Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EchoPark segment achieved all-time record quarterly gross profit, segment income, and adjusted EBITDA.
- Sonic Automotive Inc (SAH, Financial) reported a 17% increase in the quarterly cash dividend to $0.35 per share.
- The company maintained a strong balance sheet with $834 million in available liquidity.
- Parts and service operations saw an 8% increase in same-store fixed ops gross profit.
- Sonic Automotive Inc (SAH) successfully increased technician headcount, contributing to additional fixed ops gross profit.
Negative Points
- Adjusted EPS decreased by 38% year over year, primarily due to normalization of new vehicle GPU and CDK outage effects.
- The CDK outage negatively impacted third-quarter GAAP income before taxes by approximately $17.2 million.
- New vehicle GPU declined due to larger headwinds from electric vehicle sales and stop-sale orders on high-margin models.
- Elevated used retail prices remain a challenge for consumers, contributing to affordability concerns.
- EchoPark segment retail unit sales volume decreased by 7% year over year.
Q & A Highlights
Q: What is the estimated impact of the CDK outage and BMW stop-sale on adjusted EPS?
A: Heath Byrd, Chief Financial Officer, stated that the CDK impact is estimated at around $17 million, equating to a $0.33 impact on EPS. The BMW stop-sale impact is $2.6 million, or $0.05 of EPS, totaling a $0.38 impact.
Q: How did the recent storms affect Sonic Automotive's operations?
A: Jeff Dyke, President, mentioned that the company was well-prepared for the storms, resulting in minimal impact. There was no inventory loss, and only minor damage occurred, such as an air-conditioning unit issue.
Q: Can you provide a breakdown of the headwinds related to electric vehicles (EVs) on gross profit per unit (GPU)?
A: Heath Byrd explained that in Q1, the EV headwind was $400, in Q2 it was $170, and in Q3 it was $440. The sequential difference in GPU was about $530, with half of that related to EVs.
Q: What is the status of the technician hiring initiative, and is there potential for further growth?
A: Jeff Dyke noted that the company is on track to hire 300 technicians by the end of the year, with a current net increase of 216. There is potential for continued growth, but the focus will shift to retention after reaching the target.
Q: How did Sonic Automotive manage to achieve positive new unit sales despite the CDK outage?
A: David Smith, CEO, credited the company's experienced team and strong guest experience focus. Jeff Dyke added that strong performance in brands like Honda and Mercedes contributed to the positive results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
