Sonic Automotive ((SAH)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Sonic Automotive revealed a mixed sentiment, with strong performance in franchise revenues and strategic growth initiatives juxtaposed against challenges in the used vehicle market and a decrease in adjusted EPS. Despite these hurdles, the company’s proactive approach in strategic acquisitions and technician hiring reflects a positive outlook for the future.
Record Quarterly Franchise Revenues
Sonic Automotive celebrated a significant milestone by generating an all-time record quarterly franchise revenue of $3.4 billion, marking a 12% increase year-over-year. This impressive growth was driven by a 13% increase in new retail volume and a 10% increase in fixed operations revenues, underscoring the company’s robust performance in its core franchise business.
Successful Technician Hiring Initiative
The company exceeded its 2024 goal of hiring 335 net technicians, laying a strong foundation for growth in fixed operations in 2025. This strategic hiring initiative is expected to bolster the company’s operational capabilities and support its growth trajectory in the coming years.
EchoPark Segment Profitability
EchoPark reported full-year adjusted EBITDA of $27.6 million, a significant turnaround from a loss of $83 million in 2023. Achieving profitability on a pretax basis marks a notable achievement for the segment, highlighting Sonic Automotive’s successful efforts in improving EchoPark’s financial performance.
Strong Balance Sheet and Liquidity
The company ended the year with a robust $862 million in available liquidity, including $384 million in cash and floor plan deposits. This strong financial position enables Sonic Automotive to strategically deploy capital and pursue new growth opportunities.
Dividend Approval
Sonic Automotive’s board of directors approved a quarterly cash dividend of $0.35 per share, payable on April 15, 2025. This decision reflects the company’s commitment to returning value to shareholders and confidence in its financial health.
Decrease in Adjusted EPS
The company reported an adjusted EPS of $1.51 per share, representing a 7% decrease year-over-year. This decline in earnings per share highlights some of the financial challenges Sonic Automotive is navigating, particularly in the current economic climate.
EchoPark EBITDA Shortfall
EchoPark faced a shortfall in adjusted EBITDA for the fourth quarter, reporting $4.2 million, below the guidance of $7.8 million. This was largely due to a $200 sequential decline in used GPU, reflecting ongoing challenges in the used vehicle market.
Challenges in Used Vehicle Market
EchoPark experienced a 9% year-over-year decline in revenues, with retail unit sales volume decreasing by 5%. These figures underscore the difficulties faced in the used vehicle market, impacting overall segment performance.
Forward-Looking Guidance
Sonic Automotive’s forward-looking guidance remains optimistic despite current challenges. The company anticipates continued growth driven by strategic initiatives and favorable market conditions. They plan to pursue new vehicle franchise acquisitions in 2025, leveraging their strong liquidity position. Strategic growth in their diversified business model is expected to support ongoing expansion.
In conclusion, the earnings call exhibited a balanced sentiment with Sonic Automotive showcasing strong franchise revenue growth and strategic initiatives, while also acknowledging the hurdles in the used vehicle segment and a decrease in adjusted EPS. The company’s strategic focus and robust liquidity position are poised to support future growth prospects, making it a company to watch in the automotive industry.
