Sonic Automotive Inc.'s record revenue, coupled with record finance and insurance gross profits, strong new-vehicle gross profits and more used-vehicle sales through its used-only EchoPark stores, helped boost its fourth-quarter earnings.
Revenue for the nation's sixth-largest new-vehicle retailer rose 1.8 percent to an all-time quarterly record $2.8 billion. Net income rose 24 percent to $57.34 million.
Net income from continuing operations also rose 24 percent to $57.5 million.
"Our fourth quarter and full year 2020 results reflect the continued strength and resilience of both our EchoPark and franchised dealership segments, a significant rebound in customer activity and increasing demand for both new and used vehicles during the second half of the year, as well as fundamental improvements in our operating cost structure," Sonic President Jeff Dyke said Wednesday in a statement. "These trends have continued into early 2021."
Sonic's EchoPark used-only stores generated record fourth-quarter revenue of $386.9 million, up 25 percent. Sales rose 17 percent to 14,841. The unit reported a loss of $834,000 in the quarter compared with a $2.1 million gain in the same quarter in 2019.
For all of 2020, EchoPark revenues rose 22 percent to a record $1.4 billion, as sales jumped 15 percent to a record 57,161 units. The unit's net income for the year fell 55 percent to $4.1 million.
Sonic opened four EchoPark locations during the fourth quarter: stores in Duluth, Ga., Nashville and Plano, Texas, and a delivery and buy center in Knoxville, Tenn.
The company also said it acquired two used-vehicle businesses in Maryland and New York. Late in the fourth quarter, Sonic and EchoPark purchased Used Car King, which had three stores in New York state. Dyke told Automotive News that it closed one store and two Used Car King dealerships near Syracuse have become EchoPark stores. It also purchased Carbiz in February, Dyke said, with two locations, one in Baltimore and one in Laurel, Md. They also will become EchoPark stores.
Terms of the transactions, including purchase prices, weren’t disclosed, but Dyke said together the acquisitions are expected to generate annual revenues of more than $350 million.
Sonic shares closed down 6.5 percent at $41.26 on Wednesday in New York.
Records: All-time quarterly revenue; all-time quarterly pre-tax income from continuing operations of $90.4 million; all-time quarterly adjusted earnings from continuing operations; and several others.
Sales: New-vehicle sales slipped 9.9 percent to 27,566. Used-vehicle sales at its franchised stores dropped 5.9 percent to 25,490. Used-vehicle sales at its EchoPark stores jumped 17 percent to 14,841.
Same-store sales: New-vehicle sales on a same-store basis fell 6.9 percent to 27,552. That was worse than the 2.4 percent drop for all U.S. new light-vehicle sales in the fourth quarter, according to the Automotive News Research & Data Center. Used-vehicle sales on a same-store basis sold through Sonic's franchised dealerships dipped 2.9 percent to 25,479. Same-store used-vehicle sales at EchoPark stores dropped 14 percent to 10,794.
Full-year results: Revenue dipped 6.6 percent to $9.8 billion. The company posted a net loss of $51.4 million compared with net income of $144.1 million in 2019 and a $50.7 million loss from continuing operations vs. net income of $144.5 million from continuing operations in 2019. Adjusted earnings from continuing operations of $168.9 million set an all-time record, up 50 percent from 2019.
Sonic, of Charlotte, N.C., ranks No. 6 on Automotive News' list of the top 150 dealership groups based in the U.S., retailing 114,131 new vehicles in 2019. It retailed 162,149 used vehicles for the same period, ranking it No. 6 on Automotive News' list of the top 100 dealership groups in used-vehicle sales.