Sonic Automotive(SAH)2025-04-25 02:37Financial Data and Key Metrics Changes - GAAP EPS was $2.04 per share, and adjusted EPS was $1.48 per share, a 9% increase year over year [6] - Consolidated total revenues reached a record of $3.1 billion, up 8% year over year, while consolidated gross profit grew 6% and adjusted EBITDA increased 7% [7][8] - Same-store new vehicle gross profit per unit (GPU) was $3,089, down sequentially from the fourth quarter [9] Business Line Data and Key Metrics Changes - Franchised dealership segment generated record franchise revenues of $3.1 billion, up 9% year over year, driven by an 11% increase in new retail volume and a 6% increase in fixed operations revenues [7][8] - EchoPark segment income was a record $10.3 million, with adjusted EBITDA at $15.8 million, up 116% year over year; EchoPark revenues were $560 million, flat year over year [11] - Power Sports segment generated record revenues of $34.4 million, with a gross profit of $8.5 million, and a segment adjusted EBITDA loss of $700,000 [14] Market Data and Key Metrics Changes - Same-store used vehicle volume decreased 2% year over year, driven by lower levels of late-model used vehicles and consumer affordability challenges [9] - EchoPark segment retail unit sales volume for the quarter was 18,800 units, up 5% year over year [12] Company Strategy and Development Direction - The company is focused on adapting to ongoing changes in the automotive retail environment and macroeconomic backdrop while making strategic decisions to maximize long-term returns [16] - The EchoPark business model is being strategically adjusted to position for disciplined long-term growth as used vehicle market conditions improve [13] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment, indicating that the industry is resilient and can adapt to challenges [25][26] - The company is maintaining a disciplined balance sheet approach with $947 million in available liquidity, allowing for strategic capital deployment as market conditions evolve [15] Other Important Information - The Board of Directors approved a quarterly cash dividend of $0.35 per share, payable on July 15, 2025 [15] - The company has updated or withdrawn certain items in its previous financial guidance for 2025 due to uncertainties around tariffs [16] Q&A Session Summary Question: Impact of tariffs on factory partners and pricing - Management indicated that conversations with manufacturers suggest a potential stabilization in the next 90 days, with no significant price increases expected [25][26] Question: Update on fixed operations headcount - The company has hired 345 additional technicians, which has positively impacted fixed operations performance [33][34] Question: Used vehicle GPU trajectory - Management noted that margins seen in Q1 should hold throughout the year, with EchoPark's margins expected to improve due to a higher percentage of cars being sourced from the street [54][55] Question: Warranty work versus customer pay - Warranty work grew by 40% in Q1, while customer pay grew by only 2-3%, prompting management to adjust their focus to balance the mix better [67][68] Question: EchoPark's full-year guidance - Management explained that the conservative guidance is due to the uncertainty surrounding tariffs and their potential impact on used car pricing [112][113]