Sonic Automotive Inc Q1 FY2026 Earnings Call

Good morning and welcome to the Sonic Automotive First Quarter 2026 Earnings Conference Call. This conference call is being recorded today, Thursday, April 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 1995. During this conference call, management may discuss financial projections, 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-K filed with the Securities and Exchange Commission earlier today. I would now like to introduce Mr. David Smith, Chairman and Chief Executive Officer of Sonic Automotive. Mr. Smith, you may begin your conference.

Thank you very much, and good morning, everyone. Welcome to the Sonic Automotive First Quarter 2026 Earnings Call. I'm David Smith, the company's chairman and CEO. Joining me on today's call is our president, Mr. Jeff Dyke, our CFO, Mr. Heath Bird, our Echo Park chief operating officer, Mr. Tim Keene, and our vice president of investor relations, Mr. Danny Weiland. I would like to open the call by thanking our amazing teammates for continuing to deliver a world-class guest experience for our customers. It's because of our outstanding teammates that Sonic Automotive was just recognized as one of America's most trustworthy companies by Newsweek. We believe our strong relationships with our teammates, guests, and manufacturer lending partners are key to our future success, and as always, I would like to thank them all for their continued support and loyalty to the Sonic Automotive team. Earlier this morning, Sonic Automotive reported first quarter financial results, including record first quarter total revenues of $3.7 billion, up 1% from the previous year, and record first quarter total gross profit of $598.8 million, up 6% year-over-year. First quarter reported gap EPS was $1.79 per share. Excluding the effect of certain items, as detailed in our press release this morning, adjusted EPS for the first quarter was $1.62 per share, a 9% increase year over year. Moving now to our first quarter franchised dealership segment results. We generated reported revenues of $3.1 billion, flat year over year, and same-store revenues of $2.9 billion, down 4% year-over-year. This same-store decrease was largely driven by a 10% decrease in new vehicle retail volume, offset partially by a 3% increase in used vehicle retail volume year-over-year. It should be noted that first quarter new and used vehicle volume faced tough year-over-year comparisons due to the pull-forward consumer demand for vehicles in the prior year ahead of the U.S. auto import tariffs announced in March 2025. Reported franchised total gross profit for the first quarter was up 5% and was flat year-over-year on a same-store basis. Our fixed operations gross profit and F&I gross profit set quarterly records, up 10% and 7% year-over-year, respectively, on a reported basis. These two high-margin business lines continue to increase their share of our total gross profit pool, once again contributing over 75% of total gross profit for the first quarter, mitigating the potential headwinds to new vehicle volume and margin to our overall profitability, while also leveraging our SG&A expenses more efficiently than incremental vehicle-related gross profit. Same-store new vehicle GPU was $3,002 per unit, down 4% year-over-year. On a reported basis, new vehicle GPU was $3,144 per unit, up 2% year-over-year. On the used vehicle side of the franchise business, same-store used GPU decreased 4% year-over-year to $1,533 per unit, but increased 11% sequentially due to typical seasonality in the used car business. Our F&I performance continues to be a strength with first quarter record reported franchised F&I GPU of $2,670 per unit, up 9% year-over-year and up 2% sequentially. Turning now to Echo Park, adjusted segment income was an all-time record $12.6 million, up 25% year-over-year. year, and adjusted EVA dial was an all-time record $18.6 million, up 18% year-over-year. For the first quarter, we reported Echo Park revenues of $581 million, up 4% year-over-year, an all-time record gross profit of $68 million, up 6% year-over-year. Echo Park segment retail unit sales volume for the quarter increased 3% year-over-year, and Echo Park segment total GPU was a first-quarter record $3,502 per unit, up 3% per unit year-over-year, and up 2% sequentially from the fourth quarter. With momentum on our side, we believe we are well-positioned to resume a disciplined cadence of Echo Park store openings beginning in late 2026, while also initiating targeted investment in brand marketing as a key component of our long-term growth strategy. We expect to begin funding these brand marketing efforts this year, potentially increasing advertising expenses by $10 to $20 million, with the majority of that investment occurring in the second half. Turning now to our Power Sports segment, we generated first quarter record revenues of $41 million, up 19% year over year. First quarter record gross profit of $10 million up 19% year over year. First quarter combined new and used retail volume was up 25% year over year. And we are beginning to see the benefits of our investment in modernizing the power sports business and the future growth opportunities it may provide. We also welcome our new team members from Space Coast Harley-Davidson, Treasure Coast Harley-Davidson, Falcon's Fury Harley-Davidson, Raging Bull Harley-Davidson, and San Diego Harley-Davidson. The acquisition of these five dealerships provides us coverage in key riding states of California, Florida, Georgia, and North Carolina. This acquisition further reaffirms our commitment to strategic growth within the power sports segment and diversifies our geographic footprint and seasonality. Finally, turning to our balance sheet, we ended the quarter with $770 million in available liquidity, including $381 million in combined cash and floor plan deposits on hand. Our focus on maintaining a strong balance sheet and liquidity position allows us to strategically deploy capital in a variety of ways to deliver value to our shareholders. During the first quarter, we repurchased approximately 2.1 million shares of our common stock for approximately $136 million, representing a 6% decrease in outstanding share count from December 31, 2025. In addition, I'm pleased to report today that our Board of Directors approved an additional $500 million share repurchase authorization and an 8% increase to the quarterly cash dividend to $0.41 per share payable on July 15, 2026 to all stockholders of record on June 15, 2026. We continue to work closely with our manufacturer partners to understand the potential impact of tariffs on vehicle production, pricing, and volume forecasts, vehicle affordability, and consumer demand going forward. The full year 2026 outlook and guidance on page 13 of our investor presentation considers these uncertainties and represents our current expectations for 2026 financial results. As always, our team remains focused on executing our strategy and adapting to ongoing changes in the automotive retail environment while making strategic decisions to maximize long-term returns. This concludes our opening remarks, and we look forward to answering any questions you may have. Thank you.

We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Jeff Lick with Stevens, Inc.

Good morning. Thanks for taking my questions. I was curious if you wanted to just talk a little bit about Echo Park. You know, it appears that you're having some success there. Now you're talking about the optimism about opening some new stores. I'm curious, is there anything about this particular environment where, obviously, supply is pretty tight? It seems like used demand might be a little higher than new demand. Anything about this environment that plays into Echo Park's business model? And, you know, then what is it that gives you confidence to open new stores?

This is Jeff Dyke. On a same-store basis, new car prices were over $60,000 in the first quarter. That's an all-time high for the first quarter. Our total store was over $61,000. So, with the appreciation or the increase in new car pricing, you know, it's making affordability a big, big issue, and that is going to put wind in the sale for pre-owned. So, it gives us a lot of confidence. We also are buying a lot more cars as a percentage of our overall business off the street, both on the franchise side and Echo Park. I believe we approached in the 40% range in the first quarter. And so, that makes a big difference. The margins are better. We're selling more cars. we have access to inventory, we're growing, we're executing at a high level. And so it gives us a lot of confidence as we move into Q2 to see the same kind of growth or even better for Echo Park on a year-over-year basis. And we're seeing it on the franchise side too, maybe as a percentage growth, not quite to the extent, but in Q2, but the business is real strong. And it's being driven by, you know, just amazingly high new car pricing in the marketplace.

And this is Heath. Let me add one point. I think it's really important to understand the value of us getting the non-auction sourcing, and the team's done a great job. Keep in mind, when we started, we were 90% auction and 10% other sources, and now, as Jeff mentioned, we're 40%. And those vehicles make $1,200, give or take, more in GPU than the auction vehicles. So that's been a big driver. The team has found ways to source vehicles in multiple ways rather than the auction. That's a big, big part of it.

And can you talk a little bit about, I know you've somewhat integrated or tried to use your franchise dealerships as a strategic asset for Echo Park. You know, and it's notable that you did a positive same-store sales and franchise for used as well. Can you maybe just talk about, you know, kind of the symbiotic relationship between those two and how you're using that, you know, the source for the entire enterprise?

Yeah, it's Jeff. We'd never done that before. We started here in the first quarter, really the later end of the first quarter. And so it's not that many cars yet, a few hundred overall. But it's going to grow. And we're buying nearly new cars out of the franchise side of the business, which obviously is helping the franchise, helps the franchise side of the business, bringing those cars into Echo Park. The margins are decent. Back-end margins are great. And we're selling the heck out of them, in particular on the East Coast. They've been really, really strong. The Atlanta market's been really strong in this arena. And we'll continue to explore and do that with more brands. We've been really focused on Toyota and Honda, but we'll do that with more brands as we get better at this. It's very new for us, and, again, just a few hundred units would be included in those numbers that you're looking at for the quarter. Thanks very much. I'll get back in the queue, and that's a blessing.

Thank you, sir.

Our next question is from John Babcock with Barclay.

All right, thanks. First question, I was wondering if you were able to quantify the impact of weather, and apologies if I missed, But, you know, whether it's, you know, an impact on overall dollars or if there's some way to estimate the impact on volumes, any color there would be useful.

Yes, thank you. This is David Smith. And, you know, honestly, I'm not being a smartass, but we really do not allow weather reports in our business and in our meetings. And we just push through. And so we really don't focus on that at all.

Okay, totally understand. Next question, I was wondering, are you guys seeing OEMs pull forward lease maturities? And if so, is that benefiting EcoPark at this point?

100 percent uh they're doing that in particular around bev um and we're seeing that on the east coast and or the west coast and we're selling uh those vehicles it's helping both the franchise side and somewhat at echo park uh we're keeping most of those uh on the franchise side of the business and and um but definitely uh the pull-aheads are helping in bmw mercedes bmw's done in particular a really good job with it, and we expect that to continue as we move forward, in particular around BEV because there's so many more BEV lease returns coming back here over the next six, between now and the end of the year as those leases mature.

So is it primarily happening with the luxury brands?

Yes.

Okay, interesting. And then just last question, I was wondering if you might be able to provide some color on where you plan to open the Echo Park stores, whether it's in the same region as your existing stores or if you're planning to expand into other areas?

Our early expansion is primarily in Florida and Texas.

Okay. Thank you.

Thanks, sir. Our next question is from Chris Pierce with Needham and Company.

Hey, good morning. Just one on Echo Park. I know you're guiding to high single-digit unit gains. And I just was curious, I mean, you guys have performed better on front-end GPU, kind of talked about how you performed better last year on vendor leverage, seeing healthy OpEx leverage. But I guess I just want to understand what would be the real driver of unit growth. And, again, I'm not trying to pooh-pooh, you know, high single-digit unit growth in a flat market. I just want to – and I'm also not trying to compare you to someone putting up 40% unit growth, but I'm just kind of curious what would be a real driver of the double-digit unit gains. That sounds like what you're doing.

Yeah, 40% certainly was an impressive number. Now, look, at the end of the day, we're executing our playbook and our process. We sold well over 30 units per sales associate in the month of March, for example, and we're executing, we think, at a high level. Those gains will continue through this year. That's what's given us the confidence to open more stores as we move to the end of the year and then on into 27. And we're very comfortable with where we are. We are proud of our team for the growth that they have, and we look forward to that growth continuing.

And this is Heath. I'll add one of the things that would drive the unit growth is awareness. That is precisely why we're investing in the brand starting this year.

Yeah, and Jeff noted before we mentioned Atlanta, we've had all-time record sales in Atlanta, and we think that a big part of that is because the market is much more aware of the Echo Park brand.

And one final point on that, this is Danny, is on the earlier point on non-auction sourcing improvements, we were up about 15% in terms of our sales in the first quarter year-over-year that were non-auction sourced. You know, as Heath added, it's about a $1,200 better GPU on those vehicles, but it also gives us upside to grow that volume without being dependent or at risk of pricing on the wholesale auction front. Our wholesale action volume was actually down year over year in the first quarter, and some of that was strategic given the 7% wholesale auction price increases we saw in Q1. Take advantage of it in the late fourth quarter, but when pricing gets too high, we really push on this non-auction sourcing path, and that will only benefit from further investment in brand awareness and sourcing from customers as we go forward.

Can you, Keith, could you please drill down on Atlanta a little bit? Like, how should we think of Atlanta in terms of cohort, age of store versus Denver, marketing spend in Atlanta versus other regions, and sort of just kind of give us some sort of, like, support beams as to, you know, what you're doing there that's driving the growth you talked about?

Yeah, this is David. You know, one of the things we did, you may have seen, is that, you know, we got the naming rights for Atlanta Motor Speedway, which is now Echo Park Speedway. That's had a – we've seen in the numbers, that's been a major impact on customer awareness of the brand. And we found, you know, since 2014 when we opened our first stores in Denver that, you know, if people know about the Echo Park brand and they search for us and once they experience it and their friends experience it, it's why we have the number one guest experience in the industry is rated by reputation.com. That really pays off. So we've been really focused on that, and as we've said, we're going to start growing now, but we wanted to make sure we can maintain that world-class guest experience and the kind of volume that, like Jeff mentioned, in March, our teammates were able to deliver those. We had some teammates who sold 50 or 60 cars in just the month of March and maintain that high-level guest experience. So that's something that we're thinking of the future and how that's going to benefit the brand in the future.

Yeah, the awareness in the Atlanta market has more than doubled since the sponsorship. And that really gave us the leg to say, okay, we need to really make some investments here from a marketing perspective, from a brand awareness. We just weren't ready until this year. And we really spent a lot of time getting our house in order, buying more cars off the street, executing at a high level. You've seen we've put quarters back-to-back-to-back-to-back together if you're following Echo Park closely in the growth. And that growth is going to accelerate, and in particular, as we start opening stores, it'll have the, you know, hockey stick acceleration. And we're very excited about that opportunity, but we're going to be, you know, very prudent and focused. We've done this before, and this time we're going to make sure that we get this absolutely right. And so we're real excited about getting some stores open towards the end of the year.

I just wanted to highlight one more thing on this is that both Jeff and David mentioned. The fact that we have sales associates that are selling 30-plus vehicles when I would say probably the average. 30-plus on the average per month per associate. That efficiency, the process that we have, that's one of the reasons that you see for this quarter, Echo Park's SG&A's percent of gross was lower than 70 percent, and our semi-fixed expense structure there coupled with the processes that allow that kind of efficiency is just going to get better, and you'll see, as we've said from the beginning, that Echo Park has the ability to leverage that SG&A because of the way it's set up. It's very unique to have associates averaging that number of vehicles per month.

And, Chris, one more point on the Atlanta market specifically. You know, I guess as maybe operational points supporting the brand awareness and the gains we've made there, our unit volume in the first quarter in Atlanta was up about 25% year over year, and our total GPU was up $225 a car. So we're seeing more traffic. We're monetizing those incremental vehicles at a better rate. Some of that non-auction sourcing mix we talked about obviously benefits us there. But we really think that's, you know, kind of an incremental proof point in the early stages on brand awareness and reaching consumers and letting them know who Echo Park is, what our guest experience is, will only help continue to benefit those growing markets, but also our more mature markets in Houston and Dallas and Denver as we go forward.

Yeah, and this is David. One last thing is you'll see as we move forward and as we open new stores, new Echo Park stores, that our cost basis in those stores is going to be less than we have spent. historically, which is going to make it far easier to become profitable a lot faster in those locations.

Great. Thanks for all that detail. Appreciate it and good luck.

Yes, sir. Thank you.

Our next question is from Raja Gupta with J.P. Morgan.

Great. Thanks for taking the question. Pretty good execution. Congrats on that. I had a question on parks and service. You know, I acknowledge that, you know, you don't like to talk about weather. So irrespective, you know, the growth is pretty strong despite, you know, some of the tough warranty comps. I'm curious how we should think about growth there. I know you're sticking to, like, your framework, but maybe if you could unpack that for us a little bit, you know, what's really helping that business, any change in processes, you know, hiring cadence, And, you know, how should we just think about growth there for the rest of the year?

This is Jeff. I mean, look, we told you this two years ago. We were on a mission to hire technicians. We've plus 400 technicians, I think, since we started that mission. We continue to hire techs. We're executing at a really high level in our playbooks. We have a value service program that we're very focused on to drive more customers into our service drive, which then allows us to upsell off of those value services that we brought into the service drive. The used business is growing, so that helps internals. Just overall, we're executing at a very high level. And, you know, mid-single digits is a good number, maybe up a little bit above that. And it's across the board. It's not one market or another. It's not one brand or another. We've got some warranty challenges in comparison to last year. I think with our Honda brand, we're off about a million dollars in gross there. But we'll drive more CP. Obviously, we're not in control of warranty, but we'll drive more customer gross into those brands, into that brand. And it's a bright future for fixed operations at Sonic Automotive. It's going to get better as we go on this year. It's going to get better and stronger into 27, 28, and towards the end of the decade. There's a lot of business out there for us to get. Remember, customers buy new cars, but half of them don't go to a dealership. and not just Sonic, anybody, because we're, you know, the industry's priced high and processes were crazy and it's reputation, I think. We've cleaned all that up. Our service CSI scores are fantastic, and that's all playing into the results that we're seeing, and they're just going to get stronger as we move forward.

And one additional opportunity there is it's very ripe for AI. Our AI team is just going in now, and we're starting to look at the processes that fixed. Obviously, a very high-margin part of our business, but we think we can be more efficient with the technology, so I think there's opportunity in that area as well.

We just broke $90 million in gross in a single month in the first quarter. That was an all-time record for us for a single month, and that's going to continue to get bigger. We've got short-term goals of being over $100 million a month in fixed operations gross, and we're hopeful to see a month this year do that, and then ongoing we'll be above that. So there's just huge growth there and great opportunity for us as we started to look at the business differently, more of a high volume, high traffic count business than we have in the past. And there's just too much opportunity and too many guests out there in our AOIs to take advantage of that. So that's what we're focused on.

And just a couple other points there, as you might have seen in the release. You know, we grew customer pay at a 5% rate on the same-store basis, and warranty was at a 7% rate. So that was even an uptick in growth rate versus the fourth quarter. Warranty was only 2% up year-over-year in the fourth quarter. So continuing to see benefits there as long as that warranty tailwind persists, but really focused on customer pay. And we got 40 basis points of margin expansion out of it. But on an all-in basis, customer pay is growing at 9%, warranty is up 15%, including the acquisitions. So we've got some year-over-year upside in terms of the comparisons as we get into the back half and lap those JLR acquisitions from last year.

Right, right. That's very clear and helpful. I wanted to just ask a broader question around just pricing dynamics. I mean, like maybe like a twofold question. One is you have this one big nationwide competitor of yours that is undergoing a pretty well telegraphed price cut. I'm curious if you're feeling it. Are you seeing it? You know, have you reacted to it? Any thoughts on that would be helpful. And then second question, you know, Carvana yesterday talked about, you know, some risks in the second quarter from just narrowing wholesale retail spreads. I know that you have, like, much lower day supply, and you're increasing consumer sourcing, too, but I'm curious if that is something to keep in mind, you know, as far as your business goes.

As far as the pricing goes, we haven't felt that, and it's, you know, isolated to VINs and marketplaces, and that hasn't, you know, tripped any wires over here at all, so we're not feeling that. You want to attack the Carbano?

On the spread? Yeah. Yeah, I mean, it's pretty normal seasonality. Obviously, prices went up in the first quarter. We were buying cars early in the first quarter when wholesale prices were down. As we go into the second quarter, we're seeing that shrink, the gap between the two. It's not going as rapid as last year, but it is closing, so that is real.

But we still expect nice growth with Echo Park in the second quarter. We're going to continue to expand better growth than we had in the first quarter, So, you know, maybe the margins are hanging in there better, both on the franchise side and Echo Park side in April, better than, you know, they normally do from a pre-owned perspective, which is very good, and that's great to see. We'll see how supplies hold up as we move in. They always tighten, and we're always trying to shrink our day supply, so at this time of the year, after the big first quarter and tax season. So we'll see how things go, but the pre-owned business should be nice and solid as we move throughout the rest of the year.

And again, to that, our actual performance in the first quarter, our average selling price at Echo Park was down about 2% sequentially from the fourth quarter. But, you know, wholesale pricing was up 7% as we went through the first quarter. But our GPU expanded, our vehicle-related GPU only expanded about $200 sequentially. So we were seeing narrowing retail pricing on a mixed basis anyway, increases in wholesale pricing, but still saw an expansion in GPU, again, because of the way we buy, because of that non-auction sourcing mix. And that should only give us more insulation against those movements, as well as, as Tim said, recognizing the normal seasonality of used car pricing movements in January, February, March, and then on the downswing in April, May, June, post-tax refund season.

Got it. That's helpful. Maybe just last one on balance sheet. You know, very surprised by, like, the big buyback here in the first quarter. Curious, like, how should you think about leverage here? You obviously increased their authorization. So maybe, like, another way to ask is, like, is the ramp-up in buyback just a signal that you're not really worried about, like, the macro or the cycle here? And, you know, you just feel like, you know, with the growth in parts and services, you know, the trends in Echo Park, you know, you know, there's just like more good things to come, you know, from an EBITDA perspective and you feel comfortable, you know, buying back this heavily right now. I was just a little surprised given some of the choppiness we hear about in the macro. Thanks.

Yeah, this is David. Yes, I mean, we obviously, we would not have bought back the shares if we didn't feel confident in our business. And, you know, as always, we want our investors to know that we're going to be looking at all our different options of where we place our capital and look for the best return. So, but I think the key to what you were saying there and what you're asking is what are we going to do going forward? And we're going to look at various opportunities, like the Power Sports acquisition that we just made. That was a great opportunity and offered a great ROI opportunity. And we're going to continue with that, whether it's with whatever we choose, whether it's share repurchases or debt reduction or acquisitions. It just depends on what we see in the market.

Yeah, I'll just say we feel like we have a very strong balance sheet at a little over two turns for our leverage ratio, and that gives us, in a lot of liquidity, that gives us the ability to actually invest in multiple areas. As you've just seen, we were able to purchase five JLR stores last year, five power sports dealerships this year. At the same time, buy back two million shares, increase the dividend by 8 percent, investing in our business as it relates to AI, buying real estate, enhancing the facilities. And finally, we're still in great shape to expand Echo Park. And so I think the balance sheet is allowing us to do that. We're completely comfortable where we are in the leverage ratio, and we've got it all cooked in and understand the impact, and we're very comfortable that we've got a lot of dry powder to invest in all of these areas.

And, Rajit, I think if you look at the quarters, you know, the last six or seven quarters that we've strung together, we're showing the execution, the discipline, you know, in this company like we've never shown before. And so that gives us a real high level of confidence. It doesn't matter if there's, you know, COVID or tariffs or weather or whatever else is going to come, Godzilla is going to come out of the, you know, whatever and, you know, blow up all our cars. We're overcoming all of that. And I think that's just a big testament to our team. The tenure that we have on this team is amazing. We had our board meeting yesterday, and we were going through our tenure in this company. It's just incredible. And, you know, very, very confident. So we look forward to the great remainder of the year and a very bright future for Sunlight.

Awesome. Thanks for all the color, and good luck.

You bet.

Thank you.

Our next question is for Brett Jordan with Jeff.

Hey, good morning, guys. This is Patrick Buckley on for Brett. Thanks for taking our questions. Hi, Patrick. And as you think about the longer-term outlook on franchise new GPUs, you know, how are you thinking about the new floor there? Some peers have recently suggested a landing spot towards the upper end of their previous targets. Have your thoughts changed at all?

I mean, we didn't change guidance there. We're seeing a little bit of shrinkage on front-end margin in April for new, but it's going the other way for pre-owned. So, you know, I think we're fine in the range that we gave you guys for the year. You know, Mix moves around a little bit if you're selling more domestic than normal or more Honda than normal. We get a little drop in our front-end margin. But our F&I numbers are so good at our franchise stores. Our F&I numbers, my first quarter, we're up $230 a vehicle, which is just fantastic. And we expect that to continue to grow as we move throughout the year. So the total all-in margin, I think we're going to be just fine. And it may move around a little bit due to mix. You know, Mercedes sells more or less or BMW more or less, and then Honda comes in or Ford comes in. The margins are a little different. But our F&I numbers are so strong that it balances it all out. And I think we'll be fine with our guidance that we gave you for 2026.

Got it. And then on BMW, we've heard some talks of delayed new product timing there. Has there been any notable disruptions or impact due to that delayed product change this year? No, no.

They've been doing a fantastic job. They communicate well, and they've done an amazing job managing through this, as all of our manufacturer partners have. And there have been no issues. I mean, we need to watch affordability and entry-level models into some of the luxury brands. That's an important topic to study and watch. But, you know, you start getting past – there's two quarters in a row now we're past $60,000 mark. We'll see – I don't see that changing in the second quarter. Third quarter, they're going to pass on, you know, the tariff expenses to the consumer. Prices are going up. It helps the used car business. We'll see how much elasticity is in the new car pricing. I mean, something's going to have to happen if volume really slows off because day supply will start growing. And then you will have a margin compression issue. I just don't see that happening this quarter or next, maybe a little bit due to change in mix for us. But overall, I think it will be nice and steady as she goes. Got it.

That's all for us. Thank you.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question is from Alex Perry with Bank of America.

Hi, thanks for taking my questions here, and congrats on the execution. I just wanted to ask about if you've seen sort of any impact from the war, any sort of change in new used vehicle sales trends as we moved into April. And could you maybe help us on, like, the cadence of the monthly comps in the quarter on the new side? Thanks.

I would say, Alex, this is David, that it's been really pleasantly surprising that the resilience of the consumer and that they've just continued to – our demand, and you've seen in our numbers, they're continuing to do business with us. And despite the uncertainty, I think that it's really been fantastic to see. And I think that hopefully soon this major conflict will be over, and I think we'll go into the summer months with some great results. But, J.D.?

Yeah, I mean, if anything, BEV units from a pre-owned perspective, we're selling a lot more of those. The pull-aheads are helping, and we're getting a – that's a big win in our sales right now, because otherwise, you know, we'd have some overhang, I think, with Beth. And in particular, I think the luxury stores are doing a great job with that. BMW, Mercedes, they're doing a really good job. But other than that, no, I mean, the business has been good. Cadence-wise, January was amazing. I mean, it was just an unreal January. If you wanted to talk about weather, maybe that slowed us down a little bit at the end of January. But, I mean, just a fantastic January and a really good February. We started comping against the tariff pull-aheads in March. And you did that all of March, really, in the first two weeks or so of April, 10 days of April. And then the comps will get a lot easier as we move into May and June. So we'll see some flip around in our year-over-year numbers. We'll start sort of heading into the positive direction. And just throw out the comparison of March and the first two weeks of april it's not it's not a fair comparison compare it against 24 and 23 and we look fantastic on a on a year-over-year basis and so that's how that looks and that's kind of behind us now you're going to get a little bump when we get to the september time frame and we bounce against the bev kind of pull ahead um from that time frame but it ought to be smooth sailing other

than that for the rest of the year that's really helpful context and then i i guess my next question You mentioned in the deck consolidation opportunity in power sports. Is that a place where you'll continue to add doors there? What are you seeing there that gets you excited? Do you expect it to be sort of on the Harley side in the motorcycle space or more sort of traditional power sports? Would love to hear just sort of how you're thinking about that segment.

Yeah. Thanks for the question. This is David. You know, we've been, you know, really, really pleased. A big shout-out to our Power Sports team. They've just done an outstanding job in, as I mentioned, modernizing the Power Sports industry, at least the ones that we have. We see some great opportunities, and the prices, the acquisition opportunities are coming at us. It's very interesting. You know, we like our diversified portfolio, so we're not going to be concentrated solely on Harley-Davidson, but this recent acquisition was just really just outstanding. And they do fantastic locations where, as I mentioned, you have a lot of sunny days in those markets to offset some of the snowy weather in our big South Dakota Sturgis stores. But we do see fantastic opportunities. As you look at the growth that's generated in motorcycle sales, new and used, is really – it's crazy. It's like we're making the same amount of profit on selling an item that's maybe a third of the price of a vehicle. And so there's some great opportunities there. J.D.?

Yeah, I would tell you, just to give you a little more detail on what David was talking about, I mean, our new GPU for the first quarter franchise was 3,144, and our GPU for PowerSports was 2,891, damn near the same number. Our used GPU, which we've really grown the heck out of our used business on PowerSports, that's something that industry lacks, was 1,938 a copy versus 1,539 a copy. We're making more gross selling used, you know, than we are selling used on the franchise side. So very exciting opportunity for us to grow that part of the business. And we're opportunistically buying, just being very careful and cautious. And as we told you from day one, growing the business and putting in our playbooks, our technology, taking care of our guests, taking care of our teammates, and we just get better and stronger. We have an all-time record quarter. We see that backing up to the next all-time record quarter and the next one. It's a fun business with great margin percentage. And our team loves going in and buying them. And who we are acquiring love it. So we're having a great time. And as David said, we've got a fantastic leadership team running that business, totally separate from Echo Park and our franchise business. And we'll see what happens in the coming quarters. There's a lot of opportunity in this segment.

that's really helpful could i ask one follow-up on that the the used grosses and the differential versus the uh vehicle side is pretty interesting what why do you think the grosses are are so high in the power sports side on a relatively lower asp is it just the fragmentation of the market

yeah it is that's part of it but think about customers don't know that they what to do with that product. When they buy a new power supply, buy something, a Polaris or whatever, they've always taken their old one and put a sign on it in the front yard and said, for sale. They don't know that we want to buy that from them. And so we're giving them a great deal of buying that. And they're expensive. You buy a brand new four-door Polaris now, it's $55,000. We can trade for them and sell them for, you know, in the upper teens or lower 20s, make great margin like you see, and provide the consumer with something. They've never gotten in this industry. So there's a huge, I mean, it's just industry just did not sell pre-owned and we're growing pre-owned at 40 and 50 percent clips a quarter and that's going to continue into the future. They just didn't focus on it and that's something that, you know, is core to our success at Sonic Automotive and we're bringing that to this industry and it's making

a big difference. And that's one of the things that validated our entry into this is over the last three quarters we've grown 35, 40 and this quarter 56 percent used vehicle volume year over year, even in an off quarter like the first quarter seasonally. New volume was up 16%. Both new and used gross per unit grew 7% or 8%. So we're growing not just the base, but the efficiency of those products just as we get into prime selling season here starting in April, May.

They also had very, very little discipline around inventory management. And as you guys know, that's something that we're known for in our day supply and how we manage inventory. We don't get surprises there. If we do, they're fixed in two weeks. And there's just absolutely none of that in the power sports business. So we've cleaned all that up from a parts, from a used, from a new perspective, and we're turning inventory like we should. And that's going to expand margin when you do that.

That's incredibly helpful. It sounds like an exciting opportunity. Best of luck going forward. Thank you so much.

Thank you. There are no further questions at this time. I would like to hand the floor. Back over to David Smith for any closing comments.

Great. Thank you very much. Thank you, everyone. We'll talk to you next quarter.

This concludes today's conference. You may disconnect your lines at this time.