Sonic Automotive (SAH) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $3.49 billion, down 4% year-over-year, with net income up 8% to $74.2 million and diluted EPS of $2.13, up 11% year-over-year, but adjusted EPS fell 38% due to margin normalization and CDK outage impacts.

• EchoPark segment achieved record quarterly gross profit of $55.2 million and adjusted EBITDA of $8.9 million, despite a 13% revenue decline; segment returned to profitability with improved unit economics.

• Powersports segment delivered $59.4 million in revenue and $5.8 million in adjusted EBITDA, with strong sequential and year-over-year growth.

• Franchised Dealerships segment saw revenue of $2.89 billion, with new vehicle gross profit per unit down 35% to $3,047 and operating income down 31% year-over-year.

• Board approved a 17% increase in quarterly dividend to $0.35 per share, effective January 2025.

Financial highlights

• Q3 2024 consolidated revenue was $3.49 billion, down 4% year-over-year; gross profit was $543.6 million, down 7%; adjusted EBITDA was $135 million, down 19% year-over-year.

• Adjusted net income was $44.0 million, down 39% year-over-year; adjusted EPS was $1.26, down 38%.

• CDK Global outage reduced Q3 pre-tax income by $17.2 million and net income by $12.7 million.

• $31 million tax benefit from a prior period adjustment related to franchise asset impairment.

• SG&A as a percentage of gross profit was 71.9% consolidated, 71.6% Franchised Dealerships, 77.1% EchoPark, and 63.7% Powersports.

Outlook and guidance

• Management expects Q4 new vehicle GPU in the low $3,000 range, with normalization to $2,500–$3,000 per unit in 2025.

• EchoPark and Powersports are expected to offset lower Franchised Dealerships earnings, with EchoPark positive adjusted EBITDA in 2024 and growth in 2025.

• Disciplined EchoPark expansion planned for 2025–2026 as market conditions normalize.

• No material impact from the CDK outage is anticipated beyond Q3 2024.