Sonic Automotive ((SAH)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Sonic Automotive’s recent earnings call presented a generally positive sentiment, with the company achieving record performances across several segments. Despite facing challenges such as a noncash charge impacting GAAP EPS, a decline in used vehicle volume, and issues within the Powersports segment, the overall sentiment was buoyed by significant growth in revenue and profitability.
Record-Breaking Second Quarter Revenue
Sonic Automotive reported a record-breaking second quarter, with consolidated total revenues up 6% year-over-year. The company saw a 12% increase in consolidated gross profit and a 22% rise in consolidated adjusted EBITDA, marking a significant achievement for the quarter.
Franchised Dealerships Segment Success
The Franchised Dealerships segment achieved second-quarter record revenues of $3.1 billion, a 6% increase year-over-year on a same-store basis. Notably, same-store new retail volume rose by 5%, while same-store fixed operations revenues saw a 10% increase, underscoring the segment’s robust performance.
EchoPark Segment Achievements
EchoPark, Sonic Automotive’s used car segment, reached all-time quarterly records in segment income and adjusted EBITDA, with figures of $11.7 million and $16.4 million, respectively. This represents a 128% year-over-year increase, although EchoPark revenues experienced a slight 2% decline.
Strong F&I Performance
The company recorded an all-time high in quarterly franchised F&I GPU, achieving $2,721 per unit. This figure marks a 12% sequential increase and a 14% year-over-year rise, highlighting the strength of Sonic Automotive’s financial and insurance operations.
Powersports Segment Growth
Despite some challenges, the Powersports segment reported record second-quarter revenues of $48.1 million, up 21% year-over-year. However, the segment’s adjusted EBITDA decreased by 13% year-over-year, indicating areas for potential improvement.
Increased Quarterly Cash Dividend
Reflecting confidence in its financial health, Sonic Automotive’s Board of Directors approved a 9% increase in the quarterly cash dividend, raising it to $0.38 per share.
Noncash Charge Impact on GAAP EPS
The earnings call revealed a reported GAAP EPS loss of $1.34 per share, primarily due to a noncash charge related to franchise asset impairment testing. This was a significant factor impacting the company’s financial results.
Used Vehicle Volume Decline
The company experienced a 4% year-over-year decline in same-store used vehicle volume, attributed to a lower supply of late-model used vehicles and ongoing consumer affordability challenges.
Forward-Looking Guidance
Sonic Automotive’s management provided forward-looking guidance, emphasizing a reported GAAP EPS loss of $1.34 per share due to a noncash charge. However, the adjusted EPS was $2.19, a 49% year-over-year increase. The company highlighted strategic adjustments to mitigate potential tariff impacts on vehicle pricing and expressed optimism about future growth across its segments.
In summary, Sonic Automotive’s earnings call reflected a positive outlook, with record performances in several segments and strategic initiatives to address challenges. Despite some setbacks, the company’s growth trajectory and financial health remain strong, offering a promising outlook for investors.