The following is a summary of the Sonic Automotive, Inc. (SAH) Q3 2024 Earnings Conference Call Transcript:

Financial Performance:

• Q3 GAAP EPS was $2.13, reflecting a $31 million tax benefit from an out-of-period adjustment.

• Adjusted EPS was $1.26 per share, a 38% decrease year-over-year, largely due to normalized new vehicle GPU and the impact of the CDK outage.

• EchoPark segment reported record quarterly gross profit and adjusted EBITDA.

• Third quarter new vehicle GPU fell to $3,049, a $540 decrease from Q2 due to EV sales and stop sale orders.

• Used vehicle average retail pricing decreased by 1%, with a slight increase in wholesale auction prices.

Business Progress:

• Achieved a record quarterly performance in EchoPark with increases in adjusted EBITDA, revenue, and gross profit.

• Increased technician headcount net by 216 techs as part of an initiative to boost fixed operations business.

• Launched sonicpowersports.com and integrating new processes and technology in the Powersports segment.

Opportunities:

• The used vehicle market shows signs of normalization which might boost EchoPark's sales volumes in 2025.

• Potential interest rate cuts could improve customer affordability, supporting both new and used vehicle sales.

• The firm plans to incrementally add technicians to enhance service capacity, aiming for an additional $100 million in annualized gross profit.

Risks:

• Operational disruptions and the impact of the CDK outage led to an estimated loss of $17.2 million in pre-tax GAAP income.

• Continuing normalization of new vehicle margins and increased vehicle production pose challenges to maintaining GPU levels.

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