Sonic Automotive Reports All-Time Record Quarterly Revenues
Previously Announced Strategic Adjustments to EchoPark Business Expected to Enhance Near-Term Performance While Maintaining Long-Term Strategic Plan
CHARLOTTE, N.C. – July 27, 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 second quarter ended June 30, 2023.
Second Quarter 2023 Financial Summary
•All-time record quarterly revenues of $3.7 billion, up 4% year-over-year; quarterly gross profit of $568.9 million, down 3% year-over-year
•Reported second quarter net income of $23.4 million, down 75% year-over-year ($0.65 earnings per diluted share, down 72% year-over-year)
▪Adjusted second quarter net income* was $66.0 million, down 33% year-over-year ($1.83 adjusted earnings per diluted share*, down 25% year-over-year)
•Reported selling, general and administrative (“SG&A”) expenses as a percentage of gross profit of 68.9% (59.7% on a Franchised Dealerships Segment basis)
▪Adjusted SG&A expenses as a percentage of gross profit* of 70.5% (63.3% on a Franchised Dealerships Segment basis)
•EchoPark Segment revenues of $600.6 million, down 9% year-over-year; EchoPark Segment gross profit of $26.8 million, down 44% year-over-year; EchoPark Segment retail used vehicle unit sales volume of 17,084, up 4% year-over-year
EchoPark Update
•Completed previously announced plan to indefinitely suspend operations at eight EchoPark retail hub locations and 14 related EchoPark delivery/buy centers, plus three Northwest Motorsport locations within the EchoPark Segment (collectively, the "closed EchoPark stores"), representing a total of $13.2 million of segment loss in the second quarter of 2023
•Recorded a second quarter 2023 charge related to the closed EchoPark stores of approximately $75.2 million, including $62.6 million of non-cash impairment charges, $2.2 million of severance, $0.4 million of non-cash lease exit charges and $10.0 million of non-cash inventory valuation adjustments (of which $7.7 million relates to stores with ongoing operations)
•Expect ongoing expenses associated with the closed EchoPark stores of approximately $2.5 million to $3.0 million per quarter
•Reiterate previously issued guidance of an expected return to breakeven EchoPark Segment adjusted EBITDA* in the first quarter of 2024
* Represents a non-GAAP financial measure - please refer to the discussion and reconciliation of non-GAAP financial measures below.
Management Commentary
David Smith, Chairman and Chief Executive Officer of Sonic Automotive, stated, “Our team remains focused on executing our strategic plan and adapting our business to an evolving industry backdrop. I am extremely proud of our team's continued efforts to maximize profitability in the near-term, while positioning Sonic for long-term success. We believe the strategic investments in our business and our teammates will allow us to continue to deliver an exceptional guest experience while generating returns for our stockholders in the long run.”
Jeff Dyke, President of Sonic Automotive, commented, “Our team's combined decades of experience in the automotive retail industry has taught us that making tough business decisions in the short-term can pay dividends over time. We remain confident in the long-term potential for EchoPark and believe that the steps we have taken to improve near-term financial performance will position us to achieve our strategic goals. In the meantime, our franchised dealerships and powersports teams continue to perform at a high level, maintaining our focus on profitability enhancements and cash flow generation as market conditions begin to normalize.”
Heath Byrd, Chief Financial Officer of Sonic Automotive, added, “Our strong balance sheet and cash flows provide us with the flexibility to continue to enhance our diversified business model and adapt to changes in the macroeconomic and industry backdrop. As of June 30, 2023, we had $864 million of liquidity, including $407 million in cash and floor plan deposits on hand. With the improvements we have made to the EchoPark cost structure, we believe we remain well-positioned to achieve our financial goals and continue to deliver long-term returns for our stockholders.”
Second Quarter 2023 Segment Highlights
The financial measures discussed below are results for the second quarter of 2023 with comparisons made to the second quarter of 2022, unless otherwise noted.
•Same store revenues up 6%; same store gross profit down 2%
•Same store retail new vehicle unit sales volume up 12%; same store retail new vehicle gross profit per unit down 25%, to $4,986
•Same store retail used vehicle unit sales volume down 10%; same store retail used vehicle gross profit per unit down 3%, to $1,618
•Same store parts, service and collision repair (“Fixed Operations”) gross profit up 9%; same store customer pay gross profit up 11%; same store warranty gross profit up 6%; same store Fixed Operations gross margin down 10 basis points, to 49.6%
•Same store finance and insurance ("F&I") gross profit up 4%; same store F&I gross profit per retail unit of $2,522, up 4% (all-time record quarterly Franchised Dealerships Segment F&I per unit of $2,516, up 2%)
•On a trailing quarter cost of sales basis, the Franchised Dealerships Segment had 30 days’ supply of new vehicle inventory (including in-transit) and 31 days’ supply of used vehicle inventory
•EchoPark Segment operating results include:
•Revenues of $600.6 million, down 9%; gross profit of $26.8 million, down 44% (reported gross profit includes a $10.0 million charge related to used vehicle inventory valuation adjustments)
•Revenues from the closed EchoPark stores were $74.4 million, down 30%; gross profit from the closed EchoPark stores was $3.1, down 37%
•Retail used vehicle unit sales volume of 17,084, up 4%
•Retail used vehicle unit sales volume from the closed EchoPark stores was 2,324 units (14% of EchoPark Segment retail used vehicle unit sales volume)
•Reported segment loss of $52.8 million, adjusted segment loss* of $40.0 million, and adjusted EBITDA* loss of $31.8 million
•Reported segment loss from the closed EchoPark stores was $13.2 million
•Retail used vehicle unit sales volume was comprised of 82% 1-4-year-old vehicles and 18% 5-plus-year-old vehicles, with 23% of retail used vehicle unit sales volume sourced from non-auction sources
•On a trailing quarter cost of sales basis, the EchoPark Segment had 39 days’ supply of used vehicle inventory
•Powersports Segment operating results include:
•Revenues of $45.0 million, gross profit of $12.8 million, gross margin of 28.5%
•Segment income of $2.0 million and adjusted EBITDA* of $3.4 million
•Year-over-year comparative financial results are not meaningful due to the timing of acquisitions of Horny Toad Harley-Davidson in Temple, Texas (one store acquired in January 2022), Team Mancuso Powersports in Houston, Texas (seven stores acquired in August 2022), and Black Hills Harley-Davidson in Sturgis, South Dakota (five stores acquired in February 2023)
* Represents a non-GAAP financial measure - please refer to the discussion and reconciliation of non-GAAP financial measures below.
Acquisition and Disposition Activity
During the second quarter of 2023, Sonic disposed of three franchised dealerships in Alabama and North Carolina, which generated net cash from disposition of approximately $52.3 million and a net gain on disposition of approximately $20.9 million. These disposed stores represent projected annualized revenues of approximately $170 million and projected annualized pre-tax income of approximately $5 million.
Dividend
Sonic’s Board of Directors approved a quarterly cash dividend of $0.29 per share, payable on October 13, 2023 to all stockholders of record on September 15, 2023.
Second Quarter 2023 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 (866) 682-6100 (domestic) or +1 (862) 298-0702 (international) and ask to be connected to the Sonic Automotive Second Quarter 2023 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 most comprehensive retailers of nearly new pre-owned vehicles in America today. Our unique business model offers a best-in-class shopping and utilizes 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 2023 Consumer Satisfaction Award from DealerRater. 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 anticipated future EchoPark profitability, anticipated future EchoPark adjusted EBITDA, and anticipated future expenses related to closed locations. 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, 2022 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, adjusted segment loss, 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 June 30,
Better / (Worse)
Six Months Ended June 30,
Better / (Worse)
2023
2022
% Change
2023
2022
% Change
(In millions, except per share amounts)
Revenues:
Retail new vehicles
$
1,608.2
$
1,344.3
20
%
$
3,051.0
$
2,695.6
13
%
Fleet new vehicles
28.3
19.8
43
%
47.1
38.0
24
%
Total new vehicles
1,636.5
1,364.1
20
%
3,098.1
2,733.6
13
%
Used vehicles
1,305.9
1,448.3
(10)
%
2,650.8
2,818.4
(6)
%
Wholesale vehicles
91.5
121.4
(25)
%
177.0
290.2
(39)
%
Total vehicles
3,033.9
2,933.8
3
%
5,925.9
5,842.2
1
%
Parts, service and collision repair
443.7
399.2
11
%
874.2
780.5
12
%
Finance, insurance and other, net
175.3
173.2
1
%
344.0
339.7
1
%
Total revenues
3,652.9
3,506.2
4
%
7,144.1
6,962.4
3
%
Cost of sales:
Retail new vehicles
(1,466.8)
(1,176.0)
(25)
%
(2,771.5)
(2,359.6)
(17)
%
Fleet new vehicles
(27.0)
(18.9)
(43)
%
(45.0)
(36.2)
(24)
%
Total new vehicles
(1,493.8)
(1,194.9)
(25)
%
(2,816.5)
(2,395.8)
(18)
%
Used vehicles
(1,274.4)
(1,401.7)
9
%
(2,589.3)
(2,724.0)
5
%
Wholesale vehicles
(92.5)
(120.2)
23
%
(174.9)
(287.6)
39
%
Total vehicles
(2,860.7)
(2,716.8)
(5)
%
(5,580.7)
(5,407.4)
(3)
%
Parts, service and collision repair
(223.3)
(200.6)
(11)
%
(440.9)
(394.9)
(12)
%
Total cost of sales
(3,084.0)
(2,917.4)
(6)
%
(6,021.6)
(5,802.3)
(4)
%
Gross profit
568.9
588.8
(3)
%
1,122.5
1,160.1
(3)
%
Selling, general and administrative expenses
(391.9)
(402.8)
3
%
(804.7)
(789.8)
(2)
%
Impairment charges
(62.6)
—
(100)
%
(62.6)
—
(100)
%
Depreciation and amortization
(36.1)
(31.2)
(16)
%
(70.5)
(61.1)
(15)
%
Operating income (loss)
78.3
154.8
(49)
%
184.7
309.2
(40)
%
Other income (expense):
Interest expense, floor plan
(17.0)
(6.1)
(179)
%
(31.5)
(11.1)
(184)
%
Interest expense, other, net
(28.9)
(21.3)
(36)
%
(57.3)
(42.1)
(36)
%
Other income (expense), net
0.1
(0.2)
150
%
0.2
0.1
100
%
Total other income (expense)
(45.8)
(27.6)
(66)
%
(88.6)
(53.1)
(67)
%
Income (loss) before taxes
32.5
127.2
(74)
%
96.1
256.1
(62)
%
Provision for income taxes - benefit (expense)
(9.1)
(32.4)
72
%
(25.0)
(64.0)
61
%
Net income (loss)
$
23.4
$
94.8
(75)
%
$
71.1
$
192.1
(63)
%
Basic earnings (loss) per common share
$
0.66
$
2.40
(73)
%
$
2.00
$
4.81
(58)
%
Basic weighted-average common shares outstanding
35.3
39.5
11
%
35.6
40.0
11
%
Diluted earnings (loss) per common share
$
0.65
$
2.34
(72)
%
$
1.95
$
4.67
(58)
%
Diluted weighted-average common shares outstanding
36.0
40.5
11
%
36.5
41.2
12
%
Dividends declared per common share
$
0.29
$
0.25
16
%
$
0.57
$
0.37
54
%
Franchised Dealerships Segment - Reported
Three Months Ended June 30,
Better / (Worse)
Six Months Ended June 30,
Better / (Worse)
2023
2022
% Change
2023
2022
% Change
(In millions, except unit and per unit data)
Revenues:
Retail new vehicles
$
1,583.3
$
1,341.7
18
%
$
3,004.3
$
2,687.4
12
%
Fleet new vehicles
28.3
19.9
42
%
47.1
38.0
24
%
Total new vehicles
1,611.6
1,361.6
18
%
3,051.4
2,725.4
12
%
Used vehicles
774.5
871.9
(11)
%
1,542.0
1,725.7
(11)
%
Wholesale vehicles
55.6
79.2
(30)
%
114.0
185.5
(39)
%
Total vehicles
2,441.7
2,312.7
6
%
4,707.4
4,636.6
2
%
Parts, service and collision repair
433.4
398.1
9
%
857.2
778.7
10
%
Finance, insurance and other, net
132.2
129.8
2
%
249.4
256.2
(3)
%
Total revenues
3,007.3
2,840.6
6
%
5,814.0
5,671.5
3
%
Gross Profit:
Retail new vehicles
136.9
167.3
(18)
%
270.9
333.8
(19)
%
Fleet new vehicles
1.3
0.9
44
%
2.1
1.8
17
%
Total new vehicles
138.2
168.2
(18)
%
273.0
335.6
(19)
%
Used vehicles
44.5
43.7
2
%
85.3
90.6
(6)
%
Wholesale vehicles
(1.0)
(0.5)
(100)
%
1.0
(0.9)
211
%
Total vehicles
181.7
211.4
(14)
%
359.3
425.3
(16)
%
Parts, service and collision repair
215.4
198.1
9
%
425.0
384.8
10
%
Finance, insurance and other, net
132.2
129.8
2
%
249.4
256.2
(3)
%
Total gross profit
529.3
539.3
(2)
%
1,033.7
1,066.3
(3)
%
Selling, general and administrative expenses
(316.1)
(327.5)
3
%
(647.3)
(642.9)
(1)
%
Impairment charges
—
—
—
%
—
—
—
%
Depreciation and amortization
(27.9)
(25.3)
(10)
%
(54.5)
(50.0)
(9)
%
Operating income (loss)
185.3
186.5
(1)
%
331.9
373.4
(11)
%
Other income (expense):
Interest expense, floor plan
(11.9)
(3.9)
(205)
%
(21.8)
(7.2)
(203)
%
Interest expense, other, net
(27.5)
(20.2)
(36)
%
(54.4)
(40.3)
(35)
%
Other income (expense), net
—
(0.3)
100
%
0.1
0.1
—
%
Total other income (expense)
(39.4)
(24.4)
(61)
%
(76.1)
(47.4)
(61)
%
Income (loss) before taxes
145.9
162.1
(10)
%
255.8
326.0
(22)
%
Add: Impairment charges
—
—
—
%
—
—
—
%
Segment income (loss)
$
145.9
$
162.1
(10)
%
$
255.8
$
326.0
(22)
%
Unit Sales Volume:
Retail new vehicles
27,358
24,342
12
%
51,897
48,944
6
%
Fleet new vehicles
590
422
40
%
1,031
782
32
%
Total new vehicles
27,948
24,764
13
%
52,928
49,726
6
%
Used vehicles
25,197
28,156
(11)
%
50,304
55,234
(9)
%
Wholesale vehicles
5,516
5,851
(6)
%
10,999
12,623
(13)
%
Retail new & used vehicles
52,555
52,498
—
%
102,201
104,178
(2)
%
Used-to-New Ratio
0.92
1.16
(21)
%
0.97
1.13
(14)
%
Gross Profit Per Unit:
Retail new vehicles
$
5,003
$
6,871
(27)
%
$
5,221
$
6,821
(23)
%
Fleet new vehicles
$
2,099
$
2,235
(6)
%
$
2,065
$
2,285
(10)
%
New vehicles
$
4,942
$
6,792
(27)
%
$
5,159
$
6,749
(24)
%
Used vehicles
$
1,765
$
1,553
14
%
$
1,695
$
1,640
3
%
Finance, insurance and other, net
$
2,516
$
2,472
2
%
$
2,440
$
2,460
(1)
%
NM = Not Meaningful
Franchised Dealerships Segment - Same Store
Three Months Ended June 30,
Better / (Worse)
Six Months Ended June 30,
Better / (Worse)
2023
2022
% Change
2023
2022
% Change
(In millions, except unit and per unit data)
Revenues:
Retail new vehicles
$
1,558.2
$
1,323.9
18
%
$
2,953.7
$
2,653.8
11
%
Fleet new vehicles
28.4
19.9
43
%
47.2
38.0
24
%
Total new vehicles
1,586.6
1,343.8
18
%
3,000.9
2,691.8
11
%
Used vehicles
761.9
857.2
(11)
%
1,513.4
1,695.2
(11)
%
Wholesale vehicles
54.5
78.3
(30)
%
112.0
183.0
(39)
%
Total vehicles
2,403.0
2,279.3
5
%
4,626.3
4,570.0
1
%
Parts, service and collision repair
427.3
392.5
9
%
843.5
767.9
10
%
Finance, insurance and other, net
130.1
124.8
4
%
245.4
246.2
—
%
Total revenues
2,960.4
2,796.6
6
%
5,715.2
5,584.1
2
%
Gross Profit:
Retail new vehicles
133.8
160.0
(16)
%
265.1
319.1
(17)
%
Fleet new vehicles
1.2
0.9
33
%
2.1
1.8
17
%
Total new vehicles
135.1
161.0
(16)
%
267.2
320.9
(17)
%
Used vehicles
40.0
45.9
(13)
%
78.5
93.0
(16)
%
Wholesale vehicles
(0.3)
(0.6)
50
%
1.4
(0.9)
256
%
Total vehicles
174.8
206.3
(15)
%
347.1
413.0
(16)
%
Parts, service and collision repair
212.0
195.2
9
%
417.5
379.1
10
%
Finance, insurance and other, net
130.1
124.8
4
%
245.4
246.2
—
%
Total gross profit
$
516.9
$
526.3
(2)
%
$
1,010.0
$
1,038.3
(3)
%
Unit Sales Volume:
Retail new vehicles
26,844
23,936
12
%
50,840
48,170
6
%
Fleet new vehicles
590
422
40
%
1,031
782
32
%
Total new vehicles
27,434
24,358
13
%
51,871
48,952
6
%
Used vehicles
24,737
27,596
(10)
%
49,260
54,099
(9)
%
Wholesale vehicles
5,418
5,764
(6)
%
10,790
12,426
(13)
%
Retail new & used vehicles
51,581
51,532
—
%
100,100
102,269
(2)
%
Used-to-New Ratio
0.92
1.15
(20)
%
0.97
1.12
(13)
%
Gross Profit Per Unit:
Retail new vehicles
$
4,986
$
6,686
(25)
%
$
5,215
$
6,624
(21)
%
Fleet new vehicles
$
2,099
$
2,235
(6)
%
$
2,065
$
2,285
(10)
%
New vehicles
$
4,924
$
6,609
(25)
%
$
5,152
$
6,555
(21)
%
Used vehicles
$
1,618
$
1,663
(3)
%
$
1,593
$
1,718
(7)
%
Finance, insurance and other, net
$
2,522
$
2,422
4
%
$
2,452
$
2,407
2
%
NM = Not Meaningful
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)
2023
2022
% Change
2023
2022
% Change
(In millions, except unit and per unit data)
Revenues:
Retail new vehicles
$
—
$
1.3
(100)
%
$
1.0
$
5.7
(82)
%
Used vehicles
524.0
574.5
(9)
%
1,096.5
1,089.8
1
%
Wholesale vehicles
35.5
42.0
(15)
%
62.5
104.5
(40)
%
Total vehicles
559.5
617.8
(9)
%
1,160.0
1,200.0
(3)
%
Finance, insurance and other, net
41.1
43.1
(5)
%
91.1
83.0
10
%
Total revenues
600.6
660.9
(9)
%
1,251.1
1,283.0
(2)
%
Gross Profit:
Retail new vehicles
—
0.6
(100)
%
0.1
1.6
(94)
%
Used vehicles
(14.3)
2.4
(696)
%
(26.2)
3.1
(945)
%
Wholesale vehicles
—
1.7
(100)
%
1.2
3.4
(65)
%
Total vehicles
(14.3)
4.7
(404)
%
(24.9)
8.1
(407)
%
Finance, insurance and other, net
41.1
43.1
(5)
%
91.1
83.0
10
%
Total gross profit
26.8
47.8
(44)
%
66.2
91.1
(27)
%
Selling, general and administrative expenses
(66.6)
(73.0)
9
%
(140.4)
(144.1)
3
%
Impairment charges
(62.6)
—
(100)
%
(62.6)
—
(100)
%
Depreciation and amortization
(7.4)
(5.8)
(28)
%
(14.4)
(10.9)
(32)
%
Operating income (loss)
(109.8)
(31.0)
(254)
%
(151.2)
(63.9)
(137)
%
Other income (expense):
Interest expense, floor plan
(4.8)
(2.2)
(118)
%
(9.3)
(3.9)
(138)
%
Interest expense, other, net
(0.9)
(1.1)
18
%
(1.8)
(1.8)
—
%
Other income (expense), net
0.1
0.1
—
%
—
—
—
%
Total other income (expense)
(5.6)
(3.2)
(75)
%
(11.1)
(5.7)
(95)
%
Income (loss) before taxes
(115.4)
(34.2)
(237)
%
(162.3)
(69.6)
(133)
%
Add: Impairment charges
62.6
—
100
%
62.6
—
100
%
Segment income (loss)
$
(52.8)
$
(34.2)
(54)
%
$
(99.7)
$
(69.6)
(43)
%
Unit Sales Volume:
Retail new vehicles
—
37
(100)
%
11
81
(86)
%
Used vehicles
17,084
16,496
4
%
37,064
31,427
18
%
Wholesale vehicles
3,235
2,694
20
%
6,151
6,343
(3)
%
Gross Profit Per Unit:
Total used vehicle and F&I
$
1,569
$
2,751
(43)
%
$
1,750
$
2,730
(36)
%
NM = Not Meaningful
EchoPark Segment - Same Market
Three Months Ended June 30,
Better / (Worse)
Six Months Ended June 30,
Better / (Worse)
2023
2022
% Change
2023
2022
% Change
(In millions, except unit and per unit data)
Revenues:
Used vehicles
$
422.3
$
338.7
25
%
$
875.9
$
621.2
41
%
Wholesale vehicles
23.7
26.8
(12)
%
43.9
72.2
(39)
%
Total vehicles
446.0
365.5
22
%
919.8
693.4
33
%
Finance, insurance and other, net
33.0
25.2
31
%
73.4
47.5
55
%
Total revenues
479.0
390.7
23
%
993.2
740.9
34
%
Gross Profit:
Used vehicles
(2.2)
(2.1)
(5)
%
(10.6)
(5.4)
(96)
%
Wholesale vehicles
0.1
1.3
(92)
%
1.1
3.0
(63)
%
Total vehicles
(2.1)
(0.8)
(163)
%
(9.5)
(2.4)
(296)
%
Finance, insurance and other, net
33.0
25.2
31
%
73.4
47.5
55
%
Total gross profit
$
30.9
$
24.4
27
%
$
63.9
$
45.1
42
%
Unit Sales Volume:
Used vehicles
13,732
10,104
36
%
29,823
18,791
59
%
Wholesale vehicles
2,462
1,849
33
%
4,736
4,452
6
%
Gross Profit Per Unit:
Total used vehicle and F&I
$
2,244
$
2,290
(2)
%
$
2,107
$
2,241
(6)
%
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 June 30,
Better / (Worse)
Six Months Ended June 30,
Better / (Worse)
2023
2022
% Change
2023
2022
% Change
(In millions, except unit and per unit data)
Revenues:
Retail new vehicles
$
24.9
$
1.2
NM
$
45.7
$
2.5
NM
Used vehicles
7.4
1.9
NM
12.3
2.9
NM
Wholesale vehicles
0.4
0.2
NM
0.5
0.2
NM
Total vehicles
32.7
3.3
NM
58.5
5.6
NM
Parts, service and collision repair
10.3
1.1
NM
17.0
1.8
NM
Finance, insurance and other, net
2.0
0.3
NM
3.5
0.5
NM
Total revenues
45.0
4.7
NM
79.0
7.9
NM
Gross Profit:
Retail new vehicles
4.5
0.4
NM
8.5
0.6
NM
Used vehicles
1.3
0.5
NM
2.4
0.7
NM
Wholesale vehicles
—
—
NM
(0.1)
—
NM
Total vehicles
5.8
0.9
NM
10.8
1.3
NM
Parts, service and collision repair
5.0
0.5
NM
8.3
0.9
NM
Finance, insurance and other, net
2.0
0.3
NM
3.5
0.5
NM
Total gross profit
12.8
1.7
NM
22.6
2.7
NM
Selling, general and administrative expenses
(9.2)
(2.3)
NM
(17.0)
(2.8)
NM
Depreciation and amortization
(0.8)
(0.1)
NM
(1.6)
(0.2)
NM
Operating income (loss)
2.8
(0.7)
NM
4.0
(0.3)
NM
Other income (expense):
Interest expense, floor plan
(0.3)
—
NM
(0.4)
—
NM
Interest expense, other, net
(0.5)
—
NM
(1.1)
—
NM
Other income (expense), net
—
—
NM
0.1
—
NM
Total other income (expense)
(0.8)
—
NM
(1.4)
—
NM
Income (loss) before taxes
2.0
(0.7)
NM
2.6
(0.3)
NM
Add: Impairment charges
—
—
NM
—
—
NM
Segment income (loss)
$
2.0
$
(0.7)
NM
$
2.6
$
(0.3)
NM
Unit Sales Volume:
Retail new vehicles
1,396
48
NM
2,503
89
NM
Used vehicles
691
112
NM
1,135
176
NM
Wholesale vehicles
50
—
NM
57
—
NM
Gross Profit Per Unit:
Retail new vehicles
$
3,235
$
7,401
NM
$
3,385
$
7,156
NM
Used vehicles
$
1,942
$
4,196
NM
$
2,093
$
4,028
NM
Finance, insurance and other, net
$
952
$
1,933
NM
$
964
$
1,818
NM
NM = Not Meaningful
Note: Year-over-year comparative financial results are not meaningful due to the timing of acquisitions of Horny Toad Harley-Davidson in Temple, Texas (one store acquired in January 2022), Team Mancuso Powersports in Houston, Texas (seven stores acquired in August 2022), and Black Hills Harley-Davidson in Sturgis, South Dakota (five stores acquired in February 2023).
Non-GAAP Reconciliation - Franchised Dealerships Segment - Income (Loss) Before Taxes and Segment Income (Loss)
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Reported:
Income (loss) before taxes
$
145.9
$
162.1
(10)
%
$
255.8
$
326.0
(22)
%
Add: Impairment charges
—
—
—
—
Segment income (loss)
$
145.9
$
162.1
(10)
%
$
255.8
$
326.0
(22)
%
Adjustments:
Acquisition and disposition-related (gain) loss
$
(20.9)
$
—
$
(20.9)
$
—
Hail and storm damage charges
1.9
—
1.9
—
Long-term compensation charges
—
4.4
—
4.4
Total pre-tax adjustments
$
(19.0)
$
4.4
$
(19.0)
$
4.4
Adjusted:
Segment income (loss)
$
126.9
$
166.5
(24)
%
$
236.8
$
330.4
(28)
%
Non-GAAP Reconciliation - EchoPark Segment - Income (Loss) Before Taxes and Segment Income (Loss)
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Reported:
Income (loss) before taxes
$
(115.4)
$
(34.2)
(237)
%
$
(162.3)
$
(69.6)
(133)
%
Add: Impairment charges
62.6
—
62.6
—
Segment income (loss)
$
(52.8)
$
(34.2)
(54)
%
$
(99.7)
$
(69.6)
(43)
%
Adjustments:
Acquisition and disposition-related (gain) loss
$
0.2
$
—
$
0.2
$
—
Lease exit charges
0.4
—
0.4
—
Severance and long-term compensation charges
2.2
—
4.2
—
Used vehicle inventory valuation adjustment
10.0
—
10.0
—
Total pre-tax adjustments
$
12.8
$
—
$
14.8
$
—
Adjusted:
Segment income (loss)
$
(40.0)
$
(34.2)
(17)
%
$
(84.9)
$
(69.6)
(22)
%
Non-GAAP Reconciliation - Powersports Segment - Income (Loss) Before Taxes and Segment Income (Loss)
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
% Change
2023
2022
% Change
(In millions)
Reported:
Income (loss) before taxes
$
2.0
$
(0.7)
NM
$
2.6
$
(0.3)
NM
Add: Impairment charges
—
—
—
—
Segment income (loss)
$
2.0
$
(0.7)
NM
2.6
(0.3)
NM
NM = Not Meaningful
Non-GAAP Reconciliation - Consolidated - Net Income (Loss) and Diluted Earnings (Loss) Per Share
Three Months Ended June 30, 2023
Three Months Ended June 30, 2022
Weighted- Average Shares
Amount
Per Share Amount
Weighted- Average Shares
Amount
Per Share Amount
(In millions, except per share amounts)
Reported net income (loss), diluted shares, and diluted earnings (loss) per share
36.0
$
23.4
$
0.65
40.5
$
94.8
$
2.34
Adjustments:
Acquisition and disposition-related gain (loss)
$
(20.7)
$
—
Hail and storm damage charges
1.9
—
Impairment charges
62.6
—
Lease exit charges
0.4
—
Severance and long-term compensation charges
2.2
4.4
Used vehicle inventory valuation adjustment
10.0
—
Total pre-tax items of interest
$
56.4
$
4.4
Tax effect of above items
(13.8)
—
Adjusted net income (loss), diluted shares, and diluted earnings (loss) per share
36.0
$
66.0
$
1.83
40.5
$
99.2
$
2.45
Six Months Ended June 30, 2023
Six Months Ended June 30, 2022
Weighted- Average Shares
Net Income (Loss)
Per Share Amount
Weighted- Average Shares
Net Income (Loss)
Per Share Amount
(In millions, except per share amounts)
Reported net income (loss), diluted shares, and diluted earnings (loss) per share
36.5
$
71.1
$
1.95
41.2
$
192.1
$
4.67
Adjustments:
Acquisition and disposition-related gain (loss)
$
(20.7)
$
—
Hail and storm damage charges
1.9
—
Impairment charges
62.6
—
Lease exit charges
0.4
—
Severance and long-term compensation charges
4.2
4.4
Used vehicle inventory valuation adjustment
10.0
—
Total pre-tax items of interest
$
58.4
$
4.4
Tax effect of above items
(14.3)
—
Adjusted net income (loss), diluted shares, and diluted earnings (loss) per share
36.5
$
115.2
$
3.16
41.2
$
196.5
$
4.77
Non-GAAP Reconciliation - Adjusted EBITDA
Three Months Ended June 30, 2023
Three Months Ended June 30, 2022
Franchised Dealerships Segment
EchoPark Segment
Powersports Segment
Total
Franchised Dealerships Segment
EchoPark Segment
Powersports Segment
Total
(In millions)
Net income (loss)
$
23.4
$
94.8
Provision for income taxes
9.1
32.4
Income (loss) before taxes
$
145.9
$
(115.4)
$
2.0
$
32.5
$
162.1
$
(34.2)
$
(0.7)
$
127.2
Non-floor plan interest (1)
25.8
0.8
0.6
27.2
19.1
1.0
—
20.1
Depreciation and amortization (2)
29.5
7.4
0.8
37.7
26.4
5.9
0.1
32.4
Stock-based compensation expense
5.6
—
—
5.6
4.2
—
—
4.2
Loss (gain) on exit of leased dealerships
—
0.4
—
0.4
—
—
—
—
Impairment charges
—
62.6
—
62.6
—
—
—
—
Severance and long-term compensation charges
—
2.2
—
2.2
4.4
—
—
4.4
Acquisition and disposition related (gain) loss
(20.9)
0.2
—
(20.7)
0.1
—
—
0.1
Hail and storm damage charges
1.9
—
—
1.9
—
—
—
—
Used vehicle inventory valuation adjustment
—
10.0
—
10.0
—
—
—
—
Adjusted EBITDA
$
187.8
$
(31.8)
$
3.4
$
159.4
$
216.3
$
(27.3)
$
(0.6)
$
188.4
Six Months Ended June 30, 2023
Six Months Ended June 30, 2022
Franchised Dealerships Segment
EchoPark Segment
Powersports Segment
Total
Franchised Dealerships Segment
EchoPark Segment
Powersports Segment
Total
(In millions)
Net income (loss)
$
71.1
$
192.1
Provision for income taxes
25.0
64.0
Income (loss) before taxes
$
255.8
$
(162.3)
$
2.6
$
96.1
$
326.0
$
(69.6)
$
(0.3)
$
256.1
Non-floor plan interest (1)
51.2
1.7
1.2
54.1
38.1
1.7
—
39.8
Depreciation & amortization (2)
57.7
14.4
1.5
73.6
52.3
11.0
0.2
63.5
Stock-based compensation expense
10.6
—
—
10.6
8.6
—
—
8.6
Loss (gain) on exit of leased dealerships
—
0.4
—
0.4
—
—
—
—
Impairment charges
—
62.6
—
62.6
—
—
—
—
Severance and long-term compensation charges
—
4.2
—
4.2
4.4
—
—
4.4
Acquisition and disposition related (gain) loss
(20.9)
0.2
—
(20.7)
(1.0)
—
—
(1.0)
Hail and storm damage charges
1.9
—
—
1.9
—
—
—
—
Used vehicle inventory valuation adjustment
—
10.0
—
10.0
—
—
—
—
Adjusted EBITDA
$
356.3
$
(68.8)
$
5.3
$
292.8
$
428.4
$
(56.9)
$
(0.1)
$
371.4
(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.
