Sign in

You're signed outSign in or to get full access.

SA

SONIC AUTOMOTIVE INC (SAH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $3.65B (+8% y/y) and adjusted EPS of $1.48 grew 9% y/y; EchoPark delivered all‑time record quarterly gross profit, segment income, and adjusted EBITDA, while consolidated adjusted EBITDA was $144.0M .
  • Results beat S&P Global consensus: revenue $3.65B vs $3.52B*, adjusted EPS $1.48 vs $1.44*, and EBITDA $151.7M* vs $140.4M*; drivers were stronger new vehicle volumes, resilient F&I, and EchoPark mix/turns advantages (see tables) .
  • Non-GAAP adds: $30.0M cyber insurance gain offset by $1.4M impairment, $1.2M disposition loss, $0.9M storm charge and $7.4M tax expense; adjusted net income was $51.3M .
  • FY25 outlook updated amid tariff uncertainty: new vehicle GPU $2,500–$3,000, used GPU $1,300–$1,500, fixed ops mid-single-digit GP growth, F&I GPU ~$2,400; EchoPark adj. EBITDA $35–$40M; Powersports adj. EBITDA $6–$8M; prior guidance withdrawn/not relied upon .

What Went Well and What Went Wrong

  • What Went Well

    • EchoPark inflected: record gross profit $63.9M (+21% y/y), segment income $10.3M, and adjusted EBITDA $15.8M; unit volume +5% y/y to 18,798 and total GPU hit a record $3,411 per unit .
    • Franchised fixed ops and F&I set first‑quarter records; same‑store fixed ops GP +7% (margin +70 bps to 50.8%), F&I per unit $2,442 (+4% y/y) .
    • Management tone confident on execution and liquidity ($430M cash/floor plan deposits; $947M total liquidity) and maintained dividend at $0.35/sh .
    • Quote: “We remain focused on delivering an outstanding experience… growing EchoPark volume and profitability… and optimizing our expense structure to drive sustained success.” — CEO David Smith .

  • What Went Wrong

    • New vehicle GPU normalized lower: Franchised new GPU $3,089 (‑17% y/y) despite strong unit growth; EchoPark wholesale remained a small drag .
    • Powersports loss widened: segment loss ($3.5M) vs ($2.3M) y/y, with SG&A to gross 112.5% (adjusted 102.0%) amid seasonally weak quarter and impairment .
    • Fixed ops mix skewed to warranty (≈+40% y/y) vs customer pay (+2–3%), prompting management to rebalance lane loading in Q2 to protect CP throughput and margins .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($B)$3.49 $3.90 $3.65
Gross Profit ($M)$543.6 $574.0 $566.4
Operating Income ($M)$113.6 $133.5 $145.0
Net Income ($M)$74.2 $58.6 $70.6
Diluted EPS ($)$2.13 $1.67 $2.04
Adjusted EPS ($)$1.26 $1.51 $1.48
Adjusted EBITDA ($M)$135.0 $149.3 $144.0
SG&A as % of GP (Reported)72.1% 69.6% 67.1%
SG&A as % of GP (Adjusted)71.9% 71.2% 72.1%

Q1 2025 vs S&P Global consensus (beats in bold):

  • Revenue: $3.651B vs $3.518B* (beat +3.8%) .
  • Adjusted EPS: $1.48 vs $1.44* (beat +$0.04) .
  • EBITDA: $151.7M* vs $140.4M* (beat +8.0%).
    Values retrieved from S&P Global.*

Segment performance – Q1 2025

SegmentRevenues ($M)Gross Profit ($M)Segment Income (Loss) ($M)Adjusted Segment Income (Loss) ($M)
Franchised Dealerships3,057.2 494.0 91.9 63.1
EchoPark559.7 63.9 10.3 10.1
Powersports34.4 8.5 (3.5) (2.6)

Key operating KPIs

KPIQ3 2024Q4 2024Q1 2025
Franchised Retail New Units27,391 32,250 28,082
Franchised Retail Used Units24,940 25,702 25,441
Franchised New GPU ($/unit)$3,047 $3,238 $3,089
Franchised Used GPU ($/unit)$1,386 $1,401 $1,568
F&I GPU ($/unit) – Franchised$2,340 $2,424 $2,439
EchoPark Used Units17,757 16,674 18,798
EchoPark Total GPU ($/unit)$3,111 $2,974 $3,411
Fixed Ops GP Margin (Same‑store, Franchised)50.2% 50.7% 50.8%
Days Supply – Franchised (New/Used)57/34 46/31 51/31
Days Supply – EchoPark (Used)33 38 35

Non‑GAAP and adjustments (Q1 2025)

  • Cyber insurance proceeds +$30.0M pre‑tax; impairment ($1.4M), disposition loss ($1.2M), storm ($0.9M), tax on net adjustments ($7.4M) → adjusted net income $51.3M and adjusted EPS $1.48 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New Vehicle GPU ($/unit)FY 2025Prior guidance withdrawn/not to be relied upon $2,500–$3,000 Updated
Used Vehicle GPU ($/unit)FY 2025Prior guidance withdrawn/not to be relied upon $1,300–$1,500 Updated
Fixed Ops Gross ProfitFY 2025Prior guidance withdrawn Mid single‑digit % growth Updated
F&I GPU ($/unit)FY 2025Prior guidance withdrawn ~$2,400 Updated
Adjusted SG&A % of Gross Profit (Consol.)FY 2025Prior guidance withdrawn Low 70% range Updated
EchoPark Adjusted EBITDA ($M)FY 2025Prior guidance withdrawn $35–$40 Updated
Powersports Adjusted EBITDA ($M)FY 2025Prior guidance withdrawn $6–$8 (majority in Q3) Updated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 / Q4 2024)Current Period (Q1 2025)Trend
Tariffs / MacroCDK outage and normalization of new margins stressed in Q3; no tariff specifics in releases Team sees near‑term uncertainty; not “massive concerns,” expect resolution within ~90 days; will avoid customer gouging Elevated risk but measured approach
Fixed Ops / Tech HiringQ3 fixed ops +8% same‑store; Q4 fixed ops +12% same‑store; technician expansion emphasized Warranty +~40% vs CP +2–3%; rebalancing mix in Q2; 345 techs added since last March, still ramping productivity Strong but mix correction underway
EV / Hybrid Dynamics—BEV GPU headwind improved from ~$350/unit in FY24 to ~$200 in Q1 as supply aligns with demand Improving headwinds
EchoPark Strategy & SourcingQ3: record EchoPark GP and EBITDA; Q4: EBITDA positive and improving Off‑street sourcing up to 30–35% of units; record GPU and EBITDA; poised for selective expansion when conditions allow Structural improvement
SG&A DisciplineQ3 adjusted SG&A/GP 71.9% ; Q4 71.2% Reaffirmed FY consolidated low‑70% target Stable in low‑70s
Inventory Days SupplyQ3 Franchised 57/34; EchoPark 33 Q4 46/31; Q1 51/31; EchoPark 35 Normalizing

Management Commentary

  • CEO: Focused on “growing our EchoPark volume and profitability… gaining market share… and optimizing our expense structure,” while acknowledging tariff uncertainty and capital deployment opportunities .
  • President: “EchoPark… achieved all‑time record quarterly gross profit, segment income and adjusted EBITDA… capitalizing on seasonal strength” .
  • CFO: Liquidity “~$430M in cash and floor plan deposits… total liquidity ~$947M,” and FY25 guidance updated/withdrawn items due to tariffs .

Q&A Highlights

  • Tariffs: Management expects near‑term uncertainty but not a severe prolonged impact; will maintain market pricing and guest satisfaction standards (no gouging) .
  • Fixed ops mix: Warranty growth (~+40%) crowded CP throughput; teams are rebalancing scheduling/lane loading in Q2; 345 techs added since March 2024 still ramping .
  • EchoPark sourcing & GPU: Weekly off‑street purchases now ~30–35%, supporting higher front‑end margins; GPU gains continued into April; potential to reach 40–45% off‑street if needed .
  • EV supply alignment: BEV GPU headwind improved to ~$200/unit in Q1 from ~$350 in FY24 as OEM supply better matches demand .
  • SG&A: Some Q1 one‑time comp items; no structural pay‑plan changes; full‑year consolidated SG&A target in low‑70% range reaffirmed .

Estimates Context

  • Q1 2025 beats: revenue $3.651B vs $3.519B*; adjusted EPS $1.48 vs $1.44*; EBITDA $151.7M* vs $140.4M*. Potential estimate revisions upward reflect EchoPark profitability, stronger new volumes, and F&I/used GPU resilience (margin normalization in new remains a headwind) .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EchoPark inflection is real: record GPU, EBITDA, and income, with structural improvements from off‑street sourcing and faster turns; watch for footprint expansion timing and sustained GPU trajectory .
  • New‑vehicle margin normalization persists, but volume strength, robust F&I per unit, and fixed ops stability are offsetting; monitor tariff pass‑throughs and luxury mix impact on GPUs .
  • Fixed ops is a durable lever; near‑term mix adjustment from warranty to CP should support throughput/margins as technician cohort reaches full productivity .
  • FY25 outlook reset for tariff uncertainty still targets low‑70% adjusted SG&A/GP and positive EchoPark EBITDA of $35–$40M; execution against these ranges is the key KPI stack for FY25 .
  • Liquidity and dividend support capital allocation flexibility; balance sheet can fund selective M&A and EchoPark growth while sustaining shareholder returns .
  • Near‑term trading catalysts: ongoing tariff headlines vs company’s pricing/volume posture; EchoPark monthly trends; Q2 lane mix shift in fixed ops; any store expansion announcements .

Values retrieved from S&P Global.*