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): July 29, 2021
____________________________________
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 July 29, 2021, Sonic Automotive, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal second quarter ended June 30, 2021 (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 July 29, 2021, 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 July 29, 2021. |
| 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. | ||
|---|---|---|
| July 29, 2021 | By: | /s/ STEPHEN K. COSS |
| Stephen K. Coss | ||
| Senior Vice President and General Counsel |
Document
Exhibit 99.1
Sonic Automotive Reports All-Time Record Quarterly Revenues and Earnings Per Share
Record Second Quarter Results Driven By Strong Franchised Dealership Performance Across All Business Lines
Fourth Consecutive Quarter of Record EchoPark Revenues and Retail Unit Sales Volume
EchoPark Announces Plans To Achieve 2 Million Vehicle Sales Annually At Maturity
Board Announces Review of Strategic Alternatives for EchoPark Business
CHARLOTTE, N.C. – July 29, 2021 – Sonic Automotive, Inc. (“Sonic” or the “Company”) (NYSE:SAH), one of the nation’s largest automotive retailers, today reported financial results for the second quarter and six months ended June 30, 2021.
Key Highlights
•All-time record quarterly revenues of $3.4 billion, up 58.7% year-over-year
•All-time record quarterly income from continuing operations before taxes of $151.0 million, up 303.4% year-over-year
•All-time record quarterly earnings from continuing operations of $114.0 million ($2.63 per diluted share)
•All-time record quarterly selling, general and administrative (“SG&A”) expenses as a percentage of gross profit of 62.8%
•All-time record quarterly Adjusted EBITDA margin* of 5.7%, up 220 basis points year-over-year
•All-time record quarterly total Finance & Insurance (“F&I”) gross profit per retail unit of $2,214, up 13.8% year-over-year
•All-time record quarterly EchoPark revenues of $595.6 million, up 88.9% year-over-year
•All-time record quarterly EchoPark retail sales volume of 21,261, up 61.0% year-over-year
Commentary
David Smith, Sonic’s and EchoPark’s Chief Executive Officer, commented, “During the second quarter, our team continued to execute at a high level, driving record performance in our franchised dealerships and a fourth consecutive quarter of record revenue and retail unit sales volume for our EchoPark business. Given the increasing consumer demand we’ve experienced, our success in maximizing operating efficiency at our franchised dealerships and continued expansion of the EchoPark brand, we believe we can sustain our strong operating performance throughout the balance of 2021 and well into 2022. Longer-term, we’re confident of attaining our goal of more than doubling total revenues to $25 billion by 2025 while continuing to significantly increase profitability.”
Jeff Dyke, Sonic’s and EchoPark’s President, commented, “We are pleased to report that we are halfway through our nationwide EchoPark distribution network & digital expansion plan for 2021, and expect to achieve 25% population coverage by the end of 2021 and 90% population coverage by 2025. At 10% share of our segment of the market, which we already exceed in our more mature markets, this represents a 2 million vehicle annual sales opportunity at maturity. Complementing this, we are making excellent progress with our new, proprietary digital retail platform and are on track for a fourth quarter 2021 launch. In the meantime, our guest-centric EchoPark buying experience continues to drive market share gains and we anticipate our market penetration and brand recognition will continue to grow rapidly in tandem with our nationwide network.”
Second Quarter Financial Highlights
The financial measures discussed below are results for the second quarter of 2021 with comparisons made to the second quarter of 2020, unless otherwise noted. Certain metrics are also compared to the second quarter of 2019 to exclude the effects of the onset of the COVID-19 pandemic on comparative results.
•All-time record quarterly revenues of $3.4 billion, up 58.7% year-over-year (up 28.2% compared to the second quarter of 2019), and all-time record quarterly income from continuing operations before taxes of $151.0 million, up 303.4% (up 310.1% compared to the second quarter of 2019)
•All-time record quarterly earnings from continuing operations of $114.0 million ($2.63 per diluted share), compared to second quarter 2020 reported earnings from continuing operations of $31.0 million ($0.71 per diluted share) and adjusted earnings from continuing operations* of $27.8 million ($0.64 per diluted share)
•All-time record quarterly selling, general and administrative (“SG&A”) expenses as a percentage of gross profit of 62.8%, a 1,210 basis-point decrease from 74.9% in the second quarter of 2020
•All-time record quarterly total Finance & Insurance (“F&I”) gross profit per retail unit of $2,214, up 13.8%
•Franchised Dealerships Segment operating results include:
◦Same store revenues up 54.8%, gross profit up 74.0% (up 24.9% and 39.6%, respectively, compared to the second quarter of 2019)
◦Same store new vehicle unit sales volume up 55.3% (up 17.6% compared to the second quarter of 2019); new vehicle gross profit per unit up 71.5%, to $3,827 (up 85.2% compared to the second quarter of 2019)
◦Same store retail used vehicle unit sales volume up 20.5% (up 6.6% compared to the second quarter of 2019); retail used vehicle gross profit per unit up 63.3%, to $1,844 (up 41.4% compared to the second quarter of 2019)
◦Same store parts, service and collision repair gross profit up 42.6% (up 6.9% compared to the second quarter of 2019); customer pay gross profit up 41.7% (up 16.6% compared to the second quarter of 2019); gross margin up 130 basis points, to 50.6% (up 150 basis points compared to the second quarter of 2019)
◦Same store F&I gross profit up 56.5% (up 43.0% compared to the second quarter of 2019); all-time record reported Franchised Dealerships Segment F&I gross profit per retail unit of $2,110, up 14.7% (up 33.5% compared to the second quarter of 2019)
◦All-time record Franchised Dealerships Segment SG&A expenses as a percentage of gross profit of 58.1%, a 1,660 basis-point decrease from 74.7% in the second quarter of 2020 (a decrease of 1,900 basis points from 77.1% in the second quarter of 2019)
•EchoPark Segment operating results include:
◦All-time record quarterly EchoPark revenues of $595.6 million, up 88.9% (up 104.2% compared to the second quarter of 2019)
◦All-time record quarterly EchoPark retail sales volume of 21,261, up 61.0% (up 68.9% compared to the second quarter of 2019)
◦EchoPark market share increase of 90 basis points, to 5.0% of the 1-4-year old vehicle segment in our current markets
◦EchoPark pre-tax loss of $14.4 million and Adjusted EBITDA* loss of $9.4 million (including market expansion-related losses of $6.6 million and $5.4 million, respectively)
◦EchoPark loss reflects expansion-related losses and the effect of strategic price management to grow top line sales and market share amidst temporary used market pricing inversion
Board Announces Review of Strategic Alternatives for EchoPark
As a result of the success of the EchoPark strategy and our confidence in our runway for continued expansion, Sonic’s Board of Directors, working together with financial and legal advisors, has initiated a review process to evaluate potential strategic alternatives for its EchoPark business. The Company is considering a full range of potential alternatives with respect to its EchoPark business. No timetable has been established for the completion of the review, and the review may not result in any transaction. The Company does not intend to disclose further developments with respect to its review process unless and until its Board approves a specific action or otherwise concludes the review.
Lazard and Kirkland & Ellis LLP are acting as financial and legal advisors to the Company, respectively, in connection with the review.
Dividend
Sonic’s Board of Directors approved a quarterly cash dividend of $0.12 per share payable on October 15, 2021 to all stockholders of record on September 15, 2021.
Second Quarter 2021 Earnings Conference Call
Senior management will hold a conference call on Thursday, July 29, 2021 at 11:00 A.M. (Eastern). Investor presentation and earnings press release materials will be accessible beginning the morning of the conference call on the Company’s website at ir.sonicautomotive.com.
To access the live webcast, please go to ir.sonicautomotive.com. For telephone access to this conference call, please register in advance using this link: http://www.directeventreg.com/registration/event/6951789. After registering, you will receive a confirmation email that includes dial-in numbers and unique conference call and registrant passcodes for entry. Registration remains available through the live call, however, to ensure you are connected for the full call we suggest registering at least 10 minutes before the start of the call.
A conference call replay will be available one hour 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 one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com.
About EchoPark Automotive
EchoPark Automotive is a rapidly growing operating segment within the Company that specializes in pre-owned vehicle sales, utilizing technology to provide a unique, guest-centric buying experience and deliver superior value to customers. More information about EchoPark Automotive can be found at www.echopark.com.
Forward-Looking Statements
Included herein are forward-looking statements, including statements regarding anticipated future revenue levels, future profitability, pre-owned vehicle sales projections, the opening of additional EchoPark markets, and future population coverage. 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, new and used vehicle industry sales volume, anticipated future growth in our EchoPark Segment, the success of our operational strategies, the rate and timing of overall economic expansion or contraction, the effect of the COVID-19 pandemic and related government-imposed restrictions on operations, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other reports and information filed with the 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 earnings from continuing operations, adjusted earnings per diluted share from continuing operations, Adjusted EBITDA and Adjusted EBITDA margin. 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.
*Adjusted earnings from continuing operations, adjusted earnings per diluted share from continuing operations, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures. The tables included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Company Contacts
Investor Inquiries:
Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400
Danny Wieland, Vice President, Investor Relations & Financial Reporting (704) 927-3462
ir@sonicautomotive.com
Press Inquiries:
Danielle DeVoren / Joshua Greenwald
212-896-1272 / 646-379-7971
ddevoren@kcsa.com/jgreenwald@kcsa.com
Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations - Consolidated
| Three Months Ended June 30, | Better / (Worse) | Six Months Ended June 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except per share amounts) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 1,462,893 | $ | 900,003 | 62.5 | % | $ | 2,619,210 | $ | 1,859,492 | 40.9 | % |
| Used vehicles | 1,266,696 | 808,877 | 56.6 | % | 2,356,794 | 1,658,930 | 42.1 | % | ||||
| Wholesale vehicles | 84,807 | 33,175 | 155.6 | % | 159,614 | 81,718 | 95.3 | % | ||||
| Total vehicles | 2,814,396 | 1,742,055 | 61.6 | % | 5,135,618 | 3,600,140 | 42.7 | % | ||||
| Parts, service and collision repair | 360,596 | 259,058 | 39.2 | % | 681,509 | 593,738 | 14.8 | % | ||||
| Finance, insurance and other, net | 177,254 | 110,773 | 60.0 | % | 321,916 | 226,064 | 42.4 | % | ||||
| Total revenues | 3,352,246 | 2,111,886 | 58.7 | % | 6,139,043 | 4,419,942 | 38.9 | % | ||||
| Cost of sales: | ||||||||||||
| New vehicles | (1,344,467) | (854,617) | (57.3) | % | (2,431,319) | (1,768,690) | (37.5) | % | ||||
| Used vehicles | (1,231,943) | (781,506) | (57.6) | % | (2,291,171) | (1,599,428) | (43.2) | % | ||||
| Wholesale vehicles | (80,280) | (33,601) | (138.9) | % | (154,240) | (82,303) | (87.4) | % | ||||
| Total vehicles | (2,656,690) | (1,669,724) | (59.1) | % | (4,876,730) | (3,450,421) | (41.3) | % | ||||
| Parts, service and collision repair | (184,748) | (134,779) | (37.1) | % | (350,612) | (311,560) | (12.5) | % | ||||
| Total cost of sales | (2,841,438) | (1,804,503) | (57.5) | % | (5,227,342) | (3,761,981) | (39.0) | % | ||||
| Gross profit | 510,808 | 307,383 | 66.2 | % | 911,701 | 657,961 | 38.6 | % | ||||
| Selling, general and administrative expenses | (320,620) | (230,359) | (39.2) | % | (609,976) | (512,515) | (19.0) | % | ||||
| Impairment charges | — | (833) | 100.0 | % | — | (268,833) | 100.0 | % | ||||
| Depreciation and amortization | (24,761) | (22,647) | (9.3) | % | (48,448) | (44,944) | (7.8) | % | ||||
| Operating income (loss) | 165,427 | 53,544 | 209.0 | % | 253,277 | (168,331) | (250.5) | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (4,329) | (6,314) | 31.4 | % | (9,441) | (16,822) | 43.9 | % | ||||
| Interest expense, other, net | (10,077) | (9,797) | (2.9) | % | (20,363) | (20,762) | 1.9 | % | ||||
| Other income (expense), net | — | — | — | % | 100 | 100 | — | % | ||||
| Total other income (expense) | (14,406) | (16,111) | 10.6 | % | (29,704) | (37,484) | 20.8 | % | ||||
| Income (loss) from continuing operations before taxes | 151,021 | 37,433 | 303.4 | % | 223,573 | (205,815) | (208.6) | % | ||||
| Provision for income taxes for continuing operations - benefit (expense) | (37,030) | (6,437) | (475.3) | % | (55,893) | 37,680 | 248.3 | % | ||||
| Income (loss) from continuing operations | 113,991 | 30,996 | 267.8 | % | 167,680 | (168,135) | (199.7) | % | ||||
| Discontinued operations: | ||||||||||||
| Income (loss) from discontinued operations before taxes | (204) | (289) | 29.4 | % | 516 | (573) | 190.1 | % | ||||
| Provision for income taxes for discontinued operations - benefit (expense) | 58 | 84 | (31.0) | % | (129) | 166 | (177.7) | % | ||||
| Income (loss) from discontinued operations | (146) | (205) | 28.8 | % | 387 | (407) | 195.1 | % | ||||
| Net income (loss) | $ | 113,845 | $ | 30,791 | 269.7 | % | $ | 168,067 | $ | (168,542) | (199.7) | % |
| Basic earnings (loss) per common share: | ||||||||||||
| Earnings (loss) per share from continuing operations | $ | 2.74 | $ | 0.72 | 280.6 | % | $ | 4.03 | $ | (3.93) | (202.5) | % |
| Earnings (loss) per share from discontinued operations | — | — | — | % | 0.01 | (0.01) | 200.0 | % | ||||
| Earnings (loss) per common share | $ | 2.74 | $ | 0.72 | 280.6 | % | $ | 4.04 | $ | (3.94) | (202.5) | % |
| Weighted-average common shares outstanding | 41,581 | 42,940 | 3.2 | % | 41,561 | 42,779 | 2.8 | % | ||||
| Diluted earnings (loss) per common share: | ||||||||||||
| Earnings (loss) per share from continuing operations | $ | 2.63 | $ | 0.71 | 270.4 | % | $ | 3.86 | $ | (3.93) | (198.2) | % |
| Earnings (loss) per share from discontinued operations | — | — | — | % | 0.01 | (0.01) | 200.0 | % | ||||
| Earnings (loss) per common share | $ | 2.63 | $ | 0.71 | 270.4 | % | $ | 3.87 | $ | (3.94) | (198.2) | % |
| Weighted-average common shares outstanding | 43,424 | 43,575 | 0.3 | % | 43,483 | 42,779 | (1.6) | % | ||||
| Dividends declared per common share | $ | 0.12 | $ | 0.10 | 20.0 | % | $ | 0.22 | $ | 0.20 | 10.0 | % |
Franchised Dealerships Segment - Reported
| Three Months Ended June 30, | Better / (Worse) | Six Months Ended June 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 1,461,984 | $ | 900,003 | 62.4 | % | $ | 2,618,301 | $ | 1,859,492 | 40.8 | % |
| Used vehicles | 761,524 | 535,699 | 42.2 | % | 1,423,059 | 1,102,587 | 29.1 | % | ||||
| Wholesale vehicles | 62,956 | 28,509 | 120.8 | % | 119,160 | 70,948 | 68.0 | % | ||||
| Total vehicles | 2,286,464 | 1,464,211 | 56.2 | % | 4,160,520 | 3,033,027 | 37.2 | % | ||||
| Parts, service and collision repair | 346,118 | 251,998 | 37.3 | % | 654,194 | 576,499 | 13.5 | % | ||||
| Finance, insurance and other, net | 124,060 | 80,401 | 54.3 | % | 221,586 | 163,429 | 35.6 | % | ||||
| Total revenues | 2,756,642 | 1,796,610 | 53.4 | % | 5,036,300 | 3,772,955 | 33.5 | % | ||||
| Gross Profit: | ||||||||||||
| New vehicles | 118,326 | 45,386 | 160.7 | % | 187,790 | 90,802 | 106.8 | % | ||||
| Used vehicles | 55,220 | 30,416 | 81.5 | % | 87,219 | 62,730 | 39.0 | % | ||||
| Wholesale vehicles | 1,434 | (357) | 501.7 | % | 2,172 | (440) | 593.6 | % | ||||
| Total vehicles | 174,980 | 75,445 | 131.9 | % | 277,181 | 153,092 | 81.1 | % | ||||
| Parts, service and collision repair | 175,578 | 124,465 | 41.1 | % | 330,844 | 282,561 | 17.1 | % | ||||
| Finance, insurance and other, net | 124,060 | 80,401 | 54.3 | % | 221,586 | 163,429 | 35.6 | % | ||||
| Total gross profit | 474,618 | 280,311 | 69.3 | % | 829,611 | 599,082 | 38.5 | % | ||||
| Selling, general and administrative expenses | (275,709) | (209,496) | (31.6) | % | (525,785) | (465,914) | (12.9) | % | ||||
| Impairment charges | — | (833) | NM | — | (268,833) | NM | ||||||
| Depreciation and amortization | (20,616) | (19,895) | (3.6) | % | (40,992) | (39,484) | (3.8) | % | ||||
| Operating income (loss) | 178,293 | 50,087 | 256.0 | % | 262,834 | (175,149) | 250.1 | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (3,155) | (5,675) | 44.4 | % | (7,271) | (15,283) | 52.4 | % | ||||
| Interest expense, other, net | (9,721) | (9,556) | (1.7) | % | (19,682) | (20,156) | 2.4 | % | ||||
| Other income (expense), net | (2) | — | (100.0) | % | 76 | 100 | (24.0) | % | ||||
| Total other income (expense) | (12,878) | (15,231) | 15.4 | % | (26,877) | (35,339) | 23.9 | % | ||||
| Income (loss) before taxes | 165,415 | 34,856 | 374.6 | % | 235,957 | (210,488) | (212.1) | % | ||||
| Add: impairment charges | — | 833 | NM | — | 268,833 | NM | ||||||
| Segment income (loss) | $ | 165,415 | $ | 35,689 | 363.5 | % | $ | 235,957 | $ | 58,346 | 304.4 | % |
| Unit Sales Volume: | ||||||||||||
| New vehicles | 30,488 | 19,891 | 53.3 | % | 54,846 | 41,615 | 31.8 | % | ||||
| Used vehicles | 28,550 | 23,973 | 19.1 | % | 55,786 | 50,011 | 11.5 | % | ||||
| Wholesale vehicles | 6,753 | 4,827 | 39.9 | % | 13,585 | 11,737 | 15.7 | % | ||||
| Retail new & used vehicles | 59,038 | 43,864 | 34.6 | % | 110,632 | 91,626 | 20.7 | % | ||||
| Used-to-New Ratio | 0.94 | 1.21 | (22.3) | % | 1.02 | 1.20 | (15.4) | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| New vehicles | $ | 3,881 | $ | 2,282 | 70.1 | % | $ | 3,424 | $ | 2,182 | 56.9 | % |
| Used vehicles | $ | 1,934 | $ | 1,269 | 52.4 | % | $ | 1,563 | $ | 1,254 | 24.6 | % |
| Finance, insurance and other, net | $ | 2,110 | $ | 1,839 | 14.7 | % | $ | 2,017 | $ | 1,798 | 12.2 | % |
NM = Not Meaningful
Franchised Dealerships Segment - Same Store
| Three Months Ended June 30, | Better / (Worse) | Six Months Ended June 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 1,461,984 | $ | 892,958 | 63.7 | % | $ | 2,618,301 | $ | 1,843,548 | 42.0 | % |
| Used vehicles | 761,524 | 531,335 | 43.3 | % | 1,423,059 | 1,092,131 | 30.3 | % | ||||
| Wholesale vehicles | 62,956 | 28,236 | 123.0 | % | 119,160 | 70,339 | 69.4 | % | ||||
| Total vehicles | 2,286,464 | 1,452,529 | 57.4 | % | 4,160,520 | 3,006,018 | 38.4 | % | ||||
| Parts, service and collision repair | 343,441 | 247,134 | 39.0 | % | 649,631 | 568,429 | 14.3 | % | ||||
| Finance, insurance and other, net | 116,657 | 74,522 | 56.5 | % | 208,903 | 152,213 | 37.2 | % | ||||
| Total revenues | 2,746,562 | 1,774,185 | 54.8 | % | 5,019,054 | 3,726,660 | 34.7 | % | ||||
| Gross Profit: | ||||||||||||
| New vehicles | 116,692 | 43,811 | 166.4 | % | 185,648 | 88,926 | 108.8 | % | ||||
| Used vehicles | 52,647 | 26,759 | 96.7 | % | 82,920 | 58,900 | 40.8 | % | ||||
| Wholesale vehicles | 4,199 | (289) | 1,552.9 | % | 4,935 | (338) | 1,560.1 | % | ||||
| Total vehicles | 173,538 | 70,281 | 146.9 | % | 273,503 | 147,488 | 85.4 | % | ||||
| Parts, service and collision repair | 173,900 | 121,946 | 42.6 | % | 327,583 | 278,411 | 17.7 | % | ||||
| Finance, insurance and other, net | 116,657 | 74,522 | 56.5 | % | 208,903 | 152,213 | 37.2 | % | ||||
| Total gross profit | $ | 464,095 | $ | 266,749 | 74.0 | % | $ | 809,989 | $ | 578,112 | 40.1 | % |
| Unit Sales Volume: | ||||||||||||
| New vehicles | 30,488 | 19,631 | 55.3 | % | 54,846 | 41,041 | 33.6 | % | ||||
| Used vehicles | 28,550 | 23,701 | 20.5 | % | 55,786 | 49,336 | 13.1 | % | ||||
| Wholesale vehicles | 6,753 | 4,773 | 41.5 | % | 13,585 | 11,611 | 17.0 | % | ||||
| Retail new & used vehicles | 59,038 | 43,332 | 36.2 | % | 110,632 | 90,377 | 22.4 | % | ||||
| Used-to-New Ratio | 0.94 | 1.21 | (22.4) | % | 1.02 | 1.20 | (15.4) | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| New vehicles | $ | 3,827 | $ | 2,232 | 71.5 | % | $ | 3,385 | $ | 2,167 | 56.2 | % |
| Used vehicles | $ | 1,844 | $ | 1,129 | 63.3 | % | $ | 1,486 | $ | 1,194 | 24.5 | % |
| Finance, insurance and other, net | $ | 1,984 | $ | 1,726 | 14.9 | % | $ | 1,902 | $ | 1,698 | 12.0 | % |
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 June 30, | Better / (Worse) | Six Months Ended June 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| New vehicles | $ | 909 | $ | — | 100.0 | % | $ | 909 | $ | — | 100.0 | % |
| Used vehicles | 505,172 | 273,178 | 84.9 | % | 933,735 | 556,343 | 67.8 | % | ||||
| Wholesale vehicles | 21,851 | 4,666 | 368.3 | % | 40,454 | 10,770 | 275.6 | % | ||||
| Total vehicles | 527,932 | 277,844 | 90.0 | % | 975,098 | 567,113 | 71.9 | % | ||||
| Parts, service and collision repair | 14,478 | 7,060 | 105.1 | % | 27,315 | 17,239 | 58.4 | % | ||||
| Finance, insurance and other, net | 53,194 | 30,372 | 75.1 | % | 100,330 | 62,635 | 60.2 | % | ||||
| Total revenues | 595,604 | 315,276 | 88.9 | % | 1,102,743 | 646,987 | 70.4 | % | ||||
| Gross Profit: | ||||||||||||
| New vehicles | 100 | — | 100.0 | % | 100 | — | 100.0 | % | ||||
| Used vehicles | (20,467) | (3,045) | (572.2) | % | (21,596) | (3,228) | (569.0) | % | ||||
| Wholesale vehicles | 3,093 | (69) | 4,582.6 | % | 3,202 | (145) | 2,308.3 | % | ||||
| Total vehicles | (17,274) | (3,114) | (454.7) | % | (18,294) | (3,373) | 442.4 | % | ||||
| Parts, service and collision repair | 270 | (186) | 245.2 | % | 54 | (383) | 113.8 | % | ||||
| Finance, insurance and other, net | 53,194 | 30,372 | 75.1 | % | 100,330 | 62,635 | 60.2 | % | ||||
| Total gross profit | 36,190 | 27,072 | 33.7 | % | 82,090 | 58,879 | 39.4 | % | ||||
| Selling, general and administrative expenses | (44,911) | (20,863) | (115.3) | % | (84,191) | (46,601) | (80.7) | % | ||||
| Impairment charges | — | — | — | % | — | — | — | % | ||||
| Depreciation and amortization | (4,145) | (2,752) | (50.6) | % | (7,456) | (5,460) | (36.6) | % | ||||
| Operating income (loss) | (12,866) | 3,457 | (472.2) | % | (9,557) | 6,818 | (240.2) | % | ||||
| Other income (expense): | ||||||||||||
| Interest expense, floor plan | (1,174) | (639) | (83.7) | % | (2,170) | (1,539) | (41.0) | % | ||||
| Interest expense, other, net | (356) | (241) | (47.7) | % | (681) | (606) | (12.4) | % | ||||
| Other income (expense), net | 2 | — | 100.0 | % | 24 | — | 100.0 | % | ||||
| Total other income (expense) | (1,528) | (880) | (73.6) | % | (2,827) | (2,145) | (31.8) | % | ||||
| Income (loss) before taxes | (14,394) | 2,577 | (658.6) | % | (12,384) | 4,673 | (365.0) | % | ||||
| Add: impairment charges | — | — | NM | — | — | NM | ||||||
| Segment income (loss) | $ | (14,394) | $ | 2,577 | (658.6) | % | $ | (12,384) | $ | 4,672 | (365.1) | % |
| Unit Sales Volume: | ||||||||||||
| New vehicles | 14 | — | 100.0 | % | 14 | — | 100.0 | % | ||||
| Used vehicles | 21,261 | 13,207 | 61.0 | % | 40,931 | 27,193 | 50.5 | % | ||||
| Wholesale vehicles | 2,878 | 1,454 | 97.9 | % | 5,739 | 3,219 | 78.3 | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Total used vehicle and F&I | $ | 1,539 | $ | 2,069 | (25.6) | % | $ | 1,924 | $ | 2,185 | (11.9) | % |
NM = Not Meaningful
EchoPark Segment - Same Market
| Three Months Ended June 30, | Better / (Worse) | Six Months Ended June 30, | Better / (Worse) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| (In thousands, except unit and per unit data) | ||||||||||||
| Revenues: | ||||||||||||
| Used vehicles | $ | 368,857 | $ | 273,178 | 35.0 | % | $ | 716,654 | $ | 556,353 | 28.8 | % |
| Wholesale vehicles | 14,951 | 4,666 | 220.4 | % | 30,722 | 10,770 | 185.3 | % | ||||
| Total vehicles | 383,808 | 277,844 | 38.1 | % | 747,376 | 567,123 | 31.8 | % | ||||
| Parts, service and collision repair | 10,602 | 7,060 | 50.2 | % | 21,248 | 17,205 | 23.5 | % | ||||
| Finance, insurance and other, net | 39,007 | 30,259 | 28.9 | % | 77,473 | 62,430 | 24.1 | % | ||||
| Total revenues | 433,417 | 315,163 | 37.5 | % | 846,097 | 646,758 | 30.8 | % | ||||
| Gross Profit: | ||||||||||||
| Used vehicles | (17,118) | (6,545) | (161.5) | % | (18,633) | (10,703) | (74.1) | % | ||||
| Wholesale vehicles | 2,288 | (69) | 3,415.9 | % | 2,410 | (145) | 1,762.1 | % | ||||
| Total vehicles | (14,830) | (6,614) | (124.2) | % | (16,223) | (10,848) | 49.5 | % | ||||
| Parts, service and collision repair | (4) | (186) | 97.8 | % | (27) | (383) | 93.0 | % | ||||
| Finance, insurance and other, net | 39,007 | 30,259 | 28.9 | % | 77,473 | 62,430 | 24.1 | % | ||||
| Total gross profit | $ | 24,173 | $ | 23,459 | 3.0 | % | $ | 61,223 | $ | 51,199 | 19.6 | % |
| Unit Sales Volume: | ||||||||||||
| Used vehicles | 15,382 | 13,207 | 16.5 | % | 31,189 | 27,193 | 14.7 | % | ||||
| Wholesale vehicles | 1,847 | 1,454 | 27.0 | % | 4,151 | 3,219 | 29.0 | % | ||||
| Gross Profit Per Unit: | ||||||||||||
| Total used vehicle and F&I | $ | 1,423 | $ | 1,796 | (20.8) | % | $ | 1,887 | $ | 1,902 | (0.8) | % |
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.
Selling, General and Administrative ("SG&A") Expenses - Consolidated
| Three Months Ended June 30, | Better / (Worse) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Change | % Change | ||||||||
| (In thousands) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 213,842 | $ | 140,266 | $ | (73,576) | (52.5) | % | |||
| Advertising | 15,345 | 8,087 | (7,258) | (89.7) | % | ||||||
| Rent | 13,665 | 13,223 | (442) | (3.3) | % | ||||||
| Other | 77,768 | 68,783 | (8,985) | (13.1) | % | ||||||
| Total SG&A expenses | $ | 320,620 | $ | 230,359 | $ | (90,261) | (39.2) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 41.9 | % | 45.6 | % | 370 | bps | |||||
| Advertising | 3.0 | % | 2.6 | % | (40) | bps | |||||
| Rent | 2.7 | % | 4.3 | % | 160 | bps | |||||
| Other | 15.2 | % | 22.4 | % | 720 | bps | |||||
| Total SG&A expenses as a % of gross profit | 62.8 | % | 74.9 | % | 1,210 | bps | |||||
| Six Months Ended June 30, | Better / (Worse) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | Change | % Change | ||||||||
| (In thousands) | |||||||||||
| Reported: | |||||||||||
| Compensation | $ | 402,333 | $ | 314,688 | $ | (87,645) | (27.9) | % | |||
| Advertising | 27,515 | 22,222 | (5,293) | (23.8) | % | ||||||
| Rent | 27,409 | 27,088 | (321) | (1.2) | % | ||||||
| Other | 152,719 | 148,517 | (4,202) | (2.8) | % | ||||||
| Total SG&A expenses | $ | 609,976 | $ | 512,515 | $ | (97,461) | (19.0) | % | |||
| Reported: | |||||||||||
| SG&A expenses as a % of gross profit: | |||||||||||
| Compensation | 44.1 | % | 47.8 | % | 370 | bps | |||||
| Advertising | 3.0 | % | 3.4 | % | 40 | bps | |||||
| Rent | 3.0 | % | 4.1 | % | 110 | bps | |||||
| Other | 16.8 | % | 22.6 | % | 580 | bps | |||||
| Total SG&A expenses as a % of gross profit | 66.9 | % | 77.9 | % | 1,100 | bps |
Earnings Per Share from Continuing Operations - Non-GAAP Reconciliation
| Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Weighted-<br>Average<br>Shares | Amount | Per<br>Share<br>Amount | Weighted-<br>Average<br>Shares | Amount | Per<br>Share<br>Amount | |||||
| (In thousands, except per share amounts) | ||||||||||
| Diluted earnings (loss) and shares from continuing operations | 43,424 | $ | 113,991 | $ | 2.63 | 43,575 | $ | 30,996 | $ | 0.71 |
| Pre-tax items of interest: | ||||||||||
| Non-recurring tax items | $ | — | $ | (3,175) | ||||||
| Adjusted diluted earnings (loss) and shares from continuing operations | 43,424 | $ | 113,991 | $ | 2.63 | 43,575 | $ | 27,821 | $ | 0.64 |
| Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Weighted-<br>Average<br>Shares | Amount | Per<br>Share<br>Amount | Weighted-<br>Average<br>Shares | Amount | Per<br>Share<br>Amount | |||||
| (In thousands, except per share amounts) | ||||||||||
| Diluted earnings (loss) and shares from continuing operations (1) | 43,483 | $ | 167,680 | $ | 3.86 | 42,779 | $ | (168,135) | $ | (3.93) |
| Pre-tax items of interest: | ||||||||||
| Impairment charges | $ | — | $ | 268,000 | ||||||
| Total pre-tax items of interest | $ | — | $ | 268,000 | ||||||
| Tax effect of above items | — | (51,295) | ||||||||
| Non-recurring tax items | — | (3,175) | ||||||||
| Adjusted diluted earnings (loss) and shares from continuing operations | 43,483 | $ | 167,680 | $ | 3.86 | 42,779 | $ | 45,395 | $ | 1.06 |
(1) Basic weighted-average shares used for six months ended June 30, 2020 due to net loss on GAAP basis.
Adjusted EBITDA - Non-GAAP Reconciliation
| Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | |||||||||
| (In thousands) | ||||||||||||||||
| Net income (loss) | $ | 113,845 | $ | 30,791 | ||||||||||||
| Provision for income taxes | 36,972 | 6,353 | ||||||||||||||
| Income (loss) before taxes | $ | 165,415 | $ | (14,394) | $ | (204) | $ | 150,817 | $ | 34,856 | $ | 2,577 | $ | (289) | $ | 37,144 |
| Non-floor plan interest | 8,895 | 348 | — | 9,243 | 8,938 | 234 | — | 9,172 | ||||||||
| Depreciation and amortization | 21,444 | 4,152 | — | 25,596 | 20,514 | 2,758 | — | 23,272 | ||||||||
| Stock-based compensation expense | 3,989 | — | — | 3,989 | 2,971 | — | — | 2,971 | ||||||||
| Asset impairment charges | — | — | — | — | 833 | — | — | 833 | ||||||||
| Long-term compensation charges | — | 500 | — | 500 | — | — | — | — | ||||||||
| Loss (gain) on franchise and real estate disposals | (400) | (23) | — | (423) | 1,117 | — | — | 1,117 | ||||||||
| Adjusted EBITDA | $ | 199,343 | $ | (9,417) | $ | (204) | $ | 189,722 | $ | 69,229 | $ | 5,569 | $ | (289) | $ | 74,509 |
| Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | Franchised Dealerships Segment | EchoPark Segment | Discontinued Operations | Total | |||||||||
| (In thousands) | ||||||||||||||||
| Net income (loss) | $ | 168,067 | $ | (168,542) | ||||||||||||
| Provision for income taxes | 56,022 | (37,846) | ||||||||||||||
| Income (loss) before taxes | $ | 235,957 | $ | (12,384) | $ | 516 | $ | 224,089 | $ | (210,487) | $ | 4,672 | $ | (573) | $ | (206,388) |
| Non-floor plan interest | 18,022 | 682 | — | 18,704 | 18,981 | 599 | — | 19,580 | ||||||||
| Depreciation & amortization | 42,650 | 7,456 | — | 50,106 | 40,658 | 5,466 | — | 46,124 | ||||||||
| Stock-based compensation expense | 7,474 | — | — | 7,474 | 5,398 | — | — | 5,398 | ||||||||
| Asset impairment charges | — | — | — | — | 268,833 | — | — | 268,833 | ||||||||
| Long-term compensation charges | — | 1,000 | — | 1,000 | — | — | — | — | ||||||||
| Loss (gain) on franchise disposals | (421) | (9) | — | (430) | 1,117 | — | — | 1,117 | ||||||||
| Adjusted EBITDA | $ | 303,682 | $ | (3,255) | $ | 516 | $ | 300,943 | $ | 124,500 | $ | 10,737 | $ | (573) | $ | 134,664 |
ex992
® Sonic Automotive – Investor Presentation July 2021 Updated July 29, 2021 Exhibit 99.2
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,” “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, the effects of COVID-19 on operations, our anticipated future new vehicle unit sales volume, revenues and profitability, our anticipated future used vehicle unit sales volume, revenues and profitability, 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, anticipated openings of new EchoPark stores, anticipated future population coverage, anticipated future performance and growth of our Franchised Dealerships Segment, anticipated liquidity positions, anticipated industry new vehicle sales volume, the implementation of growth and operating strategies, including acquisitions of dealerships and properties, 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, 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, 2020 and other reports and information filed with the 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 116 20+ 14 16 $9.8 Billion $1.4 Billion 93K New Vehicles Sold 159K Total Revenues Automotive Brands Locations Used Vehicles Sold States Collision Centers Gross Profit Note: Revenue, Gross Profit, New & Used Vehicles Sold are for FY 2020 Our Core Franchised Dealerships Segment is a Full-Service Automotive Retail Business With Strategic Growth Levers Across Multiple Business Lines with a Diversified Brand Portfolio Our High Growth 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
5 Investment Highlights Multiple Growth And Profit Drivers For Franchised Segment Unique, High Return EchoPark Business Model Broad Revenue Stream Diversification Complementary Relationship – Sonic Franchised And EchoPark Disciplined Capital Allocation To Accelerate EchoPark Growth Focused On Expense Control And Strengthening The Balance Sheet Expect To Grow Total Revenue To $25 Billion By 2025 Note: Total revenue projection is estimate of future results. Actual results may differ. See “Forward-Looking Statements.”
6 Revenue Composition BY GEOGRAPHY TX 28% CA 26%CO 10% TN 7% FL 7% AL 6% NC 5% GA 3% VA 2% MD 2% SC 2% NV 2% Concentrated in Major Metro Markets Geographic Footprint, Revenue Streams and Brand Mix Offer Attractive Diversification Across the Automotive Retail Space Note: Percentages are Percent of Total Revenue for FY 2020 * Based On 2020 U.S. Census Bureau Data 3rd Fastest Growing State* Pandemic Recovery Has Lagged Other Markets – Near-Term Potential Upside
7 Revenue Composition – Diversified Revenue Streams Note: Percentages are Percent of Total for FY 2020 5% 34% 13% 42% 39% 7%43% 17% 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 FY 2020 Brand % of Revenue Franchise Brand % of Revenue BMW 22% Mercedes 11% Audi 6% Lexus 4% Land Rover 4% Porsche 3% Cadillac 2% MINI 1% Other Luxury (1) 2% Honda 11% Toyota 7% Hyundai 1% Volkswagen 1% Nissan <1% EchoPark 15% Non-Franchise 15% Ford 5% General Motors (2) 5% Luxury 55% 20%Import Domestic 10% (1) Includes Volvo, Jaguar, Acura and Infiniti (2) Includes Chevrolet, GMC and Buick Business Line Mix Majority Of Gross Profit Driven By Stable Business Lines
8 ® EchoPark Automotive – A Unique Growth Story Growing Nationwide Distribution Network Expected To Reach 90% Of Population By 2025 Unique, High Return Business Model 1 to 4-Year-Old Vehicles - Nearly New With Remaining OEM Warranty Wide Reach – 30% of Guests Travel More Than 30 Minutes To Shop Our Inventory Priced Up to $3,000 Below Market With Simplified, Easy Purchase Experience Focus On Pre-Owned Market – More Stable Than New Vehicle Market The New Car Alternative™ Price. Quality. Experience.
9 Franchised Dealerships ® ® Complementary Relationship Between Segments • Thrives When New Vehicle Industry Is Healthy, Particularly Where Luxury Brands Are Strong • Diversified Revenue Streams • Relatively Low Fixed Costs And Multiple Strategic Levers • Further Growth Opportunities: Parts and Service Business Used Vehicles F&I Penetration Expense Leverage Strategic Acquisitions • Strong Secular Growth Phase Due To: Focus On Recession-Resistant Pre-Owned Vehicle Market Below-Market Pricing Strategy Simplified, Easy Purchase Experience • If Pre-Owned Vehicle Valuations Decline, EchoPark Should: Benefit From Rapid Inventory Turns, Creating An Even Greater Pricing Advantage Over Competitors To Drive Additional Volume
10 Strategic Direction • 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 Omni-Channel Distribution Network • Early-Stage Strong Secular Growth Phase • Projected To Add 25 New Locations Annually In 2021- 2025 • Expect 25% Population Coverage By End Of 2021, 90% Coverage By 2025 • Profitability Inflection Point Expected In 2022 • Nationwide Distribution Network Expected To Deliver 575,000 Unit Sales And $14 Billion In Revenues Annually By 2025 • 2 Million Vehicle Addressable Market Opportunity • Invest In Proprietary Digital Retail Platform To Accelerate Growth • Focus On Guest Experience To Drive Market Share Gains • Strict Capital Allocation Strategy Prioritizes Highest Return on Investment • Return Of Capital To Shareholders Via Dividend And Share Repurchase Program Franchised Dealerships EchoParkStrategic Drivers Note: Profitability and revenue projection are estimates of future results. Actual results may differ. See “Forward-Looking Statements.”
11 EchoPark
12 EchoPark – Brand Promise Up To 40% Below New Vehicle Price Up To 10% Below Used Vehicle Market Price High Quality, Low Mileage Vehicle With Existing Warranty Transparent Guest-Centric Experience New Car Feel Without The New Car Price Complete Purchase In Under An Hour Zero Reported Accidents On CARFAX 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 . T h e F u l l O m n i - C h a n n e l O p t i o n
13 EchoPark – Developing Nationwide Distribution Network 25% Population Coverage By End Of 2021 90% Population Coverage By 2025 Note: Future locations and population coverage are based on projections. Actual results may differ. See “Forward-Looking Statements.” Existing Retail Hub Existing Delivery Center Delivery Center Coverage Area Future Market Opportunities
14 EchoPark – Addressable Market Opportunity * Share Of Vehicles That Fit 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 Multiple Markets Priced Up to $3,000 Below Used Compete On Price Vs. 5–6- Year-Old Vehicles, Consumer Can Buy Newer Vehicle At Same Price Priced Up To 40% Below New Attract Prospective New Car Buyers 2 MILLION Opportunity 15+ MILLION 1–4-Year-Old Vehicles 6+ MILLION 5–6-Year- Old Vehicles 13+ MILLION New Vehicles 5% Q2 2021 Average Market Share* – Up 90 Basis Points From Q2 2020 Annual Retail Vehicle Sales Volume
15 EchoPark – 5-Year Growth Forecast 57,161 575,000 FY 2020 FY 2025E Retail Unit Sales Volume FY 2020 FY 2025E $1.4 $14.0 Total Revenues (In Billions) 58% CAGR $221.0 FY 2020 FY 2025E Pre-Tax Profit (Loss) (In Millions) ($1.1) $11.0 $261.0 FY 2020 FY 2025E EBITDA (In Millions) Growth Drivers • Expect to Open ~25 Markets Per Year From 2021-2025 • ~20 Delivery Centers, ~5 Medium Or Large Retail Hubs • See 4-Wall Model On Next Slide • Existing Markets Generate ~400,000 Unique Leads On An Annualized Basis • Expect To Cover 25% Of U.S. Population By 2021, 90% By 2025 • Population Coverage, Market Density Growth And Continued Market Share Gains Drive Long-Term Opportunities Note: Amounts are estimates of future results used for modeling purposes. Actual results may differ materially.
16 EchoPark – Modeled 4-Wall Economics At Maturity (Modeled Metrics Assume 100% Maturity) Delivery Center Medium Retail Hub Large Retail Hub Average Monthly Retail Unit Volume 300 750 1,500 Average Vehicle Selling Price 20,500$ 20,500$ 20,500$ Total Annual Revenues 82,000,000$ 205,000,000$ 410,000,000$ Total Combined Gross Profit Per Unit Retailed ("GPU") 1,700$ 2,150$ 2,150$ Target SG&A Expenses as % of Gross Profit 65% 60% 60% Annual Pre-Tax Profit 2,100,000$ 7,200,000$ 14,400,000$ Average Compensation Per Employee (with Fringe) 68,000$ 78,000$ 78,000$ Total Headcount 7 105 170 Sales Experience Guide ("EG") Headcount N/A 25 50 Average Retail Unit Sales Per EG Per Month N/A 30 30 Target Inventory Days' Supply N/A 30 Days 30 Days Working Capital Investment -$ 15,000,000$ 31,000,000$ Inventory Floor Plan Financing -$ (15,000,000)$ (31,000,000)$ Capital Expenditures, Including Land (Varies By Market) $1-$2 Million $7-$12 Million $20-$25 Million Estimated Months to Breakeven 3-6 Months 6-9 Months 6-9 Months Estimated Years to Maturity 2 Years 4 Years 5 Years Expected Pre-Tax Return On Investment 55%+ 35% - 50% 28% - 33% Note: Estimated average pre-tax losses of $1.5 to $2.0 million per new medium or large retail hub opening (~40% incurred in 3 months prior to opening, ~60% incurred post- opening prior to targeted breakeven). Pre-tax losses for new Delivery Center locations are expected to be approximately $0.2 million per location prior to targeted breakeven. Note: Amounts are estimates of future results used for comparative modeling purposes. Actual store results may differ. See “Forward-Looking Statements.”
17 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 • Arrange Vehicle Transport To Delivery Center • Guest Picks Up Vehicle At EchoPark Delivery Center Near Their Home (i.e. Next-To-Last-Mile Delivery) Strategic Advantages • Quick 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 Open ~20 Delivery Centers Annually From 2021-2025 • Target Adjacent Secondary Markets Or Large Markets Where Traditional Dealership Real Estate Is Unavailable Or Cost Prohibitive
18 EchoPark – High Volume Model Drives Superior Returns Gross Profit Per Unit (“GPU”) Franchised Used EchoPark Better (Worse) Front-End Used Vehicle GPU $1,300 $(100) F&I GPU $1,600 $2,250 Parts and Service Reconditioning GPU $500 - Total Used-Related GPU $3,400 $2,150 ($1,250) Volume Differential Factor x1 X5 Pro Forma Comparative Used-Related Gross Profit $3,400 $10,750 $7,350 Ultra-Low Pricing Attractive F&I High Volume Throughput Below-Market Pricing Drives High Customer Lead Volume Higher Penetration Rates On F&I Products vs. Sonic Franchised Stores 5X Volume Throughput Per Retail Hub vs. Sonic Franchised Stores Note: Amounts are estimates of future results used for comparative modeling purposes. Actual results may differ.
19 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 $- $100 $200 $300 $400 $500 $600 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 (In M illi on s) Quarterly Retail Units Quarterly Revenue Retail Unit Volume Forecast: FY 2021 – 100,000-105,000 Units (75%-85% Growth vs. FY 2020) 8.1% Sequential Unit Growth In Q2 2021, 61.0% Growth vs. Q2 2020
20 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) $6.1 $6.2 $6.8 $4.8 ($0.3) $6.7 ($4.0) ($10.0) ($8.0) ($6.0) ($4.0) ($2.0) $0.0 $2.0 $4.0 $6.0 Adjusted EBITDA Less Impact of New Stores (In M illi on s) Balanced Pricing Strategy To Maintain Top Line Growth, Market Share And Sales Velocity During Transient Used Market Pricing Environment In Q2 2021 Refer To Appendix For Calculation And Reconciliation of Adjusted EBITDA (A Non-GAAP Measure) Market Expansion Expected To Reduce Adjusted EBITDA By $12-$14 Million In FY 2021
21 EchoPark – Market Pricing Impact 2021 Used Vehicle Market Wholesale Vs. Retail Pricing • Q1 2021 – Normal Market Conditions (See Next Slide) • Wholesale Price Lower Than Market Retail • EchoPark Priced At Discount To Market Retail • Q2 2021 – Abnormal Inverted Wholesale Market Conditions (See Next Slide) • Wholesale Price Higher Than Market Retail • EchoPark Priced At Premium To Market Retail To Mitigate Losses • Q3 2021 – Market Beginning To Return To Normal Conditions In Late July • Wholesale Price Lower Than Market Retail • EchoPark Resumes Normal Discount To Market Retail • Q4 2021 – Expect Normal Market Conditions • Wholesale Price Lower Than Market Retail • EchoPark Priced At Normal Discount To Market Retail
22 EchoPark Price Near Wholesale Price = Normal GPU EchoPark Price Below Wholesale & Above Market Retail = GPU Pressure To Maintain Volume $18,000 $19,000 $20,000 $21,000 $22,000 $23,000 $24,000 $25,000 $26,000 $27,000 $28,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Av er ag e Pr ic e Week Of Year – 2021 To Date Manheim Wholesale Price Market Average Retail Price EchoPark Average Retail Price EchoPark vs. Market Pricing Weekly Trend 2021 Wholesale Crosses Above Retail (Abnormal) Normal Market Conditions Transient Market Conditions Retail Crosses Back Above Wholesale (Normal) Our Low Days’ Supply And High Rate Of Auction Sourcing Is Disproportionately Impacted By Short-Term Abnormal Market Conditions
23 Franchised Dealerships
24 New & Used Vehicle Sales Parts & Service (P&S) Finance & Insurance (F&I) ® Franchised Dealerships Franchised Dealerships86 Brands, Luxury Weighted20+ Diversified Revenue Streams • New & Used Vehicle Sales • Parts Service (P S) • Finance & Insurance (F&I) Collision Repair Centers14 20 Major Metropolitan Markets Stable Business With Organic And Acquisition Growth Opportunities Resilient And Flexible Business Model Through Economic Cycles
25 Franchised Dealerships – Geographic Footprint Platforms Concentrated In Major Metro Markets 86 Stores, 20+ Brands, 14 Collision Repair Centers
26 Franchised Dealerships – Strategic Levers Multiple Growth Drivers Divest Underperforming or Capital-Intensive Stores Grow Parts and Service Maximize F&I Penetration High Used Vehicle Volume Throughput Data-Driven Inventory Management Apply EchoPark Learnings Develop Omni-Channel Platform SG&A Expense Discipline Acquire Potential High Return Stores
27 Omni-Channel Strategy
28 Full Omni-Channel Infrastructure Guest Experience Managers Centralized Appraisals, Inventory Sourcing, Pricing Centralized Call Support Centralized F&I Digital Interface People Proprietary Technology Centralized Marketing Develop & Launch eCommerce Platform B u y & S e l l Yo u r Wa y Proprietary Ability to Buy a Car A to Z Online or Any Step In Between Utilize SIMS, Python Analytics, Robotic Process Automation, Hyper-Intelligence Technology ON-SITE ONLINE Se am le ss G ue st E xp er ie nc e
29 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 ~10% Of Q2 2021 Vehicle Sales Transactions
30 Q2 2021 Financial Snapshot
31 Q2 2021 – Consolidated Continuing Operations % Better / (Worse) than (In millions, except per share data) Q2 2021 Q2 2020 Q2 2019 Revenues $3,352.2 58.7% 28.2% Gross profit $510.8 66.2% 34.0% SG&A expenses $320.6 (39.2%) (8.9%) SG&A expenses as % of gross profit 62.8% 1,210 bps 1,440 bps Earnings from continuing operations before taxes $151.0 303.4% 310.1% Continuing Ops: Net income $114.0 267.8% 326.1% Diluted earnings per share $2.63 270.4% 324.2% Refer to Appendix for Calculation of Adjusted Results and Reconciliation of Non-GAAP Measures Excluding The Effect Of A $3.2 Million Non-Recurring Income Tax Benefit In Q2 2020, Adjusted Q2 2021 Diluted EPS From Continuing Operations Increased 310.9%
32 Q2 2021 – Franchised Dealerships Segment % Better / (Worse) than (In millions, except unit and per unit data) Q2 2021 Q2 2020 Q2 2019 Revenues $2,756.6 53.4% 18.7% Gross profit $474.6 69.3% 34.3% SG&A expenses $275.7 (31.6%) (1.2%) SG&A expenses as % of gross profit 58.1% 1,660 bps 1,900 bps Segment income (loss) $165.4 363.5% 370.9% New vehicle unit sales volume 30,488 53.3% 8.1% Retail used vehicle unit sales volume 28,550 19.1% (1.1%) New vehicle gross profit per unit $3,881 70.1% 94.0% Retail used vehicle gross profit per unit $1,934 52.4% 49.1% F&I gross profit per unit retailed $2,110 14.7% 33.5% Excluding The Effect Of Disposals In 2019, Same Store Q2 2021 New Unit Volume Increased 17.6% And Retail Used Unit Volume Increased 6.6% Compared to Q2 2019 Refer to Appendix for Reconciliation Of Segment Income (Loss)
33 Q2 2021 – EchoPark Segment % Better / (Worse) than (In millions, except unit and per unit data) Q2 2021 Q2 2020 Q2 2019 Revenues $595.6 88.9% 104.2% Gross profit $36.2 33.7% 29.6% SG&A expenses $44.9 (115.3%) (102.3%) SG&A expenses as % of gross profit 124.1% (4,700) bps (4,460) bps Segment income (loss) ($14.4) (658.6%) (950.2%) Retail used vehicle unit sales volume 21,261 61.0% 68.9% Total combined gross profit per unit retailed $1,539 (25.6%) (31.1%) All-Time Record Quarterly Volume Q2 2021 Segment Income (Loss) Includes Market Expansion-Related Loss of $6.6 Million All-Time Record Quarterly Revenue Balanced Pricing Strategy To Maintain Top Line Growth, Market Share And Sales Velocity During Transient Used Market Conditions ($19.3M Negative Impact On Gross Profit In Q2 2021) Refer to Appendix for Reconciliation Of Segment Income (Loss)
34 Strong Balance Sheet And Liquidity June 30,2021 December 31,2020 (In Millions) Cash and cash equivalents 239.6$ 170.3$ Availability under the 2021 Revolving Credit Facility(1) 224.3 214.7 Availability under the 2019 Mortgage Facility 16.7 11.2 Availability under the 2020 Line Of Credit Facility 54.1 57.0 Floor plan deposit balance 75.0 73.2 Total available liquidity resources 609.7$ 526.4$ Covenant Requirement* June 30,2021 December 31,2020 Liquidity ratio >= 1.05 1.19 1.18 Fixed charge coverage ratio >= 1.20 2.21 2.07 Total lease adjusted leverage ratio <= 5.75 1.34 2.79 Net debt to Adjusted EBITDA ratio(2) 0.69 1.29 * As Defined In The 2021 Revolving Credit Facility and 2019 Mortgage Facility (1) Balance As Of December 31, 2020 Was Under The 2016 Revolving Credit Facility (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)
35 Capital Expenditure Discipline Strict Capital Allocation Strategy Prioritizes Highest Return On Investment Actual YTD Q2 2021 Capital Expenditures Of $105.2 Million FY 2021E Includes Plans For 25 New EchoPark Locations In 2021 And Real Estate For 2022 Openings $181.2 $87.8 $89.3 $92.4 $80.0 $53.0 $75.8 $36.3 $34.8 $110.0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021E Gross Capital Expenditures (In Millions) Franchise EchoPark
36 Appendix
37 Non-GAAP Reconciliation – Segment Income Franchised Dealerships Segment EchoPark Segment Consolidated (In millions, except unit data) Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Revenues 2,756.6$ 1,796.6$ 595.6$ 315.3$ 3,352.2$ 2,111.9$ Gross profit 474.6$ 280.3$ 36.2$ 27.1$ 510.8$ 307.4$ SG&A expenses 275.7$ 209.5$ 44.9$ 20.9$ 320.6$ 230.4$ Segment income 165.4$ 35.7$ (14.4)$ 2.6$ 151.0$ 38.3$ Impairment charges - (0.8) - - - (0.8) Earnings (loss) from continuing operations before taxes 165.4$ 34.9$ (14.4)$ 2.6$ 151.0$ 37.5$ Adjusted net income (loss) from continuing operations 114.0$ 27.8$ Impairment charges (before taxes) - - Tax effect of items of interest and non-recurring tax items - 3.2 Net income (loss) from continuing operations 114.0$ 31.0$ New vehicle unit sales volume 30,488 19,891 14 - 30,502 19,891 Retail used vehicle unit sales volume 28,550 23,973 21,261 13,207 49,811 37,180 Note: Segment Income (Loss) Defined As Earnings (Loss) From Continuing Operations Before Taxes And Impairment Charges
38 Non-GAAP Reconciliation – Earnings Per Share Q2 2021 Q2 2020 (In thousands, except per share amounts) Weighted- Average Shares Amount Per Share Amount Weighted- Average Shares Amount Per Share Amount Diluted earnings (loss) and shares from continuing operations 43,424 113,991$ 2.63$ 43,575 30,996$ 0.71$ Non-recurring tax items - (3,175) Adjusted diluted earnings (loss) and shares from continuing operations 43,424 113,991$ 2.63$ 43,575 27,821$ 0.64$
39 Non-GAAP Reconciliation – Adjusted EBITDA (In thousands) FY 2017 FY 2018 FY 2019 FY 2020 LTM Q2 2021 Net Income (Loss) 92,983$ 51,650$ 144,137$ (49,349)$ 285,223$ Provision For Income Taxes 13,198 22,645 54,954 12,983 109,487 Income (Loss) Before Taxes 106,181$ 74,295$ 199,091$ (36,366)$ 394,710$ Non-Floor Plan Interest 50,531 52,049 50,475 38,672 37,797 Depreciation and Amortization 92,127 96,652 95,646 93,922 97,902 Stock-Based Compensation Expense 11,119 11,853 10,797 11,704 13,778 Loss (Gain) On Exit Of Leased Dealerships 2,157 1,709 (170) - - Impairment Charges 9,394 29,514 20,768 270,017 1,184 Loss (Gain) On Debt Extinguishment 14,607 - 6,690 - - Long-Term Compensation Charges - 32,522 - - - Loss (Gain) on Franchise and Real Estate Disposals (9,980) (39,307) (74,812) (8,247) (9,791) Adjusted EBITDA 276,136$ 259,287$ 308,485$ 369,702$ 535,580$ Long-Term Debt (Including Current Portion) 1,024,703$ 945,083$ 706,886$ 720,066$ 686,393$ Cash and Equivalents (6,352) (5,854) (29,103) (170,313) (239,617) Floor Plan Deposit Balance (3,000) - - (73,180) (75,000) Net Debt 1,015,351$ 939,229$ 677,783$ 476,573$ 371,776$ Net Debt To Adjusted EBITDA Ratio 3.68 3.62 2.20 1.29 0.69 Note – Balance Sheet Amounts Are As Of December 31 for the FY Then Ended. LTM Q2 2021 Amounts Are For The Twelve-Month Period Ended June 30, 2021. Balance Sheet Amounts For LTM Q2 2021 Are As Of June 30, 2021.
40 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) (In thousands) Net Income (Loss) $ 113,845 $ 30,791 Provision For Income Taxes 36,972 6,353 Income (Loss) Before Taxes $ 165,415 $ (14,394) $ (204) $ 150,817 $ 34,856 $ 2,577 $ (289) $ 37,144 Non-Floor Plan Interest 8,895 348 - 9,243 8,938 234 - 9,172 Depreciation And Amortization 21,444 4,152 - 25,596 20,514 2,758 - 23,272 Stock-Based Compensation Expense 3,989 - - 3,989 2,971 - - 2,971 Impairment Charges - - - - 833 - - 833 Long-Term Compensation Charges - 500 - 500 - - - - Gain On Franchise And Real Estate Disposals (400) (23) - (423) 1,117 - - 1,117 Adjusted EBITDA $ 199,343 $ (9,417) $ (204) $ 189,722 $ 69,229 $ 5,569 $ (289) $ 74,509 Q2 2021 Q2 2020
41 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 54,222 $ (199,333) Provision For Income Taxes 19,051 (44,200) Income (Loss) Before Taxes $ 70,543 $ 2,010 $ 720 $ 73,273 $ (245,344) $ 2,096 $ (285) $ (243,533) Non-Floor Plan Interest 9,127 334 - 9,461 10,043 365 - 10,408 Depreciation And Amortization 21,206 3,304 - 24,510 20,144 2,708 - 22,852 Stock-Based Compensation Expense 3,485 - - 3,485 2,427 - - 2,427 Impairment Charges - - - - 268,000 - - 268,000 Long-Term Compensation Charges - 500 - 500 - - - - Gain On Franchise And Real Estate Disposals (21) 14 - (7) - - - - Adjusted EBITDA $ 104,340 $ 6,162 $ 720 $ 111,222 $ 55,270 $ 5,169 $ (285) $ 60,154 Q1 2021 Q1 2020 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 59,376 $ 46,307 Provision For Income Taxes 30,208 14,703 Income (Loss) Before Taxes $ 90,611 $ (833) $ (194) $ 89,584 $ 75,466 $ (14,518) $ 62 $ 61,010 Non-Floor Plan Interest 8,963 201 - 9,164 12,335 435 - 12,770 Depreciation And Amortization 21,167 2,863 - 24,030 20,972 2,765 - 23,737 Stock-Based Compensation Expense 3,152 - - 3,152 2,690 - - 2,690 Impairment Charges 1,158 - - 1,158 1,075 16,617 - 17,692 Loss On Debt Extinguishment - - - - 6,690 - - 6,690 Gain On Franchise And Real Estate Disposals (821) (5,152) - (5,973) (29,242) - - (29,242) Adjusted EBITDA $ 124,230 $ (2,921) $ (194) $ 121,115 $ 89,986 $ 5,299 $ 62 $ 95,347 Q4 2020 Q4 2019
42 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 59,818 $ 29,010 Provision For Income Taxes 20,620 11,307 Income (Loss) Before Taxes $ 80,434 $ 239 $ (235) $ 80,438 $ 38,417 $ 2,123 $ (223) $ 40,317 Non-Floor Plan Interest 9,781 147 - 9,928 12,011 402 - 12,413 Depreciation And Amortization 21,004 2,763 - 23,767 21,561 2,703 - 24,264 Stock-Based Compensation Expense 3,153 - - 3,153 2,681 - - 2,681 Impairment Charges 26 - - 26 - 1,124 - 1,124 Gain On Franchise Disposals (3,388) - - (3,388) 823 - - 823 Adjusted EBITDA $ 111,010 $ 3,149 $ (235) $ 113,924 $ 75,493 $ 6,352 $ (223) $ 81,622 Q3 2020 Q3 2019 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 30,791 $ 26,599 Provision For Income Taxes 6,353 10,009 Income (Loss) Before Taxes $ 34,856 $ 2,577 $ (289) $ 37,144 $ 35,129 $ 1,693 $ (213) $ 36,608 Non-Floor Plan Interest 8,938 234 - 9,172 12,599 431 - 13,030 Depreciation And Amortization 20,514 2,758 - 23,272 21,736 2,668 - 24,404 Stock-Based Compensation Expense 2,971 - - 2,971 2,612 - - 2,612 Impairment Charges 833 - - 833 - - - - Gain On Franchise Disposals 1,117 - - 1,117 356 - - 356 Adjusted EBITDA $ 69,229 $ 5,569 $ (289) $ 74,509 $ 72,432 $ 4,792 $ (213) $ 77,010 Q2 2020 Q2 2019
43 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ (199,333) $ 42,221 Provision For Income Taxes (44,200) 18,935 Income (Loss) Before Taxes $ (245,344) $ 2,096 $ (285) $ (243,533) $ 61,156 $ 180 $ (180) $ 61,156 Non-Floor Plan Interest 10,043 365 - 10,408 11,829 433 - 12,262 Depreciation And Amortization 20,144 2,708 - 22,852 20,824 2,418 - 23,242 Stock-Based Compensation Expense 2,427 - - 2,427 2,814 - - 2,814 Loss (Gain) On Exit Of Leased Dealerships - - - - (170) - - (170) Impairment Charges 268,000 - - 268,000 26 1,926 - 1,952 Gain On Franchise Disposals - - - - (46,750) - - (46,750) Adjusted EBITDA $ 55,270 $ 5,169 $ (285) $ 60,154 $ 49,729 $ 4,957 $ (180) $ 54,506 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 46,307 $ 21,821 Provision For Income Taxes 14,703 9,150 Income (Loss) Before Taxes $ 75,466 $ (14,518) $ 62 $ 61,010 $ 37,388 $ (6,196) $ (221) $ 30,971 Non-Floor Plan Interest 12,335 435 - 12,770 12,902 423 89 13,414 Depreciation And Amortization 20,972 2,765 - 23,737 21,086 2,211 - 23,297 Stock-Based Compensation Expense 2,690 - - 2,690 1,264 - - 1,264 Loss (Gain) On Exit Of Leased Dealerships - - - - (1,080) 3 89 (988) Impairment Charges 1,075 16,617 - 17,692 14,053 1,500 - 15,553 Loss On Debt Extinguishment 6,690 - - 6,690 - - - - Gain On Franchise Disposals (29,242) - - (29,242) (158) - - (158) Adjusted EBITDA $ 89,986 $ 5,299 $ 62 $ 95,347 $ 85,455 $ (2,059) $ (43) $ 83,353 Q4 2019 Q4 2018 Q1 2020 Q1 2019
44 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 29,010 $ 15,118 Provision For Income Taxes 11,307 7,262 Income (Loss) Before Taxes $ 38,417 $ 2,123 $ (223) $ 40,317 $ 28,087 $ (5,455) $ (252) $ 22,380 Non-Floor Plan Interest 12,011 402 - 12,413 12,279 423 98 12,800 Depreciation And Amortization 21,561 2,703 - 24,264 22,140 1,999 - 24,139 Stock-Based Compensation Expense 2,681 - - 2,681 4,578 - - 4,578 Loss (Gain) On Exit Of Leased Dealerships - - - - 24 4 103 131 Impairment Charges - 1,124 - 1,124 - - - - Gain On Franchise Disposals 823 - - 823 88 - - 88 Adjusted EBITDA $ 75,493 $ 6,352 $ (223) $ 81,622 $ 67,196 $ (3,029) $ (51) $ 64,116 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 26,599 $ 16,905 Provision For Income Taxes 10,009 8,142 Income (Loss) Before Taxes $ 35,129 $ 1,693 $ (213) $ 36,608 $ 53,176 $ (27,832) $ (297) $ 25,047 Non-Floor Plan Interest 12,599 431 - 13,030 12,349 406 106 12,861 Depreciation And Amortization 21,736 2,668 - 24,404 22,801 1,919 - 24,720 Stock-Based Compensation Expense 2,612 - - 2,612 3,049 - - 3,049 Loss (Gain) On Exit Of Leased Dealerships - - - - (2,618) 6 106 (2,506) Impairment Charges - - - - 10,317 - - 10,317 Long-Term Compensation Charges - - - - - 23,333 - 23,333 Gain On Franchise Disposals 356 - - 356 (38,047) - - (38,047) Adjusted EBITDA $ 72,432 $ 4,792 $ (213) $ 77,010 $ 61,027 $ (2,168) $ (85) $ 58,774 Q3 2019 Q3 2018 Q2 2019 Q2 2018
45 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 42,221 $ (2,194) Provision For Income Taxes 18,935 (1,910) Income (Loss) Before Taxes $ 61,156 $ 180 $ (180) $ 61,156 $ 10,830 $ (14,686) $ (248) $ (4,104) Non-Floor Plan Interest 11,829 433 - 12,262 12,469 389 115 12,973 Depreciation And Amortization 20,824 2,418 - 23,242 22,830 1,666 - 24,496 Stock-Based Compensation Expense 2,814 - - 2,814 2,962 - - 2,962 Loss (Gain) On Exit Of Leased Dealerships (170) - - (170) 4,955 7 109 5,071 Impairment Charges 26 1,926 - 1,952 3,561 82 - 3,643 Long-Term Compensation Charges - - - - - 9,189 - 9,189 Gain On Franchise Disposals (46,750) - - (46,750) (1,190) - - (1,190) Adjusted EBITDA $ 49,729 $ 4,957 $ (180) $ 54,506 $ 56,417 $ (3,353) $ (24) $ 53,040 Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 21,821 $ 61,952 Provision For Income Taxes 9,150 (8,399) Income (Loss) Before Taxes $ 37,388 $ (6,196) $ (221) $ 30,971 $ 57,822 $ (3,976) $ (293) $ 53,553 Non-Floor Plan Interest 12,902 423 89 13,414 12,449 276 123 12,848 Depreciation And Amortization 21,086 2,211 - 23,297 22,639 1,314 - 23,953 Stock-Based Compensation Expense 1,264 - - 1,264 2,217 - - 2,217 Loss (Gain) On Exit Of Leased Dealerships (1,080) 3 89 (988) 23 - 118 141 Impairment Charges 14,053 1,500 - 15,553 6,079 - - 6,079 Long-Term Compensation Charges - - - - - 1,271 - 1,271 Gain On Franchise Disposals (158) - - (158) (1,507) - (6) (1,513) Adjusted EBITDA $ 85,455 $ (2,059) $ (43) $ 83,353 $ 99,722 $ (1,115) $ (58) $ 98,549 Q1 2019 Q1 2018 Q4 2018 Q4 2017
46 Non-GAAP Reconciliation – Adjusted EBITDA Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total Franchised Dealerships Segment EchoPark Segment Discontinued Operations Total (In thousands) Net Income (Loss) $ 15,118 $ 19,440 Provision For Income Taxes 7,262 13,935 Income (Loss) Before Taxes $ 28,087 $ (5,455) $ (252) $ 22,380 $ 38,228 $ (4,372) $ (481) $ 33,375 Non-Floor Plan Interest 12,279 423 98 12,800 12,126 253 132 12,511 Depreciation And Amortization 22,140 1,999 - 24,139 22,179 1,317 - 23,496 Stock-Based Compensation Expense 4,578 - - 4,578 3,179 - - 3,179 Loss (Gain) On Exit Of Leased Dealerships 24 4 103 131 (173) - 362 189 Impairment Charges - - - - 200 - - 200 Gain On Franchise Disposals 88 - - 88 (8,490) - - (8,490) Adjusted EBITDA $ 67,196 $ (3,029) $ (51) $ 64,116 $ 67,249 $ (2,802) $ 13 $ 64,460 Q3 2018 Q3 2017
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® Investor Relations Contacts: Sonic Automotive Inc. (NYSE: SAH) Danny Wieland, Vice President, Investor Relations & Financial Reporting ir@sonicautomotive.com (704) 927-3462 KCSA Strategic Communications David Hanover / Scott Eckstein sonic@kcsa.com (212) 896-1220