [17] Market Data and Key Metrics Changes - New vehicle day supply decreased to 46 days from 57 days at the end of Q3, while used vehicle day supply was at 31 days [13][14] - EchoPark's used vehicle day supply finished Q4 at 38 days, up from 33 days at the end of Q3 [18] Company Strategy and Development Direction - The company is actively pursuing major acquisitions of new vehicle franchises in 2025, with a focus on luxury and import brands [10][28] - The company aims to maintain a conservative balance sheet while strategically deploying capital as market conditions evolve [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in EchoPark's long-term potential despite recent challenges in the used vehicle market, indicating a belief in a recovery in market conditions [18] - The company anticipates that the used car supply will hit the bottom in 2025, setting the stage for expansion in EchoPark [48] Other Important Information - The company ended the year with $862 million in available liquidity, including $384 million in cash and floor plan deposits [20] - A quarterly cash dividend of $0.35 per share was approved, payable on April 15, 2025 [21] Q&A Session Summary Question: What is the company's view on M&A activity and valuations? - Management noted that they see more opportunities in the luxury segment and that multiples have improved, allowing for strategic acquisitions without adding debt [27][28] Question: What are the key performance indicators needed for EchoPark to resume store openings? - Management indicated that affordability and inventory levels are critical, with plans to begin opening stores in 2026 if conditions improve [44][48] Question: How does the company view the impact of electric vehicles on gross profit? - Management acknowledged that electric vehicles have been a drag on gross profit, estimating a $400 impact, and emphasized the need for better inventory management by manufacturers [36][39] Question: What is the outlook for parts and service growth? - Management expects mid-single-digit growth in fixed operations, with the potential for upside due to the hiring of additional technicians [61][65] Question: How does the company perceive its valuation compared to peers? - Management expressed confusion over the discounted multiple despite strong performance and emphasized the importance of continued execution and growth [92][96]