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SONIC AUTOMOTIVE INC (SAH)·Q4 2024 Earnings Summary

Executive Summary

  • Sonic delivered all-time record quarterly revenue of $3.896B (+9% YoY) and gross profit of $574.0M (+6% YoY); GAAP EPS rose to $1.67 (+50% YoY) while adjusted EPS fell to $1.51 (-7% YoY) due to non-GAAP items; adjusted EBITDA grew to $149.3M (+11% QoQ) .
  • Franchised Dealerships posted record revenue ($3.359B, +12% YoY) and gross profit ($517.4M, +5% YoY) on strong unit growth and fixed ops/F&I, while new vehicle GPU continued to normalize; reported SG&A leverage improved to 67.3% of GP (adjusted 69.3%) .
  • EchoPark gross profit hit a Q4 record ($49.0M, +14% YoY) and total GPU rose (+21% YoY), but adjusted EBITDA of $4.2M missed prior $7–$8M guidance due to aged inventory and seasonal demand; segment revenue declined 9% YoY .
  • Management guided FY2025 to low single-digit revenue/gross profit growth and ~70% adjusted SG&A/GP, with EchoPark adjusted EBITDA of $30–$33M and Powersports $7–$8M; Board approved $0.35 quarterly dividend payable April 15, 2025 .
  • Key stock catalysts: record top-line, improved SG&A leverage, 2025 outlook, accelerated M&A focus in luxury/imports, and continued EchoPark profitability trajectory (despite Q4 miss vs guidance) .

What Went Well and What Went Wrong

  • What Went Well
    • Franchised Dealerships: Record quarterly revenue ($3.359B, +12% YoY) and gross profit ($517.4M, +5% YoY); fixed ops gross profit +12% YoY and F&I gross profit +14% YoY .
    • Technician hiring exceeded the 2024 goal with +335 net technicians, positioning for ~$100M annualized fixed ops GP once fully productive; “strong finish” to 2024 with momentum into 2025 (CEO) .
    • EchoPark: Q4 record gross profit ($49.0M, +14% YoY) and total GPU $2,974 (+21% YoY); on same market basis, revenue flat and gross profit +29% YoY (volume +4%) .
  • What Went Wrong
    • EchoPark Q4 adjusted EBITDA ($4.2M) missed prior guidance ($7–$8M) due to aged inventory from building levels too quickly exiting Q3 and a seasonal demand slowdown, reducing front-end used GPU by ~$200 sequentially (President commentary) .
    • New vehicle GPU normalized further; BEV oversupply created a ~$400 per-unit drag in Q4, pressuring overall new vehicle GPU vs prior year (management) .
    • Powersports saw seasonal softness: Q4 revenue $30.6M (+13% YoY) but adjusted EBITDA loss of $1.0M; SG&A as % of GP elevated (106.6% adjusted) .

Financial Results

Consolidated financials (sequential view)

MetricQ2 2024Q3 2024Q4 2024
Total Revenues ($USD Billions)$3.453 $3.492 $3.896
Gross Profit ($USD Millions)$539.1 $543.6 $574.0
GAAP Diluted EPS ($)$1.18 $2.13 $1.67
Adjusted Diluted EPS ($)$1.47 $1.26 $1.51
Adjusted EBITDA ($USD Millions)$141.3 $135.0 $149.3
Reported SG&A / GP (%)72.9% 72.1% 69.6%
Adjusted SG&A / GP (%)70.7% 71.9% 71.2%

YoY Q4 comparison

MetricQ4 2023Q4 2024
Total Revenues ($USD Billions)$3.585 $3.896
Gross Profit ($USD Millions)$541.1 $574.0
GAAP Diluted EPS ($)$1.11 $1.67
Adjusted Diluted EPS ($)$1.63 $1.51
New Vehicle GPU (Consolidated, $)$4,230 $3,212
Used Vehicle GPU (Consolidated, $)$888 $881
F&I GPU (Consolidated, $)$2,317 $2,505

Segment performance (Q4 2023 → Q3 2024 → Q4 2024)

SegmentMetricQ4 2023Q3 2024Q4 2024
Franchised DealershipsRevenue ($USD Millions)$3,001.1 $2,887.2 $3,359.0
Franchised DealershipsGross Profit ($USD Millions)$491.3 $470.7 $517.4
EchoParkRevenue ($USD Millions)$556.6 $544.9 $506.2
EchoParkGross Profit ($USD Millions)$42.8 $55.2 $49.0
PowersportsRevenue ($USD Millions)$27.2 $59.4 $30.6
PowersportsGross Profit ($USD Millions)$7.0 $17.7 $7.5

KPIs and operating metrics

KPIQ4 2023Q3 2024Q4 2024
Retail New Vehicle Units (Consolidated)29,439 28,657 33,190
Retail Used Vehicle Units (Consolidated)42,216 43,474 42,896
EchoPark Retail Units17,562 17,757 16,674
New Vehicle GPU (Franchised, $)$4,289 $3,047 $3,238
Used Vehicle GPU (Franchised, $)$1,440 $1,386 $1,401
F&I GPU (Franchised, $)$2,330 $2,340 $2,424
EchoPark Total GPU (Used + F&I, $)$2,461 $3,111 $2,974
Franchised New Inventory Days (Trailing)—57 46
Franchised Used Inventory Days (Trailing)—34 31
EchoPark Used Inventory Days (Trailing)—33 38
Fixed Ops Gross Profit ($USD Millions)$215.4 $239.9 $241.6
Fixed Ops Gross Margin (%)——50.8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated RevenuesFY2025N/ALow single-digit % growth New
Consolidated Gross ProfitFY2025N/ALow single-digit % growth New
Adjusted SG&A / GP (Consolidated)FY2025N/A≈70% New
Franchised Rev/GP GrowthFY2025N/ALow single-digit % growth; adjusted SG&A/GP in low 70% range New
EchoPark Adjusted EBITDAFY2025N/A$30–$33M New
EchoPark Used Retail Unit GrowthFY2025N/AMid-single-digit % growth New
EchoPark F&I GPU GrowthFY2025N/ALow single-digit % growth New
EchoPark SG&A / GPFY2025N/AHigh 70% range (target <70% at maturity) New
Powersports Adjusted EBITDAFY2025N/A$7–$8M (majority Q3; Q1 & Q4 slightly negative) New
DividendNext PaymentPrior $0.35 declared 10/24/24 $0.35 payable 4/15/25, record 3/14/25 Maintained
EchoPark Q4 Adjusted EBITDAQ4 2024$7–$8M (prior commentary) $4.2M actual Lower than guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
CDK outage impact and recoveryQ2: ~$30M pre-tax reduction; net income impact ~$22.2M . Q3: carryover effects in July reduced GAAP PBT by ~$17.2M; net ~$12.7M .Operations normalized; continued execution across segments (CEO) .Improving/behind them
New vehicle GPU normalizationQ3: same-store new GPU $3,049 (-35% YoY) .BEV oversupply created ~$400 per-unit drag; new GPU expected $2,500–$3,000 “new normal” (slides/call) .Ongoing normalization; EV policy/supply critical
EchoPark profitability and growthQ2: record adj EBITDA $7.2M; same market revenue +10% . Q3: record adj EBITDA $8.9M; same market GP +21% .Q4 adj EBITDA $4.2M (below $7–$8M guide) due to aged inventory and seasonal demand; rightsized heading into Q1; plan footprint expansion begins 1H26 (team) .Profitable FY; near-term margin volatility; disciplined expansion
Technician hiring/fixed opsQ3: net +216 techs toward +300 target, ~$100M annualized fixed ops GP goal .Exceeded +335 net techs; fixed ops GP +12% YoY; expect further benefits in 2025 .Execution ahead of plan; structural tailwind
M&A strategyLimited prior specifics.Accelerating acquisitions; focus on luxury/import in growth markets; valuations viewed constructive; liquidity to fund without added debt (CEO/President) .Positive deal pipeline
Inventory days supplyQ3: new 57 days; used 34 days .New 46; used 31; EchoPark 38 (built too quickly exiting Q3) .Better alignment; EchoPark adjusted
BEV/hybrid dynamics—BEV inventory oversupply; EV GPU lag; hybrid demand stronger; BEV mix aligned to ~10–11% sales; OEM incentives create “false positives” (team) .Managing powertrain mix carefully

Management Commentary

  • CEO: “Our franchised dealerships segment achieved all-time record quarterly revenues, outperforming the industry in both new and used retail unit sales volume growth and generating all-time quarterly record parts and service revenues… we exceeded our goal of increasing technician headcount by 300 in 2024, with a final net increase of 335 technicians.” .
  • President: “2024 was a strong year of execution… Our EchoPark team… achieving all-time record annual adjusted EBITDA of $27.6 million… As we look ahead to 2025, our focus remains on… growing our EchoPark volume and profitability, gaining market share in our franchised dealerships and powersports segments, and optimizing our expense structure” .
  • CFO: “As of December 31, 2024, we had approximately $384 million in cash and floor plan deposits on hand, with total liquidity of approximately $862 million, before considering unencumbered real estate” .

Q&A Highlights

  • Acquisition strategy & valuations: Management is “green to buy” across luxury/import OEMs, seeing more deals at improved multiples and strong liquidity to fund without adding debt; expect announcements in coming months .
  • EV GPU drag: BEV oversupply created ~$400 per-unit drag; inventory mix was right-sized to ~10–11% EVs by year-end; OEM incentives may be creating “false positives” in EV volumes .
  • EchoPark cadence & store openings: After rightsizing inventory, margins normalized into Q1; affordability and lease returns expected to trough in 2025; target to begin openings in 1H26, potentially earlier if conditions improve .
  • Fixed ops growth: +335 techs expected to drive ~$100M annualized fixed ops GP when fully productive; mid-single-digit fixed ops GP growth guide may be conservative given early 2025 strength (management tone) .
  • Powersports TAM and discipline: Cautious on near-term cycle; improving playbooks and standardization; pursuing targeted opportunities (e.g., Sturgis Harley add point) while avoiding overreach .

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q4 2024 was unavailable due to an SPGI request limit error at time of retrieval; consequently, explicit “vs estimates” comparisons cannot be provided. Values from S&P Global are therefore not included, and we note the limitation transparently.
  • Qualitatively, EchoPark’s adjusted EBITDA missed prior internal guidance ($4.2M actual vs $7–$8M guided), which may prompt downward adjustments to segment margin expectations in near-term models; Franchised outperformance and SG&A leverage improvements likely offset some pressure at consolidated level .

Key Takeaways for Investors

  • Franchised momentum plus SG&A leverage drove record revenue and solid GP; fixed ops/F&I strength provides durable earnings support as new GPU normalizes .
  • EchoPark is structurally profitable for the year with improving GPU, but quarterly margin volatility persists; inventory discipline and marketing optimization are key to achieving FY2025 EBITDA guide ($30–$33M) .
  • EV headwinds remain a watch item; BEV oversupply depresses GPU while hybrid demand is resilient; Sonic’s alignment of inventory to sell-through is improving .
  • Management’s M&A posture (luxury/import focus, favorable multiples, no added debt) could be a medium-term EPS driver and SG&A leverage enhancer .
  • Powersports remains seasonally variable; execution improvements and targeted expansion may contribute modestly, with bulk EBITDA slated for Q3 .
  • Liquidity is robust ($862M total; $384M cash & floor plan deposits), supporting capital deployment across acquisitions and shareholder returns (dividend $0.35) .
  • Near-term trading: favor strength in franchised metrics and SG&A leverage; monitor EchoPark monthly margins and BEV inventory mix; catalysts include deal announcements and 2025 execution against SG&A/EBITDA targets .