8-K
SONIC AUTOMOTIVE INC (SAH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 8-K
____________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 15, 2023
____________________________________
SONIC AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
____________________________________
Delaware
(State or other jurisdiction
of incorporation)1-1339556-2010790(CommissionFile Number)(IRS EmployerIdentification No.)
| 4401 Colwick Road | |||
|---|---|---|---|
| Charlotte, | North Carolina | 28211 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (704) 566-2400
Not Applicable
(Former name or former address, if changed since last report.)
____________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A Common Stock, par value $0.01 per share | SAH | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 15, 2023, Sonic Automotive, Inc. (the “Company”) issued a press release announcing its financial results for its fourth fiscal quarter and fiscal year ended December 31, 2022 (the “Earnings Press Release”). A copy of the Earnings Press Release is attached hereto as Exhibit 99.1 and a copy of the earnings call presentation materials is attached hereto as Exhibit 99.2.
Item 7.01. Regulation FD Disclosure.
On February 15, 2023, in the Earnings Press Release, the Company announced the approval of a quarterly cash dividend.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br><br>No. | Description |
|---|---|
| 99.1 | Press Release of Sonic Automotive, Inc., dated February 15, 2023. |
| 99.2 | Earnings Call Presentation Materials. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SONIC AUTOMOTIVE, INC. | ||
|---|---|---|
| February 15, 2023 | By: | /s/ STEPHEN K. COSS |
| Stephen K. Coss | ||
| Senior Vice President and General Counsel |
Document
Exhibit 99.1
Sonic Automotive Reports All-Time Record Fourth Quarter and Full Year Revenues
Repurchased 5.6 Million Shares of Class A Common Stock During 2022, or 14% of Total Shares Outstanding as of December 31, 2021
Announces Acquisition of 13 Powersports Locations, Further Diversifying Retail Portfolio
CHARLOTTE, N.C. – February 15, 2023 – 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 fourth quarter and fiscal year ended December 31, 2022.
Fourth Quarter 2022 Financial Summary
•All-time record quarterly revenues of $3.6 billion, up 13% year-over-year; record fourth quarter gross profit of $576.1 million, up 9% year-over-year
•Reported fourth quarter net loss of $190.9 million ($5.22 loss per diluted share)
◦Reported net loss includes the effect of a $320.4 million pre-tax charge related to non-cash impairment charges, offset partially by a $9.1 million pre-tax gain on the disposal of real estate and an income tax benefit of $22.6 million related to these non-recurring items
◦Excluding non-recurring items, adjusted fourth quarter net income* was $97.8 million ($2.61 adjusted earnings per diluted share*)
•Selling, general and administrative (“SG&A”) expenses as a percentage of gross profit of 63.6% (56.6% on a Franchised Dealerships Segment basis, a decrease of 110 basis points year-over-year)
◦Adjusted SG&A expenses as a percentage of gross profit* of 65.2% (58.3% on a Franchised Dealerships Segment basis, an increase of 80 basis points year-over-year)
•Record fourth quarter EchoPark revenues of $589.3 million, up 2% year-over-year; fourth quarter EchoPark gross profit of $40.8 million, flat year-over-year
•Since October 1, 2022, Sonic has repurchased approximately 0.7 million shares of its Class A Common Stock for an aggregate purchase price of approximately $35.8 million, or an average of $48.25 per share
Full Year 2022 Financial Summary
•All-time record annual revenues of $14.0 billion, up 13% year-over-year; all-time record annual gross profit of $2.3 billion, up 21% year-over-year
•Reported full year net income of $88.5 million ($2.23 earnings per diluted share)
◦Reported net income includes the effect of a $320.4 million pre-tax charge related to non-cash impairment charges and a $4.4 million pre-tax charge related to long-term compensation charges, offset partially by a $9.1 million pre-
tax gain on the disposal of real estate and an income tax benefit of $22.6 million related to these non-recurring items
◦Excluding non-recurring items, adjusted full year net income* was $381.6 million ($9.61 adjusted earnings per diluted share*, an all-time annual record)
•SG&A expenses as a percentage of gross profit of 67.1% (59.9% on a Franchised Dealerships Segment basis, a decrease of 110 basis points year-over-year)
◦Adjusted SG&A expenses as a percentage of gross profit* of 67.3% (60.1% on a Franchised Dealerships Segment basis, a decrease of 80 basis points year-over-year)
•All-time record annual EchoPark revenues of $2.5 billion, up 5% year-over-year; all-time record annual EchoPark gross profit of $175.1 million, up 18% year-over-year
•During 2022, Sonic repurchased approximately 5.6 million shares of its Class A Common Stock for an aggregate purchase price of approximately $261.9 million, or an average of $47.08 per share
* 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, “We are extremely proud of our team’s performance in the fourth quarter, capping off another year of all-time record annual revenues and adjusted earnings per share. Our commitment to delivering an exceptional guest experience and our dedication to the growth and development of our teammates continue to pay dividends for our key stakeholders. As we execute our long-term strategic plan, we remain focused on leveraging growth opportunities across our diversified portfolio to maximize future earnings potential and to position Sonic Automotive for continued success in the future. To that end, we are pleased to announce further diversification of our retail portfolio with our newly created Powersports Segment, driving incremental growth opportunities by partnering with top powersports brands, including Harley-Davidson, Can-Am, Sea-Doo, Polaris, Kawasaki, Suzuki, Ducati, BMW, Honda, Indian Motorcycle and Yamaha. We are excited about the opportunity in this space and would like to welcome the teams from Black Hills Harley-Davidson in Sturgis, South Dakota, Team Mancuso Powersports in Houston, Texas, and Horny Toad Harley-Davidson in Temple, Texas to the Sonic Automotive family.”
Jeff Dyke, President of Sonic Automotive, commented, “Our franchised dealerships team has continued to successfully adapt to an unprecedented automotive retail environment, driving exceptional performance in 2022. Despite a challenging used vehicle industry backdrop, we remain committed to EchoPark’s long-term potential and are focused on executing strategic enhancements to the business model in 2023, while maintaining our target of 90% U.S. population coverage by 2025. We firmly believe in our team’s ability to adapt to an evolving automotive retail market and macroeconomic backdrop to drive toward achieving our long-term goals.”
Heath Byrd, Chief Financial Officer of Sonic Automotive, added, “Our outstanding results in 2022 speak to the strength of our diversified model, which has allowed us to focus on the long-term growth potential at EchoPark while also returning capital to our stockholders via our dividend and share repurchases. We remain committed to a disciplined, return-based capital allocation, balancing $454.8 million in remaining share repurchase authorization with prudent cash management in an uncertain macroeconomic
environment. We had $804.5 million of liquidity as of December 31, 2022, which we believe provides us flexibility to strategically deploy capital in 2023 and beyond to continue to deliver long-term returns for our stockholders.”
Fourth Quarter 2022 Segment Highlights
The financial measures discussed below are results for the fourth quarter of 2022 with comparisons made to the fourth quarter of 2021, unless otherwise noted.
•Franchised Dealerships Segment operating results include:
•Same store revenues up 12%; same store gross profit up 3%
•Same store retail new vehicle unit sales volume up 5%; same store retail new vehicle gross profit per unit down 6%, to $6,301
•Same store retail used vehicle unit sales volume up 6%; same store retail used vehicle gross profit per unit down 33%, to $1,405
•Same store parts, service and collision repair (“Fixed Operations”) gross profit up 12%; same store customer pay gross profit up 13%; same store warranty gross profit up 15%; same store Fixed Operations gross margin up 10 basis points, to 49.8%
•Same store F&I gross profit up 11%; record fourth quarter reported Franchised Dealerships Segment F&I gross profit per retail unit of $2,421, up 3%
•On a trailing quarter cost of sales basis, the Franchised Dealerships Segment had 24 days’ supply of new vehicle inventory (including in-transit) and 26 days’ supply of used vehicle inventory
•EchoPark Segment operating results include:
•Record fourth quarter revenues of $589.3 million, up 2% year-over-year; gross profit of $40.8 million, flat year-over-year
•Record fourth quarter retail used vehicle unit sales volume of 17,435, up 11% year-over-year
•Retail used vehicle unit sales volume was comprised of 81% 1-4-year-old vehicles and 19% 5-plus-year-old vehicles, with 28% of retail used vehicle unit sales volume sourced from non-auction sources
•Segment loss of $33.3 million and adjusted EBITDA* loss of $25.4 million (including market expansion-related losses of $4.2 million and $3.6 million, respectively)
•On a trailing quarter cost of sales basis, the EchoPark Segment had 40 days’ supply of used vehicle inventory
•Powersports Segment operating results include:
•Financial results from eight stores acquired during 2022, including Horny Toad Harley-Davidson in Temple, Texas (acquired January 2022) and seven Team Mancuso Powersports stores in Houston, Texas (acquired August 2022)
•Revenues of $28.6 million, gross profit of $8.7 million, gross margin of 30.3%
•Segment income of $1.8 million and adjusted EBITDA* of $2.9 million
* Please refer to the discussion and reconciliation of Non-GAAP Financial Measures below.
Full Year 2022 Segment Highlights
The financial measures discussed below are results for the full year 2022 with comparisons made to the full year 2021, unless otherwise noted.
•Franchised Dealerships Segment operating results include:
•Same store revenues up 1%; same store gross profit up 7%
•Same store retail new vehicle unit sales volume down 14%; same store retail new vehicle gross profit per unit up 45%, to $6,630
•Same store retail used vehicle unit sales volume down 11%; same store retail used vehicle gross profit per unit down 9%, to $1,605
•Same store Fixed Operations gross profit up 9%; same store customer pay gross profit up 14%; same store warranty gross profit up 1%; same store Fixed Operations gross margin down 40 basis points, to 49.8%
•Same store F&I gross profit down 1%; record annual reported Franchised Dealerships Segment F&I gross profit per retail unit of $2,453, up 14%
•EchoPark Segment operating results include:
•All-time record annual revenues of $2.5 billion, up 5% year-over-year; all-time record annual gross profit of $175.1 million, up 18% year-over-year
•Retail used vehicle unit sales volume of 64,259, down 18% year-over-year
•Retail used vehicle unit sales volume was comprised of 86% 1-4-year-old vehicles and 14% 5-plus-year-old vehicles, with 25% of retail used vehicle unit sales volume sourced from non-auction sources
•Segment loss of $133.9 million and adjusted EBITDA* loss of $105.4 million (including market expansion-related losses of $32.6 million and $30.2 million, respectively)
•Powersports Segment operating results include:
•Financial results from eight stores acquired during 2022, including Horny Toad Harley-Davidson in Temple, Texas (acquired January 2022) and seven Team Mancuso Powersports stores in Houston, Texas (acquired August 2022)
•Full year 2022 financial results for the Powersports Segment do not reflect expected annualized amounts on a go-forward basis due to the timing of acquisitions in 2022 and the February 2023 acquisition of the Black Hills Harley-Davidson platform, consisting of five retail locations near Sturgis, South Dakota
•Revenues of $53.5 million, gross profit of $16.8 million, gross margin of 31.3%
•Segment income of $2.7 million and adjusted EBITDA* of $4.6 million
* 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 $0.28 per share, payable on April 14, 2023 to all stockholders of record on March 15, 2023.
Fourth Quarter 2022 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 Fourth Quarter 2022 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
Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, North Carolina, is on a quest to become the most valuable automotive retailer and service brand in America. Our Company culture thrives on creating, innovating, and providing industry-leading guest experiences, driven by strategic investments in technology, teammates, and ideas that ultimately fulfill ownership dreams, enrich lives, and deliver happiness to our guests and teammates. As one of the largest automotive retailers in America, we are committed to delivering on this goal while pursuing expansive growth and taking progressive measures to be the leader in this category. Our new platforms, programs, and people are set to drive the next generation of automotive experiences. More information about Sonic Automotive can be found at www.sonicautomotive.com and ir.sonicautomotive.com.
About EchoPark Automotive
EchoPark Automotive is one of the fastest growing and most comprehensive retailers of nearly new pre-owned vehicles in America today. Our rapid growth plan is expected to bring our unique business model to 90% of the U.S. population by 2025, utilizing one of the most innovative technology-enabled sales strategies in our industry. Our approach provides a personalized and proven guest-centric buying process that consistently delivers award-winning guest experiences and superior value to car buyers nationwide, with savings of up to $3,000 versus the competition. Consumers have responded by putting EchoPark at number one among national pre-owned vehicle retailers in products, sales, and service based on Google Reviews between April 2021 through April 2022, while receiving the 2021 Consumer Satisfaction Award from DealerRater. EchoPark’s nationwide growth will continue to leverage the unique and preferred Experience Centers in-market with a best-in-class shopping and online buying tool. EchoPark’s mission is in the name: Every Car, Happy Owner. This drives the experience for guests and differentiates EchoPark from the competition. More information about EchoPark Automotive can be found at www.echopark.com.
Forward-Looking Statements
Included herein are forward-looking statements, including statements regarding EchoPark's anticipated future U.S. population coverage, anticipated future capital allocation and anticipated incremental growth opportunities. 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, economic conditions in the markets in which we operate, supply chain disruptions and manufacturing delays, labor shortages, the impacts of inflation and increases 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, the rate and timing of overall economic expansion or contraction, the integration of recent or future acquisitions, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 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.
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 as a percentage of gross profit, and adjusted EBITDA. 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.
Company Contacts
Investor Inquiries:
Heath Byrd, Executive Vice President and Chief Financial Officer
Danny Wieland, Vice President, Investor Relations & Financial Reporting
ir@sonicautomotive.com
Press Inquiries:
Sonic Automotive Media Relations
media.relations@sonicautomotive.com
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations - Consolidated
| Three Months Ended December 31, | Better / (Worse) | Twelve Months Ended December 31, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions, except per share amounts) | ||||||||||||
| Revenues: | ||||||||||||
| Retail new vehicles | $ | 1,555.3 | $ | 1,278.3 | 22 | % | $ | 5,622.6 | $ | 4,993.4 | 13 | % |
| Fleet new vehicles | 29.3 | 73.6 | (60) | % | 99.4 | 124.6 | (20) | % | ||||
| Total new vehicles | 1,584.6 | 1,351.9 | 17 | % | 5,722.0 | 5,118.0 | 12 | % | ||||
| Used vehicles | 1,341.1 | 1,210.9 | 11 | % | 5,515.4 | 4,933.6 | 12 | % | ||||
| Wholesale vehicles | 80.0 | 110.5 | (28) | % | 484.9 | 367.2 | 32 | % | ||||
| Total vehicles | 3,005.7 | 2,673.3 | 12 | % | 11,722.3 | 10,418.8 | 13 | % | ||||
| Parts, service and collision repair | 411.1 | 360.1 | 14 | % | 1,599.7 | 1,340.4 | 19 | % | ||||
| Finance, insurance and other, net | 173.8 | 151.2 | 15 | % | 679.1 | 637.2 | 7 | % | ||||
| Total revenues | 3,590.6 | 3,184.6 | 13 | % | 14,001.1 | 12,396.4 | 13 | % | ||||
| Cost of sales: | ||||||||||||
| Retail new vehicles | (1,390.7) | (1,120.9) | (24) | % | (4,959.8) | (4,533.7) | (9) | % | ||||
| Fleet new vehicles | (27.5) | (73.0) | 62 | % | (94.5) | (123.0) | 23 | % | ||||
| Total new vehicles | (1,418.2) | (1,193.9) | (19) | % | (5,054.3) | (4,656.7) | (9) | % | ||||
| Used vehicles | (1,305.6) | (1,164.3) | (12) | % | (5,334.6) | (4,800.6) | (11) | % | ||||
| Wholesale vehicles | (83.7) | (107.3) | 22 | % | (488.0) | (357.3) | (37) | % | ||||
| Total vehicles | (2,807.5) | (2,465.5) | (14) | % | (10,876.9) | (9,814.6) | (11) | % | ||||
| Parts, service and collision repair | (207.0) | (188.5) | (10) | % | (807.2) | (667.5) | (21) | % | ||||
| Total cost of sales | (3,014.5) | (2,654.0) | (14) | % | (11,684.1) | (10,482.1) | (11) | % | ||||
| Gross profit | 576.1 | 530.6 | 9 | % | 2,317.0 | 1,914.3 | 21 | % | ||||
| Selling, general and administrative expenses | (366.3) | (343.3) | (7) | % | (1,555.1) | (1,274.7) | (22) | % | ||||
| Impairment charges | (320.4) | (0.1) | NM | (320.4) | (0.1) | NM | ||||||
| Depreciation and amortization | (33.5) | (27.4) | (22) | % | (127.5) | (101.1) | (26) | % | ||||
| Operating income (loss) | (144.1) | 159.8 | (190) | % | 314.0 | 538.4 | (42) | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (13.6) | (4.0) | (240) | % | (34.3) | (16.7) | (105) | % | ||||
| Interest expense, other, net | (24.9) | (17.8) | (40) | % | (89.9) | (48.0) | (87) | % | ||||
| Other income (expense), net | 0.1 | (15.9) | 101 | % | 0.2 | (15.5) | 101 | % | ||||
| Total other income (expense) | (38.4) | (37.7) | (2) | % | (124.0) | (80.2) | (55) | % | ||||
| Income (loss) before taxes | (182.5) | 122.1 | (249) | % | 190.0 | 458.2 | (59) | % | ||||
| Provision for income taxes - benefit (expense) | (8.4) | (25.8) | 67 | % | (101.5) | (109.3) | 7 | % | ||||
| Net income (loss) | $ | (190.9) | $ | 96.3 | (298) | % | $ | 88.5 | $ | 348.9 | (75) | % |
| Basic earnings (loss) per common share | $ | (5.22) | $ | 2.35 | (322) | % | $ | 2.29 | $ | 8.43 | (73) | % |
| Basic weighted-average common shares outstanding | 36.5 | 40.9 | 11 | % | 38.7 | 41.4 | 7 | % | ||||
| Diluted earnings (loss) per common share | $ | (5.22) | $ | 2.25 | (332) | % | $ | 2.23 | $ | 8.06 | (72) | % |
| Diluted weighted-average common shares outstanding(1) | 36.5 | 42.8 | 15 | % | 39.7 | 43.3 | 8 | % | ||||
| Dividends declared per common share | $ | 0.28 | $ | 0.12 | 133 | % | $ | 1.03 | $ | 0.46 | 124 | % |
(1) Basic weighted-average common shares outstanding used for the three months ended December 31, 2022 due to the net loss on a reported GAAP basis.
NM = Not Meaningful
Franchised Dealerships Segment - Reported
| Three Months Ended December 31, | Better / (Worse) | Twelve Months Ended December 31, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| Retail new vehicles | $ | 1,534.5 | $ | 1,273.6 | 20 | % | $ | 5,581.6 | $ | 4,984.4 | 12 | % |
| Fleet new vehicles | 29.4 | 73.7 | (60) | % | 99.4 | 124.6 | (20) | % | ||||
| Total new vehicles | 1,563.9 | 1,347.3 | 16 | % | 5,681.0 | 5,109.0 | 11 | % | ||||
| Used vehicles | 823.4 | 727.7 | 13 | % | 3,391.5 | 2,901.0 | 17 | % | ||||
| Wholesale vehicles | 52.6 | 74.0 | (29) | % | 314.0 | 257.2 | 22 | % | ||||
| Total vehicles | 2,439.9 | 2,149.0 | 14 | % | 9,386.5 | 8,267.2 | 14 | % | ||||
| Parts, service and collision repair | 404.8 | 346.3 | 17 | % | 1,588.0 | 1,340.4 | 18 | % | ||||
| Finance, insurance and other, net | 128.0 | 110.1 | 16 | % | 510.1 | 443.5 | 15 | % | ||||
| Total revenues | 2,972.7 | 2,605.4 | 14 | % | 11,484.6 | 10,051.1 | 14 | % | ||||
| Gross Profit: | ||||||||||||
| Retail new vehicles | 160.8 | 156.7 | 3 | % | 655.3 | 458.7 | 43 | % | ||||
| Fleet new vehicles | 1.8 | 0.6 | 200 | % | 4.9 | 1.6 | 206 | % | ||||
| Total new vehicles | 162.6 | 157.3 | 3 | % | 660.2 | 460.3 | 43 | % | ||||
| Used vehicles | 38.4 | 50.8 | (24) | % | 174.4 | 188.1 | (7) | % | ||||
| Wholesale vehicles | (3.2) | 0.4 | (900) | % | (6.3) | 0.6 | NM | |||||
| Total vehicles | 197.8 | 208.5 | (5) | % | 828.3 | 649.0 | 28 | % | ||||
| Parts, service and collision repair | 200.9 | 171.1 | 17 | % | 786.7 | 673.1 | 17 | % | ||||
| Finance, insurance and other, net | 128.0 | 110.1 | 16 | % | 510.1 | 443.5 | 15 | % | ||||
| Total gross profit | 526.7 | 489.7 | 8 | % | 2,125.1 | 1,765.6 | 20 | % | ||||
| Selling, general and administrative expenses | (298.1) | (282.8) | (5) | % | (1,273.0) | (1,076.9) | (18) | % | ||||
| Impairment charges | (115.5) | — | NM | (115.5) | — | NM | ||||||
| Depreciation and amortization | (26.0) | (22.5) | (16) | % | (101.8) | (84.8) | (20) | % | ||||
| Operating income (loss) | 87.1 | 184.4 | (53) | % | 634.8 | 603.9 | 5 | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (9.8) | (2.5) | (292) | % | (23.6) | (11.8) | (100) | % | ||||
| Interest expense, other, net | (23.4) | (17.1) | (37) | % | (85.0) | (46.3) | (84) | % | ||||
| Other income (expense), net | — | (15.6) | 100 | % | (0.1) | (15.5) | 99 | % | ||||
| Total other income (expense) | (33.2) | (35.2) | 6 | % | (108.7) | (73.6) | (48) | % | ||||
| Income (loss) before taxes | 53.9 | 149.2 | (64) | % | 526.1 | 530.3 | (1) | % | ||||
| Add: Impairment charges | 115.5 | — | NM | 115.5 | — | NM | ||||||
| Segment income (loss) | $ | 169.4 | $ | 149.2 | 14 | % | $ | 641.6 | $ | 530.3 | 21 | % |
| Unit Sales Volume: | ||||||||||||
| Retail new vehicles | 26,239 | 23,475 | 12 | % | 99,424 | 99,815 | — | % | ||||
| Fleet new vehicles | 661 | 2,246 | (71) | % | 2,115 | 3,543 | (40) | % | ||||
| Total new vehicles | 26,900 | 25,721 | 5 | % | 101,539 | 103,358 | (2) | % | ||||
| Used vehicles | 26,631 | 23,397 | 14 | % | 108,512 | 105,457 | 3 | % | ||||
| Wholesale vehicles | 5,616 | 5,424 | 4 | % | 24,052 | 25,128 | (4) | % | ||||
| Retail new & used vehicles | 52,870 | 49,118 | 8 | % | 207,936 | 208,815 | — | % | ||||
| Used:New Ratio | 1.01 | 0.91 | 12 | % | 1.09 | 1.02 | 7 | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Retail new vehicles | $ | 6,130 | $ | 6,673 | (8) | % | $ | 6,591 | $ | 4,595 | 43 | % |
| Fleet new vehicles | $ | 2,642 | $ | 286 | 824 | % | $ | 2,292 | $ | 454 | 405 | % |
| New vehicles | $ | 6,044 | $ | 6,115 | (1) | % | $ | 6,502 | $ | 4,453 | 46 | % |
| Used vehicles | $ | 1,442 | $ | 2,172 | (34) | % | $ | 1,607 | $ | 1,784 | (10) | % |
| Finance, insurance and other, net | $ | 2,421 | $ | 2,349 | 3 | % | $ | 2,453 | $ | 2,160 | 14 | % |
NM = Not Meaningful
Note: Reported Franchised Dealerships Segment results include (i) same store results from the “Franchised Dealerships Segment - Same Store” table below and (ii) the effects of acquisitions, open points, dispositions and holding company impacts for the periods reported. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.
Franchised Dealerships Segment - Same Store
| Three Months Ended December 31, | Better / (Worse) | Twelve Months Ended December 31, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| Retail new vehicles | $ | 1,380.9 | $ | 1,202.3 | 15 | % | $ | 4,794.4 | $ | 4,901.8 | (2) | % |
| Fleet new vehicles | 27.2 | 11.8 | 131 | % | 85.1 | 62.7 | 36 | % | ||||
| Total new vehicles | 1,408.1 | 1,214.1 | 16 | % | 4,879.5 | 4,964.5 | (2) | % | ||||
| Used vehicles | 744.7 | 695.6 | 7 | % | 2,955.6 | 2,860.8 | 3 | % | ||||
| Wholesale vehicles | 59.9 | 66.5 | (10) | % | 256.9 | 249.2 | 3 | % | ||||
| Total vehicles | 2,212.7 | 1,976.2 | 12 | % | 8,092.0 | 8,074.5 | — | % | ||||
| Parts, service and collision repair | 378.2 | 337.3 | 12 | % | 1,458.6 | 1,327.8 | 10 | % | ||||
| Finance, insurance and other, net | 114.4 | 103.1 | 11 | % | 429.0 | 435.3 | (1) | % | ||||
| Total revenues | 2,705.3 | 2,416.6 | 12 | % | 9,979.6 | 9,837.6 | 1 | % | ||||
| Gross Profit: | ||||||||||||
| Retail new vehicles | 147.5 | 148.7 | (1) | % | 561.3 | 449.2 | 25 | % | ||||
| Fleet new vehicles | 1.2 | 0.6 | 100 | % | 3.6 | 1.6 | 125 | % | ||||
| Total new vehicles | 148.7 | 149.3 | — | % | 564.9 | 450.8 | 25 | % | ||||
| Used vehicles | 33.2 | 47.0 | (29) | % | 149.1 | 184.2 | (19) | % | ||||
| Wholesale vehicles | (2.8) | 2.2 | (227) | % | (5.1) | 8.0 | (164) | % | ||||
| Total vehicles | 179.1 | 198.5 | (10) | % | 708.9 | 643.0 | 10 | % | ||||
| Parts, service and collision repair | 188.3 | 167.5 | 12 | % | 725.8 | 666.3 | 9 | % | ||||
| Finance, insurance and other, net | 114.4 | 103.1 | 11 | % | 429.0 | 435.3 | (1) | % | ||||
| Total gross profit | $ | 481.8 | $ | 469.1 | 3 | % | $ | 1,863.7 | $ | 1,744.6 | 7 | % |
| Unit Sales Volume: | ||||||||||||
| Retail new vehicles | 23,416 | 22,238 | 5 | % | 84,663 | 98,311 | (14) | % | ||||
| Fleet new vehicles | 621 | 293 | 112 | % | 1,853 | 1,590 | 17 | % | ||||
| Total new vehicles | 24,037 | 22,531 | 7 | % | 86,516 | 99,901 | (13) | % | ||||
| Used vehicles | 23,624 | 22,371 | 6 | % | 92,939 | 104,084 | (11) | % | ||||
| Wholesale vehicles | 5,275 | 5,049 | 4 | % | 19,533 | 24,683 | (21) | % | ||||
| Retail new & used vehicles | 47,040 | 44,609 | 5 | % | 177,602 | 202,395 | (12) | % | ||||
| Used:New Ratio | 1.01 | 1.01 | — | % | 1.10 | 1.06 | 4 | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Retail new vehicles | $ | 6,301 | $ | 6,686 | (6) | % | $ | 6,630 | $ | 4,570 | 45 | % |
| Fleet new vehicles | $ | 1,879 | $ | 1,962 | (4) | % | $ | 1,938 | $ | 969 | 100 | % |
| New vehicles | $ | 6,187 | $ | 6,625 | (7) | % | $ | 6,529 | $ | 4,512 | 45 | % |
| Used vehicles | $ | 1,405 | $ | 2,099 | (33) | % | $ | 1,605 | $ | 1,769 | (9) | % |
| Finance, insurance and other, net | $ | 2,431 | $ | 2,349 | 3 | % | $ | 2,415 | $ | 2,151 | 12 | % |
Note: All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.
EchoPark Segment - Reported
| Three Months Ended December 31, | Better / (Worse) | Twelve Months Ended December 31, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| Retail new vehicles | $ | 2.0 | $ | 4.6 | (57) | % | $ | 9.2 | $ | 9.0 | 2 | % |
| Used vehicles | 515.5 | 497.0 | 4 | % | 2,116.8 | 2,032.6 | 4 | % | ||||
| Wholesale vehicles | 27.3 | 36.5 | (25) | % | 170.6 | 110.0 | 55 | % | ||||
| Total vehicles | 544.8 | 538.1 | 1 | % | 2,296.6 | 2,151.6 | 7 | % | ||||
| Finance, insurance and other, net | 44.5 | 41.1 | 8 | % | 166.4 | 193.7 | (14) | % | ||||
| Total revenues | 589.3 | 579.2 | 2 | % | 2,463.0 | 2,345.3 | 5 | % | ||||
| Gross Profit: | ||||||||||||
| Retail new vehicles | 0.2 | 0.7 | (71) | % | 1.1 | 1.1 | — | % | ||||
| Used vehicles | (3.6) | (3.7) | 3 | % | 4.4 | (55.2) | 108 | % | ||||
| Wholesale vehicles | (0.3) | 2.8 | (111) | % | 3.2 | 9.2 | (65) | % | ||||
| Total vehicles | (3.7) | (0.2) | NM | 8.7 | (44.9) | 119 | % | |||||
| Finance, insurance and other, net | 44.5 | 41.1 | 8 | % | 166.4 | 193.7 | (14) | % | ||||
| Total gross profit | 40.8 | 40.9 | — | % | 175.1 | 148.8 | 18 | % | ||||
| Selling, general and administrative expenses | (62.3) | (60.5) | (3) | % | (269.8) | (197.8) | (36) | % | ||||
| Impairment charges | (204.9) | (0.1) | NM | (204.9) | (0.1) | NM | ||||||
| Depreciation and amortization | (7.0) | (4.8) | (46) | % | (24.7) | (16.3) | (52) | % | ||||
| Operating income (loss) | (233.4) | (24.5) | (853) | % | (324.3) | (65.4) | (396) | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (3.9) | (1.5) | (160) | % | (10.7) | (4.9) | (118) | % | ||||
| Interest expense, other, net | (0.9) | (0.8) | (13) | % | (3.9) | (1.7) | (129) | % | ||||
| Other income (expense), net | — | 0.1 | (100) | % | 0.1 | (0.1) | 200 | % | ||||
| Total other income (expense) | (4.8) | (2.2) | (118) | % | (14.5) | (6.7) | (116) | % | ||||
| Income (loss) before taxes | (238.2) | (26.7) | (792) | % | (338.8) | (72.1) | (370) | % | ||||
| Add: Impairment charges | 204.9 | 0.1 | NM | 204.9 | 0.1 | NM | ||||||
| Segment income (loss) | $ | (33.3) | $ | (26.6) | (25) | % | $ | (133.9) | $ | (72.0) | (86) | % |
| Unit Sales Volume: | ||||||||||||
| Retail new vehicles | 26 | 59 | (56) | % | 152 | 128 | 19 | % | ||||
| Used vehicles | 17,435 | 15,649 | 11 | % | 64,107 | 77,835 | (18) | % | ||||
| Wholesale vehicles | 2,444 | 2,436 | — | % | 11,236 | 11,667 | (4) | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Total used vehicle and F&I | $ | 2,340 | $ | 2,344 | — | % | $ | 2,657 | $ | 1,774 | 50 | % |
NM = Not Meaningful
Note: Reported EchoPark Segment results include (i) same market results from the “EchoPark Segment - Same Market” table below and (ii) the effects of acquisitions, open points, dispositions and holding company impacts for the periods reported. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening.
EchoPark Segment - Same Market
| Three Months Ended December 31, | Better / (Worse) | Twelve Months Ended December 31, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| Retail new vehicles | $ | 2.2 | $ | 4.5 | (51) | % | $ | 12.5 | $ | 8.9 | 40 | % |
| Used vehicles | 400.0 | 464.3 | (14) | % | 1,623.2 | 1,993.9 | (19) | % | ||||
| Wholesale vehicles | 22.3 | 35.2 | (37) | % | 149.3 | 108.7 | 37 | % | ||||
| Total vehicles | 424.5 | 504.0 | (16) | % | 1,785.0 | 2,111.5 | (15) | % | ||||
| Finance, insurance and other, net | 32.0 | 38.9 | (18) | % | 123.0 | 190.8 | (36) | % | ||||
| Total revenues | 456.5 | 542.9 | (16) | % | 1,908.0 | 2,302.3 | (17) | % | ||||
| Gross Profit: | ||||||||||||
| Retail new vehicles | 0.2 | 0.4 | (50) | % | 1.1 | 0.8 | 38 | % | ||||
| Used vehicles | (5.5) | (5.6) | 2 | % | (14.3) | (56.8) | 75 | % | ||||
| Wholesale vehicles | (0.2) | 2.9 | (107) | % | 3.7 | 9.4 | (61) | % | ||||
| Total vehicles | (5.5) | (2.3) | (139) | % | (9.5) | (46.6) | 80 | % | ||||
| Finance, insurance and other, net | 32.0 | 38.9 | (18) | % | 123.0 | 190.8 | (36) | % | ||||
| Total gross profit | $ | 26.5 | $ | 36.6 | (28) | % | $ | 113.5 | $ | 144.2 | (21) | % |
| Unit Sales Volume: | ||||||||||||
| Retail new vehicles | 26 | 59 | (56) | % | 152 | 128 | 19 | % | ||||
| Used vehicles | 13,919 | 14,882 | (6) | % | 51,336 | 76,838 | (33) | % | ||||
| Wholesale vehicles | 1,969 | 2,321 | (15) | % | 9,466 | 11,546 | (18) | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Total used vehicle and F&I | $ | 1,895 | $ | 2,239 | (15) | % | $ | 2,109 | $ | 1,741 | 21 | % |
Note: All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening.
Powersports Segment - Reported
| Three Months Ended December 31, | Better / (Worse) | Twelve Months Ended December 31, | Better / (Worse) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||
| (In millions, except unit and per unit data) | ||||||||||
| Revenues: | ||||||||||
| Retail new vehicles | $ | 18.8 | $ | — | NM | $ | 31.8 | $ | — | NM |
| Used vehicles | 2.1 | — | NM | 7.1 | — | NM | ||||
| Wholesale vehicles | 0.1 | — | NM | 0.3 | — | NM | ||||
| Total vehicles | 21.0 | — | NM | 39.2 | — | NM | ||||
| Parts, service and collision repair | 6.3 | — | NM | 11.7 | — | NM | ||||
| Finance, insurance and other, net | 1.3 | — | NM | 2.6 | — | NM | ||||
| Total revenues | 28.6 | — | NM | 53.5 | — | NM | ||||
| Gross Profit: | ||||||||||
| Retail new vehicles | 3.6 | — | NM | 6.4 | — | NM | ||||
| Used vehicles | 0.7 | — | NM | 2.0 | — | NM | ||||
| Wholesale vehicles | — | — | NM | — | — | NM | ||||
| Total vehicles | 4.3 | — | NM | 8.4 | — | NM | ||||
| Parts, service and collision repair | 3.1 | — | NM | 5.8 | — | NM | ||||
| Finance, insurance and other, net | 1.3 | — | NM | 2.6 | — | NM | ||||
| Total gross profit | 8.7 | — | NM | 16.8 | — | NM | ||||
| Selling, general and administrative expenses | (5.9) | — | NM | (12.3) | — | NM | ||||
| Impairment charges | — | — | NM | — | — | NM | ||||
| Depreciation and amortization | (0.6) | — | NM | (1.0) | — | NM | ||||
| Operating income (loss) | 2.2 | — | NM | 3.5 | — | NM | ||||
| Other income (expense): | ||||||||||
| Interest expense, floor plan | — | — | NM | — | — | NM | ||||
| Interest expense, other, net | (0.6) | — | NM | (1.0) | — | NM | ||||
| Other income (expense), net | 0.2 | — | NM | 0.2 | — | NM | ||||
| Total other income (expense) | (0.4) | — | NM | (0.8) | — | NM | ||||
| Income (loss) before taxes | 1.8 | — | NM | 2.7 | — | NM | ||||
| Add: impairment charges | — | — | NM | — | — | NM | ||||
| Segment income (loss) | $ | 1.8 | $ | — | NM | $ | 2.7 | $ | — | NM |
| Unit Sales Volume: | ||||||||||
| Retail new vehicles | 1,013 | — | NM | 1,592 | — | NM | ||||
| Used vehicles | 237 | — | NM | 590 | — | NM | ||||
| Wholesale vehicles | 34 | — | NM | 35 | — | NM | ||||
| Retail new & used vehicles | 1,250 | — | NM | 2,182 | — | NM | ||||
| Gross Profit Per Unit: | ||||||||||
| Retail new vehicles | $ | 3,535 | $ | — | NM | $ | 3,974 | $ | — | NM |
| Used vehicles | $ | 2,860 | $ | — | NM | $ | 3,349 | $ | — | NM |
| Finance, insurance and other, net | $ | 1,026 | $ | — | NM | $ | 1,205 | $ | — | NM |
NM = Not Meaningful
Non-GAAP Reconciliation - Consolidated - SG&A Expenses
| Three Months Ended December 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||||
| (In millions) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 240.8 | $ | 226.0 | $ | (14.8) | (7) | % | |||
| Advertising | 22.6 | 17.4 | (5.2) | (30) | % | ||||||
| Rent | 12.7 | 12.1 | (0.6) | (5) | % | ||||||
| Other | 90.2 | 87.8 | (2.4) | (3) | % | ||||||
| Total SG&A expenses | $ | 366.3 | $ | 343.3 | $ | (23.0) | (7) | % | |||
| Items of interest: | |||||||||||
| Long-term compensation charges | $ | — | $ | (6.5) | |||||||
| Acquisition and disposition-related gain (loss) | 9.1 | (1.2) | |||||||||
| Total SG&A adjustments | $ | 9.1 | $ | (7.7) | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 375.4 | $ | 335.6 | $ | (39.8) | (12) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 41.8 | % | 42.6 | % | 80 | bps | |||||
| Advertising | 3.9 | % | 3.3 | % | (60) | bps | |||||
| Rent | 2.2 | % | 2.3 | % | 10 | bps | |||||
| Other | 15.7 | % | 16.5 | % | 80 | bps | |||||
| Total SG&A expenses as a % of gross profit | 63.6 | % | 64.7 | % | 110 | bps | |||||
| Items of interest: | |||||||||||
| Long-term compensation charges | — | % | (1.2) | % | |||||||
| Acquisition and disposition-related gain (loss) | 1.6 | % | (0.2) | % | |||||||
| Total effect of adjustments | 1.6 | % | (1.4) | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 65.2 | % | 63.3 | % | (190) | bps |
Non-GAAP Reconciliation - Consolidated - SG&A Expenses (Continued)
| Twelve Months Ended December 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||||
| (In millions) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 1,014.8 | $ | 834.5 | $ | (180.3) | (22) | % | |||
| Advertising | 95.4 | 61.6 | (33.8) | (55) | % | ||||||
| Rent | 51.0 | 53.2 | 2.2 | 4 | % | ||||||
| Other | 393.9 | 325.4 | (68.5) | (21) | % | ||||||
| Total SG&A expenses | $ | 1,555.1 | $ | 1,274.7 | $ | (280.4) | (22) | % | |||
| Items of interest: | |||||||||||
| Long-term compensation charges | $ | (4.4) | $ | (6.5) | |||||||
| Acquisition and disposition-related gain (loss) | 9.1 | (1.2) | |||||||||
| Total SG&A adjustments | $ | 4.7 | $ | (7.7) | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 1,559.8 | $ | 1,267.0 | $ | (292.8) | (23) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 43.8 | % | 43.6 | % | (20) | bps | |||||
| Advertising | 4.1 | % | 3.2 | % | (90) | bps | |||||
| Rent | 2.2 | % | 2.8 | % | 60 | bps | |||||
| Other | 17.0 | % | 17.0 | % | — | bps | |||||
| Total SG&A expenses as a % of gross profit | 67.1 | % | 66.6 | % | (50) | bps | |||||
| Items of interest: | |||||||||||
| Long-term compensation charges | (0.2) | % | (0.3) | % | |||||||
| Acquisition and disposition-related gain (loss) | 0.4 | % | (0.1) | % | |||||||
| Total effect of adjustments | 0.2 | % | (0.4) | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 67.3 | % | 66.2 | % | (110) | bps |
Non-GAAP Reconciliation - Franchised Dealerships Segment - SG&A Expenses
| Three Months Ended December 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||||
| (In millions) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 200.8 | $ | 189.8 | $ | (11.0) | (6) | % | |||
| Advertising | 10.7 | 6.3 | (4.4) | (70) | % | ||||||
| Rent | 10.5 | 10.4 | (0.1) | (1) | % | ||||||
| Other | 76.1 | 76.3 | 0.2 | — | % | ||||||
| Total SG&A expenses | $ | 298.1 | $ | 282.8 | $ | (15.3) | (5) | % | |||
| Items of interest: | |||||||||||
| Acquisition and disposition-related gain (loss) | $ | 9.1 | $ | (1.2) | |||||||
| Total SG&A adjustments | $ | 9.1 | $ | (1.2) | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 307.2 | $ | 281.6 | $ | (25.6) | (9) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 38.1 | % | 38.8 | % | 70 | bps | |||||
| Advertising | 2.0 | % | 1.3 | % | (70) | bps | |||||
| Rent | 2.0 | % | 2.1 | % | 10 | bps | |||||
| Other | 14.5 | % | 15.5 | % | 100 | bps | |||||
| Total SG&A expenses as a % of gross profit | 56.6 | % | 57.7 | % | 110 | bps | |||||
| Items of interest: | |||||||||||
| Acquisition and disposition-related gain (loss) | 1.7 | % | (0.2) | % | |||||||
| Total effect of adjustments | 1.7 | % | (0.2) | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 58.3 | % | 57.5 | % | (80) | bps |
Non-GAAP Reconciliation - Franchised Dealerships Segment - SG&A Expenses (Continued)
| Twelve Months Ended December 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||||
| (In millions) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 858.0 | $ | 719.6 | $ | (138.4) | (19) | % | |||
| Advertising | 36.9 | 26.1 | (10.8) | (41) | % | ||||||
| Rent | 42.4 | 46.6 | 4.2 | 9 | % | ||||||
| Other | 335.6 | 284.6 | (51.0) | (18) | % | ||||||
| Total SG&A expenses | $ | 1,272.9 | $ | 1,076.9 | $ | (196.0) | (18) | % | |||
| Items of interest: | |||||||||||
| Long-term compensation charges | $ | (4.4) | $ | — | |||||||
| Acquisition and disposition-related gain (loss) | 9.1 | (1.2) | |||||||||
| Total SG&A adjustments | $ | 4.7 | $ | (1.2) | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 1,277.6 | $ | 1,075.7 | $ | (201.9) | (19) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 40.4 | % | 40.8 | % | 40 | bps | |||||
| Advertising | 1.7 | % | 1.5 | % | (20) | bps | |||||
| Rent | 2.0 | % | 2.6 | % | 60 | bps | |||||
| Other | 15.8 | % | 16.1 | % | 30 | bps | |||||
| Total SG&A expenses as a % of gross profit | 59.9 | % | 61.0 | % | 110 | bps | |||||
| Items of interest: | |||||||||||
| Long-term compensation charges | (0.2) | % | — | % | |||||||
| Acquisition and disposition-related gain (loss) | 0.4 | % | (0.1) | % | |||||||
| Total effect of adjustments | 0.2 | % | (0.1) | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 60.1 | % | 60.9 | % | 80 | bps |
Non-GAAP Reconciliation - EchoPark Segment - SG&A Expenses
| Three Months Ended December 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||||
| (In millions) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 35.8 | $ | 36.2 | $ | 0.4 | 1 | % | |||
| Advertising | 11.6 | 11.1 | (0.5) | (5) | % | ||||||
| Rent | 2.2 | 1.7 | (0.5) | (29) | % | ||||||
| Other | 12.7 | 11.5 | (1.2) | (10) | % | ||||||
| Total SG&A expenses | $ | 62.3 | $ | 60.5 | $ | (1.8) | (3) | % | |||
| Items of interest: | |||||||||||
| Long-term compensation charges | $ | — | $ | (6.5) | |||||||
| Total SG&A adjustments | $ | — | $ | (6.5) | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 62.3 | $ | 54.0 | $ | (8.3) | (15) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 87.9 | % | 88.5 | % | 60 | bps | |||||
| Advertising | 28.4 | % | 27.1 | % | (130) | bps | |||||
| Rent | 5.3 | % | 4.2 | % | (110) | bps | |||||
| Other | 31.2 | % | 28.3 | % | (290) | bps | |||||
| Total SG&A expenses as a % of gross profit | 152.8 | % | 148.1 | % | (470) | bps | |||||
| Items of interest: | |||||||||||
| Long-term compensation charges | — | % | (15.9) | % | |||||||
| Total effect of adjustments | — | % | (15.9) | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 152.8 | % | 132.2 | % | (2,060) | bps |
Non-GAAP Reconciliation - EchoPark Segment - SG&A Expenses (Continued)
| Twelve Months Ended December 31, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||||
| (In millions) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 148.0 | $ | 114.9 | $ | (33.1) | (29) | % | |||
| Advertising | 58.0 | 35.5 | (22.5) | (63) | % | ||||||
| Rent | 8.5 | 6.6 | (1.9) | (29) | % | ||||||
| Other | 55.3 | 40.8 | (14.5) | (36) | % | ||||||
| Total SG&A expenses | $ | 269.8 | $ | 197.8 | $ | (72.0) | (36) | % | |||
| Items of interest: | |||||||||||
| Long-term compensation charges | $ | — | $ | (6.5) | |||||||
| Total SG&A adjustments | $ | — | $ | (6.5) | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses | $ | 269.8 | $ | 191.3 | $ | (78.5) | (41) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 84.5 | % | 77.2 | % | (730) | bps | |||||
| Advertising | 33.1 | % | 23.9 | % | (920) | bps | |||||
| Rent | 4.9 | % | 4.4 | % | (50) | bps | |||||
| Other | 31.6 | % | 27.4 | % | (420) | bps | |||||
| Total SG&A expenses as a % of gross profit | 154.1 | % | 132.9 | % | (2,120) | bps | |||||
| Items of interest: | |||||||||||
| Long-term compensation charges | — | % | (4.3) | % | |||||||
| Total effect of adjustments | — | % | (4.3) | % | |||||||
| Adjusted: | |||||||||||
| Total adjusted SG&A expenses as a % of gross profit | 154.1 | % | 128.6 | % | (2,550) | bps |
Powersports Segment - SG&A Expenses
| Three Months Ended December 31, | Better / (Worse) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||
| (In millions) | |||||||||
| Reported: | |||||||||
| Compensation | $ | 4.1 | $ | — | NM | NM | |||
| Advertising | 0.3 | — | NM | NM | |||||
| Rent | — | — | NM | NM | |||||
| Other | 1.5 | — | NM | NM | |||||
| Total SG&A expenses | $ | 5.9 | $ | — | NM | NM | |||
| Reported: | |||||||||
| SG&A expenses as a % of gross profit: | |||||||||
| Compensation | 47.9 | % | — | % | NM | bps | |||
| Advertising | 3.9 | % | — | % | NM | bps | |||
| Rent | 0.4 | % | — | % | NM | bps | |||
| Other | 16.2 | % | — | % | NM | bps | |||
| Total SG&A expenses as a % of gross profit | 68.4 | % | — | % | NM | bps |
NM = Not Meaningful
| Twelve Months Ended December 31, | Better / (Worse) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | % Change | ||||||
| (In millions) | |||||||||
| Reported: | |||||||||
| Compensation | $ | 8.9 | $ | — | NM | NM | |||
| Advertising | 0.6 | — | NM | NM | |||||
| Rent | — | — | NM | NM | |||||
| Other | 2.8 | — | NM | NM | |||||
| Total SG&A expenses | $ | 12.3 | $ | — | NM | NM | |||
| Reported: | |||||||||
| SG&A expenses as a % of gross profit: | |||||||||
| Compensation | 52.9 | % | — | % | NM | bps | |||
| Advertising | 3.4 | % | — | % | NM | bps | |||
| Rent | 0.2 | % | — | % | NM | bps | |||
| Other | 16.9 | % | — | % | NM | bps | |||
| Total SG&A expenses as a % of gross profit | 73.4 | % | — | % | NM | bps |
NM = Not Meaningful
Non-GAAP Reconciliation - Franchised Dealerships Segment - Income (Loss) Before Taxes and Segment Income (Loss)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions) | ||||||||||||
| Reported: | ||||||||||||
| Income (loss) before taxes | $ | 53.9 | $ | 149.2 | (64) | % | $ | 526.1 | $ | 530.3 | (1) | % |
| Add: impairment charges | 115.5 | — | 115.5 | — | ||||||||
| Segment income (loss) | $ | 169.4 | $ | 149.2 | 14 | % | $ | 641.6 | $ | 530.3 | 21 | % |
| Pre-tax items of interest: | ||||||||||||
| Acquisition and disposition-related (gain) loss | $ | (9.1) | $ | 1.2 | $ | (9.1) | $ | 1.2 | ||||
| Long-term compensation charges | — | — | 4.4 | — | ||||||||
| Loss on debt extinguishment | — | 15.6 | — | 15.6 | ||||||||
| Total pre-tax items of interest | $ | (9.1) | $ | 16.8 | $ | (4.7) | $ | 16.8 | ||||
| Adjusted: | ||||||||||||
| Segment income (loss) | $ | 160.3 | $ | 166.0 | (3) | % | $ | 636.9 | $ | 547.1 | 16 | % |
Non-GAAP Reconciliation - EchoPark Segment - Income (Loss) Before Taxes and Segment Income (Loss)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||
| (In millions) | ||||||||||||
| Reported: | ||||||||||||
| Income (loss) before taxes | $ | (238.2) | $ | (26.7) | 792 | % | $ | (338.8) | $ | (72.1) | 370 | % |
| Add: impairment charges | 204.9 | 0.1 | 204.9 | 0.1 | ||||||||
| Segment income (loss) | $ | (33.3) | $ | (26.6) | 25 | % | $ | (133.9) | $ | (72.0) | 86 | % |
| Pre-tax items of interest: | ||||||||||||
| Long-term compensation charges | — | 6.5 | — | 6.5 | ||||||||
| Total pre-tax items of interest | $ | — | $ | 6.5 | $ | — | $ | 6.5 | ||||
| Adjusted: | ||||||||||||
| Segment income (loss) | $ | (33.3) | $ | (20.1) | 66 | % | $ | (133.9) | $ | (65.5) | 104 | % |
Non-GAAP Reconciliation - Powersports Segment - Income (Loss) Before Taxes and Segment Income (Loss)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||
| (In millions) | ||||||||||
| Reported: | ||||||||||
| Income (loss) before taxes | $ | 1.8 | $ | — | NM | $ | 2.7 | $ | — | NM |
| Add: impairment charges | — | — | — | — | ||||||
| Segment income (loss) | 1.8 | — | NM | 2.7 | — | NM |
NM = Not Meaningful
Non-GAAP Reconciliation - Consolidated - Net Income (Loss) and Diluted Earnings (Loss) Per Share
| Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Weighted-<br>Average<br>Shares | Net Income (Loss) | Per<br>Share<br>Amount | Weighted-<br>Average<br>Shares | Net Income (Loss) | Per<br>Share<br>Amount | |||||
| (In millions, except per share amounts) | ||||||||||
| Reported net income (loss), diluted shares(1), and diluted earnings (loss) per share | 36.5 | $ | (190.9) | $ | (5.22) | 42.8 | $ | 96.3 | $ | 2.25 |
| Pre-tax items of interest: | ||||||||||
| Acquisition and disposition-related (gain) loss | $ | (9.1) | $ | 1.2 | ||||||
| Long-term compensation charges | — | 6.5 | ||||||||
| Loss on debt extinguishment | — | 15.6 | ||||||||
| Impairment charges | 320.4 | — | ||||||||
| Total pre-tax items of interest | $ | 311.3 | $ | 23.3 | ||||||
| Tax effect of above items | (22.6) | (5.9) | ||||||||
| Adjusted net income (loss), diluted shares, and diluted earnings (loss) per share | 36.5 | $ | 97.8 | $ | 2.61 | 42.8 | $ | 113.7 | $ | 2.66 |
(1) Basic weighted-average common shares outstanding used for the three months ended December 31, 2022 due to the net loss on a reported GAAP basis.
| Twelve Months Ended December 31, 2022 | Twelve Months Ended December 31, 2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Weighted-<br>Average<br>Shares | Net Income (Loss) | Per<br>Share<br>Amount | Weighted-<br>Average<br>Shares | Net Income (Loss) | Per<br>Share<br>Amount | |||||
| (In millions, except per share amounts) | ||||||||||
| Reported net income (loss), diluted shares, and diluted earnings (loss) per share | 39.7 | $ | 88.5 | $ | 2.23 | 43.3 | $ | 348.9 | $ | 8.06 |
| Pre-tax items of interest: | ||||||||||
| Acquisition and disposition-related (gain) loss | $ | (9.1) | $ | 1.2 | ||||||
| Long-term compensation charges | 4.4 | 6.5 | ||||||||
| Loss on debt extinguishment | — | 15.6 | ||||||||
| Impairment charges | 320.4 | — | ||||||||
| Total pre-tax items of interest | $ | 315.7 | $ | 23.3 | ||||||
| Tax effect of above items | (22.6) | (5.9) | ||||||||
| Adjusted net income (loss), diluted shares, and diluted earnings (loss) per share | 39.7 | $ | 381.6 | $ | 9.61 | 43.3 | $ | 366.3 | $ | 8.46 |
Non-GAAP Reconciliation - Adjusted EBITDA
| Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Franchised Dealerships Segment | EchoPark Segment | Powersports <br>Segment | Total | Franchised Dealerships Segment | EchoPark Segment | Powersports <br>Segment | Total | |||||||||
| (In millions) | ||||||||||||||||
| Net income (loss) | $ | (190.9) | $ | 96.3 | ||||||||||||
| Income tax (benefit) expense | 8.4 | 25.8 | ||||||||||||||
| Income (loss) before taxes | $ | 53.9 | $ | (238.2) | $ | 1.8 | $ | (182.5) | $ | 148.9 | $ | (26.8) | $ | — | $ | 122.1 |
| Non-floor plan interest (1) | 22.0 | 0.9 | 0.6 | 23.5 | 16.2 | 0.7 | — | 16.9 | ||||||||
| Depreciation and amortization (2) | 27.4 | 7.0 | 0.5 | 34.9 | 23.4 | 4.9 | — | 28.3 | ||||||||
| Stock-based compensation expense | 3.6 | — | — | 3.6 | 3.8 | — | — | 3.8 | ||||||||
| Asset impairment charges | 115.5 | 204.9 | — | 320.4 | — | 0.1 | — | 0.1 | ||||||||
| Loss (gain) on debt extinguishment | — | — | — | — | 15.6 | — | — | 15.6 | ||||||||
| Long-term compensation charges | — | — | — | — | — | 6.5 | — | 6.5 | ||||||||
| Acquisition and disposition-related (gain) loss | (9.2) | — | — | (9.2) | 0.5 | — | — | 0.5 | ||||||||
| Adjusted EBITDA | $ | 213.2 | $ | (25.4) | $ | 2.9 | $ | 190.7 | $ | 208.4 | $ | (14.6) | $ | — | $ | 193.8 |
| Twelve Months Ended December 31, 2022 | Twelve Months Ended December 31, 2021 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Franchised Dealerships Segment | EchoPark Segment | Powersports <br>Segment | Total | Franchised Dealerships Segment | EchoPark Segment | Powersports <br>Segment | Total | |||||||||
| (In millions) | ||||||||||||||||
| Net income (loss) | $ | 88.5 | $ | 348.9 | ||||||||||||
| Income tax (benefit) expense | 101.5 | 109.3 | ||||||||||||||
| Income (loss) before taxes | $ | 526.1 | $ | (338.8) | $ | 2.7 | $ | 190.0 | $ | 530.3 | $ | (72.1) | $ | — | $ | 458.2 |
| Non-floor plan interest (1) | 80.0 | 3.7 | 1.0 | 84.7 | 43.0 | 1.7 | — | 44.7 | ||||||||
| Depreciation and amortization (2) | 107.0 | 24.8 | 0.9 | 132.7 | 87.9 | 16.4 | — | 104.3 | ||||||||
| Stock-based compensation expense | 16.0 | — | — | 16.0 | 15.0 | — | — | 15.0 | ||||||||
| Asset impairment charges | 115.5 | 204.9 | — | 320.4 | — | 0.1 | — | 0.1 | ||||||||
| Loss (gain) on debt extinguishment | — | — | — | — | 15.6 | — | — | 15.6 | ||||||||
| Long-term compensation charges | 4.4 | — | — | 4.4 | — | 8.0 | — | 8.0 | ||||||||
| Acquisition and disposition-related (gain) loss | (9.7) | — | — | (9.7) | — | (0.4) | — | (0.4) | ||||||||
| Adjusted EBITDA | $ | 839.3 | $ | (105.4) | $ | 4.6 | $ | 738.5 | $ | 691.8 | $ | (46.3) | $ | — | $ | 645.5 |
(1)Includes interest expense, other, net in the accompanying consolidated statements of operations, net of any amortization of debt issuance costs or net debt discount/premium included in (2) below.
(2)Includes the following line items from the accompanying consolidated statements of cash flows: depreciation and amortization of property and equipment; debt issuance cost amortization; and debt discount amortization, net of premium amortization.
sah2022q4ex992
® Sonic Automotive – Investor Presentation February 2023 Updated February 15, 2023
2 Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events, are not historical facts and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These statements can generally be identified by lead-in words such as “may,” “will,” “should,” “could,” “believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,” “project,” “foresee” and other similar words or phrases. Statements that describe our Company’s objectives, plans or goals are also forward-looking statements. Examples of such forward- looking information we may be discussing in this presentation include, without limitation, our anticipated future new vehicle unit sales volume, revenues and profitability, our anticipated future used vehicle unit sales volume, revenues and profitability, future levels of consumer demand for new and used vehicles, our anticipated future parts, service and collision repair (“Fixed Operations”) gross profit, our anticipated expense reductions, long-term annual revenue and profitability targets, anticipated future growth capital expenditures, profitability and pricing expectations in our EchoPark Segment, EchoPark’s omnichannel strategy, anticipated future EchoPark population coverage, anticipated future EchoPark revenue and unit sales volume, anticipated future performance and growth of our Franchised Dealerships Segment, anticipated growth of our Powersports Segment, anticipated liquidity positions, anticipated industry new vehicle sales volume, the implementation of growth and operating strategies, including acquisitions of dealerships and properties, anticipated future acquisition synergies, the return of capital to stockholders, anticipated future success and impacts from the implementation of our strategic initiatives, and earnings per share expectations. You are cautioned that these forward-looking statements are not guarantees of future performance, involve risks and uncertainties and actual results may differ materially from those projected in the forward-looking statements as a result of various factors. These risks and uncertainties include, without limitation, economic conditions in the markets in which we operate, supply chain disruptions and manufacturing delays, labor shortages, the impacts of inflation and increases in interest rates, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic expansion or contraction, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and other reports and information filed with the United States Securities and Exchange Commission (the “SEC”). These forward-looking statements, risks, uncertainties and additional factors speak only as of the date of this presentation. We undertake no obligation to update any such statements, except as required under federal securities laws and the rules and regulations of the SEC.
3 Company Overview
4 ® Sonic Automotive: Who We Are QUICK FACTS (NYSE: SAH) a Fortune 500 Company and One of the Nation’s Largest Automotive Retailers 175 25+ 25 17 $14.0 Billion $2.3 Billion 103K New Vehicles Sold 173K Total Revenues Automotive Brands Locations Used Vehicles Sold Collision Centers States Gross Profit Note: Location Counts As Of February 15, 2023. Revenues, Gross Profit, New & Used Vehicles Sold are for FY 2022 Our Core Franchised Dealerships Segment Is A Full-Service Automotive Retail Business With Strategic Growth Levers Across Multiple Business Lines And A Diversified Brand Portfolio Our High Growth Potential EchoPark Segment Offers A Unique Approach To Pre-Owned Vehicle And F&I Sales Below-Market Pricing With A No Haggle Purchase Experience Drives Industry-Leading Used Vehicle Volume Throughput Early-Stage Consolidation Growth Opportunity At Attractive Multiples
5 Investment Highlights Multiple Growth And Profit Drivers For Franchised Dealerships Segment Unique, High Return Potential EchoPark Business Model Broad Revenue Stream Diversification Complementary Relationship Between Operating Segments Disciplined Capital Allocation To Drive Shareholder Returns Focused On Expense Control And Maintaining Strong Balance Sheet
6 Revenue Composition BY GEOGRAPHY TX 26% CA 22% CO 8% TN 7% ID 6% FL 6% AL 5% NC 4% GA 4% VA 2% MD 2% SC 2% All Others 6% Broad Geographic Distribution Geographic Footprint, Revenue Streams and Brand Mix Offer Attractive Diversification Across the Automotive Retail Space Note: Percentages are Percent of Total Revenue for Year Ended December 31, 2022
7 Revenue Composition – Diversified Revenue Streams Note: Percentages are Percent of Total for the Year Ended December 31, 2022 5% 29% 11% 34% 43% 8% 41% 29% Revenue Gross Profit New Vehicle Used Vehicle (Including Wholesale) Parts, Service & Collision Repair ("Fixed Operations") Finance & Insurance ("F&I") Brand Distribution Note: Percentages are Percent of Total Revenue for the Year Ended December 31, 2022 Brand % of Revenue Franchise Brand % of Revenue BMW 21% Mercedes 10% Audi 5% Lexus 4% Porsche 3% Land Rover 3% Cadillac 2% Other Luxury (1) 4% Honda 8% Toyota 7% Other Import (2) 3% EchoPark 17% Non-Franchise 17% Chevrolet GMC Buick 5% Ford 4% Chrysler Dodge Jeep RAM 4% Powersports <1% Powersports (3) <1% Luxury 52% 18%Import Domestic 13% (1) Includes Alfa Romeo, Infiniti, Jaguar, Maserati, MINI and Volvo (2) Includes Hyundai, Nissan, Mazda, Subaru and Volkswagen (3) Includes Harley-Davidson, Kawasaki, BRP, Polaris, Honda, Suzuki, BMW Motorrad, Yamaha, Ducati, and Indian Motorcycle Business Line Mix Majority Of Gross Profit Driven By Stable Business Lines
8 ® EchoPark Automotive – A Unique Growth Story Growing Nationwide Distribution Network Unique, High Return Potential Business Model Focus On High Quality Pre-Owned Vehicles, In-Store or Online Expect To Reach 90% Of U.S. Population By 2025 Priced Up To $3,000 Below Market With Simplified, Easy Purchase Experience Focus On Pre-Owned Market – 2.5x Larger & More Stable Than New Vehicle Market The New Car Alternative™ Price. Quality. Experience. Note: Expected U.S. population reach is a projection, actual results may differ. See “Forward-Looking Statements.”
9 Strategic Focus • Continued Growth Opportunity In Parts & Service, F&I Per Unit • Ongoing Profitability Enhancement Through SG&A Expense Control, Inventory Management • Pursue Strategic Acquisition Opportunities As Market Evolves • Utilize Existing Infrastructure To Support Omnichannel Distribution Network • Early-Stage Strong Secular Growth Phase • Achieved >50% U.S. Population Coverage To Date, Expect 90% Coverage By 2025 • Growing eCommerce Presence Offers Scalable Incremental Reach • Addressable Market Opportunity Of 2 Million Vehicles Annually At Maturity • Focus On Guest Experience And eCommerce Opportunity To Drive Market Share Gains • Balanced Capital Allocation Strategy Prioritizes Highest Return on Investment • Return Of Capital To Shareholders Via Share Repurchase Program And Dividend • Further Diversify Business Model In Adjacent Sectors (Powersports) Franchised Dealerships EchoParkStrategic Focus Note: Profitability, unit sales volume and population coverage projections are estimates of future results. Actual results may differ. See “Forward-Looking Statements.”
10 Strong Balance Sheet And Liquidity December 31, 2022 December 31, 2021 (In Millions) Cash and cash equivalents 229.2$ 299.4$ Availability under the 2021 Revolving Credit Facility 303.3 281.4 Availability under the 2019 Mortgage Facility(1) - 22.2 Floor plan deposit balance 272.0 99.8 Total available liquidity resources 804.5$ 702.8$ Covenant Requirement* December 31, 2022 December 31, 2021 Liquidity ratio >= 1.05 1.38 1.26 Fixed charge coverage ratio >= 1.20 1.87 2.69 Total lease adjusted leverage ratio <= 5.75 2.31 2.46 Net debt to Adjusted EBITDA ratio(2) 1.69 1.80 (1) $173 Million Of Additional Availability Expected To Be Added In Q1 2023 Once Additional Real Estate Evaluations Have Been Completed. (2) Refer To Appendix For Calculation And Reconciliation of Adjusted EBITDA (A Non-GAAP Measure) and Net Debt To Adjusted EBITDA Ratio (A Non-GAAP Measure) * As Defined In The 2021 Revolving Credit Facility and 2019 Mortgage Facility Finalized Amendment To 2019 Mortgage Facility In Q4 2022, Resulting In $215 Million In Incremental Liquidity At December 31, 2022 Leverage Ratios Remain Within Our Internal Target Range
11 Impact Of Share Repurchases Repurchased 5.6 Million Shares In 2022, Or 14% Of Total Shares Outstanding As Of December 31, 2021 $454.8 Million Remaining Repurchase Authorization 42.8 43.1 41.8 40.7 36.2 30.0 35.0 40.0 45.0 Dec 2018 Dec 2019 Dec 2020 Dec 2021 Dec 2022 (In M illi on s) Total Class A & Class B Shares Outstanding Note: Remaining Repurchase Authorization Is As Of February 15, 2023
12 Franchised Dealerships
13 New & Used Vehicle Sales Parts & Service (P&S) Finance & Insurance (F&I) ® Franchised Dealerships Franchised Dealerships111 Brands, Luxury Weighted25+ Diversified Revenue Streams • New & Used Vehicle Sales • Parts Service (P S) • Finance & Insurance (F&I) Collision Repair Centers17 18 States Stable Business With Organic And Acquisition Growth Opportunities Resilient And Flexible Business Model Through Economic Cycles
14 Franchised Dealerships – Geographic Footprint Diversified Geographic Market Platform 111 Stores, 25+ Brands, 17 Collision Repair Centers
15 Franchised Dealerships – Strategic Growth Levers Mature Cash Flows + Multiple Growth Drivers Pursue Strategic Acquisitions Opportunities Grow Parts and Service Retention Maximize F&I Penetration High Used Vehicle Volume Throughput Data-Driven Inventory Management Apply EchoPark Learnings Develop Omnichannel Platform SG&A Expense Discipline Realize Synergies From Acquisitions
16 EchoPark
17 EchoPark – Brand Promise Up To 40% Below New Vehicle Price Up To $3,000 Below Used Vehicle Market Price High Quality Pre-Owned Vehicles With Available Warranty Transparent Guest-Centric Experience New Car Feel Without The New Car Price Complete Purchase In Under An Hour Free CARFAX Report With Every Vehicle Buy & Sell Your Way – On-Site Or Online P r i c e . Q u a l i t y. E x p e r i e n c e . L o w C o s t O m n i c h a n n e l M o d e l
18 EchoPark – Developing Nationwide Distribution Network Achieved >50% Population Coverage To Date Target 90% Population Coverage By 2025 Note: Future locations and U.S. population coverage are based on projections. Actual results may differ. See “Forward-Looking Statements.” Existing Delivery Center Future Delivery Center Coverage Area Existing Retail Hub Future Market Opportunities
19 EchoPark – Addressable Market Opportunity * Share Of Vehicles That Fit Core1-4-Year-Old Model In Existing EchoPark Markets Target 90% Population Coverage By 2025 With Growing Nationwide Distribution Network Target 10% Market Share Already Achieving This Share* In Most Mature Market Priced Up to $3,000 Below Market Price Competes On Price vs. Older Vehicles, Consumer Can Buy Newer Vehicle For Same Price Pricing Up To 40% Below New Converts Prospective New Car Buyers 2 MILLION Opportunity 15+ MILLION 1–4-Year-Old Vehicles 10+ MILLION 5–8-Year- Old Vehicles 13+ MILLION New Vehicles Long-Term Strategy Remains Focused On Nearly-New, 1–4-Year Old Vehicle Segment Despite Recent Strategic Adjustments To Include 5+ Year Old Inventory Annual Retail Vehicle Sales Volume Note: Annual Retail Vehicle Sales Volume, EchoPark Volume Opportunity, Population Coverage And Market Share Targets Are Based On Projections. Actual Results May Differ. See “Forward-Looking Statements.”
20 EchoPark – Delivery Center Model Existing Retail Hub Example Delivery Center Market Coverage Opportunity Delivery Center Model • Utilize Nearby Retail Hub For Inventory Storage And Reconditioning (Asset Light Expansion) • Advertise Inventory Online In Surrounding Markets • Drive Incremental eCommerce Sales In New Markets • Inspect & Buy Vehicles From Guests After Online Appraisal And Firm Purchase Offer • Arrange Vehicle Transport To Delivery Center • Guest Picks Up Vehicle At EchoPark Delivery Center Nearest Their Home (i.e. Next-To-Last-Mile Delivery) Strategic Advantages • Accelerates Entry Into New Markets With Minimal Capital Expenditures Or Overhead Costs • Same Guest-Centric Purchase Experience And Convenience • Blend Of Brick And Mortar And eCommerce Distribution Network Creates Operating Leverage Delivery Center Markets • Expect To Support 3 To 4 Delivery Centers Per Retail Hub At Maturity • Target Adjacent Secondary Markets Or Large Metro Markets Where Traditional Dealership Real Estate Is Unavailable Or Cost Prohibitive
21 EchoPark – Industry Headwinds & Action Plan Industry Headwinds • Supply Chain Disruption Continues To Suppress New Vehicle Production And Inventory Levels – Beginning To Ease In Q1 2023 • Rental Car Companies Continue To Be Net Buyers In Used Vehicle Auction Market, But Not Paying As Much Above Market As In Early 2022 (Drove 8.4% Decrease In 3-Year Old Vehicle Manheim Prices In Q4 2022) • Used Price As A Percentage Of New Price At 63% In December (Typically In 55-60% Range) Negatively Impacting Affordability • 2023 Year-To-Date, 3-Year Old Vehicle Manheim Prices Increased 2.6% - Trend Through Tax Refund Season Could Be Indicator Of Used Vehicle Price And Demand Outlook For 2023 EchoPark Action Plan In Progress • Expanded Inventory To Include 5+ Year Old Vehicles In All Markets, Driving Lower Inventory Acquisition Cost And Lower Retail Selling Price, Expanding Customer Segments While Benefiting Consumer Affordability And Gross Profit Per Unit (“GPU”) • Implemented Marketing Strategy To Source More Vehicles From Non-Auction Sources (Historically Less Than 10% Of Inventory) • Launched New EchoPark.com In June 2022 To Modernize eCommerce Offering And Drive Improved Sales Efficiency And Volume Throughput • EchoPark Brand Launch – Increase Consumer Awareness And Advertising Reach Beyond Being The Low Price Leader • Pricing And Expense Optimization At EchoPark Expected To Drive Profitability Improvement Throughout 2023 • Continued Focus On Maintaining Highest Reputation Scores In The Pre-Owned Competitive Segment EchoPark Action Plan Results To Date • Non-Auction Sourcing Mix Was 28% Of Sales In Q4 2022 Compared To 32% In Q3 2022 (Historically Less Than 10%) • Older Model Year Cohort Vehicles (5+ Years Old) Represented 19% of Q4 2022 EchoPark Unit Sales Volume (Flat With Q3 2022), Average 35% Lower Selling Price And Generate $1,650 More In Total GPU Compared To 1-4-Year Old Vehicles • New EchoPark.com eCommerce Results For Q4 2022 (Launched To 100% Of Web Traffic In June 2022) • Omnichannel Transactions Accounted For 38% Of EchoPark Retail Unit Volume In Q4 2022 (Up From 31% In Q3 2022), With 9% Of EchoPark Volume Sold End-to-End Online In Q4 2022 (Compared to 7% In Q3 2022) • Approximately 50% Of Units Sold End-To-End Online Were Shipped Out Of Market • Online F&I Attachment Continues To Exceed Expectations, Averaging $2,183 Per Unit (Down From $2,325 In Q3 2022)
22 EchoPark – Growth Path 212 660 881 920 764 941 1,136 1,585 1,685 1,673 2,049 2,400 4,496 5,518 7,459 7,698 8,762 11,051 12,587 13,206 12,676 13,986 13,207 15,127 14,841 19,670 21,261 21,255 15,649 14,931 16,496 15,245 17,435 $- $100 $200 $300 $400 $500 $600 $700 (In M illi on s) Quarterly Used Retail Units Quarterly Revenue Lower Unit Volume Beginning Q4 2021 A Result Of Strategic Adjustments To Manage Inventory Levels And Mitigate Operating Losses Amid Ongoing Challenges In Used Vehicle Price Environment Q4 2022 Volumes Improved As Prices Declined, Benefitting Affordability
23 EchoPark – Adjusted EBITDA Trend ($2.8) ($1.1) ($3.4) ($2.2) ($3.0) ($2.1) $5.0 $4.8 $6.4 $5.3 $5.2 $5.6 $3.1 ($2.9) $6.2 ($9.4) ($28.5) ($14.6) ($29.5) ($27.3) ($23.2) ($25.4) $6.1 $6.2 $6.8 $4.8 $(0.3) $6.7 $(4.0) $(11.7) $(6.1) $(18.3)$(17.6) $(17.5) $(21.8) $(32) $(27) $(22) $(17) $(12) $(7) $(2) $3 $8 Adjusted EBITDA Less Impact of New Stores (In M illi on s) Current Headcount And SG&A Structure Is Based On Higher Unit Sales Volume Projections Expected Once Used Pricing Environment Normalizes Expect Continued Improvement In Adjusted EBITDA Losses Throughout 2023 Adjusted EBITDA by Month Oct 2022 Nov 2022 Dec 2022 Q4 2022 Total EchoPark $ (6.8) $ (9.9) $ (8.6) $ (25.4) Impact of Stores Open <12 Months $ (1.4) $ (1.3) $ (0.9) $ (3.6) Net of New Store Impact $ (5.4) $ (8.6) $ (7.7) $ (21.8) Used Retail Unit Volume 5,865 5,726 5,844 17,435 Refer To Appendix For Calculation And Reconciliation of Adjusted EBITDA (A Non-GAAP Measure). Note: Amounts Reflect The Reclassification Of Certain Entities To The Powersports Segment That Were Previously Included In the EchoPark Segment Results For Q1 2022 Through Q3 2022 Note: Expected Improvement In Adjusted EBITDA Losses Is Based On Projections. Actual Results May Differ. See “Forward-Looking Statements.”
24 Powersports
25 Powersports – Opportunistic Growth • Growth Via Acquisition At Attractive Earnings Multiples • Consolidation Opportunity In A $34 Billion Market* Where 85% Of U.S. Dealers Own A Single Location • Drive Profitability Enhancement Through Technology And Process Development • Generate Higher Margins Compared To Traditional Automotive Retail * Estimated Value Of North American Powersports Industry In 2022, Per Global Market Insights Sonic Powersports
26 Omnichannel Strategy
27 Buy & Sell Your Way • Complete A Traditional Vehicle Purchase Experience With A Modern, Technology- Enabled Approach • Can Be Completed In Under An Hour • Research Online, Utilize Chat, Text, Phone, Zoom To Reduce In-Person Process • Review And Select Insurance Products And Financing Options • Includes Online Trade-In Appraisal And Firm Purchase Offer • Complete A Full eCommerce Transaction In Minutes • Conveniently Test Drive And Finalize Purchase At Franchised Dealership, EchoPark Retail Hub Or EchoPark Delivery Center Buy & Sell Your Way Start Online, Finish On-Site Or Buy Completely Online Buy On-Site • Our Blend Of Brick And Mortar And eCommerce Strategies Allows Guests To Choose Their Preferred Buying Approach • A Flexible, Guest- Centric Experience With Options • Will Be Seamless To The Guest, Regardless Of Which Path They Choose Represents 38% Of Q4 2022 EchoPark Unit Sales Volume
28 New EchoPark.com Results to Date Rolled Out To 100% Of National Web Traffic In June 2022 Conversion Rate 30% Higher Compared To Old Website Q4 2022 F&I of $2,183 Per Unit Exceeding Projections For End-To-End Online F&I Product Sales Nearly 50% Of Vehicles Sold Out Of Market In Q4 2022, Driving Incremental Reach Total Website Traffic Improved 29%, To 4.3 Million Unique Visitors, From Q3 2022 To Q4 2022 Sales Lead Conversion Rate Improved 10% From Q3 2022 To Q4 2022
29 Appendix
30 GAAP Income Statement Annual Trend – Consolidated NM = Not MeaningfulNote: Earnings (Loss) Per Share and Gross Profit Per Unit Metrics Are Calculated Based On Actual Unrounded Amounts FY 2022 Better / (Worse) % Change (In millions, except unit, per unit, and per share data) FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 Year-Over-Year Revenues: Retail new vehicles 5,622.6$ 4,993.5$ 4,224.4$ 4,777.3$ 4,905.9$ 13% Fleet new vehicles 99.4 124.5 56.8 111.9 68.2 (20%) Total new vehicles 5,722.0 5,118.0 4,281.2 4,889.2 4,974.1 12% Used vehicles 5,515.4 4,877.2 3,564.8 3,490.0 2,973.5 13% Wholesale vehicles 484.9 367.2 197.4 202.8 217.6 32% Total vehicles 11,722.3 10,362.4 8,043.4 8,582.0 8,165.2 13% Parts, service and collision repair 1,599.7 1,396.8 1,233.7 1,395.3 1,380.9 15% Finance, insurance and other, net ("F&I") 679.1 637.2 489.9 477.0 405.5 7% Total revenues 14,001.1 12,396.4 9,767.0 10,454.3 9,951.6 13% Gross profit: Retail new vehicles 662.8 459.7 233.2 231.7 240.5 44% Fleet new vehicles 4.9 1.7 0.9 1.4 1.0 201% Total new vehicles 667.7 461.4 234.1 233.1 241.5 45% Used vehicles 180.8 131.9 106.0 147.4 143.0 37% Wholesale vehicles (3.1) 9.8 (1.0) (4.5) (11.3) (131%) Total vehicles 845.4 603.1 339.1 376.0 373.2 40% Parts, service and collision repair 792.5 674.0 594.6 668.0 667.4 18% Finance, insurance and other, net 679.1 637.2 489.9 477.0 405.5 7% Total gross profit 2,317.0 1,914.3 1,423.6 1,521.0 1,446.1 21% SG&A expenses (1,555.1) (1,274.7) (1,028.7) (1,099.4) (1,145.3) (22%) Impairment charges (320.4) (0.1) (270.0) (20.8) (29.5) NM Depreciation and amortization (127.5) (101.1) (91.0) (93.1) (93.6) (26%) Operating income (loss) 314.0 538.4 33.9 307.7 177.7 (42%) Interest expense, floor plan (34.3) (16.7) (27.2) (48.5) (48.4) (105%) Interest expense, other, net (89.9) (48.0) (41.6) (53.0) (54.1) (87%) Other income (expense), net 0.2 (15.5) 0.1 (6.6) 0.1 NM Income (loss) from continuing operations before taxes 190.0 458.2 (34.8) 199.6 75.3 (59%) Income tax benefit (expense) (101.5) (109.3) (15.9) (55.1) (22.9) 7% Net income (loss) from continuing operations 88.5$ 348.9$ (50.7)$ 144.5$ 52.4$ (75%) Diluted weighted-average shares outstanding 39.7 43.3 42.5 43.7 43.0 8% Diluted earnings (loss) per share from continuing operations 2.23$ 8.06$ (1.19)$ 3.31$ 1.22$ (72%) Unit sales volume: Retail new vehicles 101,168 99,943 91,939 111,457 120,819 1% Fleet new vehicles 2,115 3,543 1,342 2,674 1,898 (40%) Used vehicles 173,209 183,292 159,025 162,149 139,605 (6%) Wholesale vehicles 35,323 36,795 32,057 34,153 34,167 (4%) Gross profit per unit ("GPU"): Retail new vehicles 6,552$ 4,600$ 2,536$ 2,078$ 1,991$ 42% Used vehicles 1,044$ 720$ 667$ 909$ 1,024$ 45% F&I 2,475$ 2,250$ 1,952$ 1,743$ 1,557$ 10%
31 Non-GAAP Reconciliation – Annual Trend – Consolidated NM = Not Meaningful Note: Earnings (Loss) Per Share and SG&A Expenses As A Percentage Of Gross Profit Metrics Are Calculated Based On Actual Unrounded Amounts Note: Balance Sheet Amounts Are As Of December 31 For The FY Then Ended FY 2022 Better / (Worse) % Change (In millions, except per share data) FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 Year-Over-Year Reported net income (loss) from continuing operations 88.5$ 348.9$ (50.7)$ 144.5$ 52.4$ (75%) Adjustments: Impairment charges 320.4$ -$ 269.2$ 19.6$ 29.5$ NM Acquisition and disposition-related (gain) loss (9.1) 1.2 (9.2) (76.0) (38.9) NM Long-term compensation charges 4.4 6.5 - 6.3 34.1 NM Loss on debt extinguishment - 15.6 - 7.2 - NM Legal and storm damage charges - - - - 5.7 NM Loss (gain) on exit of leased dealerships - - - - 1.5 NM Total pre-tax adjustments 315.7 23.3 260.0 (42.9) 31.9 NM Tax effect of above items (22.6) (5.9) (40.4) 14.2 (7.4) NM Total net income effect of adjustments 293.1 17.4 219.6 (28.7) 24.5 NM Adjusted net income (loss) from continuing operations 381.6$ 366.3$ 168.9$ 115.8$ 76.9$ 4% Diluted weighted-average shares outstanding 39.7 43.3 43.9 43.7 43.0 8% Adjusted diluted earnings (loss) per share from continuing operations 9.61$ 8.46$ 3.85$ 2.65$ 1.79$ 14% Reported SG&A expenses (1,555.1)$ (1,274.7)$ (1,028.7)$ (1,099.4)$ (1,145.3)$ (22%) Acquisition and disposition-related (gain) loss (9.1) 1.2 (9.2) (76.0) (38.9) NM Long-term compensation charges 4.4 6.5 - 6.3 34.1 NM Adjusted SG&A expenses (1,559.8)$ (1,267.0)$ (1,037.9)$ (1,169.1)$ (1,150.1)$ (23%) Adjusted SG&A expenses as a percentage of gross profit 67.3% 66.2% 72.9% 76.9% 79.0% (110) bps Reported net income (loss) 88.5$ 348.9$ (51.4)$ 144.1$ 51.7$ NM Income tax (benefit) expense 101.5 109.3 15.6 55.0 22.6 NM Income (loss) before taxes 190.0 458.2 (35.8) 199.1 74.3 NM Non-floor plan interest 84.7 44.7 38.7 50.5 52.0 NM Depreciation and amortization 132.7 104.3 93.9 95.6 96.7 NM Stock-based compensation expense 16.0 15.0 11.7 10.8 11.9 NM Loss (gain) on exit of leased dealerships - - - (0.2) 1.7 NM Impairment charges 320.4 0.1 270.0 20.8 29.5 NM Loss on debt extinguishment - 15.6 - 6.7 - NM Long-term compensation charges 4.4 8.0 - - 32.5 NM Acquisition and disposition-related (gain) loss (9.7) (0.4) (8.2) (74.8) (39.3) NM Adjusted EBITDA 738.5$ 645.5$ 370.3$ 308.5$ 259.3$ 14% Long-term debt (including current portion) 1,751.7$ 1,561.2$ 720.1$ 706.9$ 945.1$ NM Cash and equivalents (229.2) (299.4) (170.3) (29.1) (5.9) NM Floor plan deposit balance (272.0) (99.8) (73.2) - - NM Net debt 1,250.5$ 1,162.0$ 476.6$ 677.8$ 939.2$ NM Net debt to adjusted EBITDA ratio 1.69 1.80 1.29 2.20 3.62 NM Long-term debt (including current portion) to adjusted EBITDA ratio 2.37 2.42 1.94 2.29 3.64 NM
32 GAAP Income Statement Quarterly Trend – Consolidated NM = Not MeaningfulNote: Earnings (Loss) Per Share and Gross Profit Per Unit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions, except unit, per unit, and per share data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Revenues: Retail new vehicles 1,555.3$ 1,371.8$ 1,344.3$ 1,351.3$ 1,278.3$ 13% 22% Fleet new vehicles 29.3 32.0 19.8 18.2 73.6 (8%) (60%) Total new vehicles 1,584.6 1,403.8 1,364.1 1,369.5 1,351.9 13% 17% Used vehicles 1,341.1 1,354.1 1,449.4 1,370.9 1,210.9 (1%) 11% Wholesale vehicles 80.0 114.6 121.4 168.7 110.5 (30%) (28%) Total vehicles 3,005.7 2,872.5 2,934.9 2,909.1 2,673.3 5% 12% Parts, service and collision repair 411.1 410.0 398.1 380.5 360.1 0% 14% Finance, insurance and other, net ("F&I") 173.8 165.6 173.2 166.6 151.2 5% 15% Total revenues 3,590.6 3,448.1 3,506.2 3,456.2 3,184.6 4% 13% Gross profit: Retail new vehicles 164.6 162.2 168.3 167.7 157.4 1% 5% Fleet new vehicles 1.8 1.3 0.9 0.8 0.6 33% 172% Total new vehicles 166.4 163.5 169.2 168.5 158.0 2% 5% Used vehicles 35.5 50.1 47.1 48.1 46.6 (29%) (24%) Wholesale vehicles (3.7) (2.2) 1.2 1.5 3.2 (62%) (208%) Total vehicles 198.2 211.4 217.5 218.1 207.8 (6%) (5%) Parts, service and collision repair 204.1 203.7 198.1 186.6 171.6 0% 19% Finance, insurance and other, net 173.8 165.6 173.2 166.6 151.2 5% 15% Total gross profit 576.1 580.7 588.8 571.3 530.6 (1%) 9% SG&A expenses (366.3) (399.0) (402.8) (387.0) (343.3) 8% (7%) Impairment charges (320.4) - - - (0.1) NM NM Depreciation and amortization (33.5) (32.8) (31.2) (29.9) (27.4) (2%) (23%) Operating income (loss) (144.1) 148.9 154.8 154.4 159.8 (197%) (190%) Interest expense, floor plan (13.6) (9.6) (6.1) (4.9) (4.0) (42%) (245%) Interest expense, other, net (24.9) (22.9) (21.3) (20.8) (17.8) (8%) (40%) Other income (expense), net 0.1 - (0.2) 0.2 (15.6) NM NM Income (loss) before taxes (182.5) 116.4 127.2 128.9 122.4 (257%) (249%) Income tax benefit (expense) (8.4) (29.1) (32.5) (31.6) (25.9) 71% 67% Net income (loss) (190.9)$ 87.3$ 94.8$ 97.3$ 96.6$ (319%) (298%) Diluted weighted-average shares outstanding 36.5 39.2 40.5 41.8 42.8 7% 15% Diluted earnings (loss) per share (5.22)$ 2.23$ 2.34$ 2.33$ 2.25$ (334%) (332%) Unit sales volume: Retail new vehicles 27,278 24,776 24,427 24,687 23,534 10% 16% Fleet new vehicles 661 672 422 360 2,246 (2%) (71%) Used vehicles 44,303 42,069 44,764 42,073 39,046 5% 13% Wholesale vehicles 8,094 8,263 8,545 10,421 7,860 (2%) 3% Gross profit per unit ("GPU"): Retail new vehicles 6,034$ 6,547$ 6,890$ 6,793$ 6,687$ (8%) (10%) Used vehicles 800$ 1,190$ 1,053$ 1,144$ 1,193$ (33%) (33%) F&I 2,428$ 2,477$ 2,503$ 2,495$ 2,415$ (2%) 1%
33 Non-GAAP Reconciliation – Quarterly Trend – Consolidated NM = Not MeaningfulNote: Earnings (Loss) Per Share and SG&A Expenses As A Percentage Of Gross Profit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions, except per share data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Reported net income (loss) (190.9)$ 87.3$ 94.8$ 97.3$ 96.6$ (319%) (298%) Adjustments: Impairment charges 320.4$ -$ -$ -$ -$ NM NM Acquisition and disposition-related (gain) loss (9.1) - - - 1.2 NM NM Long-term compensation charges - - 4.4 - 6.5 NM NM Loss on debt extinguishment - - - - 15.6 NM NM Total pre-tax adjustments 311.3 - 4.4 - 23.3 NM NM Tax effect of above items (22.6) - - - (5.9) NM NM Total net income effect of adjustments 288.7 - 4.4 - 17.4 NM NM Adjusted net income (loss) 97.8$ 87.3$ 99.2$ 97.3$ 114.0$ 12% (14%) Diluted weighted-average shares outstanding 37.4 39.2 40.5 41.8 42.8 5% 13% Adjusted diluted earnings (loss) per share 2.61$ 2.23$ 2.45$ 2.33$ 2.66$ 17% (2%) Reported SG&A expenses (366.3)$ (399.0)$ (402.8)$ (387.0)$ (343.3)$ 8% (7%) Acquisition and disposition-related (gain) loss (9.1) - - - 1.2 NM NM Long-term compensation charges - - 4.4 - 6.5 NM NM Adjusted SG&A expenses (375.4)$ (399.0)$ (398.4)$ (387.0)$ (335.6)$ 6% (12%) Adjusted SG&A expenses as a percentage of gross profit 65.2% 68.7% 67.7% 67.7% 63.3% 350 bps (190) bps Reported net income (loss) (190.9)$ 87.3$ 94.8$ 97.3$ 96.6$ NM NM Income tax (benefit) expense 8.4 29.1 32.5 31.6 25.9 NM NM Income (loss) before taxes (182.5) 116.4 127.2 128.9 122.4 NM NM Non-floor plan interest 23.5 21.4 20.1 19.7 16.9 NM NM Depreciation and amortization 34.9 34.3 32.4 31.1 28.3 NM NM Stock-based compensation expense 3.6 3.8 4.2 4.4 3.8 NM NM Impairment charges 320.4 - - - 0.1 NM NM Loss on debt extinguishment - - - - 15.6 NM NM Long-term compensation charges - - 4.4 - 6.5 NM NM Acquisition and disposition-related (gain) loss (9.2) 0.5 0.1 (1.1) 0.5 NM NM Adjusted EBITDA 190.7$ 176.4$ 188.4$ 183.0$ 193.8$ 8% (2%)
34 GAAP Income Statement – Quarterly Trend – Franchised Dealerships Segment NM = Not MeaningfulNote: Gross Profit Per Unit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions, except unit and per unit data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Revenues: Retail new vehicles 1,534.5$ 1,359.6$ 1,341.7$ 1,345.7$ 1,273.6$ 13% 20% Fleet new vehicles 29.4 32.0 19.9 18.1 73.7 (8%) (60%) Total new vehicles 1,563.9 1,391.6 1,361.6 1,363.8 1,347.3 12% 16% Used vehicles 823.4 842.4 871.9 853.7 727.7 (2%) 13% Wholesale vehicles 52.6 75.7 79.3 106.4 74.0 (30%) (29%) Total vehicles 2,439.9 2,309.7 2,312.8 2,323.9 2,149.0 6% 14% Parts, service and collision repair 404.8 404.7 398.1 380.5 346.2 0% 17% Finance, insurance and other, net ("F&I") 128.0 125.9 129.8 126.5 110.1 2% 16% Total revenues 2,972.7 2,840.3 2,840.7 2,830.9 2,605.3 5% 14% Gross profit: Retail new vehicles 160.8 160.7 167.3 166.6 156.7 0% 3% Fleet new vehicles 1.8 1.3 0.9 0.8 0.6 33% 172% Total new vehicles 162.6 162.0 168.2 167.4 157.3 0% 3% Used vehicles 38.4 45.4 43.7 46.9 50.8 (15%) (24%) Wholesale vehicles (3.2) (2.1) (0.5) (0.4) 0.4 (57%) (855%) Total vehicles 197.8 205.3 211.4 213.9 208.5 (4%) (5%) Parts, service and collision repair 200.9 201.0 198.1 186.6 171.1 0% 17% Finance, insurance and other, net 128.0 125.9 129.8 126.5 110.1 2% 16% Total gross profit 526.7 532.2 539.3 527.0 489.7 (1%) 8% SG&A expenses (298.1) (332.0) (327.6) (315.2) (282.8) 10% (5%) Impairment charges (115.5) - - - - NM NM Depreciation and amortization (26.0) (25.9) (25.2) (24.9) (22.5) (1%) (16%) Operating income (loss) 87.1 174.3 186.5 186.9 184.4 (50%) (53%) Interest expense, floor plan (9.8) (6.6) (3.9) (3.3) (2.5) (47%) (293%) Interest expense, other, net (23.4) (21.4) (20.2) (20.0) (17.1) (9%) (37%) Other income (expense), net - - (0.3) 0.2 (15.6) NM NM Income (loss) before taxes 53.9$ 146.3$ 162.1$ 163.8$ 149.2$ (63%) (64%) Unit sales volume: Retail new vehicles 26,239 24,241 24,342 24,602 23,475 8% 12% Fleet new vehicles 661 672 422 360 2,246 (2%) (71%) Used vehicles 26,631 26,647 28,156 27,078 23,397 0% 14% Wholesale vehicles 5,616 5,813 5,851 6,772 5,424 (3%) 4% Gross profit per unit ("GPU"): Retail new vehicles 6,130$ 6,627$ 6,871$ 6,771$ 6,673$ (8%) (8%) Used vehicles 1,442$ 1,704$ 1,553$ 1,731$ 2,172$ (15%) (34%) F&I 2,421$ 2,473$ 2,472$ 2,448$ 2,349$ (2%) 3%
35 Non-GAAP Reconciliation – Quarterly Trend – Franchised Dealerships Segment NM = Not MeaningfulNote: SG&A Expenses As A Percentage Of Gross Profit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Reported income (loss) before taxes 53.9$ 146.3$ 162.1$ 163.8$ 149.2$ (63%) (64%) Impairment charges 115.5 - - - - NM NM Segment income (loss) 169.4$ 146.3$ 162.1$ 163.8$ 149.2$ 16% 14% Acquisition and disposition-related (gain) loss (9.1) - - - 1.2 NM NM Long-term compensation charges - - 4.4 - - NM NM Loss on debt extinguishment - - - - 15.6 NM NM Adjusted segment income (loss) 160.3$ 146.3$ 166.5$ 163.8$ 166.0$ 10% (3%) Reported SG&A expenses (298.1)$ (332.0)$ (327.6)$ (315.2)$ (282.8)$ 10% (5%) Acquisition and disposition-related (gain) loss (9.1) - - - 1.2 NM NM Long-term compensation charges - - 4.4 - - NM NM Adjusted SG&A expenses (307.2)$ (332.0)$ (323.2)$ (315.2)$ (281.6)$ 7% (9%) Adjusted SG&A expenses as a percentage of gross profit 58.3% 62.4% 59.9% 59.8% 57.5% 410 bps (80) bps Income (loss) before taxes 53.9$ 146.3$ 162.1$ 163.8$ 149.2$ NM NM Non-floor plan interest 22.0 19.9 19.1 19.0 16.2 NM NM Depreciation and amortization 27.4 27.3 26.4 25.9 23.4 NM NM Stock-based compensation expense 3.6 3.8 4.2 4.4 3.8 NM NM Impairment charges 115.5 - - - - NM NM Loss on debt extinguishment - - - - 15.6 NM NM Long-term compensation charges - - 4.4 - - NM NM Acquisition and disposition-related (gain) loss (9.2) 0.5 0.1 (1.1) 0.5 NM NM Adjusted EBITDA 213.2$ 197.8$ 216.3$ 212.0$ 208.4$ 8% 2%
36 GAAP Income Statement – Quarterly Trend – EchoPark Segment NM = Not MeaningfulNote: Gross Profit Per Unit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions, except unit and per unit data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Revenues: Retail new vehicles 2.0$ 1.6$ 1.2$ 4.5$ 4.6$ 24% (57%) Used vehicles 515.5 511.4 574.5 515.3 497.0 1% 7% Wholesale vehicles 27.3 38.9 42.1 62.4 36.5 (30%) (25%) Total vehicles 544.8 551.9 617.8 582.2 538.1 (1%) 4% Finance, insurance and other, net ("F&I") 44.5 38.9 43.1 39.9 41.1 14% 8% Total revenues 589.3 590.8 660.9 622.1 579.2 0% 2% Gross profit: Retail new vehicles 0.2 (0.6) 0.7 0.8 0.7 132% (75%) Used vehicles (3.6) 5.0 2.4 0.7 (3.7) (173%) 14% Wholesale vehicles (0.3) (0.1) 1.6 1.9 2.8 (166%) (110%) Total vehicles (3.7) 4.3 4.7 3.4 (0.2) (187%) (446%) Finance, insurance and other, net 44.5 38.9 43.1 39.9 41.1 14% 8% Total gross profit 40.8 43.2 47.8 43.3 40.9 (6%) 0% SG&A expenses (62.3) (63.4) (72.9) (71.2) (60.5) 2% (3%) Impairment charges (204.9) - - - (0.1) NM NM Depreciation and amortization (7.0) (6.7) (5.9) (5.1) (4.8) (4%) (45%) Operating income (loss) (233.4) (26.9) (31.0) (33.0) (24.5) (766%) (847%) Interest expense, floor plan (3.9) (3.0) (2.2) (1.6) (1.5) (30%) (162%) Interest expense, other, net (0.9) (1.1) (1.0) (0.8) (0.7) 21% (31%) Other income (expense), net - - - 0.1 - NM NM Income (loss) before taxes (238.2)$ (31.0)$ (34.2)$ (35.3)$ (26.7)$ (667%) (789%) Unit sales volume: Retail new vehicles 26 45 37 44 59 (42%) (56%) Used vehicles 17,435 15,245 16,496 14,931 15,649 14% 11% Wholesale vehicles 2,444 2,449 2,694 3,649 2,436 0% 0% Gross profit per unit ("GPU"): Total used vehicle and F&I 2,340$ 2,869$ 2,751$ 2,707$ 2,344$ (18%) 0%
37 Non-GAAP Reconciliation – Quarterly Trend – EchoPark Segment NM = Not MeaningfulNote: SG&A Expenses As A Percentage Of Gross Profit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Reported income (loss) before taxes (238.2)$ (31.0)$ (34.2)$ (35.3)$ (26.7)$ (667%) (789%) Impairment charges 204.9 - - - 0.1 NM NM Segment income (loss) (33.3)$ (31.0)$ (34.2)$ (35.3)$ (26.6)$ (7%) (25%) Long-term compensation charges - - - - 6.5 NM NM Adjusted segment income (loss) (33.3)$ (31.0)$ (34.2)$ (35.3)$ (20.1)$ (7%) (65%) Reported SG&A expenses (62.3)$ (63.4)$ (72.9)$ (71.2)$ (60.5)$ 2% (3%) Long-term compensation charges - - - - 6.5 NM NM Adjusted SG&A expenses (62.3)$ (63.4)$ (72.9)$ (71.2)$ (54.0)$ 2% (15%) Adjusted SG&A expenses as a percentage of gross profit 152.8% 146.8% 152.6% 164.4% 132.2% (600) bps (2,060) bps Income (loss) before taxes (238.2)$ (31.0)$ (34.2)$ (35.3)$ (26.7)$ NM NM Non-floor plan interest 0.9 1.1 1.0 0.7 0.7 NM NM Depreciation and amortization 7.0 6.8 5.9 5.1 4.9 NM NM Impairment charges 204.9 - - - 0.1 NM NM Long-term compensation charges - - - - 6.5 NM NM Adjusted EBITDA (25.4)$ (23.2)$ (27.3)$ (29.5)$ (14.6)$ 9% 74%
38 GAAP Income Statement – Quarterly Trend – Powersports Segment NM = Not MeaningfulNote: Gross Profit Per Unit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions, except unit and per unit data) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Revenues: Retail new vehicles 18.8$ 10.6$ 1.3$ 1.1$ -$ 78% NM Used vehicles 2.1 0.2 3.0 1.8 - 841% NM Wholesale vehicles 0.1 - 0.1 - - 62% NM Total vehicles 21.0 10.8 4.4 3.0 - 94% NM Parts, service and collision repair 6.3 5.3 - - - 19% NM Finance, insurance and other, net ("F&I") 1.3 0.9 0.3 0.2 - 48% NM Total revenues 28.6 17.0 4.7 3.2 - 68% NM Gross profit: NM Retail new vehicles 3.6 2.1 0.4 0.3 - 70% NM Used vehicles 0.7 (0.3) 1.0 0.6 - 316% NM Wholesale vehicles - - - - - 0% NM Total vehicles 4.3 1.8 1.4 0.9 - 137% NM Parts, service and collision repair 3.1 2.7 - - - 15% NM Finance, insurance and other, net 1.3 0.9 0.3 0.2 - 48% NM Total gross profit 8.7 5.4 1.7 1.1 - 61% NM SG&A expenses (5.9) (3.6) (2.3) (0.6) - (66%) NM Impairment charges - - - - - NM NM Depreciation and amortization (0.6) (0.2) (0.1) (0.1) - (108%) NM Operating income (loss) 2.2 1.6 (0.7) 0.4 - 42% NM Interest expense, floor plan - - - - - NM NM Interest expense, other, net (0.6) (0.4) - - - (42%) NM Other income (expense), net 0.2 - - - - NM NM Income (loss) before taxes 1.8$ 1.2$ (0.7)$ 0.4$ -$ 51% NM Unit sales volume: Retail new vehicles 1,013 490 48 41 - 107% NM Used vehicles 237 177 112 64 - 34% NM Wholesale vehicles 34 1 - - - NM NM Gross profit per unit ("GPU"): Retail new vehicles 3,535$ 4,304$ 7,401$ 6,829$ NM (18%) NM Used vehicles 2,860$ (1,773)$ 9,000$ 9,433$ NM 261% NM F&I 1,026$ 1,297$ 1,933$ 1,643$ NM (21%) NM
39 Non-GAAP Reconciliation – Quarterly Trend – Powersports Segment NM = Not MeaningfulNote: SG&A Expenses As A Percentage Of Gross Profit Metrics Are Calculated Based On Actual Unrounded Amounts Q4 2022 Better / (Worse) % Change (In millions) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Sequential Year-Over-Year Reported income (loss) before taxes 1.8$ 1.2$ (0.7)$ 0.4$ -$ 51% NM Impairment charges - - - - - NM NM Segment income (loss) 1.8$ 1.2$ (0.7)$ 0.4$ -$ 51% NM Long-term compensation charges - - - - - NM NM Adjusted segment income (loss) 1.8$ 1.2$ (0.7)$ 0.4$ -$ 51% NM Reported SG&A expenses (5.9)$ (3.6)$ (2.3)$ (0.6)$ -$ (66%) NM Acquisition and disposition-related (gain) loss - - - - - NM NM Long-term compensation charges - - - - - NM NM Adjusted SG&A expenses (5.9)$ (3.6)$ (2.3)$ (0.6)$ -$ (66%) NM Adjusted SG&A expenses as a percentage of gross profit 68.4% 66.2% 135.2% 53.2% NM (220) bps NM Income (loss) before taxes 1.8$ 1.2$ (0.7)$ 0.4$ -$ NM NM Non-floor plan interest 0.6 0.4 - - - NM NM Depreciation and amortization 0.5 0.2 0.1 0.1 - NM NM Impairment charges - - - - - NM NM Long-term compensation charges - - - - - NM NM Adjusted EBITDA 2.9$ 1.8$ (0.6)$ 0.5$ -$ 61% NM
40 Non-GAAP Reconciliation – Adjusted EBITDA – EchoPark Segment (In millions) Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Income (loss) before taxes (4.4)$ (4.0)$ (14.7)$ (27.8)$ (5.5)$ (6.2)$ 0.2$ 1.7$ 2.1$ (14.5)$ Non-floor plan interest 0.3 0.3 0.3 0.4 0.5 0.4 0.5 0.4 0.5 0.4 Depreciation and amortization 1.3 1.3 1.7 1.9 2.0 2.2 2.4 2.7 2.7 2.8 Stock-based compensation expense - - - - - - - - - - Loss (gain) on exit of leased dealerships - - - - - - - - - - Impairment charges - - 0.1 - - 1.5 1.9 - 1.1 16.6 Loss (gain) on debt extinguishment - - - - - - - - - - Long-term compensation charges - - - - - - - - - - Acquisition and disposition-related (gain) loss - - - - - - - - - - Adjusted EBITDA (2.8)$ (1.1)$ (3.4)$ (2.2)$ (3.0)$ (2.1)$ 5.0$ 4.8$ 6.4$ 5.3$ (In millions) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Income (loss) before taxes 2.1$ 2.6$ 0.2$ (0.8)$ 2.0$ (14.4)$ (32.9)$ (26.8)$ (35.3)$ (34.2)$ (31.1)$ (238.2)$ Non-floor plan interest 0.4 0.2 0.1 0.2 0.4 0.3 0.3 0.7 0.7 1.0 1.1 0.9 Depreciation and amortization 2.7 2.8 2.8 2.9 3.3 4.2 4.0 4.9 5.1 5.9 6.8 7.0 Stock-based compensation expense - - - - - - - - - - - - Loss (gain) on exit of leased dealerships - - - - - - - - - - - - Impairment charges - - - - - - - 0.1 - - - 204.9 Loss (gain) on debt extinguishment - - - - - - - - - - - - Long-term compensation charges - - - - 0.5 0.5 0.5 6.5 - - - - Acquisition and disposition-related (gain) loss - - - (5.2) - - (0.4) - - - - - Adjusted EBITDA 5.2$ 5.6$ 3.1$ (2.9)$ 6.2$ (9.4)$ (28.5)$ (14.6)$ (29.5)$ (27.3)$ (23.2)$ (25.4)$
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® Investor Relations Contact: Danny Wieland, Vice President, Investor Relations & Financial Reporting Sonic Automotive Inc. (NYSE: SAH) Email: ir@sonicautomotive.com Investor Relations Website: ir.sonicautomotive.com