Sonic Automotive's Q1 2025 Earnings Call: Full Transcript Revealed

Sonic Automotive, Inc. (NYSE: SAH Q1 2025 Earnings Call Transcript from April 24, 2025

Sonic Automotive, Inc. surpasses earning projections. The reported earnings per share (EPS) came in at $1.48, exceeding the anticipated $1.46.

Operator: Good morning, and welcome to the Sonic Automotive First Quarter 2025 Earnings Conference Call. Today’s call, scheduled for Thursday, April 24, 2025, will also be recorded. You can find presentation materials accompanying our discussions on the company’s website at ir.sonicautomotive.com. Before we begin, let me remind you of the Safe Harbor statement as outlined in the Private Securities Litigation Reform Act of 1995. Management might share financial forecasts, insights into product lines, or outlooks regarding markets during this meeting. These comments represent predictions based on current knowledge but come with inherent risk due to various uncertainties. Actual outcomes may vary significantly from these anticipations.

The details regarding these risks and uncertainties can be found in the firm’s submissions to the Securities and Exchange Commission. Furthermore, the management might also touch upon specific non-GAAP financial metrics as outlined by the Securities and Exchange Commission. For more information, please consult the non-GAAP reconciliations provided in the company’s most recent filing on Form 8-K submitted to the SEC this morning. Now, let me bring up Mr. David Smith, who serves both as the Chairman and CEO of Sonic Automotive. Over to you, Mr. Smith.

David Smith: Thank you immensely, and have a great morning, everybody. Thank you for joining us on Sonic Automotive’s first-quarter 2025 earnings conference call. This is David Smith, serving both as the Chairperson and Chief Executive Officer of the firm. Today, we also welcome our President, Jeff Dyke; our Chief Financial Officer, Heath Byrd; and our Vice President of Investor Relations, Mr. Danny Wieland. Firstly, let us express our heartfelt gratitude to our dedicated employees who persistently provide an exceptional customer experience. Their hard work plays a pivotal role in shaping our future achievements. My appreciation goes out once more to each individual supporting the Sonic Automotive family. Now moving forward to discuss our initial financial outcomes: according to Generally Accepted Accounting Principles (GAAP), Earnings Per Share (EPS) stood at $2.04. After adjusting for specific factors outlined earlier in our press statement released today, the adjusted EPS reached $1.48—a rise of 9% compared to last year during the same period.

In the first quarter, consolidated total revenues reached a record high at an 8% rise compared to the previous year, whereas consolidated gross profits climbed by 6%, and consolidated adjusted EBITDA rose by 7%. Shifting focus now towards our franchised dealership segment performance; during this period, we achieved a first-quarter record for franchise revenues amounting to $3.1 billion, marking a 9% improvement relative to last year’s figures. The surge in these revenues can be attributed primarily to a robust uptick of 11% in new retail volumes along with a steady climb of 6% in fixed operation incomes. Notably, the quarterly outcomes were positively impacted due to heightened sales activity involving new vehicles toward the end of the quarter, likely spurred by consumer anticipation ahead of impending tariffs implemented starting April 2nd. Additionally, both fixed operations gross profit as well as finance & insurance (F&I) gross profit witnessed unprecedented highs within Q1, escalating by 7% and 9% correspondingly when benchmarked against the same timeframe last year.

The gross profit units (GPU) for same-store new vehicles were $3,089, showing a sequential decline from the fourth quarter, primarily because of shifts towards our luxury brands and as anticipated based on what we shared previously. In terms of used vehicles within our franchise operations, same-store sales volumes dropped by 2%, attributed mainly to fewer available late-model used cars and difficulties consumers face when trying to afford them. However, same-store used vehicle GPU saw an uptick compared to the previous period, reaching $1,555 per unit. We continue to excel in financial services and insurance (F&I), with same-store franchised F&I GPU amounting to $2,442 during this quarter—a rise of 1% since the last one and 4% more so than the corresponding time frame last year. This sustained steadiness in F&I suggests that despite economic headwinds affecting consumer spending power, profits per unit should stay elevated above pre-pandemic benchmarks moving forward.

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