Sonic Automotive, Inc. Q1 FY2026 earnings call

• Chairman/CEO David Smith thanked teammates and mentioned company recognized as one of America’s most trustworthy. • CFO Heath Byrd discussed financial results, franchised dealership segment performance, EchoPark’s growth, Powersports segment’s record quarter and acquisition, balance sheet and share repurchases. • President Jeff Dyke talked about EchoPark's business model, non-auction sourcing, symbiotic relationship between franchise and EchoPark, Powersports segment's opportunities. • CFO Heath Byrd added on non-auction sourcing value. • VP of Investor Relations Danny Wieland spoke on non-auction sourcing improvements in EchoPark. • Jeff Dyke further elaborated on EchoPark's growth drivers, SG&A efficiency, and Atlanta market's performance. • CFO Heath Byrd and others discussed fixed operations gross profit growth, AI opportunities, and balance sheet strength. • David Smith and others talked about Powersports segment's leadership and growth opportunities.

Total revenues were $3.7 billion, up 1% from previous year. Franchised dealership segment: reported revenues $3.1 billion, flat YOY; same-store revenues $2.9 billion, down 4% YOY. New vehicle retail volume down 10%, used up 3% YOY. Franchise total gross profit up 5% YOY, fixed and F&I gross profit set quarterly records. EchoPark: adjusted segment income $12.6 million, up 25% YOY; adjusted EBITDA $18.6 million, up 18% YOY; revenues $581 million, up 4% YOY; gross profit $68 million, up 6% YOY. Powersports: first quarter record revenues $41 million, up 19% YOY; record gross profit $10 million, up 19% YOY; combined new and used retail volume up 25% YOY. Balance sheet: ended quarter with $770 million available liquidity; repurchased ~2.1 million shares for ~$136 million; Board approved $500 million share repurchase authorization and 8% increase in quarterly cash dividend.

• Full-year 2026 outlook considers uncertainties like tariffs. • Board approved $500 million share repurchase authorization and 8% increase in quarterly cash dividend. • Expect EchoPark to resume disciplined store openings in late 2026 and initiate brand marketing investment. • Focus on strategic deployment of capital to deliver value to shareholders.

Q: Talk about EchoPark, its success and opening new stores.

A: Jeff Dyke said new car prices high making pre-owned more affordable, buying more cars off street, non-auction sourcing helps; Heath Byrd added non-auction sourcing vehicles have higher GPU.

Q: Impact of weather?

A: David Smith said not focused on weather.

Q: OEMs pulling forward at-lease maturities and impact on EchoPark?

A: Jeff Dyke said yes, especially with BEV, helping franchise and EchoPark, luxury brands like BMW and Mercedes doing well.

Q: Where plan to open EchoPark stores?

A: Early expansion primarily in Florida and Texas.

Q: Driver of unit growth for EchoPark?

A: Jeff Dyke said executing playbook, sales associates selling well, brand awareness; Heath Byrd said awareness is driver; Danny Wieland said non-auction sourcing mix benefits.

Q: Parts and service growth?

A: Jeff Dyke said hired 400+ technicians, value service program, AI opportunities; Heath Byrd said AI team looking at fixed operations processes; Jeff Dyke said broke $90 million in gross in a month, goal to be over $100 million.

Q: Pricing dynamics, competitor price cuts, Carvana's wholesale-retail spread risk?

A: Jeff Dyke said not feeling competitor price cuts; Danny Wieland said normal seasonality; Jeff Dyke and Danny Wieland discussed EchoPark's insulation against wholesale-retail spread movements.

Q: Balance sheet, buyback?

A: David Smith said confident in business; Heath Byrd said strong balance sheet, leverage ratio around two turns; Jeff Dyke said execution discipline gives confidence.

Q: Franchise new GPUs outlook, BMW new product timing impact?

A: Jeff Dyke said didn't change guidance, F&I numbers strong; Jeff Dyke said BMW managing well, watched affordability in luxury brands.

Q: War impact on vehicle sales, monthly comps on new side?

A: David Smith said consumer resilient; Jeff Dyke said BEV pre-owned sales, January great, February good, comps easier in May-June.

Q: Powersports segment, used grosses differential?

A: David Smith and Jeff Dyke said customers not knowing to sell pre-owned powersports, industry not focusing on it, Sonic bringing that to the segment, growing pre-owned at high clips, better inventory management.