Sonic Automotive Stuns with Q2 Earnings Beat Despite Revenue Dip and Dealership Struggles: Details

Sonic Automotive, Inc. SAH reported a second-quarter 2024 total revenue decline of 5.5% year-over-year to $3.453 billion, missing the consensus estimate of $3.583 billion.

The company reported adjusted earnings per share of $1.47 (-20% YoY), beating the street view of $1.38. Franchised Dealerships segment operating results include same-store revenues declining 3% and same-store gross profit decreasing 9%.

Quarterly gross profit fell 5.2% year over year to $539.1 million, and the gross margin stood at 15.6% (flat YoY). Operating income increased 38% YoY to $107.7 million, and the margin expanded 100 bps to 3.1%.

The company’s EchoPark segment revenues of $517.3 million fell 14% year over year, with gross profit up 91% YoY to $51.1 million and Used vehicle unit sales volume of 16,641, down 3% YoY. EchoPark Segment adjusted EBITDA, which grew 123% Y/Y to $7.2 million. Excluding closed stores, adjusted EBITDA was $9 million (+149% Y/Y).

“As of today, Sonic’s access to the information systems provided by CDK has been restored, however we experienced operational disruptions throughout July related to the functionality of certain CDK customer lead applications, inventory management applications and related third-party application integrations with CDK. As a result of the business disruption caused by the CDK outage, we estimate our second quarter GAAP income before taxes was negatively impacted by approximately $30 million, or $0.64 in diluted earnings per share,” commented David Smith, Chairman and Chief Executive Officer of Sonic Automotive.

Dividend: Sonic approved a quarterly cash dividend of $0.30 per share, payable on October 15, 2024, to all stockholders of record on September 13, 2024.

“As of June 30, 2024, we had $467 million in cash and floor plan deposits on hand and approximately $885 million of total liquidity before considering unencumbered real estate,” commented Heath Byrd, Sonic Automotive’s Chief Financial Officer.

Outlook: Citing the used vehicle market’s continued improvement, the company maintained its guidance for positive quarterly EchoPark Segment adjusted EBITDA for the remainder of 2024, which is expected to help mitigate the continuing effects of margin normalization in the Franchised Dealerships Segment on consolidated earnings potential.

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Price Action: SAH shares traded lower by 2.31% at $54.60 premarket at the last check Monday.

Photo via Shutterstock