SAH - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to the Sonic Automotive Third Quarter 2024 Earnings Conference Call. This conference call is being recorded today, Thursday, October 24, 2024. Presentation materials, which accompany management's decision discussion on the conference call can be accessed at the company's website at ir.sonicautomotive.com.

At this time, I would like to refer to the safe harbor statement under the Private Securities and Litigation Reform Act of 1995.

During this conference call, management may discuss financial projections, information or expectations about the company's products or market or otherwise make statements about the future. and could a differ cause the made. forward-looking and of materially are statements that uncertainties actual statements subject number to risks from Such results to with are the These Commission. detailed and and Exchange uncertainties company's risks filings the Securities in

today. discuss Please filed Exchange In Commission. current measures David as and to report would the with company's the and non-GAAP I on non-GAAP defined addition, Sonic certain earlier Chief to financial X-K the Automotive. the like by Securities introduce Commission Chairman management Smith, Securities in Executive Form may refer of Exchange now Officer reconciliation tables Mr. and

Mr. Smith, you may your conference. begin

David Smith

Again, and to the company's I'm Thank much, good you welcome everyone, Chairman and you Sonic CEO. and very Quarter -- Third said, Call. David as Automotive's Smith, morning, Earnings XXXX

Joining Investor today the Heath Vice our our EchoPark Dyke; Keen, Jeff Danny Operating Relations, call Wieland. President Byrd; President, our our Officer, Tim CFO, Chief of me on is

We continuing sincerely would our like to amazing experience deliver customers. world-class to teammates for by guest our thanking a open the call for

the teammates scores as to teammates And Our spot the our top by dealer #X Automotive satisfaction preowned again in automotive Sonic our franchise earned company's Automotive have and among reputation.com. satisfaction once achieve guest EchoPark highest the customer ranked continue history.

to teammates, guests thank team. would truly like our with for dreams, lives relationships to and enriches to and are their Automotive all future our key deliver We I and fulfills Sonic that our an manufacturer always, lending as success. and living strong partners purpose and loyalty And our teammates are our them to support Sonic guests delivers Our teammates experience for our our believe happiness.

goals. record gross changing in performance in on make and pleased reporting EchoPark while all-time to I'm third great to in adapt near profit, market strategic EBITDA. progress to quarterly achieve to company remains income term our our that report adjusted the continued ability long-term quarter, Our we dynamics focused positioning Sonic our the segment to segment

despite well continued Overall, customer the stop as related the team increased vehicle key as Sonic certain meet the of to continuing Automotive lead in and level of CDK management new normalization to at functionality vehicle orders and applications, brands inventory manufacturer [ production. a operational ] sale disruptions high margins execute certain

GAAP quarter and the our of And Third in items to the of July. of press detailed our effects decrease was CDK primarily due $X.XX normalization release adjusted XX% morning, the this EPS $X.XX carryover per was excluding share. the as EPS share, continued GPU outage vehicle effect in a year-over-year new per certain

Our reported the results in for a the in adjustment, a correcting of an recorded franchise with $XX associated million benefit out-of-period an impairment assets error quarter prior period. included tax with connection

we the outage, estimate million In diluted $X.XX due caused in includes the our a taxes approximately who CDK income million income to teammates which compensation related to the outage. EPS reduced have our business in quarter excess $X.X impacted disruption of as to or by $X.XX earnings CDK GAAP addition, that approximately potential paid before or per $XX.X share, negatively third was result by

related after trends. supply XX-day third supply sales of with quarter with the the end of third the quarter inventory, in QX. average line inventory quarter at for days We ending accounting of dealership the the vehicle disruption Turning end now to new franchise a second the saw in levels, stability at CDK

vehicle accelerated and vehicle orders second sales the certain vehicle sale GPU unit, rate was decline of on to per Third from $X,XXX somewhat quarter. new quarter third compared effects down from GPU models. GPU new high-margin quarter due $XXX headwinds of the to quarter in second the primarily the same-store unit larger The per electric stop

due range exit the to low weighted $X,XXX However, benefits our portfolio guidance in of are affirming fourth seasonal we the quarter the quarter. to our the fourth luxury in

GPU new per XXXX, of unit Looking XXXX. structurally believe normal range will in new it normalizing $X,XXX continue we the level that to beyond higher remain the to pre-pandemic, than in vehicle $X,XXX was

teams pricing to In levels manage third partners decreased costs work wholesale new continue while inventory to auction nearly during average retail basis. evolving per vehicle same-store X% align plan vehicles with unit vehicle decrease closely dealerships floor to our on options a $XX.XX demand, better used increased market, vehicle our which to and X-year-old second used and franchise quarter, sequential the consumer Additionally, supply, quarter, manufacturer ] driving inventory days a should X% the powertrain prices for benefit with and new compared GPU. GPU interest [ the our used

challenge consumers for current used amid a rate environment. to prices remain interest affordability the concerns contributing Elevated retail

However, interest volume trends in further potential the for in used sales XXXX. wholesale used positive begin are And cuts, return vehicle rate when to pricing seasonal outlook. and business to benefit our affordability vehicle combined with normal should

incremental used team driving inventory sales and volume meantime, of opportunities, on this pricing upside the alongside car time. used retail normalization our the expected and over focused of In business driving remains line in acquisition the

well a interest rates Our same-store F&I historical X% quarter, third despite [indiscernible] elevated in performance levels. down the ] with year-over-year franchise continues [ $X,XXX consumer strength above to GPU but be of

unit our even environment. will affordability pre-pandemic a levels of F&I that supports structurally in F&I levels in remain consumer challenging higher than The stability per continued view these

and to remaining strong Ops success of as there we our Fixed proud Service XXXX and Ops area, Fixed the Parts Fixed in very ahead quarter, has our in Our with XXXX. third team increase gross we finish business had we this business look same-store profit opportunities grow the to believe are Operations are an or very in X% and remains

to net Fixed would XXXX, $XXX profit. this our techs have As approach million we an the per in contribute head adding week by date, increase goal net expect head March, additional in gross achieve in previously annualized by in discussed, count XXXX. launched initiative an XX techs we techs a To which we positioning weeks, have we Ops we technician of count increased few our XXX and the as net last end technician us to a [indiscernible], XXX

segment. the EchoPark to Turning now

very quarterly are report $X.X EchoPark with for to our record consistent previous excited adjusted EBITDA guidance quarter. third million, all-time strong of a seasonally segment We

third from prior quarter, EchoPark prior the of reported the gross XX% year all-time $XX we down the X% quarterly record EchoPark and up from For million, revenues $XXX of million, profit year.

volume per outpacing the excludes basis, X% closed of retail segment quarter. for growth up sales from sales gross EchoPark per was second result of and total EchoPark X% the industry stores, up velocity second higher Revenue XX%. volume year-over-year $XXX quarter rate and up sequentially improving sales despite up the year-over-year EchoPark was year-over-year. in X% retail unit but unit. F&I from per used units, down gross from up gross unit XX,XXX which same unit, $X,XXX was profit X% X% quarter increases quarter, market sequentially the down the per profit and unit a as On profit was segment unit $XX marginal second wholesale inventory was market approximately a unit per pricing

the quarter days XX with finished benefiting the inventory EchoPark the -- used supply at vehicle of XX GPU. end third days at of turns faster quarter, which second compared to day -- the quarter

total higher our the rooftop improve to quarter store on inventory sales variable previous footprint allowed better first GPU us XXXX overall discussed of platform, unit earnings since allocate volume the across As profitability. to per reductions and driving better calls, our the

over brand. EchoPark's the unwavering us tremendous vehicle has made and a Our improve conditions the to market positive as believe in allowed A several over demonstrates for adjustments in the to consecutive past confidence in and in resuming of quarters, challenges quarter years, look EchoPark vehicle market long-term growth adjusted for our next opportunity segment the we the quarters. we quarter EBITDA weather potential long-term for the third performance EchoPark to recent used strategic we the few disciplined continue validates forward third used

segment. Turning now to our Powersports

gross quarter, million third we of $XX.X $XX.X of $X.X of revenues the generated million, adjusted EBITDA segment million. and For profit

into year's overwhelming the Rally As was segment. processes expected, quarter, Powersports benefiting the began third integrate to in we success, this accelerated season this Sturgis technology and an and from recently new selling the

operational on network fine-tuning our focus to current within continue operating our synergies We identifying playbooks. while Powersports

finalizing management In inventory of the marketing rollout sonicpowersports.com. of to centralized F&I look strategy, forward sales recent we the the and near implementation refined and term, our

to are segment, this is time we remain growth future taking right. opportunities the disciplined about expansion in when in optimistic the we While a retail sector approach adjacent this

hand, to our unencumbered with to market excluding We third turning approach quarter real estate to the balance on in sheet with a continue combined Finally, sheet. ability maintain million strategically we available balance evolves. in as the floor capital ended the deposits deploy $XXX plan liquidity, $XXX cash and conservative and million

January on to record XX, to share dividend XX, pleased I'm stockholders a our all approved to $X.XX to the report today increase Directors on Board cash payable per Additionally, of XX% XXXX, December XXXX. of quarterly that

see guidance for can investor the financial in this morning, XXXX third our presentation released quarter results. limited following we As updated we certain you have

continue our franchise for offset segment and EchoPark the by be EBITDA believe can the significant continued at We least year in growth earnings and EchoPark to to partially dealership positive that results, improvements setting segment adjusted segment returning beyond. in lower XXXX for stage

industry-driven to that may in execution the people to over near-term for and franchised stakeholders. our consolidated maximize EchoPark to ongoing results macroeconomic business the offset to earnings Powersports the long-term face decisions to the earnings provides help right we right In Sonic our continue environment strategic continue margin We headwinds grow segments downside backdrop, focused remain business, changes opportunities our time. we culture have minimizing long-term our significant while returns. making remains believe our team automotive that adapting Furthermore, any and and to in business retail diversified we strategy, closing, model on right may to create the growth our in value and the confident and

our you Thank answering remarks, look we any opening concludes and you. questions forward may to This have.

Operator

Bank from [Operator with Instructions] first question comes John Murphy our America. And of

John Murphy

just but today. a I apologize, of noise there's very just a and lot a I simple one, have and earnings couple,

you So trying think and understand, was, the to correct basis, you the we had ex the is on, EPS this what have there's to just folks storms adjusted consensus when operating may an CDK, think comparability off. Because that some what want I and sale, think do questions focus to number about number? on about stop you

clear want So get this. on I to just

Heath R. Byrd

impact this by this quarter, It's Yes. and $X.XX Real the Heath. $X.XX the BMW CDK $XX million This is EPS. we around estimating million. on for a of impact is and that's are $X.X CDK quickly impact,

is the So a [ total $XX ] X billion. between

John Murphy

enough? being incredibly Okay. something you're I you net big I a mean impact? the could But storm of that's there always you what tease I of see helpful. was do storms? sort little or I was give think That's the I Heath, storms to us out. mean, know -- I hard is any mean, mean there on that

David Smith

say And to for like we But teammates were did on Jeff we hurt, were I'd fortunate. some very, of First and some think Dyke very has have that our damage. none I you. color

Frank Dyke

getting were good David unfortunately. prepared off Yes, really says -- John, we that unfortunately, at we're this,

And But had an conditioning that inventory. top not so we didn't We slow lose prepared. any really were it down of unit [indiscernible] had on us X store air a really We issue. overall, did storm.

John Murphy

good to from property a perspective. and That's people hear

EVs Just of you the disclose I detail, ICE mean GPU, level us hear certainly don't way that quite you but sure wait. can. breakdown to give EV we'd want that sales a but love it. -- stop is a if quickly to on are of EVs Can GPUs. I'm you a versus you new highlighted

Heath R. Byrd

related couple a it's to million QX got to headwinds $XXX In funding headwind GPU. was . and to the Yes, of ] new QX is $XXX numbers headwind [ ] EVs. [ of the $XXX ] [ I've QX, GPU,

John Murphy

were the that higher, you And first kind that normal of the third the much the incentives a to GPU quarter. luxury certain brands headwinds and West there. incentives particular, on return the lessened therefore, Coast saw difference quarter, in and that quarter, we Those in with the the second in in saw helped

Heath R. Byrd

sequentially, at that the ]. look is you related difference half If think EV, it's to the I $XXX About of the incremental. [ $XXX,

price. the So ] was was from ] $XXX [ EV, $XXX [ normal other

Danny Wieland

Danny. is this John, And

of to deck, look ICE our and than hybrid out you or And broken we've across reason can price better EV in that about an the in vehicle is the that hybrid got ice platform. in demand. between X a And GPU. imbalance Slide see or structural supply you EV, And a ICE at significantly different import It's EV and make no relative should If equal our GPU there's same is domestic. luxury underperforming. point and hybrid all the by still why

with still of And so seen our demand, in while EV our XX% relative sales. we inventory to of improvement days while only we've had of some supply a EV XX%

just relatively do. the right the We've still are got work oversupplied. think in moving direction. we're So And some I to OEMs

John Murphy

step second you is kind back going think to [indiscernible] stuff? with head those they they're kind do that quarter? the the had sand And Or still in in in of actually of it

Frank Dyke

out There is decently to just are buildup lot really a the EVs. BMW be sale the Mercedes some aggressive aggressive aggressive inventory That's because quarter. the there. incentives on stock to do now. right in continues with third

XX%. frame expect December BMW with -- stock November the in well. time fire, at us, particular, BMW to and expect I into fourth quarter, I you October that on And were So I the mean business for sale and up plus look our continue on as the

So it a great quarter. should be fourth

John Murphy

pure and pretty last I on pure gravy, lot that's a techs, one there. XXX the one I but not and -- just it's of gravy it's mean awesome then it's rate mean I gravy. week, And run like sounds XX a Great.

you you and any keep capacity beyond couldn't going is that those potential you pace? folks you pretty with hot that any point? there adding or actual this going? there's stall at XXX in keep per could And think week some about issue the techs, As think reason Do XX

Frank Dyke

issue technician. Yes, can much to capacity and time, one add we more we'll we a it capacity, and become over the but not out the once thing yes, needed in change capacity. that install best you the got to that's can't so best get the at the a stock we big culture [indiscernible] things, dealer stores more add go everybody an does so And right? do of It's -- techs, leaving

You more you technicians, get because want food storms. to in technicians the There's in working to stores, to got right? store culture to the are want the more they'll more technicians hire the

really us. changed beginning that doors for things the open made got And the in to big that's now see unlock stores, for we're difference we -- Once and a the us.

of get on technicians the the in a then shift quarter. in first this really job the past So, And done do probably We'll much our in grow kind retaining sure, our take from calendar we hired a of that we've focus techs there. year, continue and there. breather can could little better XXX than

And But the too. in probably But Fixed warranty Operations course, fantastic. business is grow be BMW. customer just that all of with to there, pays

see is go perspective, Ops 'XX -- great going fantastic. be be a how fourth from should things And from The so to quarter Fixed it and there. we'll

Operator

from comes Our Rajat JPMorgan. next with Please. Gupta question

Rajat Gupta

much had I $X.X we that And I the July, wanted net there. have of used on door? for in CDK, recovery Or be to impact the what that able sales. given maybe that it just you happened up on quick like to just more? stop the I get Is or quarter unit were follow us question thought just new with John's that follow-ups. would could impact? a more -- seen million what BMW, you on think kind than out just what you or you would seems X any And side? might just have have able mean recall lower And the X just or then curious like helpful. I are dissect to give if you of little and mentioned

Frank Dyke

Yes. a The business as car during there XXX, from and somewhere new perspective, XXX well. BMW it's the cars in obviously, preowned impact, quarter,

on and we will seeing, what the And an could that sales for in. outstanding increases vehicles why see waiting that but sell, Our that job part selling huge team stop we're the we November. and -- the to did October we for seeing were we're that's come getting sold,

mean amazing communicating to job top And on difficult us. situation. we're faced tip They they a BMW. really, an were with also with of hat did very I this. I my

the we at that a really way good team, So got XX through BMW us just those amazing of this time. getting really just a [indiscernible] all level. an stuff. kind stores executed around, at high We're did great job we've getting And and

end little with cars a be units. Do to raised to in want their our but team about to... tougher, be and month us that not cost did got it and to you certainly job, during we all of expect XXX really and a the XXX, too, we the So sold the it up up you, Again, world, October. going lot bit That's period. honest make we're the of of

Heath R. Byrd

the units, $XXX impacting it was ] This calculated is GPU Heath. and $XXX. On [ ] that new [ new impact [indiscernible] we down our million ] was about on used $XXX [ GPU units new was $XXX with units, on

obviously also deals -- that $XXX around GPU. and F&I on trying to We very well our was as side because the quickly, for do

Rajat Gupta

quarter, just then there service about the talked Is to big BMW, well, a as on sales. fourth And the going obviously October be pickup you for like moving you the side Understood. forward? -- on

Frank Dyke

that get grow, XX% will the to inventory make Yes. The business We and a warranty perspective. from be couldn't up corrected. we'll done have still so of or about to we CP what needs continue then

great it's BMW So it able quarters, of CDK was whatever a quarter, operate should and in business else any couple on those be now during last of be quarter going a The to And really really distractions. recalls good the no there. and we're at is thrown with overall. without to us going

see the fourth do And quarter. we can so we'll in what

Rajat Gupta

the in Curious given are mind to like should the changes that a numbers given we How the guidance specifically just the quarter year. on obviously to changing quarter quarter, think pretty like for in through that's [indiscernible]? have gross been anything fourth the just course in fourth And works. around full fourth about all The seasonal growth the see you SG&A the expected, happening? Understood. better than BMW comp drop you consistent structure year how look here, always a year-to-date of typically to keep

Heath R. Byrd

the we're XX% because like quarter always have growth to for -- better in us. we think the fourth very SG&A always quarter is fourth luxury and I a big over

be But in continue should the you that our would drop. of same low to see the XXs guidance So franchise. the kind for

course, of EchoPark. And

note the You guiding that and we may we're in XXs. the guiding our in guidance XXs now changed we're there, high

performance well of you've seen. the As

but yes, in the have -- see So you'll you of normal quarter. some always the fourth seasonality, like that,

Operator

comes Lick Stephens. with next from Our question Jeff

Unknown Analyst

can QX, the same-store plus about and you're it good mix why given With said CDK. because of outlier on that units because in I bit dark new brand your mix to was, quite an pretty as the units, surprised a brand based talk was been. operating have respect your it's in was it your it CRM you as what fact X should

David Smith

David. is guest is to It's take like I'd experience teammates it's our because opportunity. talked kind about organization job. structured, really our did our the that lot. This -- our teammates a We fantastic of a a layup way

Our on are a leaders. talked we hit, amount and has and calls a did. to knew, got they tenure, deliver And actually of it lot our talked we've veteran our issue it. about and going with up when CDK step the that to we that about operations We huge do teammates

Frank Dyke

basis, or inventory down luxury Yes. with a something it. did that. were we to would And were Jeff, job great a Honda, did on would brands I ] very we this on a I year-over-year The to Even add tight well. is it, BMW. brands I I I little strong. mean, X% mean XXX-some add [ Jeff. like Toyota. with import think The Honda.

job did really So there. great a we

to then on we're now it's horrible. of woke We study more day, I case but of to they the role. for and We're GM And starting lot then we universities mean, to brands big a than in because number and for overday X,XXX vehicles [indiscernible], at of luxury, absolutely are of bunch have, in Ford we're in -- screw the played be the selling And just the continues it's the the cars, ground. sell they margins the end the business, of flat. this amazing. did a July domestic Slants country the the a selling prior up a August mean year that had how brands cars supply. up I and and

incentives couponing things we're They're of away, it you. buy paying to you really instead to today. doing do cars, the giving and the they're consumers to supposed And really

in we across really So ultimately, in forward import good the to luxury continuing with volume much in domestic. pretty in board luxury mix our on the fourth particular that in look quarter. And and

Heath R. Byrd

don't of a And lot I this Mercedes. good you -- Heath. volume had is think it with mentioned we

to took Mercedes. that conquest, think of So Mercedes get we have I you that with BMW, market but some really a some share had quarter opportunity from good

Frank Dyke

Yes, up quarter. XXX-plus units the for

Unknown Analyst

servicing on just then parts technicians. And a and the follow-up the

Given incremental a know to if implies because good you're same-store and X%, think service how you it you getting of think technician the I you're parts business losing do -- but business how want do to what as you're growth, sales your much you refer don't leaving it on up table? the -- much shortage,

Frank Dyke

$XX,XXX to in technician [indiscernible]. ] It's [ month per gross per $XX,XXX for

right just ability. on out of -- You do there there the about. terms in number million what's That's XXX, that a you do $XXX math we've talking can our been the tells you

ought annualize code. to on us, by along year, next it for market And focus job so that a our you with fantastic share Operations Fixed year be growing for

that. That's all are go got Pretty with something with us. things focus been years. to for been really also huge much And we've along on business. for a customer those over It's manufacturer KPIs partners. And of we've green X the now scores satisfaction driving great X.X working our

And upside so huge continue that I expect 'XX. there on us. into for Huge, to

Operator

Our next & question comes from Needham Company. Pierce with Chris

Unknown Analyst

EchoPark. quarters, the did think EchoPark? way [ $XXX per and on right inventory I to in first demand gross closer normalize that tight the better just around unit the unit? What's at quarter kind ones X in had [ ] X that retail profit profit I of sale Is quick this was you retail because should to we modest just based about gross $XXX X quarter. per will to because to ] Or model on per of of days and better model? think

Frank Dyke

Are front end you gross? about talking

Unknown Analyst

Yes, that's right.

Frank Dyke

Yes.

a lot is because storms quarter we saw that the So valuations. of the and in the third theme

last in And some weeks range at are as $XX,XXX auctions. should in that And Valuations low the fourth few provide to upper compression month first pre-owned, see think we're what see increases think to into I we'll PUR I very did as But last numbers buying in quarter will $XX,XXX the the move 'XX. traditional up then similar range. -- going going as the that's cars gross you'll we for we seasonal and moved in it into the anywhere see for that. move quarter. and We slow that flow to the the 'XX -- our

Heath R. Byrd

I note think equity. that that actually we we look performing well. market, at other locations Denver their pre-COVID as the it's numbers of if to the see $XXX higher than let's important market, value over GPU look of In and average at they're than -- higher brand our they

so think once mentioned that opportunity up, EchoPark a hitting XXXX we that starts trough think believe, I And inventory in perfect . use we a as going heading we back for to definitely of it's be

David Smith

to cars to simply the we additional David. quarter, in keep did to store the do existing store per mind if in and existing what stores. with XXX about the were EchoPark doing third XXX around you XXX And cars capacity look at is we this per in around And And stores. potential with for our

go at to we where So and talked go GPU, technician about. the look we EchoPark -- addition to volume expect about in the as We'll our you were you where capacity. could talking with at

Frank Dyke

it's Yes, Jeff.

store we the for units and get we ] there we that the that interest to to selling average David in spoke to get range that just is When down at per look now. average to of range down of, selling. on below We're to had payment get fall, rates north $XX,XXX $XX,XXX We things [ want price. $XXX down to great and really month. $XX,XXX the $XX,XXX the of XXX continue average per numbers One

it's see they're now that Our upside. to lot X,XXX the market is the and end. It's will and it great XXX, on big we -- then But returns equity back but for we a And going we've -- the in to 'XX, prices nothing talking bit growth. begin to front in as improvement we And back have as long being a fall the little stores open a been. that we be volume XXX month. 'XX. continue rooftop improvement, lease of of the can as in brand about just margin doing be of for a and half lot A come Denver, room

Danny Wieland

that. where Danny. used for tracking price business. the this environment. to reported price for of it headwind see down, face point car used margin 'XX a we good in basis, through But widened We've car affordability. used year improves retail expected be $XXX, it on fact declines Jeff's spreads and that's on the could we're improved vehicle decline more coming the year margin the into the remainder this point, And vehicles, a used retail And the better in that of is perspective From obviously, on that is $XXX despite full wholesale One pricing have year-over-year a business.

on fronts. for So it's positive us both .

Frank Dyke

growth. or dropping, you margins Yes. selling by price as improve, overall get we In same stay more we auto can't revenue fooled but retail because is sell retail, grow average said, being cars, the

when a look lot. revenue, move can around people sometimes revenue So at

$XX,XXX $XX,XXX if a calendar in $XX,XXX very money the more car, versus great selling But in that EchoPark we've a car. with You're rather car. . done hard we $XX,XXX that make year. sell obviously well, you'd on you we That's very focused and the do something this

Unknown Analyst

still But side I to gross was make I sure That I profit you is a I do better because been little actually will look guess F&I there for lot underestimating minimal bit and you've you I and Denver? Denver on the a financing think below the just a could stay well but the think can about you cars go I of want I just I perspective? And gross buying car or right. be of I've -- still from much because about actually sure -- a can make and why about at make competitors? detail, selling growth? deeper on on model longer how And just price correctly. maybe gross want there think just make think your of stores front-end less It's kind that? When the gross All on I you gross competitors front-end understand. front-end but profit it the other the been lot $XXX to auction model, like world. below

Frank Dyke

fun positive to copy we've front, the way And the Yes. which copy a is marketing below not the is to other with as we grow since in and X brand for ability of still 'XX the November traffic lot last idea in that. COVID, it's a in a We've with been a And into affords seeing. mature of done that's on We've $XXX, $XXX, done more what of affordability things that's just great sell change markets Denver. issues awareness, that you the what nearly the $X,XXX we're And put all those We've vehicles XXXX you still us got together, a move $X,XXX sort open because us, just back-end and a market. the -- rooftop customers. in range And drives a over We brand of $XXX repeat take on or in there. average along the having the been stores, 'XX. printing in years big machine. volume X,XXX, a It's watch. or to it's XXX-unit have margin, basis lot whole out will X of Denver and that

was years there we we had been last really along. works the it said few because that our others losses. know those forward prices understandably tough ahead model. to huge bowed us know But coming. look what while built environment for very the we have But we've and EchoPark that environment, of very, out so. in lower all hung a of well lot That's The we that's and We --

Unknown Analyst

Okay. And of as just then be to and normalized basis? of just where a inventory kind where perfect. refund a EchoPark, on on you season now into tax And are as where and lastly, want you you are broadly kind far

Frank Dyke

In terms day supply? of

Unknown Analyst

Yes.

Frank Dyke

volume days increase say obviously XX And on we're days generates bring down. units the to increases, on in where lot volume days lot, inventory right XX But more we us we want lot, pipeline XX days XX XX see to on to in that's as We're decreases, we and you'll be. XX pipeline. will where level the that as stay. XX Yes, our

Unknown Analyst

you XX that... have that number in but you're share is that the I of imagine as faster. more that Is units? you that days units, metrics show them over there x that any Is actually you days could take share is turning XX market,

Frank Dyke

Yes, more cars the the correct. -- the selling, are we more mean that's lot. we're I on units

the do sell just take easily. you math if you can store So X,XXX, pretty a to in

going that on have period. turn that to the supply You're for lot to XX-day XX-day

Operator

next Our Jefferies. question Instructions] from comes [Operator Bret with Jordan

Patrick Buckley

sounds ramp back looking market This footprint for is Buckley it again, the you Patrick on sort you early of EchoPark how the just are up eventual this And touched quickly But Brett. I and a ahead like can event, an up? looking and bit. that's conditions on for? XXXX for expansion that guess, ramping XXXX, And what

Thomas Keen

XX get we'll next to additional that and the able what inventory over where be it, supply would growth with believe experiencing of pre-COVID We want Keen. we now. will supply we call Tim to is will months, This conditions, the it be XX levels normalized Yes. we're

So for sometime be perfect the 'XX, we will believe early growth. conditions in

Frank Dyke

Yes. And perspective. very disciplined that. Then I'll growth from our add to

-- So do to shelf. way. getting million ]. coverage [ the to another very we'll that it's goal the That's our matter fly have a average payment $XXX to And below disciplined a volume in see $XXX off is but really we just down an -- million and start [ of really, XX% of still country, ] where the and

of So put together. range. seeing that down the into We'll half get 'XX start plans thinking back when we'll the is we're prices

We've that hibernated, plans. will, for waiting of sort right we we've have you tracker. properties that and got own already if the time We to pull we're just the

Patrick Buckley

the any general macro improves of headwinds see add-ons upside the you But there? you I And in guess flip bit is are talking could That's there see leasing then out you're know talk and -- F&I your there. Great. side, you from called on rate you as and seeing 'XX. about where I signs or increased on more in or I GPU you trending stability slides, pushback helpful. cuts, a just on guys X,XXX guess

Frank Dyke

yes, the while chasing think consolidators that and sales. other there. cuts, more with -- opportunity we product of warranty upside drop, would and obviously, the of I big And I opportunities do. and to margins those think there levels at is sort we're in as rate an range PURs as there. it's Look, there we're perform rates top that And now. we're those drop have the group, are have at that not we can grow We than in mean and some model higher there's well. think And we I we're

So price perspective. costs a carry drops, more from can selling retail average we lender

and So where upside. yes, model if we of I'm or we think But today. in around modeling kind are there's

Operator

this no time. at are there further And questions

the I'll So floor over David to for closing Smith remarks. hand back

David Smith

Great. joining next you you, speaking Thank everyone, Thank to much. very us, forward logging for in we look you quarter. and with

Operator

call. today's day. disconnect. And may good Have a you. All Thank that concludes parties

Sonic Automotive (SAH) 24 Oct 242024 Q3 Earnings call transcript