Sonic Automotive, Inc. Q2 FY2025 earnings call

• Thanked teammates for delivering a world-class guest experience. - Reported GAAP EPS was a loss of $1.34 per share, but adjusted EPS was $2.19 per share, a 49% increase year-over-year. Consolidated total revenues were a second quarter record, up 6% year-over-year. - Franchised Dealerships: Second quarter record franchise revenues, driven by new retail volume and fixed operations revenues. Fixed operations and F&I gross profit set records. - EchoPark: Segment income and adjusted EBITDA were all-time quarterly records. Revenues down but gross profit up. - Powersports: Record revenues and gross profit, adjusted EBITDA down but ramping up. - Balance sheet: Ended the quarter with $775 million in available liquidity. - Approved a 9% increase to quarterly cash dividend. - Discussed tariff impact on vehicle pricing and margin, lease returns impact on used vehicle inventory. - Mentioned upcoming 85th Annual Sturgis Motorcycle Rally for Powersports. - F&I performance improved due to product penetration and cost reductions.

Franchised Dealerships: Generated second quarter record franchise revenues of $3.1 billion, up 6% year-over-year on a same-store basis. Driven by 5% increase in same-store new retail volume and 10% increase in same-store fixed operations revenues. Fixed operations gross profit and F&I gross profit set all-time quarterly records. Same-store new vehicle GPU was $3,391, same-store used volume decreased 4% year-over-year but same-store used GPU increased 2% sequentially. F&I GPU was $2,721 per unit. EchoPark: Second quarter segment income was $11.7 million, adjusted EBITDA was $16.4 million, up 128% year-over-year. Revenues were $509 million, down 2% year-over-year. Gross profit was $62 million, up 22% year-over-year. Retail unit sales volume increased 1% year-over-year. Total GPU was $3,747 per unit, an all-time quarterly record. Powersports: Record second quarter revenues of $48.1 million, up 21% year-over-year. Gross profit was $12.5 million, up 17% year-over-year. Adjusted EBITDA was $2 million, down 13% year-over-year but beginning to ramp up for the third quarter.

• EchoPark EBITDA guidance increased from $30 million to $35 million to $50 million to $55 million. - Lease returns picking up will help used vehicle inventory and EchoPark growth. - Expectations on new vehicle SAAR in the range of 15-16 million, depending on factors like interest rates.

• Tariff impact on vehicle pricing and margin could change. - Market volatility affecting EchoPark's inventory management. - Uncertainty in used vehicle market conditions impacting EchoPark's growth.

Q: Congrats on a great quarter again. Wondering what surprised the most, what are you pleased with the most, and things indicative of how the back half will go.

A: Jeff Dyke said the back half of July is picking up nicely, surprised by that. Pleased with F&I performance. EchoPark is on fire but may have margin pressure in third quarter.

Q: Thoughts on lease return trough in this year versus next year.

A: Jeff Dyke said lease returns are at the bottom now, will help used vehicle inventory and EchoPark growth in 2026 and beyond.

Q: On EchoPark, volume trajectory and strategy.

A: Frank Jeff Dyke said being cautious in inventory management to maximize margin, EchoPark EBITDA guidance increased.

Q: Thoughts on F&I changes and new lenders.

A: Frank Jeff Dyke said leverage from product providers (warranty, GAP) through cost reductions, not seeing new lenders entering the market.

Q: On franchise used GPU and moderation into second half.

A: Frank Jeff Dyke said will be in and around the number, some tariff pressure but comfortable.

Q: Expectations for new vehicle SAAR trajectory.

A: Frank Jeff Dyke said SAAR expected to be in the range of 15-16 million, depending on factors like interest rates