Sonic Automotive(US:SAH)2025-04-24 15:00Financial 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] - First quarter consolidated total revenues were a record $3.1 billion, up 8% year over year, while consolidated gross profit grew 6% and adjusted EBITDA increased 7% [7][12] Business Line Data and Key Metrics Changes - Franchised dealership segment generated record 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] - 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, but gross profit increased 21% [9][10] - 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 [11] Market Data and Key Metrics Changes - Same store new vehicle gross profit per unit (GPU) was $3,089, down sequentially from the fourth quarter due to luxury brand mix [8] - Same store used vehicle volume decreased 2% year over year, while same store used GPU increased sequentially to $15.55 per unit [8] - EchoPark segment total gross profit per unit was a record $3,411, up $456 per unit year over year [10] Company Strategy and Development Direction - The company is focused on maintaining strong relationships with teammates, manufacturers, and customers as key to future success [6] - The data-driven centralized inventory management strategy for EchoPark is seen as a key differentiator to minimize disruptions from market volatility [10] - The company plans to adapt to ongoing changes in the automotive retail environment and macroeconomic backdrop while making strategic decisions to maximize long-term returns [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment, stating that they expect things to settle down in the next 90 days [18] - The company is focused on executing its playbooks and processes, believing that they can handle the challenges posed by tariffs [19] - Management noted that they are well-positioned to resume disciplined long-term growth for EchoPark once used vehicle market conditions improve [10] Other Important Information - The company ended the quarter with $947 million in available liquidity, including $430 million in cash and floor plan deposits [12] - A quarterly cash dividend of $0.35 per share was approved, payable on July 15, 2025 [12] - The company updated or withdrew certain items in its previous financial guidance for 2025 due to uncertainty around the effects of tariffs on the automotive industry [12] Q&A Session Summary Question: Commentary on tariffs and their impact - Management indicated that manufacturers are uncertain about the impact of tariffs, but they expect to navigate the situation effectively [18][19] Question: Update on fixed operations hiring - Management confirmed the hiring of 345 technicians, which has positively impacted fixed operations, and they plan to continue hiring [24][26] Question: Used vehicle GPU trajectory - Management stated that margins should hold steady if market conditions remain stable, with EchoPark's margins improving due to increased street purchases [39][40] Question: Warranty work metrics - Warranty work grew by 40% in the first quarter, while customer pay growth was only 2-3%, indicating a need to balance the mix better [48][49] Question: EchoPark's guidance and tariff impact - Management explained that they are being conservative with guidance due to potential tariff impacts, but they are optimistic about future performance [72][80] Question: SG&A expenses - Management noted that first quarter SG&A expenses were in line with expectations, with no systematic changes driving them higher [84][86] Question: EchoPark's inventory management - Management expressed confidence in their ability to manage inventory effectively and adapt to market conditions, including potential tariff impacts [92][94]