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Date

Thursday, April 30, 2026 at 11 a.m. ET

Call participants

  • Chairman and CEO — David Smith
  • President — Jeff Dyke
  • Chief Financial Officer — Heath Byrd
  • EchoPark Chief Operating Officer — Thomas Keen
  • Vice President of Investor Relations — Danny Wieland

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Takeaways

  • Total revenue -- $3.7 billion, up 1%, a first-quarter record, driven by stable franchised dealership performance and gains in EchoPark and Powersports.
  • Total gross profit -- $598.8 million, up 6%, achieving a record level with over 75% derived from fixed operations and finance and insurance (F&I).
  • GAAP EPS -- $1.79 per share, with adjusted EPS at $1.62 per share, a 9% increase, after adjusting for specified non-recurring items.
  • Franchised dealership revenue -- $3.1 billion on a reported basis (flat), and $2.9 billion same-store (down 4%), impacted by a 10% decrease in same-store new vehicle retail volume, partially offset by a 3% increase in used vehicle retail volume.
  • Franchise gross profit (reported) -- Up 5%, while same-store gross profit was flat; fixed operations and F&I gross profits set quarterly records, rising 10% and 7%, respectively.
  • Same-store new vehicle GPU -- $3,002 per unit, down 4%; reported new vehicle GPU at $3,144 per unit, up 2%; same-store used GPU fell 4% to $1,533, but rose 11% sequentially.
  • Franchise F&I GPU -- $2,670 per unit, up 9% year over year and 2% sequentially, marking a first-quarter record.
  • EchoPark segment income (adjusted) -- $12.6 million, up 25% and an all-time record; adjusted EchoPark EBITDA reached $18.6 million, up 18%.
  • EchoPark revenue and gross profit -- $581 million in revenue (up 4%) and $68 million gross profit (up 6%), both all-time record first-quarter results.
  • EchoPark retail unit sales -- Up 3%, with total GPU of $3,502 per unit, a first-quarter record, up 3% year over year and 2% sequentially from Q4.
  • Non-auction sourcing -- Increased to nearly 40% of total sourcing, contributing approximately $1,200 higher GPU per vehicle compared to auction-sourced units.
  • Powersports revenue and gross profit -- $41 million revenue, up 19%; $10 million gross profit, also up 19%; combined new and used retail volume rose 25%.
  • Powersports acquisitions -- Five Harley-Davidson dealerships acquired, expanding reach in California, Florida, Georgia, and North Carolina; segment delivers gross per unit closely comparable to franchise new vehicles and higher margins on used units.
  • Liquidity -- $770 million total available, with $381 million combined cash and floor plan deposits.
  • Share repurchases and authorization -- 2.1 million shares repurchased for approximately $136 million, reducing outstanding share count by 6%; additional $500 million buyback authorized and dividend increased by 8% to $0.41 per share.

Summary

Sonic Automotive (SAH +8.10%) announced a resumption of EchoPark store expansion in late 2026 along with a $10 million to $20 million ramp in brand marketing expenditures, primarily in the year’s second half. The company highlighted ongoing efficiency improvements, such as sales associates averaging more than 30 vehicles per month in EchoPark and a declining store opening cost basis for future locations. Recent acquisitions expanded the firm's Powersports presence, with evidence of greater gross profitability in used units relative to the franchise business and strong inventory management practices bolstering margin expansion. Management emphasized that flexibility in capital deployment supports planned growth across real estate, acquisitions, share repurchases, debt reduction, and technology, enabled by a maintained leverage ratio just over two times and ample liquidity.

  • EchoPark’s Atlanta market segment grew unit volume by approximately 25% and total GPU by $225 per car, attributed to increased brand awareness following a naming rights sponsorship.
  • Customer pay gross in fixed operations grew 5% on a same-store basis; warranty gross grew 7%, with margin expansion of 40 basis points reported.
  • Management stated, “Our F&I numbers in the first quarter were up $230 a vehicle,” noting this strength offsets potential fluctuations in new vehicle margins due to product mix.
  • Sales of pre-owned battery electric vehicles (BEV) benefited from manufacturer-initiated lease pull-forwards, particularly with luxury brands such as BMW and Mercedes-Benz, as “BEV lease returns coming back here over the next six months.”
  • EchoPark’s non-auction sourced sales mix rose by 15 percentage points year over year, while wholesale auction volumes fell due to the company’s strategic inventory shift as auction prices rose 7% in the period.
  • EchoPark’s average selling price declined by 2% sequentially from the fourth quarter, while expanded gross profit per unit persisted due to sourcing strategy, “insulation against” narrowing wholesale-retail spreads.
  • Management conveyed that future EchoPark store growth will focus initially in Florida and Texas, with expected improved profitability due to “our cost basis” and continued SG&A leverage.
  • Targeted AI investments in fixed operations are expected to yield additional process efficiency, as “Our AI team is just going in now and is starting to look at the processes in fixed.”
  • Acquired Powersports dealerships contributed to a 56% year-over-year increase in used vehicle volume for the segment and outperformance in used gross per unit compared to the core franchise business.
  • Company leadership cited confidence in sustaining and expanding return to shareholders through increased dividends, buybacks, and opportunistic acquisitions, as evidenced by recent activity and “a lot of dry powder to invest in all of these areas.”

Industry glossary

  • GPU (Gross Profit per Unit): The average gross profit generated per individual retail vehicle sold.
  • F&I (Finance and Insurance): Dealership-provided financing and insurance products, including service contracts, warranties, and related aftermarket services.
  • Non-auction sourcing: Acquiring vehicles for resale directly from consumers or other means rather than through dealer auctions, typically leading to higher gross profit margins.
  • BEV (Battery Electric Vehicle): Automobiles powered entirely by electric batteries, as opposed to hybrid or internal combustion vehicles.
  • SG&A (Selling, General, and Administrative Expenses): Operating expenses not directly attributable to product acquisition or manufacturing, such as payroll, advertising, and administrative costs.

Full Conference Call Transcript

David Smith: Thank you very much and good morning, everyone. Welcome to the Sonic Automotive, Inc. first quarter 2026 earnings call. I am David Smith, the company’s Chairman and CEO. Joining me on today’s call is our President, Mr. Jeff Dyke; our CFO, Mr. Heath Byrd; our EchoPark Chief Operating Officer, Mr. Thomas Keen; and our Vice President of Investor Relations, Mr. Danny Wieland. I would like to open the call by thanking our amazing teammates for continuing to deliver a world-class guest experience for our customers. It is because of our outstanding teammates that Sonic Automotive, Inc. was just recognized as one of America’s most trustworthy companies by Newsweek.

We believe our strong relationships with our teammates, guests, and manufacturer lending partners are key to our future success. And as always, I would like to thank them all for their continued support and loyalty to the Sonic Automotive, Inc. team.

Heath Byrd: Earlier this morning, Sonic Automotive, Inc. reported first quarter financial results, including record first quarter total revenues of $3.7 billion, up 1% from the previous year, and record first quarter total gross profit of $598.8 million, up 6% year over year. First quarter reported GAAP EPS was $1.79 per share. Excluding the effect of certain items as detailed in our press release this morning, adjusted EPS for the first quarter was $1.62 per share, a 9% increase year over year. Moving now to our first quarter franchised dealership segment results, we generated reported revenues of $3.1 billion, flat year over year, and same-store revenues of $2.9 billion, down 4% year over year.

This same-store decrease was largely driven by a 10% decrease in new vehicle retail volume, offset partially by a 3% increase in used vehicle retail volume year over year. It should be noted that first quarter new and used vehicle volume faced tough year-over-year comparisons due to the pull-forward of consumer demand for vehicles in the prior year ahead of the U.S. auto import tariffs announced in March 2025. Reported franchise total gross profit for the first quarter was up 5% and was flat year over year on a same-store basis. Our fixed operations gross profit and F&I gross profit set quarterly records, up 10% and 7% year over year, respectively, on a reported basis.

These two high-margin business lines continue to increase their share of our total gross profit pool, once again contributing over 75% of total gross profit for the first quarter, mitigating the potential headwinds to new vehicle volume and margin to our overall profitability while also leveraging our SG&A expenses more efficiently than incremental vehicle-related gross profit. Same-store new vehicle GPU was $3,002 per unit, down 4% year over year. On a reported basis, new vehicle GPU was $3,144 per unit, up 2% year over year. On the used vehicle side of the franchise business, same-store used GPU decreased 4% year over year to $1,533 per unit, but increased 11% sequentially due to typical seasonality in the used car business.

Our F&I performance continues to be a strength, with first quarter record reported franchise F&I GPU of $2,670 per unit, up 9% year over year and up 2% sequentially. Turning now to EchoPark, adjusted segment income was an all-time record $12.6 million, up 25% year over year, and adjusted EBITDA was an all-time record $18.6 million, up 18% year over year. For the first quarter, we reported EchoPark revenues of $581 million, up 4% year over year, and all-time record gross profit of $68 million, up 6% year over year.

EchoPark segment retail unit sales volume for the quarter increased 3% year over year, and EchoPark segment total GPU was a first quarter record $3,502 per unit, up 3% year over year and up 2% sequentially from the fourth quarter. With momentum on our side, we believe we are well positioned to resume a disciplined cadence of EchoPark store openings beginning in late 2026 while also initiating targeted investment in brand marketing as a key component of our long-term growth strategy. We expect to begin funding these brand marketing efforts this year, potentially increasing advertising expenses by $10 million to $20 million, with the majority of that investment occurring in the second half.

Turning now to our Powersports segment, we generated first quarter record revenues of $41 million, up 19% year over year, and first quarter record gross profit of $10 million, up 19% year over year. First quarter combined new and used retail volume was up 25% year over year. And we are beginning to see the benefits of our investment in modernizing the Powersports business and the future growth opportunities it may provide. We also welcome our new team members from Space Coast Harley-Davidson, Treasure Coast Harley-Davidson, Falcon’s Fury Harley-Davidson, Raging Bull Harley-Davidson, and San Diego Harley-Davidson. The acquisition of these five dealerships provides us coverage in key riding states of California, Florida, Georgia, and North Carolina.

This acquisition further reaffirms our commitment to strategic growth within the powersports segment and diversifies our geographic footprint and seasonality. Finally, turning to our balance sheet, we ended the quarter with $770 million available liquidity, including $381 million in combined cash and floor plan deposits on hand. Our focus on maintaining a strong balance sheet and liquidity position allows us to strategically deploy capital in a variety of ways to deliver value to our shareholders. During the first quarter, we repurchased approximately 2.1 million shares of our common stock for approximately $136 million, representing a 6% decrease in outstanding share count from 12/31/2025.

In addition, I am pleased to report today that our Board of Directors approved an additional $500 million share repurchase authorization and an 8% increase to the quarterly cash dividend to $0.41 per share, payable on 07/15/2026 to all stockholders of record on 06/15/2026. We continue to work closely with our manufacturer partners to understand the potential impact of tariffs on vehicle production, pricing, and volume forecasts, vehicle affordability, and consumer demand going forward. The full-year 2026 outlook and guidance on Page 13 of our investor presentation considers these uncertainties and represents our current expectations for 2026 financial results.

As always, our team remains focused on executing our strategy and adapting to ongoing changes in the automotive retail environment while making strategic decisions to maximize long-term returns. This concludes our opening remarks and we look forward to answering any questions you may have. Thank you.

Operator: We will now open the call for questions. Our first question is from Jeff Licht with Stephens Inc.

Jeff Licht: Good morning. Thanks for taking my questions. Was curious if you could just talk a little bit about EchoPark. It appears that you are having some success there. Now you are talking about the optimism about opening some new stores. I am curious, is there anything about this particular environment where obviously supply is pretty tight, it seems like used demand might be a little higher than new demand. Anything about this environment that plays into EchoPark’s business model? And then what is it that gives you confidence to open new stores?

Jeff Dyke: On a same-store basis, new car prices were over $60,000 in the first quarter. That is an all-time high for the first quarter. Our total store was over $61,000. So with the increase in new car pricing, it is making affordability a big, big issue and that is going to put wind in the sail for pre-owned. So it gives us a lot of confidence. We also are buying a lot more cars, as a percentage of our overall business, off the street, both on the franchise side and EchoPark. I believe we approached the 40% range in the first quarter, and that makes a big difference.

So margins are better, we are selling more cars, we have access to inventory. We are growing, we are executing at a high level, and it gives us a lot of confidence as we move into Q2 to see the same kind of growth or even better for EchoPark on a year-over-year basis. And we are seeing it on the franchise side too, maybe as a percentage growth not quite to the extent, but in Q2 the business is really strong. And it is being driven by just amazingly high new car pricing in the marketplace.

Heath Byrd: And let me add one point. I think it is really important to understand the value of us getting the non-auction sourcing, and the team has done a great job. Keep in mind, when we started we were 90% auction and 10% other sources, and now, as Jeff mentioned, we are 40%. Those vehicles make about $1,200 more in GPU than the auction vehicles, so that has been a big driver. The team has found ways to source vehicles in multiple ways rather than the auction. That is a big, big part of it.

Jeff Licht: And could you talk a little bit about, I know you have somewhat integrated or tried to use your franchise dealership as a strategic asset for EchoPark. And it is notable that you did a positive same-store sales in franchise for used as well. Can you maybe just talk about the kind of the symbiotic relationship between those two and how you are using that, you know, the source for the entire enterprise?

Jeff Dyke: Yes. We have never done that before. We started here in the first quarter, really the later end of the quarter, and so it is not that many cars yet, a few hundred overall, but it is going to grow. And we are buying nearly new cars out of the franchise side of the business, which obviously is helping the franchise, so it helps the franchise side of the business. Bringing those cars into EchoPark, the margins are decent, back-end margins are great, and we are selling the heck out of them, in particular on the East Coast. They have been really, really strong.

The Atlanta market has been really strong in this arena, and we will continue to do that with more brands. We have been really focused on Toyota and Honda, but we will do that with more brands as we get better at this. It is very new for us, and again, just a few hundred units would be included in those numbers that you are looking at for the quarter.

Jeff Licht: Thanks very much. I will get back in the queue and best of luck.

Jeff Dyke: Thank you, sir. Thank you.

Operator: Our next question is from John Babcock with Barclays.

John Babcock: All right, thanks. First question, I was wondering if you are able to quantify the impact of weather. And apologies if I missed, but whether it is an impact on overall dollars or if there is some way to estimate the impact on volumes? Any color there would be useful.

David Smith: Yes. Thank you. This is David Smith, and honestly, I am not being a smart ass, but we really do not allow weather reports in our business, in our meetings, and we just push through. And so we really do not focus on that at all.

John Babcock: Okay. Totally understand. Next question, I was wondering, are you guys seeing OEMs pull forward at-lease maturities? And if so, is that benefiting EchoPark at this point?

Jeff Dyke: 100%, they are doing that, in particular around BEV. And we are seeing that on the East Coast and the West Coast, and we are selling those vehicles. It is helping both the franchise side and somewhat at EchoPark. We are keeping most of those on the franchise side of the business. But definitely, the pull-aheads are helping in BMW, Mercedes. BMW has done a particularly really good job with it, and we expect that to continue as we move forward, in particular around BEV because there are so many more BEV lease returns coming back here over the next six months between now and the end of the year as those leases mature.

John Babcock: Those are primarily happening with the luxury brands?

Jeff Dyke: Yes.

John Babcock: Okay. Interesting. And then just last question. I was wondering if you might be able to provide some color on where you plan to open the EchoPark stores, whether it is in the same region as your existing stores or if you are planning to expand into other areas?

Jeff Dyke: Our early expansion is primarily in Florida and Texas.

John Babcock: Okay. Thank you.

Operator: Our next question is from Chris Pierce with Needham & Company.

Chris Pierce: Hey, good morning. Just one on EchoPark. I know you are guiding to sub- to high-single-digit unit gains. I just was curious, I mean, you guys have performed better on front-end GPU, talked that you performed better last year on vendor leverage, seeing healthy OpEx leverage. But I guess I just want to understand what would be the real driver of unit growth? And again, I am not trying to poo-poo high-single-digit unit growth in a flat market. I am also not trying to compare you to someone putting up 40% unit growth, but I am just kind of curious what would be a real driver of mid-double-digit unit gains. That sounds like what you are doing.

Jeff Dyke: Yes, 40% is certainly an impressive number. Now look, at the end of the day, we are executing our playbook and our process. We sold well over 30 units per sales associate in the month of March, for example, and we are executing, we think, at a high level. Those gains will continue through this year. That is what is giving us the confidence to open more stores as we move to the end of the year and then on into 2027. We are very comfortable with where we are, proud of our team for the growth that they have, and we look forward to that growth continuing.

Heath Byrd: And I will add, one of the things that would drive the unit growth is awareness. That is precisely why we are investing in the brand starting this year.

David Smith: Yes. And Jeff noted before, he mentioned Atlanta. We have had all-time record sales in Atlanta, and we think that a big part of that is because the market is much more aware of the EchoPark brand.

Danny Wieland: And one final point on that, this is Danny, on the earlier point on non-auction sourcing improvements, we were up about 15% in terms of our sales in the first quarter year over year that were non-auction sourced. As Heath added, it is about a $1,200 better GPU on those vehicles, but it also gives us upside to grow that volume without being dependent on, or at risk of, pricing on the wholesale auction front. Our wholesale auction volume was actually down year over year in the first quarter, and some of that was strategic given the 7% wholesale auction price increases we saw in Q1.

We took advantage of it in the late fourth quarter, but when pricing gets too high, we really push on this non-auction source path, and that will only benefit from further investment in brand awareness and sourcing from customers as we go forward.

Chris Pierce: Can you, Heath, could you please drill down on Atlanta a little bit? Like, how should we think of Atlanta in terms of cohort age of store versus Denver, marketing spend in Atlanta versus other regions, and give us some sort of support beams as to what you are doing there that is driving the growth you talked about?

David Smith: Yeah. This is David. One of the things we did, you may have seen, is that we got the naming rights for Atlanta Motor Speedway. It is now EchoPark Speedway. We have seen in the numbers that has been a major impact on customer awareness of the brand. And we found since 2014, when we opened our first stores in Denver, that people know about the EchoPark brand and they search for us and once they experience it, and their friends experience it, it is why we have the number one guest experience in the industry as rated by reputation.com. That really pays off. So we have been really focused on that.

And as we said, we are going to start growing now, but we wanted to make sure we can maintain that world-class guest experience and the kind of volume that, like Jeff mentioned, in March our teammates were able to deliver. We had some teammates who sold 50 or 60 cars in just the month of March and maintained that high-level guest experience. That is something that, thinking of the future, is going to benefit the brand.

Jeff Dyke: The awareness in the Atlanta market has more than doubled since the sponsorship, and that really gave us the leg to say, okay, we need to really make some investments here from a marketing perspective, from a brand awareness. We just were not ready till this year. And we really spent a lot of time getting our house in order, buying more cars off the street, executing at a high level. You have seen we put quarters back to back to back to back together if you are following EchoPark closely in the growth, and that growth is going to accelerate. And in particular, as we start opening stores, it will have the hockey stick acceleration.

We are very excited about that opportunity, but we are going to be very prudent and focused. We have done this before, and this time we are going to make sure that we get this absolutely right. And so we are real excited about getting some stores open towards the end of the year.

Heath Byrd: And I just want to highlight one more thing on this. The fact that we have sales associates that are selling 30-plus vehicles per month per associate on average, that efficiency and the process that we have, that is one of the reasons that you see for this quarter EchoPark’s SG&A as a percent of gross was lower than 70%. Our semi-fixed expense structure there, coupled with the process that allows that kind of efficiency, is just going to get better. And you will see, as we have said from the beginning, that EchoPark has the ability to leverage that SG&A because of the way it is set up.

It is very unique to have associates averaging that number of vehicles per month.

Danny Wieland: And Chris, one more point on the Atlanta market specifically. As operational points supporting the brand awareness and the gains we have made there, our unit volume in the first quarter in Atlanta was up about 25% year over year, and our total GPU was up $225 per car. So we are seeing more traffic, we are monetizing those incremental vehicles at a better rate. Some of that non-auction sourcing mix we talked about obviously benefits us there.

We really think that is an incremental proof point in the early stages on brand awareness, and reaching consumers and letting them know who EchoPark is and what our guest experience is will only help continue to benefit those growing markets, but also our more mature markets in Houston, Dallas, and Denver as we go forward.

David Smith: And one last thing: you will see as we move forward and we open new EchoPark stores that our cost basis in those stores is going to be less than we have spent historically, which is going to make it far easier to become profitable a lot faster in those locations.

Chris Pierce: Great. Thanks for all the details. Appreciate it, and good luck.

Jeff Dyke: Yes, sir. Thank you.

Operator: Our next question is from Rajat Gupta with JPMorgan.

Rajat Gupta: Great. Thanks for taking the question. Pretty good execution, congrats on that. Had a question on parts and service. Acknowledge that you do not like to talk about weather. So, irrespective, the growth is pretty strong despite some of the tough warranty comps. I am curious how we should think about growth there. I know you are sticking to your framework, but maybe if you could unpack that for us a little bit—what is really helping that business? Any change in processes, hiring cadence? How should we think about growth there for the rest of the year?

Jeff Dyke: This is Jeff. Look, we told you this two years ago. We were on a mission to hire technicians—with plus 400 technicians since we started that mission. We continue to hire techs. We are executing at a really high level in our playbooks. We have a value service program that we are very focused on to drive more customers into our drive, which then allows us to upsell off of those value services we brought into the service drive. The used business is growing, so that helps internals. Just overall, we are executing at a very high level. And mid-single digits is a good number, maybe up a little bit above that.

It is across the board, it is not one market or another, it is not one brand or another. We have some warranty challenges in comparison to last year. I think we had with our Honda brand we are off about $1 million in gross there. But we will drive more customer pay. We are obviously not in control of warranty, but we will drive more customer gross into those brands, into that brand. It is a bright future for fixed operations at Sonic Automotive, Inc. It is going to get better as we go on this year. It is going to get better and stronger in 2027, 2028, towards the end of the decade.

There is a lot of business out there for us to get. Remember, customers buy new cars, but half of them do not go to a dealership—not just Sonic, anybody—because the industry is priced high and processes were crazy and this reputation. I think we have cleaned all that up. Our service CSI scores are fantastic, and that is all playing into the results that we are seeing, and they are just going to get stronger as we move forward. And one additional opportunity there is it is very ripe for AI.

Heath Byrd: Our AI team is just going in now and is starting to look at the processes in fixed. Obviously, it is a very high-margin part of our business, but we think we can be more efficient with the technology. So I think there is opportunity in that area as well.

Rajat Gupta: Got it. That is helpful.

Jeff Dyke: We just broke $90 million in gross in a single month in the first quarter. That was an all-time record for us for a single month, and that is going to continue to get bigger. We have short-term goals of being over $100 million a month in fixed operations gross, and we are hopeful to see a month this year do that and then, ongoing, we will be above that. So there is just huge growth there and great opportunity for us.

As we started to look at the business differently—more of a high-volume, high-traffic-count business than we have in the past—there is just too much opportunity and too many guests out there in our AOIs to take advantage of that. So that is what we are focused on.

Danny Wieland: And just a couple of other points there. As you might have seen in the release, we grew customer pay at a 5% rate on a same-store basis, and warranty was at a 7% rate. So that was even an uptick in growth rate versus the fourth quarter—warranty was only 2% up year over year in the fourth quarter. We are continuing to see benefits there as long as that warranty tailwind persists, but we are really focused on customer pay. We got 40 basis points of margin expansion out of it. On an all-in basis, customer pay is growing at 9%, warranty is up 15% including the acquisition.

So we have got some year-over-year upside in terms of the comparisons as we get into the back half and lap those JLR acquisitions from last year.

Rajat Gupta: Right. That is very clear and helpful. I wanted to just ask a broader question around pricing dynamics. Maybe a twofold question. One is, you have this one big nationwide competitor of yours that is undergoing a pretty well-telegraphed price cut. I am curious if you are feeling it. Are you seeing it? Have you reacted to it? Any thoughts on that would be helpful. And then second question, you know, Carvana yesterday talked about some risk in the second quarter from just narrowing wholesale-retail spreads. I know that you have much lower day supply and you are improving consumer sourcing too. But curious if that is something to keep in mind as far as your business goes.

Jeff Dyke: As far as the pricing goes, we have not felt that. It is isolated to VINs and marketplaces, and that has not tripped any wires over here at all. So we are not feeling that. I am going to let Danny attack the color on the spread.

Danny Wieland: It is pretty normal seasonality. Obviously, prices went up in the first quarter.

Jeff Dyke: We were buying cars early in the first quarter when wholesale prices were down. As we go into the second quarter, we are seeing that shrink—the gap between the two. It is not going as rapid as last year.

Danny Wieland: But it is closing.

Jeff Dyke: So that is real. But we still expect nice growth with EchoPark in the second quarter, and we are going to continue to expand—better growth than we had in the first quarter. Margins are hanging in there better both on the franchise side and EchoPark side in April, better than they normally do from a pre-owned perspective, which is very good. We will see how supplies hold up as we move in. They always tighten and we are always trying to shrink our day supply at this time of the year after the big first quarter and tax season.

We will see how things go, but the pre-owned business should be nice and solid as we move throughout the rest of the year.

Danny Wieland: And again, to our actual performance in the first quarter, our average selling price at EchoPark was down about 2% sequentially from the fourth quarter, but wholesale pricing was up 7% as we went through the first quarter. Yet our GPU expanded—our vehicle-related GPU only expanded about $200 sequentially. So we were seeing narrowing retail pricing on a mix basis anyway, increases in wholesale pricing, but still saw expansion in GPU again because of the way we buy, because of that non-auction sourcing mix.

That should only give us more insulation against those movements, as well as, as Jeff said, recognizing the normal seasonality of used car pricing movements in January, February, March, and then on the downswing in April, May, June, post tax refund season.

Rajat Gupta: Got it. That is helpful. Maybe just last one on balance sheet. Very surprised by the big buyback here in the first quarter. Curious, how should we think about leverage here? You obviously increased your authorization. Maybe another way to ask is, is the ramp-up in buyback just to signal that you are not really worried about the macro or the cycle here and you just feel like with the growth in parts and services, the trend in EchoPark, there are just more good things to come from an EBITDA perspective, and you feel comfortable buying back this equity right now? I was just really surprised given some of the choppiness we hear about in the macro. Thanks.

David Smith: Yes, I mean, we obviously would not have bought back the shares if we did not feel confident in our business. And, as always, we want our investors to know that we are going to be looking at all our different options of where we place our capital and look for the best return. I think the key to what you were asking is what are we going to do going forward. We are going to look at various opportunities like the Powersports acquisition that we just made. That was a great opportunity and offered great ROI, and we are going to continue with that—whether it is share repurchases or debt reduction or acquisitions.

It just depends on what we see in the market. Heath?

Heath Byrd: Yes. I will just say, we feel like we have a very strong balance sheet at a little over two turns for our leverage ratio. And with a lot of liquidity, that gives us the ability to invest in multiple areas. As you have just seen, we were able to purchase five JLR stores last year, five powersports dealerships this year, at the same time buy back 2 million shares, increase the dividend by 8%, invest in our business as it relates to AI, buy real estate, and enhance the facilities. And finally, we are still in great shape to expand EchoPark. I think the balance sheet is allowing us to do that.

We are completely comfortable where we are in the leverage ratio, we have it all cooked in and understand the impact, and are very comfortable that we have a lot of dry powder to invest in all of these areas.

Jeff Dyke: And I think if you look at the last six or seven quarters that we have strung together, showing the execution and the discipline in this company like we have never shown before, that gives us a real high level of confidence. It does not matter if there is COVID or tariffs or weather or whatever else is going to come—Godzilla is going to come out and blow up our cars—we are overcoming all of that. I think that is a big testament to our team. The tenure that we have on this team is amazing. We had our board meeting yesterday, and we were going through our tenure in this company. It is just incredible.

We look forward to the great remainder of the year and a very bright future for Sonic.

Rajat Gupta: Awesome. Great. Thanks for all the color and good luck.

Jeff Dyke: You bet. Thank you.

Operator: Our next question is from Bret Jordan with

Patrick Buckley: Hey, good morning, guys. This is Patrick Buckley on for Bret. Thanks for taking our questions. As you think about the longer-term outlook on franchise new GPUs, how are you thinking about the new floor there? Some peers have recently suggested a landing spot towards the upper end of their previous targets. Have your thoughts changed at all?

Jeff Dyke: We did not change guidance there. We are seeing a little bit of shrinkage on front-end in April for new, but it is going the other way for pre-owned. I think we are fine in the range that we gave you for the year. Mix moves around a little bit—if you are selling more domestic than normal or more Honda than normal, we get a little drop in our front-end margin. But our F&I numbers are so good in our franchise stores. Our F&I numbers in the first quarter were up $230 a vehicle, which is just fantastic, and we expect that to continue to grow as we move throughout the year.

So the total all-in margin, I think we are going to be just fine, and it may move around a little bit due to mix. You know, Mercedes sells more or less, or BMW more or less, then Honda comes in or Ford comes in—the margins are a little different. But our F&I numbers are so strong that it balances it all out. I think we will be fine with our guidance that we gave you for 2026.

Patrick Buckley: Got it. And then on BMW, we have heard some talk of delayed new product timing there. Has there been any notable disruptions or impact due to that delayed product change this year?

Jeff Dyke: No. They have been doing a fantastic job. They communicate well and have done an amazing job managing through this, as all of our manufacturer partners have. There have been no issues. We need to watch affordability and entry-level models in some of the luxury brands—that is an important topic to study and watch. But you start getting past four quarters in a row now we are past the $60,000 mark. I do not see that changing in the second quarter. Third quarter, they are going to pass on the tariff expenses to the consumer. Prices are going up—it helps the used car business. We will see how much elasticity is in the new car pricing.

Something is going to have to happen if volume really slows off as days’ supply starts growing, and then you will have a margin compression issue. I just do not see that happening this quarter or next—maybe a little bit due to change in mix for us. But overall, I think it will be nice and steady as she goes.

Patrick Buckley: Got it. That is all for us. Thanks, guys.

Jeff Dyke: Thank you.

Operator: Our next question is from Alex Perry with Bank of America.

Alex Perry: Hi, thanks for taking my questions here and congrats on the execution. I just wanted to ask if you have seen any impact from the war—any change in new or used vehicle sales trends as we moved into April? And could you maybe help us on the cadence of the monthly comps in the quarter on the new side?

David Smith: Thanks, Alex. It has been really pleasantly surprising—the resilience of the consumer—and they have just continued to show demand. You have seen in our numbers they are continuing to do business with us. Despite the uncertainty, it has really been fantastic to see. Hopefully soon this major conflict will be over, and I think we will go into the summer months with some great results.

Jeff Dyke: Yes. If anything, BEV units from a pre-owned perspective—we are selling a lot more of those. The pull-aheads are helping, and that is a big win in our sales right now. Otherwise, we would have some overhang with that. In particular, the larger stores are doing a great job with that—BMW, Mercedes, they are doing a really good job. Other than that, the business has been good. Cadence-wise, January was amazing—it was just an unreal January. If you want to talk about weather, maybe that slowed us down a little bit after January, but it was just a fantastic January and a really good February.

We started comping against the tariff pull-aheads in March, and you did that all of March really and the first two weeks or so of April—10 days of April—and then the comps will get a lot easier as we move into May and June. So we will see some flip around in our year-over-year numbers; we will start heading into the positive direction. If you compare March and the first two weeks of April against 2024 and 2023, we look fantastic on a year-over-year basis. That is kind of behind us now.

You are going to get a little bump when we get to the September timeframe and we bounce against the BEV pull-ahead from that time frame, but it ought to be smooth sailing other than that for the rest of the year.

Alex Perry: That is really helpful context. And then, you mentioned in the deck consolidation opportunity in powersports. Is that a place where you will continue to add doors? What are you seeing there that gets you excited? Do you expect it to be on the Harley side and the motorcycle space or more traditional powersports? Would love to hear how you are thinking about that segment. Thanks.

David Smith: Yes. Thanks for the question. We have been really, really pleased—a big shout out to our powersports team. They have done an outstanding job. As I mentioned, modernizing the powersports industry—at least the ones that we have—we see some great opportunities, and the prices that acquisition opportunities are coming at us are very interesting. We like our diversified portfolio, so we are not going to be concentrated solely on Harley-Davidson, but this recent acquisition was really outstanding, and they are fantastic locations where, as I mentioned, you have a lot of sunny days in those markets to offset some of the snowy weather in our big South Dakota Sturgis stores. We do see opportunities.

You look at the gross that is generated in motorcycle sales, new and used—it is really crazy. We are making the same amount of profit on selling an item maybe a third of the price of a vehicle. So there are some great opportunities there. Jeff?

Jeff Dyke: Yes. To give you a little more detail on what David was talking about: our new GPU for the first quarter franchise was $3,144, and our GPU for powersports was $2,891—damn near the same number. Our used GPU—we have really grown the heck out of our used business in powersports; that is something the industry lacks—was $1,938 a copy versus $1,539 a copy. We are making more gross selling used in powersports than we are selling used on the franchise side. So it is a very exciting opportunity for us to grow that part of the business.

We are opportunistically buying, just being very careful and cautious, as we told you from day one—growing the business and putting in our playbooks, our technology, taking care of our guests, taking care of our teammates—and we just get better and stronger. All-time record quarter; we see that backing up to the next all-time record quarter and the next one. It is a fun business with great margin percentage. Our team loves going in and buying them, and those we are acquiring love it. We are having a great time, and as David said, we have a fantastic leadership team running that business totally separate from EchoPark and our franchise business. We will see what happens in the coming quarters.

There is a lot of opportunity in this segment.

Alex Perry: That is really helpful. Could I ask one follow-up on that? The used grosses and the differential versus vehicle side is pretty interesting. Why do you think the grosses are so high in the powersports side on a relatively lower ASP? Is it just the fractionation of the market?

David Smith: It is. That is part of it. But think about it: customers do not know what to do with that product. When they buy a new power sport—buy something Polaris or whatever—they have always taken their old one and put a sign on it in the front yard and said “for sale.” They do not know that we want to buy that from them. And they are expensive. You buy a brand new Ford—Polaris now—$55,000. We can trade for them and sell them for in the upper teens or lower $20,000s, make great margin like you see, and provide the consumer with something they have never gotten in this industry.

Jeff Dyke: So there is a huge opportunity. The industry just did not sell pre-owned. We are growing pre-owned at 40%–50% clips a quarter, and that is going to continue into the future. They just did not focus on it, and that is something that is core to our success at Sonic Automotive, Inc., and we are bringing that to this industry. It is making a big difference.

Danny Wieland: And that is one of the things that validated our entry into this. Over the last three quarters, we have grown 35%, 40%, and this quarter 56% used vehicle volume year over year, even in an off quarter like the first quarter seasonally. New volume was up 16%. Both new and used gross per unit grew 7% or 8%. So we are growing not just the base, but the efficiency of those products just as we get into prime selling season here starting in April and May. They also had very little discipline around inventory management, and as you guys know, that is something that we are known for in our day supply and how we manage inventory.

We do not get surprises there. If we do, they are fixed within two weeks. There was absolutely none of that in the powersports business. We have cleaned all that up from a parts, used, and new perspective, and we are turning inventory like we should. That is going to expand margin when you do that.

Alex Perry: That is incredibly helpful. It sounds like an exciting opportunity. Best of luck going forward.

Jeff Dyke: Thank you very much.

Operator: Thank you. There are no further questions at this time. I would like to hand the floor back over to David Smith for any closing comments.

David Smith: Great. Thank you very much. Thank you, everyone. We will talk to you next quarter.

Operator: This concludes today’s conference. You may disconnect your lines at this time. Thank you again for your participation.