SAH

Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share. Earnings declined 17% year over year but beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. The quarter benefited from higher retail new and used vehicle volumes and growth across EchoPark and Powersports segments. At the consolidated level, gross profit rose 2% to $616.2 million. Adjusted SG&A expenses increased 6% to $443.4 million. Adjusted SG&A, as a percentage of gross profit, was 72.0% compared with 69.2% a year earlier. Adjusted net income fell 23% to $58.3 million. Sonic Automotive, Inc. price-consensus-eps-surprise-chart | Sonic Automotive, Inc. Quote Franchised Dealerships segment revenues increased 6% year over year to $3.28 billion. New-vehicle revenues rose 5% to $1.76 billion, while used-vehicle revenues increased 9% to $814.3 million. Parts, service and collision repair revenues advanced 6% to $515.5 million, while finance, insurance and other revenues increased 2% to $147.9 million. Retail new-vehicle unit volume rose 1%, and used-vehicle volume advanced 6%. Profit per vehicle remained under pressure. Reported retail new-vehicle gross profit per unit fell 11% to $3,024, while used-vehicle gross profit per unit declined 12% to $1,399. Segment income was $70.7 million, down 23% from the year-ago period. Management cited difficult comparisons tied to pre-tariff consumer demand pull-forward in the second quarter of 2025. EchoPark revenues increased 15% to $582.9 million, while gross profit rose 4% to a second-quarter record $64.3 million. Retail used-vehicle sales volume increased 17% as Sonic carried more affordable inventory and expanded its non-auction sourcing mix. Wholesale vehicle volumes increased 12%. That volume growth came with lower per-unit economics. Total used-vehicle and F&I gross profit per unit fell 12% to $3,292. Segment income dropped 38% to $7.2 million, while adjusted EBITDA declined 15% to $13.9 million. Powersports revenues surged 53% to a second-quarter record $73.5 million. Gross profit increased 58% to $19.7 million. New retail unit volume rose 27% to 1,775 units, while used retail volume jumped 61% to 1,317 units. Finance and insurance revenues climbed 75% to $3.5 million, with F&I gross profit per unit up 27% to $1,125. Segment income improved to $2.3 million from breakeven, and adjusted EBITDA increased 145% to $4.9 million. The five Harley-Davidson dealerships acquired in April are expected to add about $100 million in annualized revenue. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The board approved a quarterly dividend of 41 cents per share, to be paid out on Oct. 15, 2026, to stockholders of record as of Sept. 15. Management raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. EchoPark is still expected to deliver 12%-15% retail used-unit growth, total gross profit per unit of $3,100-$3,300 and adjusted EBITDA of $35-$40 million. Sonic also expects $8-$12 million of incremental EchoPark brand marketing expense in the fourth quarter and plans to open an Orlando location during the quarter. Sonic currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Penske’s revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, Penske’s liquidity was about $1.4 billion, including $69.5 million in cash. Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025.During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%. Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit. As of June 30, 2026, AutoNation had cash and cash equivalents of $53.3 million. Non-vehicle debt was $4.43 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report AutoNation, Inc. (AN) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. Retail automotive same-store new and used units increased 5%, while same-store service and parts gross margin improved 80 basis points to 59.5%. Penske currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Penske Automotive Group, Inc. price-consensus-eps-surprise-chart | Penske Automotive Group, Inc. Quote Retail automotive revenues increased 6% year over year to $7.3 billion. New vehicle revenues rose 5.9% to $3.38 billion, used vehicle revenues advanced 9.4% to $2.47 billion and finance and insurance revenues increased 1.3% to $211 million. Service and parts revenues rose 1.6% to $867.1 million, while fleet and wholesale revenues declined 0.8% to $375.6 million. Same-store revenues grew 5.7% to $7.12 billion. Retail automotive gross profit slipped 0.7% to $1.16 billion, with gross margin contracting to 15.8% from 16.9%. New vehicle gross profit per retail unit fell 10.4% to $4,782, while used vehicle gross profit per unit declined 8.8% to $2,095. Service and parts gross profit increased 3.1% to $517 million. Retail commercial truck revenues declined 1.7% year over year to $927.8 million. Total new and used truck units retailed increased 1.7% to 5,431, as a 64.8% jump in used units offset a 7.8% decline in new units. Retail commercial truck gross profit slipped 0.6% to $142.8 million, while gross margin improved 20 basis points to 15.4%. Class 8 market orders increased 170% in the second quarter. Premier Truck Group's backlog was about 10,400 units, with the majority expected to convert into retail sales in the second half of 2026. Used truck demand also strengthened as freight conditions improved. Commercial Vehicle Distribution and Other revenues jumped 41.1% year over year to $283.9 million. Gross profit rose 30.5% to $57.7 million, although gross margin declined to 20.3% from 22%. Australia's off-highway business was a key contributor, with revenues increasing 63% in the quarter. The company secured more than $300 million of orders during the period, bringing its 2026 secured order book to nearly $660 million, supported by energy solutions, mining and defense demand. Penske Transportation Solutions contributed $57.4 million in earnings to PAG, up 7% year over year. The improvement reflected growth in full-service leasing, better fleet utilization, lower operating expenses and lower interest costs. PTS managed more than 379,200 trucks, tractors and trailers. Continued weakness in the rental market and a lower gain on used-truck sales partly offset the benefits from improved freight conditions and fleet-rightsizing actions. Consolidated gross profit edged up 0.4% to $1.36 billion, but gross margin narrowed to 15.9% from 16.8%. Selling, general and administrative expenses increased 3.2% to $974 million, and operating income declined 7.6% to $337.6 million. Operating margin fell to 4% from 4.5%. Adjusted EBITDA was $401.8 million, up 0.3%, while other interest expense rose 53.2% to $33.1 million, reflecting higher borrowing costs associated with acquisitions. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, liquidity was about $1.4 billion, including $69.5 million in cash. PAG repurchased 265,104 shares for $42.5 million in the first half, leaving $221.2 million available under its repurchase authorization. The board also raised the quarterly dividend 1.4% to $1.44 per share, marking the company's 23rd consecutive quarterly increase. Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share, which fell 17% year over year but beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The company raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. Sonic’s EchoPark unit is still expected to deliver 12%-15% retail used-unit growth this year. Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025.During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%. Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit. As of June 30, 2026, AutoNation had cash and cash equivalents of $53.3 million. Non-vehicle debt was $4.43 billion. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report AutoNation, Inc. (AN) : Free Stock Analysis Report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Results benefited from record After-Sales gross profit and stronger Customer Financial Services profitability. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%. AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit. Customer-pay revenues increased 7% year over year, while wholesale parts revenues advanced 16%. Customer-pay repair orders rose 5% and warranty repair orders increased 8%. Parts and service gross margin declined to 48.1% from 49%, mainly reflecting a higher mix of lower-margin wholesale parts. Customer Financial Services gross profit totaled $357.6 million, down 2.7% from $367.7 million a year earlier as lower retail vehicle volumes offset stronger per-unit profitability. CFS gross profit per vehicle retailed climbed 3.2% to $2,799 from $2,712. The improvement came despite an approximately 2% drag from higher AutoNation Finance originations. AutoNation Finance, meanwhile, generated income of $10.7 million, up from $2 million a year ago. The portfolio reached $2.67 billion, increasing about 52% from $1.76 billion, while quarterly originations totaled $485 million. AN Finance accounted for 11% of total vehicle sales and 18% of financed vehicle sales, highlighting the growing contribution of the captive finance platform. New vehicle revenues declined 3.1% to $3.29 billion as retail unit sales fell 4% to 63,240. New vehicle gross profit per unit dropped 14.5% to $2,381, reflecting higher vehicle costs. Much of the volume decline was due to weaker battery-electric vehicle sales and difficult comparisons against tariff-related demand pull-forward in 2025. Used vehicle revenues increased 1.3% to $2.01 billion despite a 7.5% decline in retail unit sales to 64,521. Retail used vehicle revenue per unit increased 8.4% to $28,674, while gross profit per unit slipped 2.5% to $1,582. Total gross profit fell 3.5% year over year to $1.23 billion, with gross margin narrowing to 17.8% from 18.3%. Adjusted operating income declined 7% to $343.1 million from $369.3 million. Adjusted SG&A expenses represented 68.2% of gross profit, improving sequentially from 69.8% in the first quarter but remaining above 66.2% a year ago. Management expects the ratio to reach its 66%-67% target range on a run-rate basis by year-end. Adjusted free cash flow totaled $439.2 million in the first half of 2026, representing 125% of adjusted net income. AutoNation spent $316.5 million on acquisitions and $126 million on capital expenditures during the period. The company also repurchased 2.3 million shares for $457 million in the first half.  As of June 30, 2026, cash and cash equivalents were $53.3 million. Non-vehicle debt was $4.43 billion. AutoNation had about $1 billion of liquidity, including $0.9 billion available under its revolving credit facility, net of commercial paper borrowings. Management expects after-sales customer-pay gross profit to maintain mid-single-digit growth, supported by customer retention and technician capacity. With stable vehicle unit profitability, continued CFS and After-Sales growth, AutoNation Finance expansion and a lower share count, management expects adjusted earnings per share to grow year over year in the second half of 2026. AN stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Penske’s revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, Penske’s liquidity was about $1.4 billion, including $69.5 million in cash. Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share, down 17% year over year. Earnings beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The company raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. Sonic’s EchoPark unit is still expected to deliver 12%-15% retail used-unit growth this year. Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025. During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AutoNation, Inc. (AN) : Free Stock Analysis Report Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, July 30, 2026, at 11 a.m. ET Chairman and Chief Executive Officer - David Bruton Smith President - Jeffrey Dyke CFO - Heath R. Byrd EchoPark Chief Operating Officer - Thomas Keen VP of Investor Relations - Danny Wieland Operator: Good morning, and welcome to Sonic Automotive Second Quarter 26 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 2 thousand. 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. David Bruton Smith: Thank you very much, and good morning, everyone. Welcome to Sonic Automotive's Second Quarter 26 Earnings Call. As said, 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 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 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 25. 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 $1,350 to $1,450 Second quarter reported used vehicle GPU was $1,399 down 12% and same store used vehicle GPU $1,401 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 26 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 and 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 100 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 1 new EchoPark location in the Orlando market in the fourth quarter and 2 to 4 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 $1,125 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, 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 1 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 3 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. Operator: Thank you. Our first question is from Jeffrey Lick with Stephens. Please proceed with your question. Jeffrey Lick: Good morning. Thanks for taking my question. I wanted to just I wanted to ask about your new business You did outperform now that we have seen everyone report, you are really the only 1 that kind of matched the market. Curious just to get your thoughts on why you think that is then 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, and that your used comp is actually better than your new comp. And used units was better than new units. So can you maybe speak to why you are able to do that and what you are seeing? What might be different for you? Frank Jeff Dyke: Yes, I mean, do not know based on brand mix what the differences might be. 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. So I think we are pretty darn aggressive from a margin perspective and that helped grow the volume and really support our big F&I numbers. We strategically have higher F&I PORs I think than most of the rest of the group. And so when you combine that with the front end, it is a little lower in our higher F&I margins. The total gross dollars were in line with our expectations and we really drove a great quarter both from a new and a pre owned perspective with that strategy. Jeffrey Lick: And then just follow-up or a shift gears to EchoPark. You made some tweaks took the units up, GPU total GPU down, you know, combination of the vehicle and the finance contract F&I, Is there any details there? And then on advertising took that down by $8 million which I guess effectively means you took your EchoPark guidance down by 8 million My question there is if you were a private company, would you still take the advertising down? that is interesting. Frank Jeff Dyke: Yes. David Bruton Smith: This is David. We do not make decisions like that. We are doing what is best for our business long term. Frank Jeff Dyke: Yes. And I guess that is the easy answer, but Yeah. And it would have nothing to do with private or public. It has to do more with scheduling, getting it right before we take it out. it is a scheduling issue as well from a timing perspective. And then the margin mix was driven basically by inventory mix. Thomas Keen: Tim can comment more, but we sold more EVs and C cars. Frank Jeff Dyke: We are working on back end products for that. But drove great volume, up 17% for the quarter. And if you take a look at July, we are running north of 20-- north of 25% growth for July, which is fantastic. So all of this is kind of what we said we would do as we began the year and work towards opening beginning to open stores again. The volume is coming back. We have got really strong back end numbers. Even at the numbers that we are doing now with the mix change. And we will have some new F&I products for Bev and for CCARs that will help that. But we will stabilize in that 3.1 thousand to 3.3 thousand range, but we are going to sell more cars and we are proving that now. So all speed ahead from an EchoPark perspective. We are super excited about the business. And with affordability issues, that we see on new, I mean, we have crested $61 thousand close to from a new car price perspective. The industry is at $50 thousand Our used car pricing is less than half of what a new car price is from an EchoPark perspective. That really bodes well for EchoPark over the next 12 to 18 months. Gonna be a lot of fun to watch this brand grow. Jeffrey Lick: So I guess to sum it up then, if you look at the advertising guidance or the budget coming down, maybe looks like what you are saying is, look, volume really is not our issue given what you are observing. So maybe we do not need to spend $20 million on advertising and maybe we just need to spend a little more time kind of fine tuning the GPU. Frank Jeff Dyke: 2 separate things. We would expect the advertising that we are going to be a timing issue. that is it. And we expect that advertising when we get to the fourth quarter to even add more to what we are doing now. So that opportunity was there all along. We were being very conservative, making sure that our EBITDA was where it needed to be and just being conservative with EchoPark. The volume, you know, if you remember pre COVID, we were selling 500 plus cars on rooftop a month. So, and now we are doing in the 350 range. We have got a lot of upside opportunity in the current stores that we have. And it is just turned a little lever here and there or pull a lever here and there, and our we can push our volume up drastically. So that is going to happen. You see some of our competitors doing that. And we look forward to a great second half of the year with EchoPark. We are going see growth. And we are seeing it in July. And as we launch our new advertising campaign, which really going to be special, the world's gonna have a lot of fun with that. We expect to see even higher growth and build on margin from that point forward. Heath R. Byrd: And Jeff, this is Heath. Just to be clear, we still have our initial branding budget is $20 million. And to Jeffrey's point, it is just timing. Jeffrey Lick: Did you put Danny in some of those EchoPark ads? Frank Jeff Dyke: Yes. You just never know. Never know what we are going to do. it is going to be fantastic. Yeah. David Bruton Smith: This is David. I would just add that it is part of our plan. We will have more to announce hopefully in near future about our marketing branding plan for EchoPark. But we can tell you, anecdotally, our naming rights deal at EchoPark Speedway the customers, awareness that, that is generated once customers hear about EchoPark and they see our online views, so we again, we have got the number 1 guest experience in the industry. And the feedback, you should see the volume in our source and our land source, for example. it is double. it is a huge impact. So we know that again, we will have further things to announce soon, but we are excited about it. Jeffrey Lick: And maybe 1 more, 1 final point. Danny Wieland: This is Danny. 1 final point on that. Is with the timing, you know, we had our marketing teams very much taken a data driven approach to how we deploy this incremental brand spend. And with the shift in the way consumers are shopping, we had some back end work to do related to our websites in terms of being answer engine optimized for, you know, the portion of buyers that are searching via AI tools. Do not wanna go out with that significant amount of brand spend at least to our segment results without being prepared to capitalize on it. In the way that the consumers are currently shopping. So there was some front end work and that is what shifted the timing further back in the year from, you know, what we told you 10 to 20 million back in February. Jeffrey Lick: Well, thanks for taking my questions and congrats for definitely standout results. Thanks a lot. David Bruton Smith: Thank you. Thank you. Thank you. Operator: Our next question is from Alexander Perry with Bank of America. Please proceed with your question. Alexander Perry: Hi, thanks for taking my questions here. I guess just to follow-up on EchoPark. You spoke a bit about the share gains and it is been great to see, I guess. You know, how are you gaining market share there versus some of your used only peers that you know, something changed around the pricing strategy? You mentioned shifts in the advertising strategy and should we expect those share gains to continue? Thanks. Frank Jeff Dyke: Yes. Thomas Keen: This is Thomas Keen. Really the only shift was carrying more inventory and being conscious of us being in a value position with cheaper inventory. Which is what drove our mix change. And allowed us to drive the volume. Frank Jeff Dyke: And this is Jeffrey. As we set up against the new car pricing that is out there right now, and you see this affordability issue continues, you are going to see used car growth really, really go. And we are getting back now to used car pricing being 1-half that of the new car price that is out there, that is when the used car business really fires. And that is what is happening. it is happening naturally, and we are forcing it even more, from an EchoPark perspective. When you combine all that, it is just a it is just amazing, the energy you get from a volume perspective. We are seeing that. I think you saw it at a couple of other competitors than some others. I had made some comments about going for gross. I do not understand that a little bit. Right now from a PR perspective because inventory is coming back, off lease cars are coming. You got a lot of off lease bev cars in the market where the manufacturers kinda absorb some of the depreciation. We are taking advantage of that. Just missed out a little bit on back end products with that. I think Bev was 15% or almost 15% of our overall volume in the second quarter at EchoPark. that is way up from what it normally was running. And so we are we took advantage of that, had a bigger reach for our customer base. Expanded our customer base. And now we said we need to add some products for Bev, we will do that. But very, very focused on our pricing and the level of inventory we are carrying when you combine all that, it just it is amazing what is happening. And it is going to continue to happen through the rest of the year. Like I said, if you look at July, we are having a blast and we are plus 25% the last year or something like that right now. Danny Wieland: And 1 more point on that auction sourcing mix. In the first quarter, we were 32% non auction sourced. We were up 10 full points to 42% of our sales were non auction sourced during the quarter. So significant gains there to Jeffrey's point, you know, the way that we are attacking that with the non auction misc is going to what consumers are looking for from higher mileage, more affordable vehicles EVs, off lease, and used EVs are very hot right now. Both of those were growing 40% to 60% quarter over quarter in terms of their share of EchoPark mix. it is it is we have got to fine tune a little bit the F&I component and the relative GPUs. it is supporting the volume and it is supporting growth of the awareness of EchoPark's brand and the reach that we have. Alexander Perry: that is all really, really helpful. Thank you for that. I guess just to follow-up on parts and service. So the same store comps, I guess, moderated a bit against fairly difficult compares, you know, pretty consistent with what we have seen across the peer group. Is there anything structural driving that moderation? What supports return to sort of mid-single-digit growth? And then do you think there is an affordability challenge out there in parts and service where pricing sort of needs to come down at all? Or do you think it was more of a 1 off thing? Thanks. Frank Jeff Dyke: No. I think that there is 100% a pricing issue. I mean, when you think about it customers who buy new cars as an industry average, only half of them are coming back new car dealers to service their cars. The opportunity in fixed operations is huge. And that is why we are focused on value pricing. We have got 5 op codes right now per store that we are really focused on from a value pricing perspective, that is gonna grow. We need to get our pricing in line as an industry. Fixed operations perspective and we are working really hard on that. But we there is an affordability issue there. there is an affordability issue on the price of a new car. And when you add all that together, that is why I think you see some wobbleness in fixed operations growth. And growing only 2%. there is way more there, way more meat on the bone and that is a huge for us as we move forward. And if customers are going to stay in cars longer, I mean, average customer is financing their car 70% of our customers are financing their car for 72 months or longer. So if that is going to be the case and customers are going to drive new cars longer, there is going to be huge upside from a fixed operations perspective We have got to get our costs and our pricing in line for our customers to bring more customers into the service drive. We are absolutely focused on doing that. We have increased the number of bays that we have. We have increased the number of technicians we have. And quite honestly, the number that we are seeing out there is not good enough. there is a wobble in the second quarter. I am not sure you know, if it is the war, what is causing it. But just across the board, low single digit numbers and fixed operations is not acceptable. We need to be you know, mid to upper single digit and maybe even double digit growth as we go forward and it is something that we are very, very focused on. it is a great question. Thank you. Alexander Perry: All incredibly helpful. Best of luck going forward. Frank Jeff Dyke: Thank you so much. Thanks. Operator: Our next question is from Christopher Pierce with Needham and Company. Please proceed with your question. Christopher Pierce: Hey, guys. Good morning. Good morning, Christopher. Thomas Keen: At EchoPark, at EchoPark, can you carry this much inventory? I guess days of sale was up, up 15% year over year. Is the pricing environment, does that help you carry this inventory? Or is it more your updated sourcing? Like this sort of a new normal or the environment play a role in kind of what we saw in Q2? From inventory and unit growth? Frank Jeff Dyke: Yeah, it is really both. And it is sustainable going forward for sure. Yes. Your day supply is high, a little higher than normal right now, but we saw an opportunity to buy more cars off the street. Selling more cars as you can see. We are having a big ol' July We expect that to carry on for the rest of the year. Day supply is going to drop as we move into September and October. that is just normal seasonality. But we told you earlier, we pushed inventory up because we know there is some opportunities from a volume perspective, and we have done that. And just great opportunity for us to grow. David Bruton Smith: This is David. I think it is important to note that our existing footprint of EchoPark stores we have a lot more capacity that we can sell out of those existing stores. I mean there is it is close to double what we are selling now. So that the room that we have and how we are built and we have some salespeople who are selling 50 cars a month. Individually. Okay. Christopher Pierce: And then thank you for that there is more BEVs coming off lease for the next multiple years. Should we think about and I think Danny said this up to, like, only 15% of EchoPark with EV. I mean, should this sort of be a new sort of normal for Efren? I know I know you kind of guided where you guided, but the figure we saw in February, could it-- is it possible it could move lower as more ED comes online? Like, what is the right way to think about that? Frank Jeff Dyke: From a margin perspective? Christopher Pierce: Yes. From F&I retail dollars per vehicle at a-- Yeah. Frank Jeff Dyke: No. I mean, we are kind of in the ballpark, where we will be. I do not think it goes any lower. It could go higher because we are working on products to add that we can sell on that particular type of vehicle. So I do not expect it to go any lower. No, no, no. Operator: Go ahead. Christopher Pierce: I would say that you are not as familiar selling so many EVs, so attach might be artificially low in the this beginning period. Is that sort of a realistic expectation? Frank Jeff Dyke: Yeah. I think the industry is that way. We have got a lot of off-lease BEVs coming back now. Manufacturers have done a great job absorbing some of that depreciation. We are going to see that until I think the end of next year. When it kind of maybe levels off or the middle of the following, when you will not have we do not have as many BEVs being sold now, obviously. So there is gonna be, you know, an up and then a down. But then we have more off lease cars coming back from a combustion perspective. So that is alright and a hybrid perspective. So that will be a big help and a big boost it is going to be good for the used car business over the next couple of years, I think. From a lease return perspective. And we will work out the margin with products on the back end. It just we sold more this quarter and we will sell more in the coming quarters and we will add some F&I products to support that. Danny Wieland: And some of it on the F&I on the warrants attached with BEVs is a little bit of a disconnect in our sales approach historically with more hybrid and ICE based unit volume at EchoPark as well as consumer perception that EVs have less repair risk or less repair cost. And in fact, we are actually seeing that EVs are the highest dollars per repair on average in the industry. Some of that is because it is new technology, some of it is because you got more wholesale replacement of parts as opposed to individual components. But there is a bit of an opportunity just to educate the consumer too when you look at some of the data on EV maintenance and repair costs relative to hybridized that it is not quite as low cost as it seems, at least for the interim. Christopher Pierce: Okay. And then just lastly, judging any reaction to Jeffrey's question here, going to kind of scoff at this 1 too, but I am just kinda curious. You are growing 17%, 25% in July with no advertising. You have got easy comps in the second half. Like, why push that button now? Why not push the store opening button or why not just kinda let it run through until you need to hit the gas on that? Frank Jeff Dyke: We are gonna do both because we can grow even more and we can grow margin. The more our guests know who we are, I mean, EchoPark is also the unknown. In the markets that we do business in. And so we think there is a margin play there for us, a front end margin play. And we have got a lot more volume to get. it is there. For us to go get. And, you know, we can back off we need to, if we see we have made the investment and it is not coming. David Bruton Smith: But we have worked really hard to get this brand ready to roll. As David said earlier, our guest experience is unmatched. We are very excited about that opportunity We are going to start growing and grow the brand. We have made that commitment. We have been telling you all that this is coming for a better part of a year now. And we are ready. We are healthy. We are ready to go. We are in shape, and we will see I am not scoffing at it, but I am very excited about it. And to David's earlier point, I just want to reiterate because I think it is really important. We objectively have the best experience We objectively have the lowest cost and just for the same or better quality of The only thing we are missing is you do not know about us. If you know about us, those are the 3 things that customers are looking for, and the brand is gonna create that awareness. Okay. And so it is not it is not a quarterly play for us. that is just not how we look at this business. We are not trying to bump numbers 1 quarter after another. it is a long term educated seasoned executive team and we are going to take that and put that work for us over time. And we have been building and investing in EchoPark for a long time. it is now time to grow. Frank Jeff Dyke: Thank you very much. David Bruton Smith: Thank you. Thank you. Operator: Our next question is from Bret Jordan with Jefferies. Please proceed with your question. Patrick Buckley: Hey, good morning guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Frank Jeff Dyke: Hey, Patrick. Patrick Buckley: As you look across your segments today, where are you seeing the best valuations and opportunity for investments? Powersports seem to be the primary M&A focus quarter, but how does that pipeline compare to franchise vehicles? David Bruton Smith: This is David. it is it is really fantastic because of our team and what great job we have been doing with the market share and guest experience and agreeing with our manufacturers. So we are seeing more opportunities than ever. To grow and both in franchise and in the powersports. Certainly, the valuations in powersports are very interesting, very compelling. And we are super excited about the performance of our powersports team. And so we are I think we will be we will be hopefully announcing some things here in the coming quarters. But there is no shortage of really fantastic high quality opportunities both in powersports and franchise. Frank Jeff Dyke: Yes. This is Jeffrey. The most I have seen in my career it is amazing. From a franchise and powersports perspective, the opportunities that are out there. And great quality deals great brands and brands that we excel in. And so we are working on a lot of them right now. And as David said, stay tuned because there are more opportunities coming. Heath R. Byrd: And, this is Heath. A couple of interesting things. If you look at powersports, they traded at different multiple as smaller multiple than the franchise. And there is so much opportunity. We said at the beginning, how we could change the used business in powersports and fixed ops And it is great seeing that it is working just like we thought In the f and I piece, we have a ton of opportunity. There are competitors that are double our F&I GPU. So that is becoming a really you get it for lower multiples and there is a lot more opportunity for improvement. So that is fantastic. But the beautiful thing about Sonic is the diversification. To your point, we have got opportunities in the franchise. We have got unlimited growth opportunities with EchoPark. And now that we have sort of formalized our playbooks in powersports, that is a very attractive segment to grow in as well. And I think our diversification is something that is very attractive. Patrick Buckley: Got it. Very helpful. And then on the vehicle side, were there any notable regional callouts this quarter? Frank Jeff Dyke: No. there is nothing. I mean, it is smooth operation. it is everything was fine. I mean, the big thing is affordability. Like I said earlier, 1 in 5 customer payments now are above $1 thousand a monthly payment, approaching $800 a month, the monthly payment on a new car as an industry. This is just too high. And so something's gotta give here. In the meantime, take it. We will we will sell a lot of used cars and enjoy the 16 million SAAR that is out there. But the big surprise continues to be what the tariffs have done to affordability. Kind of across the board. And I think at some point, we are going to have to address the industry is going to have to address it, the manufacturers. Gonna have to address it. Cars are getting too expensive. Patrick Buckley: Great. that is all for us. Thanks guys. David Bruton Smith: Thank you. Thank you. Operator: Our next question is from Rajat Gupta from JPMorgan. Rajat Gupta: Great. Thanks for taking the question. I wanted to follow-up on parts and service. We have seen some slowing in the growth rates, even some negative gross profit growth, you know, you know, from some of your peers. I understand, like, warranty comps got tougher this quarter, but I am curious, like, if anything's just shifted more recently in the market backdrop in general. You know, either be it affordability or just the car park shifting? It just seems a little sudden. In terms of the shift in growth there. And to your point, like, you are still guiding to mid-single-digit growth for the year. So curious, like, what is going to drive the acceleration in the second half? Well, I mean for your fixed ops as well. Frank Jeff Dyke: Yeah. Thanks. Rajat Gupta: Thanks, Rajat. Frank Jeff Dyke: We are we are staying aggressive on our pricing, and hopefully, that is going to drive more and more RO count and customers through our service drive. I agree with you. If you look just across the board at the industry and everybody has reported, there is a wobble in fixed ops in Q2 and it really makes no sense. It should not be that way. And so I think there is tons of opportunity in the car park that is out there We are focused on mid-single-digit to upper single digit growth. And anything less than that, like I said earlier, is just not acceptable. there is just too much opportunity. If there is something happened, I do not I cannot tell you that it was the news, the war, gas prices, really fluctuating all over the place. That could be a player. But the overall opportunity has not changed. it is big. Warranty comes and goes. it is actually can be detrimental to a service department if you have too much warranty because the service riders you know, pay attention to that. it is easy money and they do not they do not sell and do the job they need to do from a customer pay perspective. So it is something we are very focused on in our service drives very focused on putting the right offers out there and keeping our costs down so that we can there is plenty of margin there so we can bring our customers in And they are not going to the mom and pop service centers all over towns. And so it is a big focus for us. But to put my finger on 1 individual thing, I think you have heard it from everybody. there is just not it is just not there. Yes. David Bruton Smith: I think it is important to note Rajat, this is David, that our marketing team, we are also done taking steps to reach out to both our existing customers and potential new customers to change the perception that yeah, the franchise dealer has, you know, higher pricing and as we are adjusting our pricing, think it is key to make sure that the people know it. And so we are taking those steps to drive our business. Danny Wieland: 1 more point, this is Danny. I mean, we are getting to the point where our average vehicle coming through our service lanes is about 5 years old. Mid 26 is with the 5 year lapping of the sudden decline in new vehicle SAAR that we saw starting in May, June 2021. You ran a 13.7 million SAAR kind of for that period, then it comes up in the mid-4 and jumped back up to the 15. So you know, not attributing that necessarily to what we have seen in this slowdown, but as we look ahead, that car park that is in its return to dealer service life is going to continue to grow over the next 2 to 3 years. And so, you know, some of the things strategically with pricing and marketing that we are doing should help us you know, get back to that mid-single-digit growth rate as we go forward, notwithstanding whatever happens with the warranty tailwinds. Rajat Gupta: Understood. No. that is great color. And then just following up on EchoPark, you know, yes, it is very the mix headwinds understood very well with respect to the impact. But there was no, like, price actions that you had to take. Right? To drive the growth. It was just pure mix and I just wanna No. Frank Jeff Dyke: We are good. We are already cheap enough for Josh. We did not need to take any price action. None whatsoever. So a little mix change there. But no. Got it. And the FTC guidelines, you know you know, which is that to, you know, a lot of, like, you know, independent dealers, you know, just raise their prices, you know, add the full fee. Rajat Gupta: Has that any had any kind of impact you know, to your traffic, to your conversion? I am just curious if there was any benefit or not to the business from that. Heath R. Byrd: This is Heath. You know, from my perspective, and I do believe that the only thing that changed because we are compliant and we will maintain that. The only thing that is unique certain markets some dealers may not be compliant. So it impacts our ability to compete from a price perspective. And so we are hoping that the FTC will stand behind this and ensure that everyone's compliant And we will follow-up on the whistleblowers that are identifying these that are not. But that is the biggest change is if everyone was on and compliant it is business as usual. there is certain markets where you have got competitors that are not fully compliant, And, at least for now, it does not appear that the FTC has followed up on those individuals. Rajat Gupta: Understood. But you did not have any, like, pricing benefit, you know, you know, because some of the independents, you know, they raised prices, like, to give you an ability to maybe capture some price, you know, because it is still competitive either way. Frank Jeff Dyke: Yeah. The opposite happened. We are in compliance, but there is like he was saying, there is a lot of dealers out there that are not. And they are still advertising 1 thing. And then and then when you get to the store, you know, it is a different price. And that you know, that is you know, not in line with the FTC rules and that is causing some wobbling. But now the third party lead providers are making adjustments and that is a big deal because if they are not going to allow you to advertise and they are going to hold you accountable, then everybody's got to play by the same rules. And that is going to all work itself out over what I would think would be the remainder of this year. So you might have a little bit of noise, but overall, it did not affect our business you know, at Sonic. Rajat Gupta: Understood. Thanks for all the color and good luck. Frank Jeff Dyke: Thank you. Thank you. Thank you. Operator: Our next question is from John Babcock with Barclays. Please proceed with your question. John Babcock: Hey, thanks for taking my questions. I guess just quickly following up on the parts and service side of things. As you are trying to chase some of that next opportunity, do you think there is going to have any impact on margins Or and if not, or if it does, I guess, actually, are there opportunities, I guess, for you to kinda take out cost, and kind of keep these parts and service margins as strong as they are? Frank Jeff Dyke: This is Jeffrey. I no. I do not think it is going to have any impact on margin. I think we are gonna continue. there is just so much opportunity out there. Because so much of the car park does not come back to a new car dealer. Because they as David was saying earlier, they really do not understand our pricing The great technology, the great technicians, we are getting that word out. that is going to drive more customers to our service drives. I am not expecting any margin erosion. I am expecting a lot of gross growth And I think as long as customers are going to stay in cars longer, which is where all the indications are that is beginning to happen, then, you know, our fixed operations business should skyrocket. There should be a lot of opportunity there for us to continue to grow. And not have what we saw happening across the industry. And in the second quarter. I think we will all adjust to that and continue our normalized growth. Heath R. Byrd: And this is Heath. Just 1 add there is, I do believe there is an opportunity to take out expense and fix stocks with some of the AI development that we are doing. that is 1 of our main areas that we think can create efficiency faster throughput which will give us the ability to service more, make more gross, and take cost out of it. John Babcock: I guess next question I had, 1 of your peers is trialing out virtual F and I. Was just curious, is that something you guys have looked at? Is it something that is interesting? Is it difficult to execute? Any color on that would be helpful. Frank Jeff Dyke: We are not looking at it, you know, or have not I get the idea. We are watching them. You know, we are when you look at our GPU for F&I, it is amongst the top 1 or 2, terms of our performance. We are very happy with that performance as If there is some major cost savings there, you know, Groupon's working on that and we will we will let them lead the charge there. There was a group out of Brazil once that or that does this that we visited with. That does all their F&I really out of 1 office. So maybe there is some opportunity there. it is an idea. it is been around for a little bit. A lot of other things we are focused on. And areas where we can take expense out of this business And we do such a good job in F&I We do not need a wobble there right now. that is 1 of our stalwarts that in our fixed operations business and what we have been able to show now in terms of our ability to grow the volume. I will let somebody else be first there and if there is an opportunity, we can certainly jump on the bandwagon. John Babcock: Okay. And then just 1 more for you on the EchoPark side of things. Just to you know, fill up the whole cup here. Just, you did it does sound like you adjusted the cadence of store openings a little bit. How much of that is related to just generally getting the construction work done and getting the site ready versus you know, maybe demand or also your view on inventory build Any thoughts there to share? Thomas Keen: Sure. This is Thomas Keen. it is 100% driven by timing of construction. Okay. John Babcock: Thank you. Nothing else. Thomas Keen: Just hold on us about it. Did we lose it? Operator: As a reminder, if you Go ahead. Sorry. Okay. Before pressing the star keys. Our next question is from Rob Saltzman with UBS. Please proceed with your question. Analyst: Hey, team. Thanks for the questions. Today. Your peers have been highlighting difficulties in sourcing used vehicles over the course of Q2. Have you been experiencing similar difficulties like competitiveness within the auction channel? And if so, like, how are you working around it? Nice to see the increase in customer source vehicles, but any details around that competitive environment on the sourcing side would be super helpful. Frank Jeff Dyke: This is Jeffrey. I do not think it is been any more competitive than it has been in the last 4 or 5 quarters. I mean, it is a super competitive in the auction lanes. You are paying up when you buy cars there. So I need to trade for more buy more cars out of your service drives. We are doing that. Do a better job of sharing inventory between the companies. Buying cars out of our buy centers that we are working on across the country. And you are seeing that effort as our percentage of cars off the street are growing. And buy cars are growing versus auction cars. But I do not do not see it being any more competitive. What I do see is a lot more off-lease cars from a BEV perspective are coming back, which is great. And more off lease cars are going to start coming back as we move you know, out of this year and into next year. So inventory abundance, we are that is probably too strong of a word. More inventory is going to be available, you know, for us as we move forward. And I think that is why you are seeing some that really understand the pre owned business start to really grow. And you are seeing those double digit growth or high single digit growth. Because there is more inventory available out there and it is we can go get it. And that is making a big difference there. Guys, just 1 follow-up for me. You know, how can you address the parts and service price competitiveness perception is there an opportunity in your view for the OEMs to offer lower price replacement parts? Make your guys' job easier? I know Ford's been out there saying that is an opportunity for them. So that something you are working on? You know, how do you change that price-competitive misperception in the service base? Thanks. Yes. This is Jeffrey. 100% we are. And it is not just the manufacturer. I want to make that straight. They need to do a better job in keeping their costs in line from a cost from a parts perspective. But also, we as retailers, and in particular our stores need to do a great job of understanding the pricing that is going on within the marketplace. AI is allowing us to do that and we are spending a lot of time and energy driving more information into our dealership's hands so that we make great pricing decisions on a daily basis with fixed operations items that we are selling in our stores. So that is an important function and something that we are paying a lot of attention to. Then as David said earlier, we have got to market that. We have to educate the consumer that wow, we do have these amazing facilities. They are not rat traps. We have got great technicians. We have got great pricing. We have got manufacturer certified trained technicians. And why would you not service your car in a dealership? Why do 50% of the customers as an industry, then why do they not come back and service their car to dealership? it is pricing. that is the answer. And we are fixing that. And then now perception. And so you gotta combine those 2 things. We are doing we are doing a much better job of that, but we will do an even better job as we go forward. We educate our stores. We educate the way ourselves on how we market that information and do exactly as you just said. that is changing the perception that we are overpriced. And it is not a perception. it is a fact. We are overpriced. And we are we are working on fixing that and driving a lot more market share into our service drive. We do a great job. Our general managers across the industry do a great job giving cars away. But for some reason, the hours that we saw in the service department like gold bars, and we need to do a much better job of understanding that pricing and then driving more customers into our service drive, maintaining great margin and great growth and growing the heck out of the customers. Half of the car park out there does not use an auto dealer we need to bring them back into our stores. It should be 70% or 80% If you start calculating that math, and you look at the upside, it is it is just infinite. And so as you could tell, I am very passionate about this topic. it is something that I am talking to our team about, you know, ad nauseam. And something that we are going to take advantage of as we move forward. Thanks so much, team. Appreciate it. You bet. Thank you. Operator: This now concludes our question and answer session. I would like to turn the floor back over to David Bruton Smith for closing comments. David Bruton Smith: Well, thank you all for your time and your questions and we will talk to you next quarter. Thank you. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, have a wonderful day. Before you buy stock in Sonic Automotive, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sonic Automotive wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Sonic Automotive (SAH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Sonic Automotive, Inc.? Here are five stocks we like better. Record quarterly performance: Sonic Automotive reported Q2 revenue of $3.9 billion, up 8% year over year, and record gross profit of $616.2 million. Adjusted earnings reached $1.82 per diluted share. Growth increasingly driven by used vehicles and service operations: EchoPark revenue rose 15% and retail volume increased 17%, while fixed-operations gross profit climbed 6% and accounted for more than 75% of total gross profit alongside F&I. Powersports expanded sharply and guidance was maintained or raised: Powersports revenue surged 53%, and Sonic raised its full-year new-vehicle gross-profit-per-unit outlook to $2,850–$3,000 while maintaining its fixed-operations and EchoPark targets. Sonic Automotive (NYSE:SAH) reported record second-quarter revenue of $3.9 billion, up 8% from a year earlier, and all-time quarterly gross profit of $616.2 million, up 2%. Reported GAAP earnings were $1.79 per diluted share, while adjusted earnings were $1.82 per diluted share, Chairman and Chief Executive Officer David Smith said on the company’s second-quarter 2026 earnings call. Smith said the company’s franchised dealerships, EchoPark used-vehicle business and Powersports operations all contributed to growth, while affordability pressures in the new-vehicle market continued to shape consumer demand and management’s operating strategy. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Franchised dealership revenue increased 6% to $3.3 billion, while same-store revenue rose 2%. Reported gross profit for the segment rose 1%, but same-store gross profit declined 3%, reflecting difficult comparisons against elevated demand ahead of tariffs in the second quarter of 2025. New-vehicle gross profit per unit remained above the company’s previous full-year outlook. Sonic raised its full-year new-vehicle GPU guidance to between $2,850 and $3,000, from its earlier range of $2,700 to $3,000. Second-quarter reported new-vehicle GPU was $3,024, down 11% year over year, and same-store new-vehicle GPU was $2,872, down 16%. → Microsoft Just Flipped the AI Spending Narrative Overnight President Jeff Dyke said the company has been willing to be more aggressive on front-end margins while maintaining inventory turnover, supporting unit volume and F&I results. Same-store new-vehicle volume was flat, in line with industry trends. Used-vehicle demand at franchised dealerships was stronger. Same-store retail used-vehicle volume increased 7%, as Sonic cited improving supply and its strategy to increase used-vehicle throughput. The company’s long-term objective is to average 100 used retail units per dealership per month, which it said represents about 25% organic volume growth potential from current levels. → Carrier Earnings Could Send the Stock to a New All-Time High Management said used-vehicle GPU could decline in the second half as it prioritizes volume and total gross-profit generation. Second-quarter reported used-vehicle GPU was $1,399, down 12%, while same-store used-vehicle GPU was $1,401, down 13%. Fixed operations gross profit rose 6% to a quarterly record of $263.8 million. Same-store fixed operations gross profit increased 2%, including a 1% increase in customer-pay gross profit and a 3% increase in warranty gross profit. Franchise dealership F&I gross profit increased 2% to a second-quarter record of $147.9 million, though same-store F&I gross profit declined 1% as F&I gross profit per unit fell 4%. Fixed operations and F&I combined accounted for more than 75% of total gross profit during the quarter, Smith said. Dyke described the industry’s fixed-operations growth as uneven in the second quarter and said Sonic is pursuing value pricing, marketing and improved customer awareness to capture service business from customers who do not return to dealerships for repairs. He said the company is focused on mid- to upper-single-digit fixed-operations growth, while CFO Heath Byrd pointed to potential efficiency gains from artificial intelligence initiatives. Management maintained its outlook for mid-single-digit same-store fixed-operations gross-profit growth for the full year. The company also said consumers may retain vehicles longer amid affordability challenges, creating a longer-term service opportunity. EchoPark revenue increased 15% to $582.9 million and segment gross profit rose 4% to a second-quarter record of $64.3 million. Retail used-vehicle volume increased 17% to 19,601 units, outpacing the broader used-vehicle market, according to the company. EchoPark’s total gross profit per unit declined 12% to $3,292. Used-vehicle front-end GPU declined 21% to $328, while F&I gross profit per unit fell 11% to $2,965. Management attributed the declines largely to a greater mix of more affordable, higher-mileage vehicles and battery-electric vehicles, which carry lower service-contract penetration and profit per contract. EchoPark Chief Operating Officer Tim Keen said carrying more inventory and maintaining a value position with lower-priced vehicles supported unit growth. Danny Wieland, vice president of investor relations, said non-auction sourcing represented 42% of EchoPark sales in the second quarter, up from 32% in the first quarter. Management said EchoPark was running above 25% unit growth in July. The company continues to target full-year retail used-vehicle volume growth of 12% to 15% and total GPU of $3,100 to $3,300 per unit. It expects additional F&I offerings for electric and smaller-segment vehicles to support margins. EchoPark generated segment income of $7.2 million and adjusted EBITDA of $13.9 million, remaining on track for its full-year adjusted EBITDA guidance of $35 million to $40 million. The company expects to open an EchoPark location in Orlando in the fourth quarter and two to four additional locations in 2027. Keen said the timing of openings is driven by construction schedules. Powersports revenue climbed 53% to a second-quarter record of $73.5 million, while gross profit increased 57% to $19.7 million. Same-store revenue and gross profit each rose 13%. The segment reported income of $2.3 million, compared with break-even results a year earlier, and adjusted EBITDA increased 145% to $4.9 million. Smith said recently acquired Harley-Davidson dealerships in California, Florida, Georgia and North Carolina supported the segment’s growth. Management said the acquired locations were producing returns above expectations despite limited integration of Sonic’s operating approach. At quarter-end, Sonic had approximately $676 million of total available liquidity, including roughly $294 million of cash and floor-plan deposits. Smith said the company sees acquisition opportunities in both franchised dealerships and Powersports, with management describing Powersports valuations as particularly compelling. The board approved a quarterly cash dividend of $0.41 per share, payable Oct. 15 to shareholders of record on Sept. 15. Sonic Automotive, Inc is a publicly traded automotive retailer that operates a network of franchised new-car dealerships and used-vehicle dealerships across the United States. Headquartered in Charlotte, North Carolina, the company offers a range of services that include vehicle sales, leasing, finance and insurance products, service and parts, and collision repair. Sonic Automotive's dealerships represent numerous major automotive brands, and the company also markets a broad selection of pre-owned vehicles under its own banner. In addition to its core dealership operations, Sonic Automotive has developed digital retail capabilities that allow customers to research, shop and complete transactions online. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Sonic Automotive Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Sonic Automotive recently reported quarterly revenue of US$3.93 billion and earnings per share of US$1.82 for the June 2026 quarter, both exceeding analyst expectations and reflecting stronger-than-anticipated performance across franchised dealerships, EchoPark, and Powersports segments. Alongside this earnings beat, the company continued returning capital to shareholders through an ongoing buyback program and a reaffirmed quarterly dividend of US$0.41 per share, highlighting management’s current emphasis on shareholder distributions. We’ll now examine how Sonic Automotive’s better-than-expected earnings performance could influence the existing investment narrative around its growth and returns. AI is about to change healthcare. These 41 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. To own Sonic Automotive today, you need to believe that its mix of franchised dealerships, EchoPark, and fixed operations can support earnings and cash generation despite thin margins and structural pressures from EVs and digital retail. The latest revenue and EPS beat supports that framework but does not materially change the near term catalyst, which remains execution at EchoPark, or the key risk, which is long term margin pressure if traditional dealerships lose relevance. Among the recent announcements, the ongoing share repurchases stand out next to the earnings beat. Sonic bought back 100,000 shares for US$6.82 million in the June quarter, bringing cumulative repurchases under the long running program to almost US$1.3 billion. For investors focused on EchoPark’s expansion and the company’s high fixed cost base, this shrinking share count interacts directly with both the upside and the risk around future earnings per share and capital flexibility. Yet alongside the upbeat quarter, there is still the risk that rising EV adoption and direct to consumer sales could quietly erode high margin service profits over time that investors should be aware of... Read the full narrative on Sonic Automotive (it's free!) Sonic Automotive's narrative projects $17.9 billion revenue and $295.1 million earnings by 2029. This requires 5.6% yearly revenue growth and about a $186 million earnings increase from $108.9 million today. Uncover how Sonic Automotive's forecasts yield a $89.27 fair value, a 11% downside to its current price. While consensus sees moderate growth, the lowest analysts were modeling only about 3.4% annual revenue growth to roughly US$16.8 billion and earnings of about US$286.9 million, reminding you that views on Sonic’s thin margins and capital spending can differ sharply and that strong quarterly numbers might still shift both bullish and bearish narratives. Explore 5 other fair value estimates on Sonic Automotive - why the stock might be worth less than half the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Sonic Automotive research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision. Our free Sonic Automotive research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Sonic Automotive's overall financial health at a glance. Opportunities like this don't last. These are today's most promising picks. Check them out now: Find 56 companies with promising cash flow potential yet trading below their fair value. Rare earth metals are the new gold rush. Find out which 29 stocks are leading the charge. Outshine the giants: these 16 early-stage AI stocks could fund your retirement. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SAH. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Thursday, July 30, 2026, at 11 a.m. ET Chairman and Chief Executive Officer - David Bruton Smith President - Jeffrey Dyke CFO - Heath R. Byrd EchoPark Chief Operating Officer - Thomas Keen VP of Investor Relations - Danny Wieland Operator: Good morning, and welcome to Sonic Automotive Second Quarter 26 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 2 thousand. 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. David Bruton Smith: Thank you very much, and good morning, everyone. Welcome to Sonic Automotive's Second Quarter 26 Earnings Call. As said, 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 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 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 25. 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 26 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 and 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 100 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 1 new EchoPark location in the Orlando market in the fourth quarter and 2 to 4 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, 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 1 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 3 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. Operator: Thank you. Our first question is from Jeffrey Lick with Stephens. Please proceed with your question. Jeffrey Lick: Good morning. Thanks for taking my question. I wanted to just I wanted to ask about your new business You did outperform now that we have seen everyone report, you are really the only 1 that kind of matched the market. Curious just to get your thoughts on why you think that is then 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, and that your used comp is actually better than your new comp. And used units was better than new units. So can you maybe speak to why you are able to do that and what you are seeing? What might be different for you? Frank Jeff Dyke: Yes, I mean, do not know based on brand mix what the differences might be. 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. So I think we are pretty darn aggressive from a margin perspective and that helped grow the volume and really support our big F&I numbers. We strategically have higher F&I PORs I think than most of the rest of the group. And so when you combine that with the front end, it is a little lower in our higher F&I margins. The total gross dollars were in line with our expectations and we really drove a great quarter both from a new and a pre owned perspective with that strategy. Jeffrey Lick: And then just follow-up or a shift gears to EchoPark. You made some tweaks took the units up, GPU total GPU down, you know, combination of the vehicle and the finance contract F&I, Is there any details there? And then on advertising took that down by $8 million which I guess effectively means you took your EchoPark guidance down by 8 million My question there is if you were a private company, would you still take the advertising down? that is interesting. Frank Jeff Dyke: Yes. David Bruton Smith: This is David. We do not make decisions like that. We are doing what is best for our business long term. Frank Jeff Dyke: Yes. And I guess that is the easy answer, but Yeah. And it would have nothing to do with private or public. It has to do more with scheduling, getting it right before we take it out. it is a scheduling issue as well from a timing perspective. And then the margin mix was driven basically by inventory mix. Thomas Keen: Tim can comment more, but we sold more EVs and C cars. Frank Jeff Dyke: We are working on back end products for that. But drove great volume, up 17% for the quarter. And if you take a look at July, we are running north of 20-- north of 25% growth for July, which is fantastic. So all of this is kind of what we said we would do as we began the year and work towards opening beginning to open stores again. The volume is coming back. We have got really strong back end numbers. Even at the numbers that we are doing now with the mix change. And we will have some new F&I products for Bev and for CCARs that will help that. But we will stabilize in that 3.1 thousand to 3.3 thousand range, but we are going to sell more cars and we are proving that now. So all speed ahead from an EchoPark perspective. We are super excited about the business. And with affordability issues, that we see on new, I mean, we have crested $61 thousand close to from a new car price perspective. The industry is at $50 thousand Our used car pricing is less than half of what a new car price is from an EchoPark perspective. That really bodes well for EchoPark over the next 12 to 18 months. Gonna be a lot of fun to watch this brand grow. Jeffrey Lick: So I guess to sum it up then, if you look at the advertising guidance or the budget coming down, maybe looks like what you are saying is, look, volume really is not our issue given what you are observing. So maybe we do not need to spend $20 million on advertising and maybe we just need to spend a little more time kind of fine tuning the GPU. Frank Jeff Dyke: 2 separate things. We would expect the advertising that we are going to be a timing issue. that is it. And we expect that advertising when we get to the fourth quarter to even add more to what we are doing now. So that opportunity was there all along. We were being very conservative, making sure that our EBITDA was where it needed to be and just being conservative with EchoPark. The volume, you know, if you remember pre COVID, we were selling 500 plus cars on rooftop a month. So, and now we are doing in the 350 range. We have got a lot of upside opportunity in the current stores that we have. And it is just turned a little lever here and there or pull a lever here and there, and our we can push our volume up drastically. So that is going to happen. You see some of our competitors doing that. And we look forward to a great second half of the year with EchoPark. We are going see growth. And we are seeing it in July. And as we launch our new advertising campaign, which really going to be special, the world's gonna have a lot of fun with that. We expect to see even higher growth and build on margin from that point forward. Heath R. Byrd: And Jeff, this is Heath. Just to be clear, we still have our initial branding budget is $20 million. And to Jeffrey's point, it is just timing. Jeffrey Lick: Did you put Danny in some of those EchoPark ads? Frank Jeff Dyke: Yes. You just never know. Never know what we are going to do. it is going to be fantastic. Yeah. David Bruton Smith: This is David. I would just add that it is part of our plan. We will have more to announce hopefully in near future about our marketing branding plan for EchoPark. But we can tell you, anecdotally, our naming rights deal at EchoPark Speedway the customers, awareness that, that is generated once customers hear about EchoPark and they see our online views, so we again, we have got the number 1 guest experience in the industry. And the feedback, you should see the volume in our source and our land source, for example. it is double. it is a huge impact. So we know that again, we will have further things to announce soon, but we are excited about it. Jeffrey Lick: And maybe 1 more, 1 final point. Danny Wieland: This is Danny. 1 final point on that. Is with the timing, you know, we had our marketing teams very much taken a data driven approach to how we deploy this incremental brand spend. And with the shift in the way consumers are shopping, we had some back end work to do related to our websites in terms of being answer engine optimized for, you know, the portion of buyers that are searching via AI tools. Do not wanna go out with that significant amount of brand spend at least to our segment results without being prepared to capitalize on it. In the way that the consumers are currently shopping. So there was some front end work and that is what shifted the timing further back in the year from, you know, what we told you 10 to 20 million back in February. Jeffrey Lick: Well, thanks for taking my questions and congrats for definitely standout results. Thanks a lot. David Bruton Smith: Thank you. Thank you. Thank you. Operator: Our next question is from Alexander Perry with Bank of America. Please proceed with your question. Alexander Perry: Hi, thanks for taking my questions here. I guess just to follow-up on EchoPark. You spoke a bit about the share gains and it is been great to see, I guess. You know, how are you gaining market share there versus some of your used only peers that you know, something changed around the pricing strategy? You mentioned shifts in the advertising strategy and should we expect those share gains to continue? Thanks. Frank Jeff Dyke: Yes. Thomas Keen: This is Thomas Keen. Really the only shift was carrying more inventory and being conscious of us being in a value position with cheaper inventory. Which is what drove our mix change. And allowed us to drive the volume. Frank Jeff Dyke: And this is Jeffrey. As we set up against the new car pricing that is out there right now, and you see this affordability issue continues, you are going to see used car growth really, really go. And we are getting back now to used car pricing being 1-half that of the new car price that is out there, that is when the used car business really fires. And that is what is happening. it is happening naturally, and we are forcing it even more, from an EchoPark perspective. When you combine all that, it is just a it is just amazing, the energy you get from a volume perspective. We are seeing that. I think you saw it at a couple of other competitors than some others. I had made some comments about going for gross. I do not understand that a little bit. Right now from a PR perspective because inventory is coming back, off lease cars are coming. You got a lot of off lease bev cars in the market where the manufacturers kinda absorb some of the depreciation. We are taking advantage of that. Just missed out a little bit on back end products with that. I think Bev was 15% or almost 15% of our overall volume in the second quarter at EchoPark. that is way up from what it normally was running. And so we are we took advantage of that, had a bigger reach for our customer base. Expanded our customer base. And now we said we need to add some products for Bev, we will do that. But very, very focused on our pricing and the level of inventory we are carrying when you combine all that, it just it is amazing what is happening. And it is going to continue to happen through the rest of the year. Like I said, if you look at July, we are having a blast and we are plus 25% the last year or something like that right now. Danny Wieland: And 1 more point on that auction sourcing mix. In the first quarter, we were 32% non auction sourced. We were up 10 full points to 42% of our sales were non auction sourced during the quarter. So significant gains there to Jeffrey's point, you know, the way that we are attacking that with the non auction misc is going to what consumers are looking for from higher mileage, more affordable vehicles EVs, off lease, and used EVs are very hot right now. Both of those were growing 40% to 60% quarter over quarter in terms of their share of EchoPark mix. it is it is we have got to fine tune a little bit the F&I component and the relative GPUs. it is supporting the volume and it is supporting growth of the awareness of EchoPark's brand and the reach that we have. Alexander Perry: that is all really, really helpful. Thank you for that. I guess just to follow-up on parts and service. So the same store comps, I guess, moderated a bit against fairly difficult compares, you know, pretty consistent with what we have seen across the peer group. Is there anything structural driving that moderation? What supports return to sort of mid-single-digit growth? And then do you think there is an affordability challenge out there in parts and service where pricing sort of needs to come down at all? Or do you think it was more of a 1 off thing? Thanks. Frank Jeff Dyke: No. I think that there is 100% a pricing issue. I mean, when you think about it customers who buy new cars as an industry average, only half of them are coming back new car dealers to service their cars. The opportunity in fixed operations is huge. And that is why we are focused on value pricing. We have got 5 op codes right now per store that we are really focused on from a value pricing perspective, that is gonna grow. We need to get our pricing in line as an industry. Fixed operations perspective and we are working really hard on that. But we there is an affordability issue there. there is an affordability issue on the price of a new car. And when you add all that together, that is why I think you see some wobbleness in fixed operations growth. And growing only 2%. there is way more there, way more meat on the bone and that is a huge for us as we move forward. And if customers are going to stay in cars longer, I mean, average customer is financing their car 70% of our customers are financing their car for 72 months or longer. So if that is going to be the case and customers are going to drive new cars longer, there is going to be huge upside from a fixed operations perspective We have got to get our costs and our pricing in line for our customers to bring more customers into the service drive. We are absolutely focused on doing that. We have increased the number of bays that we have. We have increased the number of technicians we have. And quite honestly, the number that we are seeing out there is not good enough. there is a wobble in the second quarter. I am not sure you know, if it is the war, what is causing it. But just across the board, low single digit numbers and fixed operations is not acceptable. We need to be you know, mid to upper single digit and maybe even double digit growth as we go forward and it is something that we are very, very focused on. it is a great question. Thank you. Alexander Perry: All incredibly helpful. Best of luck going forward. Frank Jeff Dyke: Thank you so much. Thanks. Operator: Our next question is from Christopher Pierce with Needham and Company. Please proceed with your question. Christopher Pierce: Hey, guys. Good morning. Good morning, Christopher. Thomas Keen: At EchoPark, at EchoPark, can you carry this much inventory? I guess days of sale was up, up 15% year over year. Is the pricing environment, does that help you carry this inventory? Or is it more your updated sourcing? Like this sort of a new normal or the environment play a role in kind of what we saw in Q2? From inventory and unit growth? Frank Jeff Dyke: Yeah, it is really both. And it is sustainable going forward for sure. Yes. Your day supply is high, a little higher than normal right now, but we saw an opportunity to buy more cars off the street. Selling more cars as you can see. We are having a big ol' July We expect that to carry on for the rest of the year. Day supply is going to drop as we move into September and October. that is just normal seasonality. But we told you earlier, we pushed inventory up because we know there is some opportunities from a volume perspective, and we have done that. And just great opportunity for us to grow. David Bruton Smith: This is David. I think it is important to note that our existing footprint of EchoPark stores we have a lot more capacity that we can sell out of those existing stores. I mean there is it is close to double what we are selling now. So that the room that we have and how we are built and we have some salespeople who are selling 50 cars a month. Individually. Okay. Christopher Pierce: And then thank you for that there is more BEVs coming off lease for the next multiple years. Should we think about and I think Danny said this up to, like, only 15% of EchoPark with EV. I mean, should this sort of be a new sort of normal for Efren? I know I know you kind of guided where you guided, but the figure we saw in February, could it-- is it possible it could move lower as more ED comes online? Like, what is the right way to think about that? Frank Jeff Dyke: From a margin perspective? Christopher Pierce: Yes. From F&I retail dollars per vehicle at a-- Yeah. Frank Jeff Dyke: No. I mean, we are kind of in the ballpark, where we will be. I do not think it goes any lower. It could go higher because we are working on products to add that we can sell on that particular type of vehicle. So I do not expect it to go any lower. No, no, no. Operator: Go ahead. Christopher Pierce: I would say that you are not as familiar selling so many EVs, so attach might be artificially low in the this beginning period. Is that sort of a realistic expectation? Frank Jeff Dyke: Yeah. I think the industry is that way. We have got a lot of off-lease BEVs coming back now. Manufacturers have done a great job absorbing some of that depreciation. We are going to see that until I think the end of next year. When it kind of maybe levels off or the middle of the following, when you will not have we do not have as many BEVs being sold now, obviously. So there is gonna be, you know, an up and then a down. But then we have more off lease cars coming back from a combustion perspective. So that is alright and a hybrid perspective. So that will be a big help and a big boost it is going to be good for the used car business over the next couple of years, I think. From a lease return perspective. And we will work out the margin with products on the back end. It just we sold more this quarter and we will sell more in the coming quarters and we will add some F&I products to support that. Danny Wieland: And some of it on the F&I on the warrants attached with BEVs is a little bit of a disconnect in our sales approach historically with more hybrid and ICE based unit volume at EchoPark as well as consumer perception that EVs have less repair risk or less repair cost. And in fact, we are actually seeing that EVs are the highest dollars per repair on average in the industry. Some of that is because it is new technology, some of it is because you got more wholesale replacement of parts as opposed to individual components. But there is a bit of an opportunity just to educate the consumer too when you look at some of the data on EV maintenance and repair costs relative to hybridized that it is not quite as low cost as it seems, at least for the interim. Christopher Pierce: Okay. And then just lastly, judging any reaction to Jeffrey's question here, going to kind of scoff at this 1 too, but I am just kinda curious. You are growing 17%, 25% in July with no advertising. You have got easy comps in the second half. Like, why push that button now? Why not push the store opening button or why not just kinda let it run through until you need to hit the gas on that? Frank Jeff Dyke: We are gonna do both because we can grow even more and we can grow margin. The more our guests know who we are, I mean, EchoPark is also the unknown. In the markets that we do business in. And so we think there is a margin play there for us, a front end margin play. And we have got a lot more volume to get. it is there. For us to go get. And, you know, we can back off we need to, if we see we have made the investment and it is not coming. David Bruton Smith: But we have worked really hard to get this brand ready to roll. As David said earlier, our guest experience is unmatched. We are very excited about that opportunity We are going to start growing and grow the brand. We have made that commitment. We have been telling you all that this is coming for a better part of a year now. And we are ready. We are healthy. We are ready to go. We are in shape, and we will see I am not scoffing at it, but I am very excited about it. And to David's earlier point, I just want to reiterate because I think it is really important. We objectively have the best experience We objectively have the lowest cost and just for the same or better quality of The only thing we are missing is you do not know about us. If you know about us, those are the 3 things that customers are looking for, and the brand is gonna create that awareness. Okay. And so it is not it is not a quarterly play for us. that is just not how we look at this business. We are not trying to bump numbers 1 quarter after another. it is a long term educated seasoned executive team and we are going to take that and put that work for us over time. And we have been building and investing in EchoPark for a long time. it is now time to grow. Frank Jeff Dyke: Thank you very much. David Bruton Smith: Thank you. Thank you. Operator: Our next question is from Bret Jordan with Jefferies. Please proceed with your question. Patrick Buckley: Hey, good morning guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. Frank Jeff Dyke: Hey, Patrick. Patrick Buckley: As you look across your segments today, where are you seeing the best valuations and opportunity for investments? Powersports seem to be the primary M&A focus quarter, but how does that pipeline compare to franchise vehicles? David Bruton Smith: This is David. it is it is really fantastic because of our team and what great job we have been doing with the market share and guest experience and agreeing with our manufacturers. So we are seeing more opportunities than ever. To grow and both in franchise and in the powersports. Certainly, the valuations in powersports are very interesting, very compelling. And we are super excited about the performance of our powersports team. And so we are I think we will be we will be hopefully announcing some things here in the coming quarters. But there is no shortage of really fantastic high quality opportunities both in powersports and franchise. Frank Jeff Dyke: Yes. This is Jeffrey. The most I have seen in my career it is amazing. From a franchise and powersports perspective, the opportunities that are out there. And great quality deals great brands and brands that we excel in. And so we are working on a lot of them right now. And as David said, stay tuned because there are more opportunities coming. Heath R. Byrd: And, this is Heath. A couple of interesting things. If you look at powersports, they traded at different multiple as smaller multiple than the franchise. And there is so much opportunity. We said at the beginning, how we could change the used business in powersports and fixed ops And it is great seeing that it is working just like we thought In the f and I piece, we have a ton of opportunity. There are competitors that are double our F&I GPU. So that is becoming a really you get it for lower multiples and there is a lot more opportunity for improvement. So that is fantastic. But the beautiful thing about Sonic is the diversification. To your point, we have got opportunities in the franchise. We have got unlimited growth opportunities with EchoPark. And now that we have sort of formalized our playbooks in powersports, that is a very attractive segment to grow in as well. And I think our diversification is something that is very attractive. Patrick Buckley: Got it. Very helpful. And then on the vehicle side, were there any notable regional callouts this quarter? Frank Jeff Dyke: No. there is nothing. I mean, it is smooth operation. it is everything was fine. I mean, the big thing is affordability. Like I said earlier, 1 in 5 customer payments now are above $1 thousand a monthly payment, approaching $800 a month, the monthly payment on a new car as an industry. This is just too high. And so something's gotta give here. In the meantime, take it. We will we will sell a lot of used cars and enjoy the 16 million SAAR that is out there. But the big surprise continues to be what the tariffs have done to affordability. Kind of across the board. And I think at some point, we are going to have to address the industry is going to have to address it, the manufacturers. Gonna have to address it. Cars are getting too expensive. Patrick Buckley: Great. that is all for us. Thanks guys. David Bruton Smith: Thank you. Thank you. Operator: Our next question is from Rajat Gupta from JPMorgan. Rajat Gupta: Great. Thanks for taking the question. I wanted to follow-up on parts and service. We have seen some slowing in the growth rates, even some negative gross profit growth, you know, you know, from some of your peers. I understand, like, warranty comps got tougher this quarter, but I am curious, like, if anything's just shifted more recently in the market backdrop in general. You know, either be it affordability or just the car park shifting? It just seems a little sudden. In terms of the shift in growth there. And to your point, like, you are still guiding to mid-single-digit growth for the year. So curious, like, what is going to drive the acceleration in the second half? Well, I mean for your fixed ops as well. Frank Jeff Dyke: Yeah. Thanks. Rajat Gupta: Thanks, Rajat. Frank Jeff Dyke: We are we are staying aggressive on our pricing, and hopefully, that is going to drive more and more RO count and customers through our service drive. I agree with you. If you look just across the board at the industry and everybody has reported, there is a wobble in fixed ops in Q2 and it really makes no sense. It should not be that way. And so I think there is tons of opportunity in the car park that is out there We are focused on mid-single-digit to upper single digit growth. And anything less than that, like I said earlier, is just not acceptable. there is just too much opportunity. If there is something happened, I do not I cannot tell you that it was the news, the war, gas prices, really fluctuating all over the place. That could be a player. But the overall opportunity has not changed. it is big. Warranty comes and goes. it is actually can be detrimental to a service department if you have too much warranty because the service riders you know, pay attention to that. it is easy money and they do not they do not sell and do the job they need to do from a customer pay perspective. So it is something we are very focused on in our service drives very focused on putting the right offers out there and keeping our costs down so that we can there is plenty of margin there so we can bring our customers in And they are not going to the mom and pop service centers all over towns. And so it is a big focus for us. But to put my finger on 1 individual thing, I think you have heard it from everybody. there is just not it is just not there. Yes. David Bruton Smith: I think it is important to note Rajat, this is David, that our marketing team, we are also done taking steps to reach out to both our existing customers and potential new customers to change the perception that yeah, the franchise dealer has, you know, higher pricing and as we are adjusting our pricing, think it is key to make sure that the people know it. And so we are taking those steps to drive our business. Danny Wieland: 1 more point, this is Danny. I mean, we are getting to the point where our average vehicle coming through our service lanes is about 5 years old. Mid 26 is with the 5 year lapping of the sudden decline in new vehicle SAAR that we saw starting in May, June 2021. You ran a 13.7 million SAAR kind of for that period, then it comes up in the mid-4 and jumped back up to the 15. So you know, not attributing that necessarily to what we have seen in this slowdown, but as we look ahead, that car park that is in its return to dealer service life is going to continue to grow over the next 2 to 3 years. And so, you know, some of the things strategically with pricing and marketing that we are doing should help us you know, get back to that mid-single-digit growth rate as we go forward, notwithstanding whatever happens with the warranty tailwinds. Rajat Gupta: Understood. No. that is great color. And then just following up on EchoPark, you know, yes, it is very the mix headwinds understood very well with respect to the impact. But there was no, like, price actions that you had to take. Right? To drive the growth. It was just pure mix and I just wanna No. Frank Jeff Dyke: We are good. We are already cheap enough for Josh. We did not need to take any price action. None whatsoever. So a little mix change there. But no. Got it. And the FTC guidelines, you know you know, which is that to, you know, a lot of, like, you know, independent dealers, you know, just raise their prices, you know, add the full fee. Rajat Gupta: Has that any had any kind of impact you know, to your traffic, to your conversion? I am just curious if there was any benefit or not to the business from that. Heath R. Byrd: This is Heath. You know, from my perspective, and I do believe that the only thing that changed because we are compliant and we will maintain that. The only thing that is unique certain markets some dealers may not be compliant. So it impacts our ability to compete from a price perspective. And so we are hoping that the FTC will stand behind this and ensure that everyone's compliant And we will follow-up on the whistleblowers that are identifying these that are not. But that is the biggest change is if everyone was on and compliant it is business as usual. there is certain markets where you have got competitors that are not fully compliant, And, at least for now, it does not appear that the FTC has followed up on those individuals. Rajat Gupta: Understood. But you did not have any, like, pricing benefit, you know, you know, because some of the independents, you know, they raised prices, like, to give you an ability to maybe capture some price, you know, because it is still competitive either way. Frank Jeff Dyke: Yeah. The opposite happened. We are in compliance, but there is like he was saying, there is a lot of dealers out there that are not. And they are still advertising 1 thing. And then and then when you get to the store, you know, it is a different price. And that you know, that is you know, not in line with the FTC rules and that is causing some wobbling. But now the third party lead providers are making adjustments and that is a big deal because if they are not going to allow you to advertise and they are going to hold you accountable, then everybody's got to play by the same rules. And that is going to all work itself out over what I would think would be the remainder of this year. So you might have a little bit of noise, but overall, it did not affect our business you know, at Sonic. Rajat Gupta: Understood. Thanks for all the color and good luck. Frank Jeff Dyke: Thank you. Thank you. Thank you. Operator: Our next question is from John Babcock with Barclays. Please proceed with your question. John Babcock: Hey, thanks for taking my questions. I guess just quickly following up on the parts and service side of things. As you are trying to chase some of that next opportunity, do you think there is going to have any impact on margins Or and if not, or if it does, I guess, actually, are there opportunities, I guess, for you to kinda take out cost, and kind of keep these parts and service margins as strong as they are? Frank Jeff Dyke: This is Jeffrey. I no. I do not think it is going to have any impact on margin. I think we are gonna continue. there is just so much opportunity out there. Because so much of the car park does not come back to a new car dealer. Because they as David was saying earlier, they really do not understand our pricing The great technology, the great technicians, we are getting that word out. that is going to drive more customers to our service drives. I am not expecting any margin erosion. I am expecting a lot of gross growth And I think as long as customers are going to stay in cars longer, which is where all the indications are that is beginning to happen, then, you know, our fixed operations business should skyrocket. There should be a lot of opportunity there for us to continue to grow. And not have what we saw happening across the industry. And in the second quarter. I think we will all adjust to that and continue our normalized growth. Heath R. Byrd: And this is Heath. Just 1 add there is, I do believe there is an opportunity to take out expense and fix stocks with some of the AI development that we are doing. that is 1 of our main areas that we think can create efficiency faster throughput which will give us the ability to service more, make more gross, and take cost out of it. John Babcock: I guess next question I had, 1 of your peers is trialing out virtual F and I. Was just curious, is that something you guys have looked at? Is it something that is interesting? Is it difficult to execute? Any color on that would be helpful. Frank Jeff Dyke: We are not looking at it, you know, or have not I get the idea. We are watching them. You know, we are when you look at our GPU for F&I, it is amongst the top 1 or 2, terms of our performance. We are very happy with that performance as If there is some major cost savings there, you know, Groupon's working on that and we will we will let them lead the charge there. There was a group out of Brazil once that or that does this that we visited with. That does all their F&I really out of 1 office. So maybe there is some opportunity there. it is an idea. it is been around for a little bit. A lot of other things we are focused on. And areas where we can take expense out of this business And we do such a good job in F&I We do not need a wobble there right now. that is 1 of our stalwarts that in our fixed operations business and what we have been able to show now in terms of our ability to grow the volume. I will let somebody else be first there and if there is an opportunity, we can certainly jump on the bandwagon. John Babcock: Okay. And then just 1 more for you on the EchoPark side of things. Just to you know, fill up the whole cup here. Just, you did it does sound like you adjusted the cadence of store openings a little bit. How much of that is related to just generally getting the construction work done and getting the site ready versus you know, maybe demand or also your view on inventory build Any thoughts there to share? Thomas Keen: Sure. This is Thomas Keen. it is 100% driven by timing of construction. Okay. John Babcock: Thank you. Nothing else. Thomas Keen: Just hold on us about it. Did we lose it? Operator: As a reminder, if you Go ahead. Sorry. Okay. Before pressing the star keys. Our next question is from Rob Saltzman with UBS. Please proceed with your question. Analyst: Hey, team. Thanks for the questions. Today. Your peers have been highlighting difficulties in sourcing used vehicles over the course of Q2. Have you been experiencing similar difficulties like competitiveness within the auction channel? And if so, like, how are you working around it? Nice to see the increase in customer source vehicles, but any details around that competitive environment on the sourcing side would be super helpful. Frank Jeff Dyke: This is Jeffrey. I do not think it is been any more competitive than it has been in the last 4 or 5 quarters. I mean, it is a super competitive in the auction lanes. You are paying up when you buy cars there. So I need to trade for more buy more cars out of your service drives. We are doing that. Do a better job of sharing inventory between the companies. Buying cars out of our buy centers that we are working on across the country. And you are seeing that effort as our percentage of cars off the street are growing. And buy cars are growing versus auction cars. But I do not do not see it being any more competitive. What I do see is a lot more off-lease cars from a BEV perspective are coming back, which is great. And more off lease cars are going to start coming back as we move you know, out of this year and into next year. So inventory abundance, we are that is probably too strong of a word. More inventory is going to be available, you know, for us as we move forward. And I think that is why you are seeing some that really understand the pre owned business start to really grow. And you are seeing those double digit growth or high single digit growth. Because there is more inventory available out there and it is we can go get it. And that is making a big difference there. Guys, just 1 follow-up for me. You know, how can you address the parts and service price competitiveness perception is there an opportunity in your view for the OEMs to offer lower price replacement parts? Make your guys' job easier? I know Ford's been out there saying that is an opportunity for them. So that something you are working on? You know, how do you change that price-competitive misperception in the service base? Thanks. Yes. This is Jeffrey. 100% we are. And it is not just the manufacturer. I want to make that straight. They need to do a better job in keeping their costs in line from a cost from a parts perspective. But also, we as retailers, and in particular our stores need to do a great job of understanding the pricing that is going on within the marketplace. AI is allowing us to do that and we are spending a lot of time and energy driving more information into our dealership's hands so that we make great pricing decisions on a daily basis with fixed operations items that we are selling in our stores. So that is an important function and something that we are paying a lot of attention to. Then as David said earlier, we have got to market that. We have to educate the consumer that wow, we do have these amazing facilities. They are not rat traps. We have got great technicians. We have got great pricing. We have got manufacturer certified trained technicians. And why would you not service your car in a dealership? Why do 50% of the customers as an industry, then why do they not come back and service their car to dealership? it is pricing. that is the answer. And we are fixing that. And then now perception. And so you gotta combine those 2 things. We are doing we are doing a much better job of that, but we will do an even better job as we go forward. We educate our stores. We educate the way ourselves on how we market that information and do exactly as you just said. that is changing the perception that we are overpriced. And it is not a perception. it is a fact. We are overpriced. And we are we are working on fixing that and driving a lot more market share into our service drive. We do a great job. Our general managers across the industry do a great job giving cars away. But for some reason, the hours that we saw in the service department like gold bars, and we need to do a much better job of understanding that pricing and then driving more customers into our service drive, maintaining great margin and great growth and growing the heck out of the customers. Half of the car park out there does not use an auto dealer we need to bring them back into our stores. It should be 70% or 80% If you start calculating that math, and you look at the upside, it is it is just infinite. And so as you could tell, I am very passionate about this topic. it is something that I am talking to our team about, you know, ad nauseam. And something that we are going to take advantage of as we move forward. Thanks so much, team. Appreciate it. You bet. Thank you. Operator: This now concludes our question and answer session. I would like to turn the floor back over to David Bruton Smith for closing comments. David Bruton Smith: Well, thank you all for your time and your questions and we will talk to you next quarter. Thank you. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, have a wonderful day. Before you buy stock in Sonic Automotive, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sonic Automotive wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Sonic Automotive (SAH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Sonic Reported Second Quarter Record Consolidated Revenues and All-Time Record Quarterly Gross Profit EchoPark Segment Retail Unit Sales Volume Increased 17% Year-Over-Year, Driving Second Quarter Record Segment Gross Profit CHARLOTTE, N.C., July 30, 2026--(BUSINESS WIRE)--Sonic Automotive, Inc. ("Sonic Automotive," "Sonic," the "Company," "we," "us" or "our") (NYSE:SAH), one of the nation’s largest automotive retailers, today reported financial results for the second quarter ended June 30, 2026. Second Quarter 2026 Financial Summary Second quarter total revenues of $3.9 billion, up 8% year-over-year; second quarter record total gross profit of $616.2 million, up 2% year-over-year Reported net income in the second quarter was $57.4 million, up 226% year-over-year ($1.79 earnings per diluted share, up 234% year-over-year) Total reported selling, general and administrative ("SG&A") expenses as a percentage of gross profit of 72.2% (71.9% on a Franchised Dealerships Segment basis, 73.4% on an EchoPark Segment basis, and 73.5% on a Powersports Segment basis) EchoPark Segment revenues of $582.9 million, up 15% year-over-year; second quarter record EchoPark Segment total gross profit of $64.3 million, up 4% year-over-year; EchoPark Segment retail used vehicle unit sales volume of 19,601, up 17% year-over-year Reported EchoPark Segment income of $7.2 million, as compared to $11.7 million in the prior year period, a 38% decrease year-over-year EchoPark Segment adjusted EBITDA* of $13.9 million, as compared to $16.4 million in the prior year period, down 15% year-over-year Previously announced acquisition of Space Coast Harley-Davidson, Treasure Coast Harley-Davidson, Falcons Fury Harley-Davidson, Raging Bull Harley-Davidson, and San Diego Harley-Davidson in April 2026 is expected to add approximately $100 million in annualized revenue to Sonic's Powersports Segment Sonic’s Board of Directors approved a quarterly cash dividend of $0.41 per share, payable on October 15, 2026 to all stockholders of record on September 15, 2026 * Represents a non-GAAP financial measure — please refer to the discussion and reconciliation of non-GAAP financial measures below. Commentary David Smith, Chairman and Chief Executive Officer of Sonic Automotive, stated, "Our second quarter performance reflects the strength of Sonic’s diversified business model and the commitment of our teammates across the organization. We generated second quarter record consolidated revenues of $3.9 billion and all-time record quarterly gross profit of $616.2 million, driven by growth across our diversified operating segments. EchoPark delivered double-digit unit volume growth and second quarter record gross profit, while Powersports achieved record second quarter revenue and gross profit. Our latest results and outlook reaffirm our commitment to investing in differentiated platforms that broaden our earnings base and position Sonic to create sustainable long-term value for our stockholders." Jeff Dyke, President of Sonic Automotive, commented, "Our teams executed well in a quarter that included difficult year-over-year comparisons and a challenging consumer affordability backdrop. Our continued focus on opportunities in our used vehicle and fixed operations businesses led to our Franchised Dealerships segment delivering strong used vehicle volume growth and all-time record quarterly fixed operations gross profit, along with second quarter record F&I gross profit. At EchoPark, retail used vehicle volume increased 17% year-over-year, driving revenue and gross profit growth despite lower total gross profit per unit. We remain focused on improving our inventory sourcing mix, optimizing F&I performance, and positioning EchoPark for disciplined footprint expansion beginning in the fourth quarter of 2026." Heath Byrd, Chief Financial Officer of Sonic Automotive, added, "We ended the quarter with approximately $294 million of cash and floor plan deposits and approximately $676 million of total available liquidity resources. Our balance sheet and liquidity position provide the flexibility to fund our existing operations, support targeted growth investments and return capital to stockholders. We will continue to apply a disciplined approach to capital allocation, balancing strategic acquisitions, organic investment and share repurchases as opportunities arise and market conditions evolve." Second Quarter 2026 Segment Highlights The financial measures discussed below are results for the second quarter of 2026 with comparisons made to the second quarter of 2025, unless otherwise noted. Franchised Dealerships Segment operating results include: EchoPark Segment operating results include: Powersports Segment operating results include: * Represents a non-GAAP financial measure — please refer to the discussion and reconciliation of non-GAAP financial measures below. Dividend Sonic’s Board of Directors approved a quarterly cash dividend of $0.41 per share, payable on October 15, 2026 to all stockholders of record on September 15, 2026. Second Quarter 2026 Earnings Conference Call Senior management will hold a conference call today at 11:00 A.M. (Eastern). Investor presentation and earnings press release materials will be accessible beginning prior to the conference call on the Company’s website at ir.sonicautomotive.com. To access the live webcast of the conference call, please go to ir.sonicautomotive.com and select the webcast link at the top of the page. For telephone access to this conference call, please dial (877) 407-8289 (domestic) or +1 (201) 689-8341 (international) and ask to be connected to the Sonic Automotive Second Quarter 2026 Earnings Conference Call. Dial-in access remains available throughout the live call; however, to ensure you are connected for the full call we suggest dialing in at least 10 minutes before the start of the call. A webcast replay will be available following the call for 14 days at ir.sonicautomotive.com. About Sonic Automotive For more than 60 years, Sonic Automotive has pursued a single purpose: to deliver an experience for our guests and our teammates that fulfills dreams, enriches lives, and delivers happiness. We don’t simply sell and service vehicles. We help people pursue their dreams, whether it’s a guest purchasing their first vehicle, a family creating lifelong memories, or a teammate building a meaningful career. Founded in 1966 by Bruton Smith, the company has grown into a Fortune 300 company under the leadership of Chairman and CEO David B. Smith. Today, more than 11,000 teammates bring the company’s purpose to life across a nationwide network of 173 automotive and powersports franchises in 145 locations in 90 cities and 21 states. We are proud to represent 24 automotive and 15 powersports brands and have helped more than 7 million guests purchase vehicles, delivered over 40 million service experiences, and earned more than 1 million 5-star reviews by consistently putting people first. At Sonic Automotive, we believe trust isn’t claimed – it’s earned through transparency, consistency, integrity, and genuine care. That’s why we were the only automotive and powersports retailer recognized by Newsweek as one of America’s Most Trustworthy Companies in 2026. As the automotive and powersports industries continue to evolve, our mission remains constant: to innovate, lead with integrity, and create exceptional experiences that inspire confidence, build lifelong relationships, and positively impact every life we touch. Sonic Automotive. Driven By People. Inspired By Purpose. For more information, visit www.sonicautomotive.com and ir.sonicautomotive.com. Forward-Looking Statements Included herein are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address our future objectives, plans and goals, as well as our intent, beliefs and current expectations regarding future operating performance, results and events, and can generally be identified by words such as "may," "will," "should," "could," "believe," "expect," "estimate," "anticipate," "intend," "plan," "foresee" and other similar words or phrases. You should not place undue reliance on these statements, and you are cautioned that these forward-looking statements are not guarantees of future performance. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management’s views, including, without limitation, the effects of tariffs on vehicle and parts pricing and supply, the effects of tariffs on consumer demand, economic conditions in the markets in which we operate, supply chain disruptions and manufacturing delays, labor shortages, the impacts of inflation and changes in interest rates, new and used vehicle industry sales volume, future levels of consumer demand for new and used vehicles, anticipated future growth in each of our operating segments, the success of our operational strategies and investment in new technologies, the rate and timing of overall economic expansion or contraction, the integration of acquisitions, cybersecurity incidents and other disruptions to our information systems, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and other reports and information filed with the United States Securities and Exchange Commission (the "SEC"). The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the SEC. Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Non-GAAP Financial Measures This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income, adjusted earnings per diluted share, adjusted SG&A expenses, adjusted SG&A expenses as a percentage of gross profit, adjusted segment income (loss), and adjusted EBITDA (loss). As required by SEC rules, the Company has provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the schedules included in this press release. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosures and provide a meaningful presentation of the Company’s results. View source version on businesswire.com: https://www.businesswire.com/news/home/20260730368443/en/ Contacts Company Contacts Investor Inquiries: Heath Byrd, Executive Vice President and Chief Financial OfficerDanny Wieland, Vice President, Investor Relations & Financial [email protected] Press Inquiries: Sonic Automotive Media [email protected]

Sonic Automotive (SAH) reported $3.93 billion in revenue for the quarter ended June 2026, representing a year-over-year increase of 7.6%. EPS of $1.82 for the same period compares to $2.19 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $3.78 billion, representing a surprise of +4.06%. The company delivered an EPS surprise of +4%, with the consensus EPS estimate being $1.75. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Sonic Automotive performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Powersports Segment - Same Store - Retail new vehicles: 1,433 versus the two-analyst average estimate of 1,652. Franchised Dealerships Segment - Unit Sales Volume - Retail New and Used Vehicle: 54,847 compared to the 52,538 average estimate based on two analysts. Franchised Dealerships Segment - Same Store - Unit Sales Volume - Retail new & used vehicles: 53,505 versus the two-analyst average estimate of 52,386. EchoPark Segment - Same Market - Unit Sales Volume - Used vehicles: 19,601 compared to the 18,487 average estimate based on two analysts. Revenues- Franchised Dealerships Segment- Same Store- Total: $3.13 billion versus $2.69 billion estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +2% change. Revenues- Powersports: $73.5 million versus $69.23 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +52.8% change. Revenues- Total new vehicles: $1.79 billion versus the two-analyst average estimate of $1.71 billion. The reported number represents a year-over-year change of +5.8%. Revenues- Used vehicles: $1.33 billion versus the two-analyst average estimate of $1.26 billion. The reported number represents a year-over-year change of +12.6%. Revenues- Wholesale vehicles: $70.5 million compared to the $85.61 million average estimate based on two analysts. The reported number represents a change of -15.4% year over year. Revenues- Parts, service and collision repair: $530.2 million versus the two-analyst average estimate of $527.18 million. The reported number represents a year-over-year change of +7%. Revenues- Finance, insurance and other, net: $209.5 million compared to the $205.7 million average estimate based on two analysts. The reported number represents a change of +3.7% year over year. Revenues- New vehicles- Fleet: $24.8 million compared to the $21.5 million average estimate based on two analysts. The reported number represents a change of -15.7% year over year. View all Key Company Metrics for Sonic Automotive here>>> Shares of Sonic Automotive have returned +35.7% over the past month versus the Zacks S&P 500 composite's -1.5% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research