Sonic Automotive Q1 Earnings Call Highlights

Key Points

• Record quarter: Sonic reported record Q1 total revenue of $3.7 billion and record gross profit of $598.8 million, with adjusted EPS of $1.62 (up 9%); robust fixed operations and F&I results contributed over 75% of total gross profit, helping offset a 10% decline in new-vehicle retail volume.
• EchoPark momentum and expansion plans: EchoPark posted record adjusted segment income ($12.6M) and EBITDA ($18.6M) with rising GPU and unit sales, and Sonic plans to resume disciplined EchoPark store openings in late 2026 while potentially increasing brand marketing by $10–$20 million.
• Capital deployment and growth moves: Sonic repurchased ~2.1M shares for $136M this quarter, received a $500M additional buyback authorization and raised the dividend 8% to $0.41, while maintaining $770M of available liquidity and expanding Powersports via five Harley‑Davidson dealership acquisitions.

Sonic Automotive NYSE: SAH reported first-quarter 2026 results highlighted by record revenue and gross profit, while management emphasized strength in fixed operations, improving performance at EchoPark, and continued momentum in its Powersports business.

First-quarter results and segment performance

Chairman and CEO David Smith said the company delivered “record first quarter total revenues of $3.7 billion,” up 1% year-over-year, and “record first quarter total gross profit of $598.8 million,” up 6%. Sonic posted GAAP earnings per share of $1.79. Excluding certain items detailed in the company’s release, Smith said adjusted EPS was $1.62, a 9% increase from the prior year.

In Sonic’s franchised dealership segment, Smith reported revenue of $3.1 billion, flat from the prior year, while same-store revenues declined 4% to $2.9 billion. He attributed the same-store decline largely to a 10% year-over-year decrease in new vehicle retail volume, partially offset by a 3% increase in used vehicle retail volume. Management also pointed to difficult year-over-year comparisons tied to pull-forward demand ahead of U.S. auto import tariffs announced in March 2025.

Smith said franchised total gross profit rose 5% on a reported basis and was flat on a same-store basis. Fixed operations and finance & insurance (F&I) produced quarterly records, with reported fixed operations gross profit up 10% and F&I gross profit up 7%. Smith said fixed operations and F&I again accounted for more than 75% of total gross profit in the quarter, helping offset headwinds in new vehicle volume and margin.

• Same-store new vehicle gross profit per unit (GPU) was $3,002, down 4% year-over-year, while reported new vehicle GPU was $3,144, up 2%.
• Same-store used GPU was $1,533, down 4% year-over-year but up 11% sequentially due to “typical seasonality,” Smith said.
• Reported franchised F&I GPU was a record $2,670 per unit, up 9% year-over-year and up 2% sequentially.

EchoPark posts record profitability; marketing and store growth plans

Management highlighted improved profitability at EchoPark, Sonic’s used-vehicle retail platform. Smith said EchoPark adjusted segment income was a record $12.6 million, up 25% year-over-year, and adjusted EBITDA was a record $18.6 million, up 18%.

EchoPark revenue rose 4% year-over-year to $581 million, while gross profit hit a first-quarter record $68 million, up 6%. Retail unit sales increased 3%, and total GPU was a first-quarter record $3,502 per unit, up 3% year-over-year and up 2% sequentially, Smith said.

Looking ahead, Smith said Sonic believes it is “well positioned to resume a disciplined cadence of EchoPark store openings beginning in late 2026,” while also starting targeted brand marketing investment. He said the company expects to begin funding brand marketing this year and “potentially” increase advertising expense by $10 million to $20 million, with most of that spending in the second half.

In the Q&A, President Jeff Dyke cited affordability pressures as supportive of pre-owned demand, noting same-store new car prices above $60,000 in the first quarter, calling it “an all-time high for the first quarter.” Dyke said rising new-car pricing “is gonna put wind in the sail for pre-owned.” CFO Heath Byrd added that EchoPark’s improved non-auction sourcing has been a meaningful driver, saying the mix has shifted from “90% auction” early on to roughly 40% other sources, and those vehicles generate about $1,200 more in GPU “give or take” than auction-sourced units.

Dyke also discussed early efforts to source “nearly new” used inventory from Sonic’s franchised dealerships into EchoPark, calling it new for the company and currently limited to “a few hundred” vehicles, with an initial focus on Toyota and Honda.

Asked about planned store locations, Byrd said EchoPark’s “early expansion is primarily in Florida and Texas.”

Atlanta awareness cited as proof point

Several executives pointed to Atlanta as an example of rising EchoPark brand awareness. Smith highlighted the company’s naming-rights sponsorship of Atlanta Motor Speedway, which is now “EchoPark Speedway,” and said it has had “a major impact on customer awareness of the brand.” Dyke said awareness in Atlanta “has more than doubled since the sponsorship,” and provided operating metrics: first-quarter unit volume in Atlanta rose about 25% year-over-year and total GPU increased by $225 per vehicle.

Byrd also pointed to sales productivity as a lever for profitability, saying EchoPark had sales associates averaging “30-plus vehicles” per month, and that this efficiency contributed to EchoPark’s SG&A as a percent of gross being “lower than 70%” in the quarter.

Powersports growth and acquisitions

Sonic’s Powersports segment also posted records. Smith reported first-quarter revenue of $41 million, up 19% year-over-year, and record gross profit of $10 million, also up 19%. Combined new and used retail volume increased 25% year-over-year, which Smith said reflects benefits from investments to modernize the business.

Smith also announced the acquisition of five Harley-Davidson dealerships: Space Coast Harley-Davidson, Treasure Coast Harley-Davidson, Falcon’s Fury Harley-Davidson, Raging Bull Harley-Davidson, and another Harley-Davidson store referenced on the call. Smith said the acquisitions expand coverage across California, Florida, Georgia, and North Carolina and help diversify Sonic’s geographic footprint and seasonality.

During Q&A, Dyke compared gross profit characteristics across segments, noting franchise new GPU of $3,144 versus Powersports GPU of $2,891 in the first quarter, and said Powersports used GPU was $1,938 compared to $1,539 on the franchised used side. Dyke and Vice President of Investor Relations Danny Wieland also described rapid used-volume growth in Powersports, with Wieland citing year-over-year used volume increases of 35%, 40%, and 56% over the last three quarters.

Capital allocation, liquidity, and tariff monitoring

On the balance sheet, Smith said Sonic ended the quarter with $770 million of available liquidity, including $381 million in cash and floor plan deposits. The company repurchased about 2.1 million shares for approximately $136 million in the quarter, representing a 6% reduction in shares outstanding since Dec. 31, 2025.

Smith said the board approved an additional $500 million share repurchase authorization and increased the quarterly dividend by 8% to $0.41 per share, payable July 15, 2026, to stockholders of record June 15, 2026.

In response to a question about the larger buyback, Smith said the company “would not have bought back the shares if we didn't feel confident in our business.” Byrd added Sonic is “completely comfortable” with its leverage ratio of “a little over two turns,” and said liquidity enables simultaneous investments in acquisitions, share repurchases, the higher dividend, AI initiatives, real estate purchases, facility enhancements, and future EchoPark expansion.

Management also said it continues to work closely with manufacturer partners to assess potential impacts from tariffs on production, pricing, affordability, and consumer demand. Smith said the company’s full-year 2026 outlook in its investor presentation reflects “these uncertainties” and management’s current expectations for the year.

About Sonic Automotive NYSE: SAH

Sonic Automotive, Inc is a publicly traded automotive retailer that operates a network of franchised new-car dealerships and used-vehicle dealerships across the United States. Headquartered in Charlotte, North Carolina, the company offers a range of services that include vehicle sales, leasing, finance and insurance products, service and parts, and collision repair. Sonic Automotive's dealerships represent numerous major automotive brands, and the company also markets a broad selection of pre-owned vehicles under its own banner.

In addition to its core dealership operations, Sonic Automotive has developed digital retail capabilities that allow customers to research, shop and complete transactions online.

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