Sonic Automotive, Inc. Q4 FY2025 earnings call

• Chairman/CEO David Smith opened by thanking teammates for customer satisfaction. • Fourth quarter GAAP EPS $1.36, adjusted EPS $1.52 (+1% Y/Y); consolidated revenues $3.9 billion, down 1% Y/Y. • Franchise dealership same-store new vehicle volume down 11%, used up 5%; fixed ops and F&I gross profit records. • EchoPark adjusted segment income and EBITDA fourth quarter records; revenue down 5% Y/Y; gross profit up 9% Y/Y. • Powersports fourth quarter record revenues and gross profit. • Board approved quarterly cash dividend of $0.38 per share.

Franchise dealership segment: Reported revenues $3.4 billion, flat Y/Y, down 5% same-store; gross profit up 4%, down 2% same-store; fixed ops and F&I gross profit records. EchoPark: Adjusted segment income and EBITDA fourth quarter records; revenues $481 million, down 5% Y/Y; gross profit $54 million, up 9% Y/Y. Powersports: Fourth quarter record revenues $36 million, up 19% Y/Y; gross profit $9 million, up 25% Y/Y.

• Full year 2026 outlook considers uncertainties. • EchoPark plans to resume disciplined store opening cadence late 2026 assuming used vehicle market improves. • Expect to invest $10 million to $20 million in brand marketing in 2026. • Focus on increasing non-auction sourced inventory for EchoPark.

• Uncertainties related to tariffs on vehicle production, pricing, and volume forecast. • Potential impact of luxury consumer pushback on high ASPs. • Concerns about new car pricing elasticity and affordability affecting used car market.

Q: Talk about EchoPark's fit in used car ecosystem.

A: EchoPark seen as Costco of pre-owned, low-cost provider, best customer experience.

Q: Updates on non-auction sourcing for EchoPark.

A: Leveraging franchise dealerships for inventory, beginning in March/April.

Q: Advertising spend for EchoPark.

A: $10M - $20M brand-based, start second quarter, return in fourth quarter.

Q: Follow up on GPUs and OEMs.

A: OEMs lowering margin rebates, increasing prices, potential luxury consumer pushback.

Q: Fixed ops and subscription nature.

A: Opportunity to sell more products, need to address customers not returning for service.

Q: Variables for EchoPark growth.

A: Inventory returning, internal efficiencies, word-of-mouth branding.

Q: Floor plan interest expense outlook.

A: Function of store count, brand mix, inflationary cost of vehicles