Sonic Automotive(US:SAH)2025-07-24 16:02Financial Data and Key Metrics Changes - Reported GAAP EPS was a loss of $1.34 per share, primarily due to a non-cash charge related to annual franchise asset impairment testing. Adjusted EPS for the second quarter was $2.19 per share, a 49% increase year over year [4] - Consolidated total revenues reached a second quarter record, up 6% year over year, while consolidated gross profit grew 12% and consolidated adjusted EBITDA increased 22% [5] Business Line Data and Key Metrics Changes - Franchise Dealership segment generated record revenues of $3.1 billion, up 6% year over year, driven by a 5% increase in same store new retail volume and a 10% increase in same store fixed operations revenues [5] - Fixed operations gross profit and F&I gross profit set all-time quarterly records, up 1215% and 14% year over year respectively on a same store basis [6] - EchoPark segment income was an all-time quarterly record of $11.7 million, with adjusted EBITDA also at a record of $16.4 million, up 128% year over year [8] - Powersports segment generated record revenues of $48.1 million, up 21% year over year, with gross profit of $12.5 million, up 17% year over year [9] Market Data and Key Metrics Changes - Same store used vehicle GPU was $3,391, down 6% year over year but up 10% sequentially from the first quarter due to a surge in pre-tariff consumer demand [6] - EchoPark segment total GPU was an all-time quarterly record of $3,747 per unit, up $669 per unit year over year [8] Company Strategy and Development Direction - The company remains focused on deploying capital via a diversified growth strategy across franchise dealerships, EchoPark, and powersports segments to grow revenue and enhance shareholder returns [11] - The acquisition of four Jaguar Land Rover dealerships in California is expected to contribute approximately $500 million in annualized revenues to the franchise dealership segment [10] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is uncertainty regarding the impact of tariffs on vehicle pricing, they have not seen a material impact to date [12] - The company is confident in its strategy and team to adapt to ongoing changes in the automotive retail environment and macroeconomic backdrop [13] Other Important Information - The Board of Directors approved a 9% increase to the quarterly cash dividend to $0.38 per share, payable on October 15, 2025 [11] - The company ended the quarter with $775 million in available liquidity, including $210 million in cash and floor plan deposits [10] Q&A Session Summary Question: What surprised you the most in Q2? - Management noted that the business picked up nicely in the back half of July, which was unexpected given the tariff noise [18] Question: Can you elaborate on the lease return expectations? - Management indicated that lease returns are expected to improve significantly in 2026, which will positively impact used vehicle inventory and volume growth [24][25] Question: What is the strategy regarding EchoPark's volume and profitability? - Management is being cautious with inventory management to maximize margins, which has resulted in strong gross dollars despite lower volume [30] Question: How did the new vehicle GPU trend throughout the quarter? - New vehicle GPUs were stronger at the beginning of the quarter, with April at approximately $3,600, May at $3,250, and June at $3,300 [40][42] Question: What are the expectations for new vehicle SAAR trajectory? - Management expects the SAAR to be in the range of 15 million to 16 million, depending on interest rates and market conditions [62]