管理層發言
Good morning, and welcome to Sonic Automotive Second Quarter 2026 Earnings Conference Call. This conference call is being recorded today, Thursday, July 30, 2026. Presentation materials which accompany management's discussion on the conference call can be accessed at the company's website at ir.sonicautomotive.com. At this time, I would like to refer to the Safe Harbor statement under the Private Securities and Litigation Reform Act of 2000. During this conference call, management may discuss financial information or expectations about the company's products, or market, or otherwise make statements about the future. Such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties are detailed in the company's filings with the Securities and Exchange Commission. In addition, management may discuss certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Please refer to the non-GAAP reconciliation tables in the company's current report on Form 8-Ks filed with the Securities and Exchange Commission earlier today. I would now like to introduce Mr. David Bruton Smith, Chairman and Chief Executive Officer of Sonic Automotive. Mr. Smith? You may begin.
Thank you very much, and good morning, everyone. Welcome to Sonic Automotive's Second Quarter 2026 Earnings Call. As stated, I am David Bruton Smith, the company's Chairman and CEO. Joining me on today's call is our President, Jeffrey Dyke; our CFO, Heath R. Byrd; our EchoPark Chief Operating Officer, Thomas Keen; and our VP of Investor Relations, Danny Wieland. I would like to begin by thanking our outstanding teammates for their continued commitment to delivering a world-class guest experience. The strength of our relationships with our teammates, our guests, our manufacturer partners and lending partners remain central to our long-term success and we appreciate their continued support for the Sonic Automotive team. Earlier this morning, Sonic Automotive reported second quarter financial results, including record second quarter total revenues of $3.9 billion, an increase of 8% from the prior year period, and an all-time record quarterly gross profit of $616.2 million, up 2% year over year. Second quarter reported GAAP EPS was $1.79 per diluted share. Excluding the effect of certain adjustments detailed in our press release this morning, non-GAAP adjusted EPS for the second quarter was $1.82 per diluted share. Beginning with our franchised dealership segment, our stores performed well despite difficult year-over-year comparisons as a result of pre-tariff consumer demand pull-forward during the second quarter of 2025. Reported revenues increased 6% to $3.3 billion while same-store revenues increased 2% year over year. Reported franchised dealership segment gross profit increased 1% while same-store gross profit decreased 3%. Halfway through the year, new vehicle gross profit per unit is tracking above the high end of our full-year guidance range of $2.7 thousand to $3 thousand per unit. As a result, we have increased our full-year new GPU guidance to $2.85 thousand to $3 thousand per unit, implying lower downside risk despite potential GPU compression in the third and fourth quarters as a result of ongoing tariff-driven affordability challenges. Second quarter reported new vehicle GPU was $3.02 thousand, down 11% year over year, and same-store new vehicle GPU was $2.87 thousand, down 16% year over year, driven primarily by higher GPUs in the prior year period as a result of pre-tariff consumer demand. Same-store new vehicle unit volume was flat year over year in line with industry trends. Year to date, used vehicle gross profit per unit is also tracking at the high end of our previously communicated full-year guidance range of $13.50 to $14.50. Second quarter reported used vehicle GPU was $13.99, down 12%, and same-store used vehicle GPU $14.01, down 13%. Same-store retail used vehicle volume increased 7% driven by improving used vehicle supply and our strategic focus on increasing used vehicle volume throughput as we progress toward our long-term objective of retailing an average of 100 used retail units per dealership per month, representing approximately 25% organic volume growth potential from current levels. We believe second-half used GPU may be lower than the first half of 2026 as we focus on volume throughput and total gross profit generation. Fixed operations remains a source of stable and recurring earnings, with reported gross profit increasing 6% to an all-time quarterly record of $263.8 million. On a same-store basis, fixed operations gross profit increased 2% driven by a 1% increase in customer-pay gross profit and a 3% increase in warranty gross profit. We believe that continued affordability challenges may lead consumers to repair their current vehicles rather than replace them with newer ones. To capitalize on this potential tailwind, we are continuing to implement value-pricing service offerings and service-based marketing strategies to drive share gains and support our guidance for mid-single-digit percentage growth in same-store fixed operations gross profit for the full year. F&I continued to make a very meaningful contribution to our results with reported franchise dealership F&I gross profit increasing 2% to a second-quarter record of $147.9 million, while same-store F&I gross profit decreased 1% driven by a 4% decrease in same-store F&I per unit. Fixed operations and F&I continue to provide a stable foundation for our business, representing more than 75% of total gross profit during the second quarter. The strength of these higher-margin businesses helped offset declines in new vehicle GPU and supported the overall profitability of our Franchise Dealership segment. Turning now to EchoPark. Second quarter revenues increased 15% to $582.9 million and segment gross profit increased 4% to a second-quarter record of $64.3 million. EchoPark retail used volume well outpaced the broader industry, increasing 17% to 19.6 thousand units, reflecting continued consumer demand for our strategic value proposition, improvement in non-auction sourcing mix, and strong execution by our teammates to continue to deliver an outstanding guest experience. EchoPark total gross profit per unit was $3.29 thousand, down 12% year over year, driven by a 21% decrease in used vehicle front GPU to $328 and an 11% decrease in F&I gross profit per unit to $2.96 thousand. Used vehicle GPU was stable sequentially, benefiting from our increased mix of non-auction source inventory. The sequential reduction in F&I gross profit per unit reflected lower service contract penetration and lower gross profit per service contract due in part to a greater mix of battery-electric and higher-mileage vehicles, which carried lower warranty penetration rates and profit per contract. As we have improved our mix of non-auction sourced inventory and shifted our inventory mix to provide more affordable, higher-mileage vehicles to consumers, it has put some pressure on our F&I GPU while benefiting volume, consumer reach, and overall gross profit levels. Going forward, we remain focused on optimizing vehicle sourcing and inventory mix, vehicle pricing, and F&I product offerings to drive targeted levels of total GPU in the $3.1 thousand to $3.3 thousand per unit range for full-year 2026 along with 12% to 15% used retail unit volume growth. EchoPark segment income was $7.2 million and adjusted EBITDA was $13.9 million, tracking within our full-year guidance of $35 million to $40 million in adjusted EBITDA. Included in this guidance is $8 million to $12 million in incremental brand marketing expense in the fourth quarter, which we believe will support new market expansion and organic volume growth in our existing EchoPark markets. We expect to open one new EchoPark location in the Orlando market in the fourth quarter and two to four new EchoPark locations in 2027. Turning now to our Power Sports segment. Revenues increased 53% to a second-quarter record $73.5 million and gross profit increased 57% to a second-quarter record $19.7 million. On a same-store basis, powersports revenues and gross profit each increased 13% year over year. Reported new retail unit volume increased 27% while reported used retail unit volume increased 61%. On a same-store basis, powersports new retail unit volume increased 3% and used retail unit volume increased 19%. Powersports reported F&I revenue increased 75% year over year to $3.5 million with total F&I per unit up 27% to $11.25. Same-store F&I revenue increased 20% while same-store F&I per unit increased 12%. Power Sports segment income increased to $2.3 million from breakeven in the prior year period and adjusted EBITDA increased 145% to $4.9 million. Our recently acquired Harley-Davidson dealerships in California, Florida, Georgia, and North Carolina contributed to the segment's growth and expanded our presence in several important riding markets. These locations also improve the geographic and seasonal diversification of our powersports portfolio, as evidenced by the increase in second-quarter adjusted EBITDA year over year. Despite limited Sonic Playbook integration to date, these stores are already seeing returns above our expectations. This gives credence to our commitment to growing and sustaining our powersports growth strategy. We are also gearing up for the 86th Annual Sturgis Motorcycle Rally, starting August 7, where we expect another strong opportunity to showcase the benefits of our expanded footprint and capitalize on one of the industry's largest retail events. Finally, turning to our balance sheet. We ended the quarter with approximately $676 million total available liquidity resources, including approximately $294 million of cash and floor plan deposits. Our liquidity position and balance sheet capacity provide us with the flexibility to support our existing businesses, make targeted organic investments, pursue strategic acquisition opportunities, and return capital to stockholders. As we continue to execute our balanced capital allocation strategy, I am pleased to announce that our Board of Directors approved a cash dividend of $0.41 per share payable on October 15, 2026, for current shareholders as of September 15, 2026. We will continue to evaluate potential use of capital based on available acquisition opportunities, relative financial returns, strategic fit, and prevailing market conditions. Our team remains focused on delivering an exceptional guest experience, while executing our long-term strategy across all three operating segments and making disciplined decisions designed to enhance long-term shareholder value. This concludes our opening remarks and we look forward to answering questions you have. Thank you.
分析師問答
Thank you. Our first question is from Jeffrey Lick with Stephens. Please proceed with your question.
Good morning. Thanks for taking my question. I wanted to ask about your new business. You did outperform—now that we have seen everyone report—you are really the only one that kind of matched the market. Curious to get your thoughts on why you think that is. And maybe if you could build on it: not only did you match the market and outperform your peers in new, but you did so when used; your used comp is actually better than your new comp, and used units were better than new units. Can you speak to why you are able to do that and what you are seeing? What might be different for you?
I do not know the brand mix differences that other companies have. I think we are a little more aggressive on our margins. We have been saying that there is going to be a margin stretch coming into the second half of the year. We pay real close attention to our day supply and making sure that we are turning inventory. I think we are pretty aggressive from a margin perspective and that helped grow the volume and really support our strong F&I numbers. We strategically have higher F&I per-unit returns than most of the rest of the group. So when you combine that with a slightly lower front-end margin, the total gross dollars were in line with our expectations and we really drove a great quarter from both a new and a preowned perspective with that strategy.
And then a follow-up, shifting gears to EchoPark. You made some tweaks, took the units up, total GPU down, a combination of the vehicle and the finance contract F&I. Any details there? And then on advertising, you reduced it by $8 million, which I guess effectively means you took your EchoPark guidance down by $8 million. My question: if you were a private company, would you still take the advertising down? That is interesting.
We would not make decisions differently simply because we're public or private. We are doing what is best for our business long term.
We do not make decisions like that. We are doing what is best for our business long term.
To expand on that, it has nothing to do with being private or public. It has to do with scheduling and getting it right before we spend the money. It is a timing issue. The margin mix was driven basically by inventory mix.
We sold more EVs and C cars, which influenced the mix.
We are working on back-end products for that. But we drove great volume—up 17% for the quarter. In July, we are running north of 25% growth, which is fantastic. This is consistent with the strategy we outlined at the beginning of the year as we begin to open stores again. Volume is coming back. We have strong back-end numbers even with the mix change. We will have some new F&I products for BEV and certain C-car categories that will help. We expect to stabilize in the $3.1 thousand to $3.3 thousand total GPU range and sell more cars. EchoPark is exciting for us. With affordability issues in new vehicles—new average transaction prices have crested near $61 thousand compared with industry around $50 thousand—used-car pricing at EchoPark is less than half of a new car price, which bodes well for EchoPark over the next 12 to 18 months. It should be a lot of fun to watch this brand grow.
So to sum up, on the advertising guidance or budget coming down, it seems volume is not the issue—given what you are observing—so perhaps you do not need to spend $20 million on advertising now and instead take time to fine-tune GPU?
Those are two separate things. We expect the advertising shift to be a timing issue. We expect to deploy that advertising in the fourth quarter and it should add to our efforts then. We have been conservative to make sure our EBITDA was where it needed to be. Pre-COVID we sold 500-plus cars per rooftop a month; now some of our rooftops are in the 350 range. There is a lot of upside in existing stores. Small adjustments can push volume up drastically. We expect a great second half of the year for EchoPark, with growth continuing in July and beyond. Our new advertising campaign will be special and should help drive higher growth and margin.
To be clear, our initial branding budget is $20 million. The shift is purely timing.
Did you put Danny in some of those EchoPark ads?
You never know. It is going to be fantastic.
It is part of our plan. We will have more to announce soon about our marketing and branding plan for EchoPark. Anecdotally, our naming rights deal at EchoPark Speedway has significantly increased customer awareness. Once customers hear about EchoPark and they see our online views, that creates a big impact. We have the number-one guest experience in the industry and the feedback is strong. We will have further announcements soon and we are excited.
One final point—
One final point on timing: our marketing teams are very data driven on how we deploy incremental brand spend. With the shift in how consumers are shopping, we had some front-end work to do related to our websites, particularly around search optimization and being prepared for buyers using AI tools. We did not want to spend substantial brand dollars without being prepared to capitalize on current shopping behavior. That front-end work shifted the timing of the spend.
Well, thanks for taking my questions and congrats on standout results. Thanks a lot.
Thank you.
Our next question is from Alexander Perry with Bank of America. Please proceed with your question.
Hi, thanks for taking my questions. Following up on EchoPark: you spoke about share gains—how are you gaining market share versus some of your used-only peers? Was there a change around pricing strategy? You mentioned shifts in advertising—should we expect those share gains to continue?
The primary shift was carrying more inventory and positioning ourselves in a value position with cheaper inventory, which drove our mix change and allowed us to drive volume.
Expanding inventory and focusing on value inventory helped drive volume. Our mix changes were intentional.
Against the current new-car pricing environment, affordability is a strong tailwind for used. Used car pricing around half the new price makes the used business fire. We have taken advantage of more off-lease BEVs and higher-mileage, more affordable vehicles. BEVs comprised nearly 15% of EchoPark volume in the second quarter, a substantial increase. We need to add F&I products tailored to those vehicles, and we will. We remain focused on pricing and inventory levels, and expect this trend to continue through the rest of the year; July performance has been strong.
On auction sourcing mix: in the first quarter, 32% of EchoPark sales were non-auction sourced, and that rose to 42% in the second quarter. That is a 10-point improvement and a significant gain. Non-auction sourcing gives us higher-mileage, more affordable vehicles and EVs, both of which are growing rapidly in our mix. We need to fine-tune the F&I component and relative GPUs but this sourcing approach supports volume and awareness growth.
That is really helpful. On parts and service: same-store comps moderated versus difficult compares, similar to peers. Is there anything structural driving that moderation? What supports a return to mid-single-digit growth? Is there an affordability pressure in parts and service pricing that should come down, or was it a one-off?
There is a pricing issue in fixed operations. Industry-wide, only about half of customers who buy new return to the new-car dealer for service. The opportunity in fixed operations is huge, which is why we are focused on value-pricing initiatives and five specific service offers per store. We need to get advertising and pricing in line to bring customers into the service drive. We have increased the number of bays and technicians. The wobble in Q2 is not acceptable; we expect mid to upper single-digit or even double-digit growth as we bring more customers back to dealers, especially since many customers are financing for longer terms—around 72 months or longer—and are likely to keep cars longer.
All incredibly helpful. Best of luck going forward.
Thank you.
Our next question is from Christopher Pierce with Needham and Company. Please proceed with your question.
Hey, good morning. At EchoPark, can you carry this much inventory? Days of supply was up 15% year over year. Does the pricing environment help you carry inventory, or is it more your updated sourcing? Is this a new normal or environment-driven?
It is both. It is sustainable. Day supply is a little higher than normal right now because we saw an opportunity to buy more cars off the street. We're selling more cars—July is strong—and day supply should drop seasonally into September and October. We intentionally pushed inventory up to capture volume opportunities.
Our existing EchoPark footprint has significant capacity; many stores could sell close to double what they currently sell. We have salespeople individually selling 50 cars a month, so there is considerable upside in our current footprint.
With more BEVs coming off lease for the next several years, should we think of a higher EV share as the new normal for EchoPark? Could F&I retail dollars per vehicle move lower as more EVs come online?
From a margin perspective, I think we're in the ballpark and I do not expect margins to go any lower; they could go higher as we add products for those vehicles. We believe we can add F&I products to support BEVs. I do not expect GDP to move materially lower as BEV mix increases.
Is attach for EVs artificially low early in this period because you are less familiar selling so many EVs? Is that realistic?
The industry overall is in that position. We sold more BEVs this quarter and will in coming quarters. Manufacturers absorbed some of the depreciation on off-lease BEVs, which will play through through next year. We will add back-end products to support BEV sales as needed.
There is a disconnect on F&I warranties attached to BEVs historically, and consumer perception that EVs have lower repair risk. In practice, EVs are showing higher dollars per repair on average in the industry, due to new technology and wholesale replacement of parts. There is an opportunity to educate consumers about EV maintenance and repair costs.
One last question: you are growing 17% with little advertising and have easy comps in H2. Why not push the store-opening button harder now rather than delaying advertising?
We will do both. We can grow volume and margin. EchoPark remains an unknown brand in many markets; advertising will build awareness and create a margin play. We will invest where we see return and can scale further. We have room to grow and will accelerate when it makes sense.
We have built the brand and experience. We are ready and healthy to grow. This is not a quarterly play; this is a long-term investment in a proven guest experience, lower cost, and strong quality. The primary missing element today is awareness, which the brand advertising will address. We have been building and investing in EchoPark for a long time; now it is time to grow.
Thank you very much.
Our next question is from Bret Jordan with Jefferies. Please proceed with your question.
Hey, good morning, guys. As you look across your segments today, where are you seeing the best valuations and opportunity for investments? Powersports seems to be the primary M&A focus this quarter, but how does that pipeline compare to franchise vehicle opportunities?
We are seeing more opportunities than ever across both franchise and powersports, thanks to our team, market share gains, guest experience, and manufacturer relationships. Valuations in powersports are compelling and the powersports team is performing well. We expect to announce opportunities in coming quarters. There is no shortage of high-quality opportunities in both areas.
I have seen more attractive opportunities in my career across both franchise and powersports. There are many great quality deals and brands that align with our capabilities. We are working on many opportunities now and will share as they close.
From a financial perspective, powersports historically trades at a smaller multiple than franchise dealerships, and there is significant opportunity to change the used business and fixed ops in powersports. That is working the way we expected. Our F&I opportunity is meaningful because some competitors have F&I per-unit numbers significantly higher than ours, so there is room for improvement. The diversification across franchise, EchoPark, and powersports is attractive and provides multiple avenues for growth.
Got it, very helpful. On the vehicle side, any notable regional call-outs this quarter?
No notable regional issues; the big theme is affordability. One in five customers now has payments above $1,000 monthly; industry payment averages approach $800 monthly for new cars. That is too high and something the industry and manufacturers will need to address. In the meantime, used cars will benefit and we will capitalize on that.
Great—that's all for us. Thanks guys.
Thank you.
Our next question is from Rajat Gupta with JPMorgan. Please proceed with your question.
Great. Thanks for taking the question. I wanted to follow up on parts and service. We've seen slowing growth rates and even negative gross profit growth among some peers. I understand warranty comps got tougher this quarter, but has anything shifted recently in the market backdrop—affordability or the car park change? It seems a little sudden. You are still guiding to mid-single-digit growth for the year—what will drive acceleration in the second half for fixed ops?
We are staying aggressive on pricing to drive more RO counts and customers through the service drive. There was a wobble across the industry in Q2, which makes no sense because the long-term opportunity is large. Warranty can be a tailwind or a headwind—too much warranty work can reduce attention to higher-margin customer-pay work. We are focused on pricing, offers, and managing costs to bring customers back to the dealership rather than independent shops. We expect to get back to normalized growth.
Our marketing team is taking steps to reach both existing and potential customers to change the perception that franchise dealers are higher priced. As we adjust pricing, it is key that customers know about it; we are taking those steps to drive business.
One more point: our average vehicle coming through service is about five years old, which reflects the lapping of SAAR changes that occurred starting mid-2021. That car park returning to dealer service life should grow for the next two to three years. Our pricing and marketing efforts should help us return to mid-single-digit growth, even accounting for variability in warranty tailwinds.
Understood, great color. On EchoPark: mix headwinds are clear; you did not have to take price actions to drive growth, correct? It was pure mix?
Correct. We were already competitively priced; we did not need to take price actions. The headwind was mix change, not price increases.
From my perspective, we remain compliant with rules. In certain markets, competitors may not be fully compliant, which impacts our ability to compete on price in those markets. We hope enforcement will bring everyone into compliance; that would normalize competition.
The opposite can happen: some dealers advertise one price and then the customer sees a different price at the store, which is not in line with rules and causes noise. Third-party lead providers are making adjustments; I expect this to get resolved over the remainder of the year. Overall, it did not materially affect Sonic.
Understood. Thanks for the color and good luck.
Thank you.
Our next question is from John Babcock with Barclays. Please proceed with your question.
Hey, thanks for taking my questions. On parts and service: as you chase that next opportunity, do you expect any impact on margins? Are there opportunities to take out cost and keep parts and service margins strong?
I do not expect margin erosion. There is a lot of opportunity because so much of the car park does not currently return to dealers. If we better communicate our pricing, technicians, and technology, we will bring more customers into the service drive. I expect gross growth without margin erosion, and as customers keep cars longer, fixed operations should increase significantly.
There is an opportunity to take out expense and reduce fixed costs through AI development. That can create efficiency, faster throughput, and allow us to service more vehicles, generating more gross and taking cost out.
On virtual F&I—some peers are trialing virtual F&I. Is that something you have looked at? Is it interesting or difficult to execute?
We are watching it. Our F&I GPU is among the top in terms of performance and we're satisfied with it. Virtual F&I may present cost savings; it's an idea others have done from centralized offices. We will monitor and adopt if it provides clear benefits, but for now our F&I performance is strong and not a priority change.
One more on EchoPark: you adjusted the cadence of store openings. How much is that related to construction timing versus demand or inventory build?
It is 100% driven by construction timing.
Our next question is from Rob Saltzman with UBS. Please proceed with your question.
Thanks. Peers highlighted difficulties sourcing used vehicles in Q2. Have you experienced similar difficulties or increased competitiveness in the auction channel, and how are you working around it? Nice to see the increase in customer-sourced vehicles; any details around the sourcing competitive environment would be helpful.
I do not think the auction lanes were more competitive than the last several quarters; auctions are generally competitive and you pay up for cars there. We have been buying more cars off the street, buying more from our service drives, sharing inventory between companies, and increasing buy-center activity across the country. Our percentage of cars sourced off the street is growing versus auction cars. We are also seeing more off-lease BEVs returning, and more inventory will be available as we move forward. Those who understand the preowned business well are starting to grow faster because more inventory is becoming available and accessible.
Follow-up: how can you address parts and service price competitiveness perception? Is there an opportunity for OEMs to offer lower-priced replacement parts to help you compete?
The manufacturers need to do a better job keeping parts costs in line, and we as retailers must do a better job understanding market pricing. AI helps deliver pricing intelligence to dealerships, enabling better daily pricing decisions in fixed operations. We must also market and educate consumers about our facilities, trained technicians, and pricing. The perception that dealer service is overpriced is something we are fixing through pricing and marketing. We're focused on bringing customers back into our service drives and capturing the large upside opportunity.
Thanks so much, team. Appreciate it.
This now concludes our question-and-answer session. I would like to turn the floor back over to David Bruton Smith for closing comments.
Well, thank you all for your time and your questions and we will talk to you next quarter. Thank you.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.