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Sonic Automotive Inc (NYSE:SAH)
Q3 2019 Earnings Call
Oct 24, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Sonic Automotive Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

Presentation materials, which management will be reviewing on the conference call can be accessed at the Company's website at www.sonicautomotive.com by clicking on Our Company, then Investor Relations, then Webcasts & Presentations.

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

In addition, management may discuss certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Please refer to the non-GAAP reconciliation tables in the company's current report on Form 8-K filed with the Securities and Exchange Commission earlier today.

I would now like to introduce Mr. David Smith, Sonic and EchoPark's Chief Executive Officer. Mr. Smith, you may begin your conference.

David Bruton Smith -- Chief Executive Officer

Thanks very much. Good morning and welcome to Sonic Automotive's third quarter 2019 earnings call. I'm David Smith, the company's CEO and joining me on the call today are; our President, Mr. Jeff Dyke, our CFO, Mr. Heath Byrd and our Executive VP of Operations, Mr. Tim Keen.

We are very excited to share our results with you all. First, we want to thank our teammates, customers, vendors and manufacturer partners for helping us achieve an outstanding third quarter.

Sonic Automotive increased diluted earnings per share from continuing operations in the third quarter by over 83%, compared to the prior year quarter. Earnings per share from continuing operations were $0.66 per diluted share, compared to $0.36 per diluted share in the prior year quarter.

EchoPark continued to build upon it's success from the prior quarter, and we believe revenues will now exceed $1.2 billion for the full year of 2019, which would represent a 71% increase over 2018 annual revenues. EchoPark's revenue for the third quarter of $312.2 million increased $126.3 million, which is up 67.9%, compared to the third quarter of 2018. This increase was driven by a retail unit sales improvement of 71.6%. EchoPark also improved its pre-tax profits during the third quarter of 2019 by $7.6 million or up 138.9%, compared to the third quarter of 2018.

As we continue to grow our top line revenues, absent the effect of new store openings, we expect a disproportionate amount of gross profit of -- flow to the bottom line. It's very important to note that the EchoPark growth story is not just about the number of traditional bricks and mortar locations, through our proprietary EchoPark Technology and our echopark.com website, we are drawing customers from over 140 markets across the United States to our only eight existing locations. Our customers have shown they are very happy to travel to our EchoPark locations for our industry-leading guest experience. While we believe our existing EchoPark stores have much more revenue and profit growth potential as they mature. We're also very excited to announce, we'll be ramping up our growth strategy as we open new EchoPark locations in major metro markets in California, Georgia and Florida that will give us a nationwide footprint by the end of 2020.

Our core franchise stores also had an outstanding third quarter. Our franchise stores benefited from overall higher gross profit from used vehicles, fixed operations and F&I during the quarter. Notably F&I gross profit improved $14.1 million from the third quarter of 2018. This was an improvement of $217 per unit retailed, up 15.2%, compared to the prior year quarter. These increases in gross coupled with active expense management resulted in a $10.3 million increase in Franchise store pre-tax income, which is up 36.8%.

Some other highlights for the third quarter of 2019 on a total Sonic consolidated basis include an all-time quarterly record pre-owned unit sales of 42,453 units, and all-time quarterly record F&I gross per retail unit of $1,771. An all-time quarterly record F&I gross of $126.8 million, an increase of $28.8 million or 29.3% from the third quarter of 2018. Our same-store fixed operations gross increased 7.3% during the third quarter of 2019.

SG&A to gross profit ratio of 76.7% in the third quarter of 2019, an improvement of 350 basis points, compared to 80.2% in the prior year period. Inventory day supply for new units was only 63 days, inventory day supply for pre-owned units was just 27 days, down four days from the prior year quarter.

Lastly, we are also pleased that our Board of Directors approved a quarterly cash dividend of $0.10 per share payable on January 15th, 2020 to all stockholders of record on December 13, 2019.

At this point we would like to open the call to questions.

Questions and Answers:

Operator

[Operator Instructions] And your first question is from the line of John Murphy with Bank of America. Please go ahead.

John Murphy -- Bank of America Merrill Lynch -- Analyst

Good morning, guys. First question on F&I, I mean, it sounds like it's a point of strength, because you're focusing on it, but it seems like there is some incremental opportunity there. I'm just curious as you think about F&I PVR or sort of best case scenario. What is sort of the highest that you think you get on any individual transaction on average. So we can understand maybe sort of the headroom there, and maybe what the components of it are? I mean, it's like $300 or $400 on origination fee, but there's a lot of other stuff going into this number. Trying to understand...

Jeff Dyke -- President and Director

This is Jeff Dyke. The warranty penetration is what really drives a big piece of that. And there's a lot of upside left. I mean AutoNation is sitting out there, they haven't announced our quarter, the last quarter, they were $1,900, we're sitting at $1,771, I think was the number we announced. So I certainly could see a 2,000 number, I mean there's plenty of upside there. Our warranty penetrations can get even better than they are today, we've got plenty of upside there, we run almost 40% penetration on the Franchise side, we're running in mid-50s on the EchoPark side.

So as we train better with Ally and with JM&A and our partners will get better, there's plenty of upside there for product penetration. It's not so much on the rate that we're getting that sort of settled in, but the product penetrations where the opportunity is. And there's still plenty of upside there for us.

John Murphy -- Bank of America Merrill Lynch -- Analyst

Okay, that's very helpful. When you -- and then two question on EchoPark, I mean, when you look at new markets that you're heading into, I think, it was Slide 23 of the deck you guys put out this morning, you showed, sort of, the medium and large stores. When you identify a new market you're going into, I think Long Beach, California is what you, kind of, had talked about is sort of the next market. I mean, how are you identifying that marketing? And it would seem that you'd want to be going into new markets where you're doing the larger format stores, because you're getting better profits and returns there. Just trying to understand sort of the nexus of, sort of, the decision making process and how you're thinking about this growth?

Jeff Dyke -- President and Director

Well, number one is data driven and so when you look at the Long Beach market or the L.A market, it's the largest zero to four year-old car market in the country. So it's a huge opportunity for us, our market share continues to grow in these markets and we sort of started off with 4%, 5%, 6% market share, now we're seeing double-digit share in some of our more mature stores. So we're going where that zero to four year-old market is. And the markets that David called out earlier, those are big, big potential markets for us. But there is a plenty more across the country and those markets for us are just stepping point to reach out to other markets all over the country. We're selling now in those eight locations into 140 plus markets across the country, and so this just gives us a great footprint across the US to continue to drive that percentage higher.

John Murphy -- Bank of America Merrill Lynch -- Analyst

And the format of the store on Slide 23, you have large versus medium, I mean, why would you ever consider doing a medium is sort of your greenfield facilities [Speech Overlap]

Jeff Dyke -- President and Director

It's also -- there is an opportunity -- opportunities come around when we have to be able to buy real estate, so that drives a little bit of it as well and the speed in which we can move to get that done.

John Murphy -- Bank of America Merrill Lynch -- Analyst

Okay. And then just a follow-up on this. When you look at EchoPark versus your used vehicle business in inside of your existing new vehicle franchise dealers. Have you find -- found any sort of cannibalization or any kind of conflicts that you've come across that have been maybe less than optimal or is there, you know, something that you could share that would be shows us really not a big issue here at all between the two?

Jeff Dyke -- President and Director

Not at all, I mean, it's a huge shop, because all these trades [Speech Overlap] Yes the opposite, well the trades that we're taking at Echo Park we push those cars that are older than four years old into the Sonic stores and we're selling a lot more cars. For example, that is our Toyota store in Denver, Colorado is selling well over 300 cars now a lot from trades that are coming from the EchoPark store. So it's made -- it's been a huge help for us to have the EchoPark stores in markets where the Sonic stores are located.

John Murphy -- Bank of America Merrill Lynch -- Analyst

Okay. And then just lastly sort of a more random question. I mean, is there been any change in the relationship you're seeing with the automakers. And it just seems like, I mean, there is some sort of change, kind of, you talked about our Nissan and their dealer support. But is there anything else is going on in the relationship between the automakers and the dealers that's either good or bad? Do you seen occurred in the last quarter or two or is it more status quo?

Jeff Dyke -- President and Director

No, it's actually, I think getting better, I mean, I think that the manufacturers are thinking outside of the box or not. So focused on these huge facilities much more technology and efficiencies. And I participate in a lot of different dealer boards, and I'll tell you what our relationship have never been better. Our partnerships are great and I think it just keeps getting better and I see no downside of that as we move forward.

David Bruton Smith -- Chief Executive Officer

Yes. This is David Smith. And I would echo that. It seems like we are working together with our manufacturer partners better than I've ever seen it since we went public with Sonic in '97.

John Murphy -- Bank of America Merrill Lynch -- Analyst

Do you feel like you're leaning into you as large, I mean, large well run companies are willing to make capital and create a good customer experience, maybe more than they have in the past and they understand that and that might advantage you versus some of the smaller players that can't necessarily keep up?

Jeff Dyke -- President and Director

I certainly think that, that is a big opportunity, I mean, they are leaning on us for technology, for guest experience and success breeds that. And so when you sell a lot more cars and they become very interested in you, and we're seeing that right now. We're selling lot more new cars and selling lot more certified pre-owned cars. Our service business is good. And so it's all clicking and that makes a big difference.

John Murphy -- Bank of America Merrill Lynch -- Analyst

Okay, great. Thank you very much.

Operator

Your next question is from the line of Rick Nelson with Stephens. Please go ahead.

Rick Nelson -- Stephens -- Analyst

Thanks, good morning guys.

David Bruton Smith -- Chief Executive Officer

Hi, Rick. How are you?

Rick Nelson -- Stephens -- Analyst

Fair, and then impairment at EchoPark that was not added back, so that the adjusted results would have been even better than what should prevent this morning?

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

Rick, this is Heath Byrd, that is accurate, we had about a $1.1 impairment related to real estate.

Rick Nelson -- Stephens -- Analyst

Got it. At EchoPark, I'm looking at the expense ratio 75.3%, we're seeing a decline in SG&A per store from a dollar standpoint. Is that accurate and I guess what is coming out of the...

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

Rick, this is Heath. I didn't hear everything, but it is accurate, that the SG&A is improving, because of the leverage that we can get on the EchoPark stores, compared to the Franchise stores.

Rick Nelson -- Stephens -- Analyst

And is SG&A per store actually lower?

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

At EchoPark and it is at Sonic Franchise stores, yes.

Jeff Dyke -- President and Director

Yes.

Rick Nelson -- Stephens -- Analyst

Yes, but EchoPark you are also seeing declines in SG&A per store?

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

Yes. The growth is also up, so that's driving part of that. That's correct.

Rick Nelson -- Stephens -- Analyst

Okay. Got it.

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

And as we have more locations, obviously, there's not a lot of expense creep on the management company side. So that's pretty stays the same regardless of how many stores that we opened, therefore will help our SG&A as a percent of gross.

Jeff Dyke -- President and Director

Yes, as we open these next three markets, we're not going to have to add, if any to the operating company. So you just have better flow-through and more efficiencies, that's part of the model.

Rick Nelson -- Stephens -- Analyst

Yes, and would you expect...

David Bruton Smith -- Chief Executive Officer

And we're going to -- this is David, and I would say that our team has gotten a lot better and more efficient about the speed and the time that it takes to get a new location open and getting it up and running and profitable has changed it a ton over the last four or five years since we started this.

Rick Nelson -- Stephens -- Analyst

And would to expect how Long Beach to be dilutive in the fourth quarter?

David Bruton Smith -- Chief Executive Officer

Not a lot, I mean, some there's going to be some carrying costs. But maybe the fourth quarter a little bit in the first quarter, right? It's sort of a $1 million on the front of opening and about $1 million worth a drag, you know, once we get it opened for a couple of months. And so there's going to be some dilution in the fourth quarter and then on into the first quarter.

Rick Nelson -- Stephens -- Analyst

And I'm just curious about the share count also from 2Q to 3Q was up about 1 million shares.

David Bruton Smith -- Chief Executive Officer

That's correct, we didn't buy any back as you can see from the slides. And so it does increase because of where we are from an incentive compensation standpoint at the current time. So we have to start going ahead and accounting for the additional shares.

Jeff Dyke -- President and Director

And Rick, this is Jeff. As we opened more markets for EchoPark, you can expect each market to have about a $2 million drag, so $6 million to $8 million is what you should sort of target for 2020, as we move into next year and start opening these other markets in terms of drag for the new locations.

Rick Nelson -- Stephens -- Analyst

And is the plan still three stores for next year, kind of [Speech Overlap]

Jeff Dyke -- President and Director

So, yes three markets. And right now, you're in the three rooftop range, that doesn't mean that there won't be some other opportunities and of course, we'll see. But then the current store base will continue to grow in profitability. And we've seen that each quarter this year, which is just been great.

David Bruton Smith -- Chief Executive Officer

Well, you can really understand that enough, Rick, but the existing stores have a lot of runway left to grow. We're at about half maturity somewhere is what we're thinking. So we've got a lot of upside in the eight locations that we have and selling into more markets. Again, we're selling into over 140 markets in those eight locations and that number is just going to continue to grow, it grew 20 markets in the last time we had a call so.

Jeff Dyke -- President and Director

And just to be clear, that three additional stores on top of Long Beach. So total of four.

Rick Nelson -- Stephens -- Analyst

Right, right. And how many stores do you thing over the long haul for EchoPark. How many do you need to?

Jeff Dyke -- President and Director

Yes, you know, it's not really rooftop count that we want you to focus on, it's just what we can penetrate and where we strategically placed those rooftops. Again, there's just a lot of rooftop that we can get out of these locations. And so, who knows, I mean, the number could be 25, it could be 100, who knows, it just depends on our penetration as we open up strategically locations around the country. So that we can penetrate out further and further from the base markets that we put the stores up.

Rick Nelson -- Stephens -- Analyst

Got it.

Jeff Dyke -- President and Director

And that's real important, that's a real important fact as we move forward. It's not rooftop count, it's how many markets we can penetrate using the technologies that we have in the great incredible guest experience that we have the guest are saying, hey, will travel a long way to come to you, because we like what you're doing so much.

Rick Nelson -- Stephens -- Analyst

Great [Speech Overlap]

David Bruton Smith -- Chief Executive Officer

Rick, this is David. And some of the key to that is that they really -- our customers we would prefer to come and see the car before they actually complete the transaction and that's what they're telling us.

Rick Nelson -- Stephens -- Analyst

Thanks a lot. Good luck.

David Bruton Smith -- Chief Executive Officer

Thank you.

Operator

Your next question is from the line of Armintas Sinkevicius with Morgan Stanley. Please go ahead.

Armintas Sinkevicius -- Morgan Stanley -- Analyst

Great, thank you. Appreciate you taking the question here. When I look at your GPU and the F&I that you're getting at EchoPark roughly 2,200. And I compare that to the online-only competitor here running at about 3,000 last quarter. Your growth being comparable to them. It's interesting to see the profitability here and what surprises me is your SG&A as a percentage of gross is significantly lower here. And I think that you alluded in the conference, that 55% to 60% SG&A to gross. How are you driving that lower SG&A growth, if we compare it to the online platform where you would expect the SG&A to be lower, because it's effectively call center reps versus employees at the store level. So if you could compare the two, just where are you able to see more efficiencies on the SG&A line?

Jeff Dyke -- President and Director

Yes, I mean, our operating platform is a heck of lot cheaper to operate and way less complicated. We don't have a whole bunch of people going around trying to deliver cars to individual clients. That creates a lot of expense and a lot of complexity. We don't have those complexities in our model and the customers coming to us. So it's a heck of lot easier to operate. We don't spend ad dollars or anywhere close to the ad dollars and we sell our technology allows us to sell a lot more cars for associate. So and our average sales associates, or experience guides as what we call them is approaching 20 units on associate. The industry average is around 9, so our efficiencies are a lot higher, our model is a lot less complex and a lot more effective from our perspective.

We just don't see how -- I'm not saying that it's not going to be part of the model as we move forward, but we don't see ever us delivering each individual unit all over the country, but operating model is very, very expensive, very, very complex and we're going to always be able to operate at a much lower SG&A from my perspective, because of the least amount of complexity that we have in our operating model. And we've built the model that way. So the throughput as you see in these eight stores and we had our best throughput yet. And that's going to continue to get better, it doesn't mean that we're not going to have drag on stores that we opened, because as we said, that will be $68 million next year, but a much more effective and efficient model from our perspective and what we're trying to accomplish.

David Bruton Smith -- Chief Executive Officer

And ironically to add to that, it's not in the SG&A section, but our capex is a lot lower than theirs as well.

Armintas Sinkevicius -- Morgan Stanley -- Analyst

Okay. What I'm hearing from you here is, you don't have the logistics cost, you don't have the advertising expense. If I look at their model in last quarter results, I back out the advertising back out logistics and back out the more logistics, because some of it is included in their cost of goods sold. I'm running at call it 73% of SG&A as a percentage of gross profit, you're still optimizing 55% to 60%. Just coming down there to see it in person in September, I really appreciate the efficiencies of the model, maybe you could talk to, is it on the comp and benefits side where the employees are more efficient? Is it on the reconditioning side? Maybe just a couple of other nuggets here to better understand the SG&A gross dynamic?

Jeff Dyke -- President and Director

Well, we have a lot less people, and we're getting a lot more with a lot less people and our technologies are allowing that to happen and so...

David Bruton Smith -- Chief Executive Officer

I mean, it looks like one-third of the number of people...

Jeff Dyke -- President and Director

They have, yes.

David Bruton Smith -- Chief Executive Officer

That we have.

Jeff Dyke -- President and Director

Yes, we have one-third of the number of people that they have. And so it's just a -- it's a -- it doesn't cost us as much to sell a car in our model as a cost them to sell a car. Now, I'm not saying that their model is not going to work for them, we're cheering for them, we wanted to be successful, because it helps the overall industry. But at the end of the day it cost us a whole lot less and we also try to figure out what we can say no to keep our expenses down. We're really, really focused on making sure that our model stays really effective and really efficient. So we can provide our customer with a really low price points that keeps them coming to us and that's really important, our prices are incredibly competitive, and that makes a big difference. We got to keep that lower price point to drive that traffic. And the amount of leads that we're getting at these stores is astronomical. Our Dallas store is receiving over 10,000 individual leads a month, that's unheard of in our industry. So our operating model is simply less complex, less expensive to run and more efficient.

Armintas Sinkevicius -- Morgan Stanley -- Analyst

Great. Much appreciated.

Jeff Dyke -- President and Director

Yes sir, thank you. Appreciate the question.

Operator

Your next question is from the line of Bret Jordan with Jefferies. Please go ahead.

Mark Jordan -- Jefferies -- Analyst

This is Mark Jordan on for Bret. Good morning.

David Bruton Smith -- Chief Executive Officer

Good morning.

Mark Jordan -- Jefferies -- Analyst

So thinking about EchoPark, I believe it was mentioned previously that around 90% of the inventory is sourced from auctions and the remainder is primarily sourced off the street and from CarCash. So I was wondering does that make still stand? And if so, should we expect the mix of vehicle sourced at auctions to decline over time. And what sort of impact that could have on the front end margins?

Jeff Dyke -- President and Director

Yes, yes. And the impact of margin is going to go up, that's the great thing. We haven't even scratched the surface yet. CarCash, our app just launched at one location here in Charlotte on the new car side and we're beginning to work with the app to drive more cars coming to us from off the street. So the mix is below 10% now, but you should expect that to as time goes on and our app becomes more efficient. And that app we're using, not only for the consumer, but we're providing it to our competitive set as well. So other dealers are now beginning to use the app for us to appraise vehicles for them. We're also doing that with Camping World, there's just a lot of different companies out there that can use the application that they are trading for vehicles.

So we expect that to become a bigger percentage of our mix. What that number is? We don't know yet. We'll see over time, but when that does happen, we all know, but when you trade work out the door, your margins go up. There's less expense, through transportation, auction fees, you name it. And so our margins can improve on the front end by doing that. That said, our prices can get more competitive, because we're always looking for ways to drive that retail price down to offer that consumer that great experience at a really good value sort of the Costco model, right? Just really low price and so one way or the other the margin of price stay where they are, the prices might get a little more competitive, but we're going to trade for more cars at the door because of the application, and we'll keep updating you as time goes on.

Mark Jordan -- Jefferies -- Analyst

Okay, great. And during the prepared remarks, it was mentioned that buyers are coming from over 140 markets to visit EchoPark. So, I was curious, if you have the mix between maybe local market buyers and sort of out of market or out of state buyers?

Jeff Dyke -- President and Director

So the way we're looking at it is, the drive time. And so if you look, sort of, 30 minutes to an hour that's about 60% to 70% of our business and the balance is outside of that. And then we're defining the market as multiple sales from each market across the country and we've got customers who have come to our Dallas store from -- as far away as Alaska and really they're coming from all over the country, but that's kind of how we're looking at it.

Mark Jordan -- Jefferies -- Analyst

Okay. Great, thank you very much.

Jeff Dyke -- President and Director

Yes, sir.

David Bruton Smith -- Chief Executive Officer

Thanks.

Operator

[Operator Instructions] Your next question is from the line of Rajat Gupta with JPMorgan. Please go ahead.

Rajat Gupta -- JPMorgan -- Analyst

Hi guys, thanks for taking my question. I appreciate the color on the drag from the new store openings in 4Q and next year. Just have a couple of follow-ups related to that. And firstly, I mean, where are you in terms of the maturity curve of the existing EchoPark stores that you have. And assuming that those should keep getting more profitable going into fourth quarter and next year. And then with the new stores that are going to come up, how quickly can they be profitable versus what you saw in some of your earlier store that you opened? So and basically just trying to get a sense of, you know, how much of this drag can be easily offset and what kind of EBITDA run rate should we be looking at going into the fourth quarter and next year. And then I have follow-up. Thanks.

Jeff Dyke -- President and Director

Yes. So, this is Jeff Dyke. We think our existing stores at about 50% maturity and so there's a lot of upside left and of course that's the point David Smith was making earlier just lots of upside. If you look at our Charlotte store was profitable in its first full month of operation. Houston took about six months, so we're thinking within a six month timeframe at the utmost our stores will be profitable. So that's kind of where we guide you to look.

Rajat Gupta -- JPMorgan -- Analyst

Got it. And so just looking at the fourth quarter, I mean you had $6.4 million EBITDA in the third quarter. With the Long Beach store coming in, I mean, I'm assuming that the fourth quarter run rate would be higher than what you did in the third quarter, given the existing stores would continue to improve. Is that the fair characterization or [Speech Overlap] just in terms of the EBITDA?

Jeff Dyke -- President and Director

In terms of income?

Rajat Gupta -- JPMorgan -- Analyst

Yes, EBITDA, yes.

Jeff Dyke -- President and Director

EBITDA, yes, I would say flat, sort of, flat is the way to look at that for Q3 versus Q4.

Rajat Gupta -- JPMorgan -- Analyst

Got it, OK.

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

Heath, again you've got $1 million drag before you open in a $1 million drag after you have been for each store on average.

Rajat Gupta -- JPMorgan -- Analyst

Got it, OK. And then in terms of [Indecipherable] funding the new EchoPark store openings next year and potentially down the line. It seems like a lot of that is going to be funded by the free cash flow from the franchisee stores. By when would you expect just the EchoPark store to generate enough free cash flow to be just self-funding future growth. I mean, are we looking at three years down the line or four years down the line, just trying to get a sense of when it's not a drag on the franchise free cash flow. Thanks.

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

Yes, this is Heath from a overall capital allocation plan, we're sticking with our exact same plan as EchoPark is still a priority. We will opportunistically look at franchise acquisitions and again the debt reduction, which we mentioned before we'll kick it off -- we kicked off $6.5 million in EBITDA in Q3. So you're going to get -- you're still going to have some franchise support into '20, but after that, I think once the other stores mature and we have four new stores on, then EchoPark is going to start supporting its own growth.

Rajat Gupta -- JPMorgan -- Analyst

That makes sense. Thanks a lot, I'll pass it on.

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

Thank you very much.

Operator

And at this time there are no further question. I will now turn the call back to Mr. Smith for closing remarks.

David Bruton Smith -- Chief Executive Officer

Thank you very much. Thank you everyone for your questions and we appreciate your time. Have a great day.

Operator

[Operator Closing Remarks]

Duration: 31 minutes

Call participants:

David Bruton Smith -- Chief Executive Officer

Jeff Dyke -- President and Director

Heath R. Byrd -- Executive Vice President and Chief Financial Officer

John Murphy -- Bank of America Merrill Lynch -- Analyst

Rick Nelson -- Stephens -- Analyst

Armintas Sinkevicius -- Morgan Stanley -- Analyst

Mark Jordan -- Jefferies -- Analyst

Rajat Gupta -- JPMorgan -- Analyst

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