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SONIC AUTOMOTIVE INC (SAH)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered record revenue of $3.66B (+6% y/y) and gross profit of $602.2M (+12% y/y). GAAP EPS was a loss of $1.34 due to a $172.4M non‑cash franchise asset impairment; adjusted EPS rose 49% to $2.19, a material beat vs Wall Street consensus, while revenue was slightly below consensus . EPS consensus: $1.63 vs actual $2.19; revenue consensus: $3.68B vs actual $3.66B*.
  • EchoPark posted all‑time record quarterly adjusted EBITDA ($16.4M), segment income ($11.7M), and total GPU ($3,747), with disciplined inventory management offsetting industry volatility .
  • Management raised FY 2025 guidance: higher new vehicle GPU ($2,800–$3,200), F&I GPU ($2,500–$2,750), EchoPark adjusted EBITDA ($50–$55M), and lowered SG&A intensity vs Q1 outlook; consolidated liquidity of ~$775M supports growth and acquisitions, including four Jaguar Land Rover dealerships expected to add ~$500M annualized revenue .
  • Catalysts: EchoPark profitability inflection, dividend hike (+9% to $0.38), and largest U.S. JLR retailer positioning; watch tariff impacts on pricing/margins and BEV inventory normalization into late Q3/Q4 .

What Went Well and What Went Wrong

What Went Well

  • EchoPark inflection: record adjusted EBITDA ($16.4M), segment income ($11.7M), and total GPU ($3,747); management highlighted cautious inventory buys and SG&A leverage (+110 bps q/q) amid variable wholesale pricing .
  • Franchised strength: record segment revenues ($3.10B), all‑time quarterly fixed operations and F&I gross profit; F&I GPU rose to $2,721 (+12% q/q, +14% y/y). “Our Franchised Dealerships Segment generated second quarter record total revenues, and all‑time record quarterly fixed operations gross profit and F&I gross profit…” — Jeff Dyke .
  • Strategic expansion and shareholder returns: JLR acquisition (~$500M added annualized revenue) and a 9% dividend increase to $0.38; liquidity ~$775M and cash + floor plan deposits ~$210M underpin capital deployment .

What Went Wrong

  • GAAP loss driven by $172.4M non‑cash impairment and storm damage/disposition charges; adjusted results strong but headline GAAP loss a negative optics factor .
  • Powersports margin pressure: segment income fell to $0.0M; adjusted EBITDA decreased to $2.0M (-13% y/y), with higher SG&A intensity; seasonality flagged with stronger Q3 expected .
  • New vehicle GPU down y/y (to $3,391, -5% vs Q2’24) despite sequential improvement; BEV excess supply remains a GPU headwind (−~$200 in Q2) .

Financial Results

Consolidated summary vs prior year, prior quarter, and estimates

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$3,453.0 $3,651.3 $3,657.2
Gross Profit ($USD Millions)$539.1 $566.4 $602.2
GAAP Diluted EPS ($USD)$1.18 $2.04 ($1.34)
Adjusted Diluted EPS ($USD)$1.47 $1.48 $2.19
Adjusted EBITDA ($USD Millions)$141.3 $144.0 $172.7
Revenue Consensus Mean ($USD Millions)*$3,611.3$3,518.3$3,677.3
Primary EPS Consensus Mean ($USD)*$1.46$1.44$1.63

Values marked with * retrieved from S&P Global.

Segment performance

MetricQ2 2024Q1 2025Q2 2025
Franchised Dealerships Revenue ($USD Millions)$2,896.2 $3,057.2 $3,100.5
Franchised Gross Profit ($USD Millions)$477.3 $494.0 $527.6
Franchised New Vehicle GPU ($USD)$3,579 $3,089 $3,391
Franchised Used Vehicle GPU ($USD)$1,508 $1,568 $1,583
Franchised F&I GPU ($USD)$2,380 $2,439 $2,721
EchoPark Revenue ($USD Millions)$517.3 $559.7 $508.6
EchoPark Gross Profit ($USD Millions)$51.1 $63.9 $62.1
EchoPark Units (Retail Used)16,641 18,798 16,742
EchoPark Total GPU ($USD)$3,078 $3,411 $3,747
Powersports Revenue ($USD Millions)$39.6 $34.4 $48.1
Powersports Gross Profit ($USD Millions)$10.7 $8.5 $12.5
Powersports Adj. EBITDA ($USD Millions)$2.3 ($0.7) $2.0

Operating KPIs

KPIQ2 2024Q1 2025Q2 2025
Adjusted SG&A as % of Gross Profit (Consolidated)70.7% 72.1% 69.2%
Franchised Adjusted SG&A as % of Gross Profit69.9% 71.8% 68.9%
EchoPark Adjusted SG&A as % of Gross Profit77.7% 70.4% 69.3%
Days’ Supply – Franchised New / Used46 / 31 51 / 31 54 / 35
Days’ Supply – EchoPark Used38 35 41

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
New Vehicle GPU ($/unit)FY 2025$2,500–$3,000 $2,800–$3,200 Raised
Used Vehicle GPU ($/unit)FY 2025$1,300–$1,500 $1,300–$1,500 Maintained
F&I GPU ($/unit)FY 2025~$2,400 $2,500–$2,750 Raised
Adjusted SG&A as % of Gross Profit (Consolidated)FY 2025Low 70% Low 70% Maintained
EchoPark Adjusted EBITDA ($USD Millions)FY 2025$35–$40 $50–$55 Raised
EchoPark SG&A as % of Gross ProfitFY 2025High 70% Low 70% (target <70% at maturity) Improved
Powersports Adjusted EBITDA ($USD Millions)FY 2025$6–$8 (majority Q3) $6–$8 (majority Q3) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Tariffs/macro pricingUncertainty around tariff effects; monitoring OEM actions Pre‑tariff demand pulled ahead April/early May; no material pricing impact yet; potential changes with MY2026 arrivals late Q3 Near‑term demand boost; watch late Q3/Q4 pricing
F&I optimizationOngoing negotiations; cost structure work RFQs/RFPs drove cost reductions and higher penetrations; F&I GPU strong; “we’re making more money without selling more cars” — Jeff Dyke Structural tailwind
EchoPark strategyPositive EBITDA; disciplined inventory; cautious expansion Record EBITDA/income/GPU; cautious inventory buys amid unstable MMR; SG&A leverage +110 bps q/q Improving profitability; controlled growth
Used supply/lease returnsIndustry trough in late 2025; gradual normalization beyond Lease returns expected to materially improve 2026–2028; inventory access improving via street buys (up to 40% mix) Medium‑term volume tailwind
BEV vs hybridBEV excess supply pressured GPU; hybrid penetration rising BEV sales reduced total new vehicle GPU by ~$200 in Q2; hybrid/ICE more favorable BEV drag moderating but remains
Powersports seasonalityQ4/Q1 weaker; focus on modernization Expect strong Q3 (Sturgis Rally); modernization starting to show benefits Seasonal upswing ahead

Management Commentary

  • “Record second quarter consolidated revenues and another all‑time record quarterly adjusted EBITDA in our EchoPark Segment… largest Jaguar Land Rover volume retailer in the U.S.” — David Smith, CEO .
  • “Franchised… all‑time record quarterly fixed operations gross profit and F&I gross profit… nearly 75% of total gross profit mix.” — Jeff Dyke, President .
  • “Total liquidity of approximately $775 million… completed the acquisition of four Jaguar Land Rover dealerships using cash on hand.” — Heath Byrd, CFO .

Q&A Highlights

  • EchoPark volume vs margin: Team is “being cautious” on inventory purchases to maximize margin; SG&A levered ~110 bps q/q despite volume step‑down .
  • F&I uplift driver: Cost renegotiations with product providers (warranty, GAP) via RFQs/RFPs increased penetrations and margins, independent of unit growth .
  • New vehicle GPU cadence: Stronger at quarter start (Apr ~$3,600; May ~$3,250; June ~$3,300); expected to hold in similar ballpark for rest of year .
  • Lease returns: Trough now; material improvement expected in 2026, accelerating into 2027–2028; street buys now >40% of mix improving access .
  • SAAR outlook: 15–16M range, with interest rates as swing factor; variability noted in quarter .

Estimates Context

  • Q2 2025 EPS: Beat — $2.19 vs $1.63 consensus*; adjusted EPS +49% y/y .
  • Q2 2025 Revenue: Slight miss — $3,657.2M vs $3,677.3M consensus* .
  • Prior quarters: Q1 2025 EPS modest beat ($1.48 vs $1.44*), revenue beat ($3,651.3M vs $3,518.3M*); Q4 2024 EPS beat ($1.51 vs $1.46*), revenue beat ($3,895.8M vs $3,611.3M*) .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • EchoPark profitability is accelerating with record GPU and EBITDA; disciplined inventory management and F&I optimization provide structural margin tailwinds .
  • Franchised mix shifting toward high‑margin fixed operations and F&I (~75% of gross profit), lowering sensitivity to front‑end margin normalization and tariff volatility .
  • Raised FY 2025 guidance (new vehicle and F&I GPU; EchoPark EBITDA) and stronger SG&A leverage support earnings resilience; monitor execution against low‑70s SG&A target .
  • Dividend increased to $0.38 (+9%) and JLR acquisitions (~$500M run‑rate) enhance luxury brand exposure and California footprint — potential multiple support .
  • Watch risks: BEV inventory alignment (current ~$200 GPU drag), tariff‑driven pricing/margin changes into late Q3/Q4, and Powersports SG&A discipline despite expected seasonal Q3 strength .