EX-99.1 2 q220198kexhibit991.htm EX-99.1
Exhibit 99.1
Sonic Automotive Reports EPS of $0.62 for the Second Quarter of 2019;
EchoPark Revenues Up 61.9% and Expected to Exceed $1.1 Billion for 2019
CHARLOTTE, N.C. – July 25, 2019 – Sonic Automotive, Inc. (NYSE: SAH), one of the nation’s largest automotive retailers, today reported financial results for the second quarter of 2019.
•EchoPark revenues of $291.7 million during the second quarter of 2019, up 61.9% from the second quarter of 2018 and on-track to exceed $1.1 billion in full year 2019 revenues.
•EchoPark pre-tax profit improved $29.5 million, or 101.6%, to $1.7 million in the second quarter of 2019, compared to a pre-tax loss of $27.8 million in the second quarter of 2018.
•EchoPark generated positive cash flow (Adjusted EBITDA*) of $4.8 million in the second quarter of 2019, improving by $7.0 million, or 321.7%, from the second quarter of 2018.
•EchoPark retailed 12,587 units during the second quarter of 2019, up 68.7% from the second quarter of 2018.
•Total Sonic consolidated GAAP continuing operations earnings per diluted share of $0.62 in the second quarter of 2019, compared to $0.40 in the second quarter of 2018 (excluding the items of interest detailed below, Adjusted earnings per diluted share from continuing operations* for the second quarter of 2018 were $0.35).
•Total Sonic consolidated all-time quarterly record pre-owned retail unit sales of 41,458 units in the second quarter of 2019.
•Total Sonic same store Fixed Operations gross increased $10.2 million in the second quarter of 2019, up 6.4% from the second quarter of 2018.
•Total Sonic consolidated all-time quarterly record F&I gross profit per retail unit of $1,710 in the second quarter of 2019.
•Total Sonic consolidated all-time quarterly record F&I gross profit of $118.3 million in the second quarter of 2019.
•SG&A to gross profit ratio of 77.2% in the second quarter of 2019, an improvement of 330 basis points compared to the second quarter of 2018 (excluding the items of interest in the second quarter of 2018 detailed below).*
* Adjusted EBITDA, Adjusted earnings per diluted share from continuing operations and Adjusted SG&A to gross profit ratio are non-GAAP financial measures. The schedules included in this press release reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Second Quarter 2019 Results
On a GAAP basis, net income from continuing operations for the second quarter of 2019 was $26.8 million, or $0.62 per diluted share. Comparatively, net income from continuing operations for the second quarter of 2018 was $17.1 million, or $0.40 per diluted share.
GAAP results reported for the second quarter of 2018 include the following pre-tax items of interest (there were no such items for the second quarter of 2019):

|  |  |  |  | Income Statement Line Item |
(In millions) |  |  | Q2 2018 |  |  |
Gain on franchise disposals |  |  | $ | 38.0 |  | SG&A expenses |
Legal and storm damage charges |  |  | $ | (3.1) |  | SG&A expenses |
Long-term compensation charges |  |  | $ | (23.3) |  | SG&A expenses | (1)
Impairment charges |  |  | $ | (10.3) |  | Impairment expenses |
Lease exit adjustments |  |  | $ | 2.6 |  | SG&A expenses |

Note: Amounts in table relate to the Franchised Dealerships Segment unless otherwise noted below.
(1) Relates to EchoPark.

Commentary
David Smith, Sonic’s and EchoPark’s Chief Executive Officer, commented, “We are quite pleased with the results for the quarter. Our franchised stores posted very good results across all revenue lines and our EchoPark operations continued on the growth and profitability path experienced in the prior quarter. We are confident that this momentum will carry into the second half of the year. Even as the new vehicle market started showing signs of weakness, we still had record results in our pre-owned and F&I business lines and grew our fixed operations by 6.4%. This, once again, shows how the dynamic dealer operating model benefits from multiple revenue streams.”
“We are very excited to see the maturity of our current EchoPark locations as illustrated by our most mature market, Denver, Colorado. When we enter a market, we have a clear objective of becoming the market volume leader and achieving that distinction in a profitable manner. It is very exciting to see the results when you focus on the customer and use technology and process to reduce your expenses and simplify the operational model. We believe we will be able to open an additional EchoPark store before the end of 2019 and another shortly thereafter in the first half of 2020. Our current plans include two additional EchoPark store openings in the second half of 2020.”
Jeff Dyke, Sonic’s and EchoPark’s President, commented, “During the second quarter, EchoPark continued to grow consistent with our expectations. The combination of a 68.7% increase in unit volume and an increase of combined front-end and F&I gross per unit of 22.3% significantly contributed to the $13.4 million increase in total gross profit in the second quarter of 2019. This represents an increase of 92.5% over the prior year quarter. At the store operating level, all of our stores improved their performance over the prior year quarter except for one, which was relocated during the current year quarter. Our team continues managing inventory levels, inventory costs and retail pricing which we believe give us a competitive advantage to the overall pre-owned industry. We believe our technology, training and execution will allow us to scale at a level that will continue to help us significantly grow revenue while remaining profitable as we add rooftops in the coming years. We continue to be very excited about our EchoPark business model as we realize and believe that the opportunity in the pre-owned market is massive.”
“Equally as exciting, our franchised stores did an excellent job during the quarter. Collectively, our new car business increased local market share and improved gross per unit on a same store basis by 4.1%. Our franchised stores also really pushed pre-owned volume during the quarter. Same store used vehicle gross profit increased nearly one percent, driven by an increase in pre-owned units sold of 6.1%, offset slightly by a $67 decline in gross per unit. Pre-owned volume also supported higher same store F&I gross profit for the second quarter, which increased 5.9% to $86.7 million. Additionally, the results of our fixed operations business were fantastic. Same store franchise fixed operations gross for the second quarter of 2019 increased 6.8%, or $10.9 million, compared to the prior year quarter. This included an increase of 7.9% in same store customer pay gross profit. Total gross profit from the franchised stores on a same store basis increased $19.7 million in the second quarter, up 6.0% from the prior year quarter. Cost controls were also in play during the quarter for the franchised store group which improved its same store SG&A to gross ratio by 30 basis points, down to 76.3% for the quarter.”
“Consolidated SG&A to gross during the second quarter of 2019 was 77.2%. This compares to an adjusted ratio of 80.5% in the prior year quarter. We continue to look at the business critically to ensure resources are allocated to those functions that are core to our operating strategy.”
Dividend
Sonic’s Board of Directors approved a quarterly dividend of $0.10 per share payable in cash for our stockholders of record on September 13, 2019. The dividend will be payable on October 15, 2019.
Second Quarter 2019 Earnings Conference Call
Senior management will host a conference call today at 10:00 A.M. (Eastern) to discuss the quarter’s results. To access the live broadcast of the call over the Internet go to: www.sonicautomotive.com, then click on “Our Company,” then “Investor Relations,” then the “Earnings Conference Calls” link at the bottom of the page.
Presentation materials for the conference call will be accessible beginning the morning of the conference call on the Company’s website at www.sonicautomotive.com by clicking on the “Investor Relations” tab under “Our Company” and choosing the “Webcasts & Presentations” link at the bottom of the page.

The conference call will also be available live by dialing in 10 minutes prior to the start of the call at:
Domestic: (877) 450-3867
International: (706) 643-0958
Conference ID: 7589142
A conference call replay will be available one hour following the call for seven days and can be accessed by calling:
Domestic: (855) 859-2056
International: (404) 537-3406
Conference ID: 7589142
About Sonic Automotive
Sonic Automotive, Inc., a Fortune 500 company based in Charlotte, N.C., is one of the nation’s largest automotive retailers. Sonic can be reached on the web at www.sonicautomotive.com. More information about EchoPark Automotive can be found at www.echopark.com.
Forward-Looking Statements
Included herein are forward-looking statements. There are many factors that affect management’s views about future events and trends of the Company’s business. These factors involve risks and uncertainties that could cause actual results or trends to differ materially from management’s views, including, without limitation, EchoPark revenue estimates, EchoPark unit sales volume, EchoPark profit estimates, economic conditions in the markets in which we operate, new and used vehicle industry sales volume, the success of our operational strategies, the rate and timing of overall economic recovery or decline, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and the Company’s other periodic reports and information filed with the Securities and Exchange Commission (the “SEC”). The Company does not undertake any obligation to update forward-looking information, except as required under federal securities laws and the rules and regulations of the SEC.
Non-GAAP Financial Measures
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as Adjusted EBITDA, Adjusted earnings per diluted share from continuing operations and Adjusted SG&A to gross profit ratio. As required by SEC rules, the Company provides reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. The Company believes that these non-GAAP financial measures improve the transparency of the Company’s disclosures and provide a meaningful presentation of the Company’s results.

Contact: | Heath Byrd, Executive Vice President and Chief Financial Officer (704) 566-2400 C.G. Saffer, Vice President and Chief Accounting Officer (704) 566-2439

Sonic Automotive, Inc.
Results of Operations (Unaudited)
Results of Operations

| Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
| 2019 |  | 2018 |  | 2019 |  | 2018
| (Dollars and shares in thousands, except per share amounts) |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |
New vehicles | $ | 1,204,754 |  | $ | 1,238,571 |  | $ | 2,271,088 |  | $ | 2,419,416
Used vehicles | 885,627 |  | 762,572 |  | 1,705,992 |  | 1,471,618
Wholesale vehicles | 50,039 |  | 53,748 |  | 104,810 |  | 119,148
Total vehicles | 2,140,420 |  | 2,054,891 |  | 4,081,890 |  | 4,010,182
Parts, service and collision repair | 355,312 |  | 346,754 |  | 696,742 |  | 698,512
Finance, insurance and other, net | 118,349 |  | 104,104 |  | 224,587 |  | 197,829
Total revenues | 2,614,081 |  | 2,505,749 |  | 5,003,219 |  | 4,906,523
Cost of Sales: |  |  |  |  |  |  |
New vehicles | (1,148,354) |  | (1,181,303) |  | (2,160,892) |  | (2,305,349)
Used vehicles | (848,898) |  | (725,263) |  | (1,632,256) |  | (1,397,538)
Wholesale vehicles | (50,752) |  | (57,105) |  | (106,789) |  | (126,929)
Total vehicles | (2,048,004) |  | (1,963,671) |  | (3,899,937) |  | (3,829,816)
Parts, service and collision repair | (184,766) |  | (179,703) |  | (362,960) |  | (361,833)
Total cost of sales | (2,232,770) |  | (2,143,374) |  | (4,262,897) |  | (4,191,649)
Gross profit | 381,311 |  | 362,375 |  | 740,322 |  | 714,874
Selling, general and administrative expenses | (294,532) |  | (277,462) |  | (541,626) |  | (582,387)
Impairment charges | — |  | (10,317) |  | (1,952) |  | (13,960)
Depreciation and amortization | (23,806) |  | (23,949) |  | (46,456) |  | (47,692)
Operating income (loss) | 62,973 |  | 50,647 |  | 150,288 |  | 70,835
Other income (expense): |  |  |  |  |  |  |
Interest expense, floor plan | (12,518) |  | (11,945) |  | (25,744) |  | (22,622)
Interest expense, other, net | (13,628) |  | (13,375) |  | (26,481) |  | (26,831)
Other income (expense), net | (5) |  | 17 |  | 95 |  | 106
Total other income (expense) | (26,151) |  | (25,303) |  | (52,130) |  | (49,347)
Income (loss) from continuing operations before taxes | 36,822 |  | 25,344 |  | 98,158 |  | 21,488
Provision for income taxes for continuing operations - benefit (expense) | (10,071) |  | (8,222) |  | (29,058) |  | (6,380)
Income (loss) from continuing operations | 26,751 |  | 17,122 |  | 69,100 |  | 15,108
Discontinued operations: |  |  |  |  |  |  |
Income (loss) from discontinued operations before taxes | (213) |  | (297) |  | (393) |  | (545)
Provision for income taxes for discontinued operations - benefit (expense) | 61 |  | 80 |  | 114 |  | 148
Income (loss) from discontinued operations | (152) |  | (217) |  | (279) |  | (397)
Net income (loss) | $ | 26,599 |  | $ | 16,905 |  | $ | 68,821 |  | $ | 14,711
Basic earnings (loss) per common share: |  |  |  |  |  |  |
Earnings (loss) per share from continuing operations | $ | 0.62 |  | $ | 0.40 |  | $ | 1.61 |  | $ | 0.35
Earnings (loss) per share from discontinued operations | — |  | — |  | (0.01) |  | (0.01)
Earnings (loss) per common share | $ | 0.62 |  | $ | 0.40 |  | $ | 1.60 |  | $ | 0.34
Weighted-average common shares outstanding | 43,066 |  | 42,662 |  | 42,953 |  | 42,725
Diluted earnings (loss) per common share: |  |  |  |  |  |  |
Earnings (loss) per share from continuing operations | $ | 0.62 |  | $ | 0.40 |  | $ | 1.60 |  | $ | 0.35
Earnings (loss) per share from discontinued operations | (0.01) |  | (0.01) |  | — |  | (0.01)
Earnings (loss) per common share | $ | 0.61 |  | $ | 0.39 |  | $ | 1.60 |  | $ | 0.34
Weighted-average common shares outstanding | 43,230 |  | 42,920 |  | 43,060 |  | 42,948
Dividends declared per common share | $ | 0.10 |  | $ | 0.06 |  | $ | 0.20 |  | $ | 0.12

New Vehicles

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Reported new vehicle: |  |  |  |  |  |  |
Revenue | $ | 1,204,754 |  | $ | 1,238,571 |  | $ | (33,817) |  | (2.7) | %
Gross profit | $ | 56,400 |  | $ | 57,268 |  | $ | (868) |  | (1.5) | %
Unit sales | 28,196 |  | 30,877 |  | (2,681) |  | (8.7) | %
Revenue per unit | $ | 42,728 |  | $ | 40,113 |  | $ | 2,615 |  | 6.5 | %
Gross profit per unit | $ | 2,000 |  | $ | 1,855 |  | $ | 145 |  | 7.8 | %
Gross profit as a % of revenue | 4.7 | % |  | 4.6 | % |  | 10 |  | bps
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Reported new vehicle: |  |  |  |  |  |  |
Revenue | $ | 2,271,088 |  | $ | 2,419,416 |  | $ | (148,328) |  | (6.1) | %
Gross profit | $ | 110,196 |  | $ | 114,067 |  | $ | (3,871) |  | (3.4) | %
Unit sales | 53,393 |  | 60,377 |  | (6,984) |  | (11.6) | %
Revenue per unit | $ | 42,535 |  | $ | 40,072 |  | $ | 2,463 |  | 6.1 | %
Gross profit per unit | $ | 2,064 |  | $ | 1,889 |  | $ | 175 |  | 9.3 | %
Gross profit as a % of revenue | 4.9 | % |  | 4.7 | % |  | 20 |  | bps
| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Same store new vehicle: |  |  |  |  |  |  |
Revenue | $ | 1,200,352 |  | $ | 1,170,278 |  | $ | 30,074 |  | 2.6 | %
Gross profit | $ | 55,803 |  | $ | 54,904 |  | $ | 899 |  | 1.6 | %
Unit sales | 28,134 |  | 28,826 |  | (692) |  | (2.4) | %
Revenue per unit | $ | 42,666 |  | $ | 40,598 |  | $ | 2,068 |  | 5.1 | %
Gross profit per unit | $ | 1,983 |  | $ | 1,905 |  | $ | 78 |  | 4.1 | %
Gross profit as a % of revenue | 4.6 | % |  | 4.7 | % |  | (10) |  | bps
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Same store new vehicle: |  |  |  |  |  |  |
Revenue | $ | 2,248,029 |  | $ | 2,267,998 |  | $ | (19,969) |  | (0.9) | %
Gross profit | $ | 108,763 |  | $ | 109,282 |  | $ | (519) |  | (0.5) | %
Unit sales | 52,829 |  | 55,736 |  | (2,907) |  | (5.2) | %
Revenue per unit | $ | 42,553 |  | $ | 40,692 |  | $ | 1,861 |  | 4.6 | %
Gross profit per unit | $ | 2,059 |  | $ | 1,961 |  | $ | 98 |  | 5.0 | %
Gross profit as a % of revenue | 4.8 | % |  | 4.8 | % |  | — |  | bps

Used Vehicles

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Reported used vehicle: |  |  |  |  |  |  |
Revenue | $ | 885,627 |  | $ | 762,572 |  | $ | 123,055 |  | 16.1 | %
Gross profit | $ | 36,729 |  | $ | 37,309 |  | $ | (580) |  | (1.6) | %
Unit sales | 41,458 |  | 35,779 |  | 5,679 |  | 15.9 | %
Revenue per unit | $ | 21,362 |  | $ | 21,313 |  | $ | 49 |  | 0.2 | %
Gross profit per unit | $ | 886 |  | $ | 1,043 |  | $ | (157) |  | (15.1) | %
Gross profit as a % of revenue | 4.1 | % |  | 4.9 | % |  | (80) |  | bps
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Reported used vehicle: |  |  |  |  |  |  |
Revenue | $ | 1,705,992 |  | $ | 1,471,618 |  | $ | 234,374 |  | 15.9 | %
Gross profit | $ | 73,736 |  | $ | 74,080 |  | $ | (344) |  | (0.5) | %
Unit sales | 79,921 |  | 69,518 |  | 10,403 |  | 15.0 | %
Revenue per unit | $ | 21,346 |  | $ | 21,169 |  | $ | 177 |  | 0.8 | %
Gross profit per unit | $ | 923 |  | $ | 1,066 |  | $ | (143) |  | (13.4) | %
Gross profit as a % of revenue | 4.3 | % |  | 5.0 | % |  | (70) |  | bps
| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Same store used vehicle: |  |  |  |  |  |  |
Revenue | $ | 826,666 |  | $ | 728,393 |  | $ | 98,273 |  | 13.5 | %
Gross profit | $ | 34,540 |  | $ | 34,677 |  | $ | (137) |  | (0.4) | %
Unit sales | 38,517 |  | 33,930 |  | 4,587 |  | 13.5 | %
Revenue per unit | $ | 21,462 |  | $ | 21,468 |  | $ | (6) |  | — | %
Gross profit per unit | $ | 897 |  | $ | 1,022 |  | $ | (125) |  | (12.2) | %
Gross profit as a % of revenue | 4.2 | % |  | 4.8 | % |  | (60) |  | bps
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Same store used vehicle: |  |  |  |  |  |  |
Revenue | $ | 1,591,287 |  | $ | 1,394,490 |  | $ | 196,797 |  | 14.1 | %
Gross profit | $ | 68,263 |  | $ | 67,477 |  | $ | 786 |  | 1.2 | %
Unit sales | 74,126 |  | 65,293 |  | 8,833 |  | 13.5 | %
Revenue per unit | $ | 21,467 |  | $ | 21,357 |  | $ | 110 |  | 0.5 | %
Gross profit per unit | $ | 921 |  | $ | 1,033 |  | $ | (112) |  | (10.8) | %
Gross profit as a % of revenue | 4.3 | % |  | 4.8 | % |  | (50) |  | bps

Wholesale Vehicles

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Reported wholesale vehicle: |  |  |  |  |  |  |
Revenue | $ | 50,039 |  | $ | 53,748 |  | $ | (3,709) |  | (6.9) | %
Gross profit (loss) | $ | (713) |  | $ | (3,357) |  | $ | 2,644 |  | 78.8 | %
Unit sales | 8,646 |  | 8,442 |  | 204 |  | 2.4 | %
Revenue per unit | $ | 5,788 |  | $ | 6,367 |  | $ | (579) |  | (9.1) | %
Gross profit (loss) per unit | $ | (82) |  | $ | (398) |  | $ | 316 |  | 79.4 | %
Gross profit (loss) as a % of revenue | (1.4) | % |  | (6.2) | % |  | 480 |  | bps
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Reported wholesale vehicle: |  |  |  |  |  |  |
Revenue | $ | 104,810 |  | $ | 119,148 |  | $ | (14,338) |  | (12.0) | %
Gross profit (loss) | $ | (1,979) |  | $ | (7,781) |  | $ | 5,802 |  | 74.6 | %
Unit sales | 17,293 |  | 18,122 |  | (829) |  | (4.6) | %
Revenue per unit | $ | 6,061 |  | $ | 6,575 |  | $ | (514) |  | (7.8) | %
Gross profit (loss) per unit | $ | (114) |  | $ | (429) |  | $ | 315 |  | 73.4 | %
Gross profit (loss) as a % of revenue | (1.9) | % |  | (6.5) | % |  | 460 |  | bps
| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Same store wholesale vehicle: |  |  |  |  |  |  |
Revenue | $ | 48,270 |  | $ | 48,127 |  | $ | 143 |  | 0.3 | %
Gross profit (loss) | $ | (631) |  | $ | (3,074) |  | $ | 2,443 |  | 79.5 | %
Unit sales | 8,230 |  | 7,460 |  | 770 |  | 10.3 | %
Revenue per unit | $ | 5,865 |  | $ | 6,451 |  | $ | (586) |  | (9.1) | %
Gross profit (loss) per unit | $ | (77) |  | $ | (412) |  | $ | 335 |  | 81.3 | %
Gross profit (loss) as a % of revenue | (1.3) | % |  | (6.4) | % |  | 510 |  | bps
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except unit and per unit data) |  |  |  |  |  |
Same store wholesale vehicle: |  |  |  |  |  |  |
Revenue | $ | 101,394 |  | $ | 108,446 |  | $ | (7,052) |  | (6.5) | %
Gross profit (loss) | $ | (1,773) |  | $ | (6,955) |  | $ | 5,182 |  | 74.5 | %
Unit sales | 16,618 |  | 16,327 |  | 291 |  | 1.8 | %
Revenue per unit | $ | 6,101 |  | $ | 6,642 |  | $ | (541) |  | (8.1) | %
Gross profit (loss) per unit | $ | (107) |  | $ | (426) |  | $ | 319 |  | 74.9 | %
Gross profit (loss) as a % of revenue | (1.7) | % |  | (6.4) | % |  | 470 |  | bps

Parts, Service and Collision Repair (“Fixed Operations”)

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands) |  |  |  |  |  |
Reported: |  |  |  |  |  |  |
Revenue |  |  |  |  |  |  |
Customer pay | $ | 142,113 |  | $ | 140,351 |  | $ | 1,762 |  | 1.3 | %
Warranty | 69,809 |  | 63,888 |  | 5,921 |  | 9.3 | %
Wholesale parts | 40,027 |  | 40,844 |  | (817) |  | (2.0) | %
Internal, sublet and other | 103,363 |  | 101,671 |  | 1,692 |  | 1.7 | %
Total | $ | 355,312 |  | $ | 346,754 |  | $ | 8,558 |  | 2.5 | %
Gross profit |  |  |  |  |  |  |  |
Customer pay | $ | 77,652 |  | $ | 75,100 |  | $ | 2,552 |  | 3.4 | %
Warranty | 39,039 |  | 35,871 |  | 3,168 |  | 8.8 | %
Wholesale parts | 6,872 |  | 6,900 |  | (28) |  | (0.4) | %
Internal, sublet and other | 46,983 |  | 49,180 |  | (2,197) |  | (4.5) | %
Total | $ | 170,546 |  | $ | 167,051 |  | $ | 3,495 |  | 2.1 | %
Gross profit as a % of revenue |  |  |  |  |  |  |
Customer pay | 54.6 | % |  | 53.5 | % |  | 110 | bps |
Warranty | 55.9 | % |  | 56.1 | % |  | (20) | bps |
Wholesale parts | 17.2 | % |  | 16.9 | % |  | 30 | bps |
Internal, sublet and other | 45.5 | % |  | 48.4 | % |  | (290) | bps |
Total | 48.0 | % |  | 48.2 | % |  | (20) | bps |
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands) |  |  |  |  |  |
Reported: |  |  |  |  |  |  |
Revenue |  |  |  |  |  |  |
Customer pay | $ | 279,834 |  | $ | 282,706 |  | $ | (2,872) |  | (1.0) | %
Warranty | 138,782 |  | 131,489 |  | 7,293 |  | 5.5 | %
Wholesale parts | 79,325 |  | 83,345 |  | (4,020) |  | (4.8) | %
Internal, sublet and other | 198,801 |  | 200,972 |  | (2,171) |  | (1.1) | %
Total | $ | 696,742 |  | $ | 698,512 |  | $ | (1,770) |  | (0.3) | %
Gross profit |  |  |  |  |  |  |
Customer pay | $ | 151,978 |  | $ | 151,449 |  | $ | 529 |  | 0.3 | %
Warranty | 77,447 |  | 73,772 |  | 3,675 |  | 5.0 | %
Wholesale parts | 13,668 |  | 14,165 |  | (497) |  | (3.5) | %
Internal, sublet and other | 90,689 |  | 97,293 |  | (6,604) |  | (6.8) | %
Total | $ | 333,782 |  | $ | 336,679 |  | $ | (2,897) |  | (0.9) | %
Gross profit as a % of revenue |  |  |  |  |  |  |
Customer pay | 54.3 | % |  | 53.6 | % |  | 70 | bps |
Warranty | 55.8 | % |  | 56.1 | % |  | (30) | bps |
Wholesale parts | 17.2 | % |  | 17.0 | % |  | 20 | bps |
Internal, sublet and other | 45.6 | % |  | 48.4 | % |  | (280) | bps |
Total | 47.9 | % |  | 48.2 | % |  | (30) | bps |

Parts, Service and Collision Repair (“Fixed Operations”)

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands) |  |  |  |  |  |
Same Store: |  |  |  |  |  |  |
Revenue |  |  |  |  |  |  |
Customer pay | $ | 141,061 |  | $ | 134,096 |  | $ | 6,965 |  | 5.2 | %
Warranty | 70,283 |  | 62,323 |  | 7,960 |  | 12.8 | %
Wholesale parts | 39,696 |  | 39,057 |  | 639 |  | 1.6 | %
Internal, sublet and other | 101,345 |  | 96,806 |  | 4,539 |  | 4.7 | %
Total | $ | 352,385 |  | $ | 332,282 |  | $ | 20,103 |  | 6.0 | %
Gross profit |  |  |  |  |  |  |
Customer pay | $ | 77,079 |  | $ | 71,426 |  | $ | 5,653 |  | 7.9 | %
Warranty | 39,247 |  | 34,874 |  | 4,373 |  | 12.5 | %
Wholesale parts | 6,813 |  | 6,557 |  | 256 |  | 3.9 | %
Internal, sublet and other | 46,655 |  | 46,720 |  | (65) |  | (0.1) | %
Total | $ | 169,794 |  | $ | 159,577 |  | $ | 10,217 |  | 6.4 | %
Gross profit as a % of revenue |  |  |  |  |  |  |
Customer pay | 54.6 | % |  | 53.3 | % |  | 130 | bps |
Warranty | 55.8 | % |  | 56.0 | % |  | (20) | bps |
Wholesale parts | 17.2 | % |  | 16.8 | % |  | 40 | bps |
Internal, sublet and other | 46.0 | % |  | 48.3 | % |  | (230) | bps |
Total | 48.2 | % |  | 48.0 | % |  | 20 | bps |
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands) |  |  |  |  |  |
Same Store: |  |  |  |  |  |  |
Revenue |  |  |  |  |  |  |
Customer pay | $ | 277,155 |  | $ | 264,824 |  | $ | 12,331 |  | 4.7 | %
Warranty | 137,720 |  | 126,537 |  | 11,183 |  | 8.8 | %
Wholesale parts | 78,277 |  | 79,069 |  | (792) |  | (1.0) | %
Internal, sublet and other | 194,421 |  | 189,409 |  | 5,012 |  | 2.6 | %
Total | $ | 687,573 |  | $ | 659,839 |  | $ | 27,734 |  | 4.2 | %
Gross profit |  |  |  |  |  |  |
Customer pay | $ | 150,513 |  | $ | 141,236 |  | $ | 9,277 |  | 6.6 | %
Warranty | 76,859 |  | 70,778 |  | 6,081 |  | 8.6 | %
Wholesale parts | 13,449 |  | 13,347 |  | 102 |  | 0.8 | %
Internal, sublet and other | 88,981 |  | 91,086 |  | (2,105) |  | (2.3) | %
Total | $ | 329,802 |  | $ | 316,447 |  | $ | 13,355 |  | 4.2 | %
Gross profit as a % of revenue |  |  |  |  |  |  |
Customer pay | 54.3 | % |  | 53.3 | % |  | 100 | bps |
Warranty | 55.8 | % |  | 55.9 | % |  | (10) | bps |
Wholesale parts | 17.2 | % |  | 16.9 | % |  | 30 | bps |
Internal, sublet and other | 45.8 | % |  | 48.1 | % |  | (230) | bps |
Total | 48.0 | % |  | 48.0 | % |  | — | bps |

Finance, Insurance and Other, Net (“F&I”)

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except per unit data) |  |  |  |  |  |
Reported: |  |  |  |  |  |  |
Revenue | $ | 118,349 |  | $ | 104,104 |  | $ | 14,245 |  | 13.7 | %
Unit sales | 69,213 |  | 66,238 |  | 2,975 |  | 4.5 | %
Gross profit per retail unit (excludes fleet) | $ | 1,710 |  | $ | 1,572 |  | $ | 138 |  | 8.8 | %
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except per unit data) |  |  |  |  |  |
Reported: |  |  |  |  |  |  |
Revenue | $ | 224,587 |  | $ | 197,829 |  | $ | 26,758 |  | 13.5 | %
Unit sales | 132,594 |  | 129,154 |  | 3,440 |  | 2.7 | %
Gross profit per retail unit (excludes fleet) | $ | 1,694 |  | $ | 1,532 |  | $ | 162 |  | 10.6 | %
| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except per unit data) |  |  |  |  |  |
Same Store: |  |  |  |  |  |  |
Revenue | $ | 108,818 |  | $ | 95,816 |  | $ | 13,002 |  | 13.6 | %
Unit sales | 66,210 |  | 62,363 |  | 3,847 |  | 6.2 | %
Gross profit per retail unit (excludes fleet) | $ | 1,644 |  | $ | 1,536 |  | $ | 108 |  | 7.0 | %
| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands, except per unit data) |  |  |  |  |  |
Same Store: |  |  |  |  |  |  |
Revenue | $ | 205,936 |  | $ | 180,977 |  | $ | 24,959 |  | 13.8 | %
Unit sales | 126,235 |  | 120,333 |  | 5,902 |  | 4.9 | %
Gross profit per retail unit (excludes fleet) | $ | 1,631 |  | $ | 1,504 |  | $ | 127 |  | 8.4 | %

Selling, General and Administrative (“SG&A”) Expenses

| Three Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands) |  |  |  |  |  |
Reported: |  |  |  |  |  |  |
Compensation | $ | 181,197 |  | $ | 197,641 |  | $ | 16,444 |  | 8.3 | %
Advertising | 15,402 |  | 16,270 |  | 868 |  | 5.3 | %
Rent | 13,336 |  | 13,702 |  | 366 |  | 2.7 | %
Other | 84,597 |  | 49,849 |  | (34,748) |  | (69.7) | %
Total SG&A expenses | $ | 294,532 |  | $ | 277,462 |  | $ | (17,070) |  | (6.2) | %
Adjustments: |  |  |  |  |  |  |
Gain on franchise disposals | $ | — |  | $ | 38,048 |  |  |  |
Legal and storm damage charges | — |  | (3,064) |  |  |  |
Long-term compensation charges | — |  | (23,333) |  |  |  |
Lease exit charges | — |  | 2,579 |  |  |  |
Total SG&A adjustments | $ | — |  | $ | 14,230 |  |  |  |
Adjusted: |  |  |  |  |  |  |
Total adjusted SG&A expenses | $ | 294,532 |  | $ | 291,692 |  | $ | (2,840) |  | (1.0) | %
Reported: |  |  |  |  |  |  |
SG&A expenses as a % of gross profit: |  |  |  |  |  |  |
Compensation | 47.5 | % |  | 54.5 | % |  | 700 | bps |
Advertising | 4.0 | % |  | 4.5 | % |  | 50 | bps |
Rent | 3.5 | % |  | 3.8 | % |  | 30 | bps |
Other | 22.2 | % |  | 13.8 | % |  | (840) | bps |
Total SG&A expenses as a % of gross profit | 77.2 | % |  | 76.6 | % |  | (60) | bps |
Adjustments: |  |  |  |  |  |  |
Gain on franchise disposals | — | % |  | 10.5 | % |  |  |  |
Legal and storm damage charges | — | % |  | (0.8) | % |  |  |  |
Long-term compensation charges | — | % |  | (6.5) | % |  |  |  |
Lease exit charges | — | % |  | 0.7 | % |  |  |  |
Total effect of adjustments | — | % |  | 3.9 | % |  |  |  |
Adjusted: |  |  |  |  |  |  |
Total adjusted SG&A expenses as a % of gross profit | 77.2 | % |  | 80.5 | % |  | 330 | bps |

| Six Months Ended June 30, |  |  |  | Better / (Worse) |  |
| 2019 |  | 2018 |  | Change |  | % Change
| (In thousands) |  |  |  |  |  |
Reported: |  |  |  |  |  |  |
Compensation | $ | 365,381 |  | $ | 382,678 |  | $ | 17,297 |  | 4.5 | %
Advertising | 30,453 |  | 32,287 |  | 1,834 |  | 5.7 | %
Rent | 28,586 |  | 35,570 |  | 6,984 |  | 19.6 | %
Other | 117,206 |  | 131,852 |  | 14,646 |  | 11.1 | %
Total SG&A expenses | $ | 541,626 |  | $ | 582,387 |  | $ | 40,761 |  | 7.0 | %
Adjustments: |  |  |  |  |  |  |
Gain on franchise disposals | $ | 46,680 |  | $ | 39,239 |  |  |  |
Legal and storm damage charges | — |  | (4,564) |  |  |  |
Long-term compensation charges | (6,264) |  | (32,522) |  |  |  |
Lease exit charges | — |  | (2,235) |  |  |  |
Total SG&A adjustments | $ | 40,416 |  | $ | (82) |  |  |  |
Adjusted: |  |  |  |  |  |  |
Total adjusted SG&A expenses | $ | 582,042 |  | $ | 582,305 |  | $ | 263 |  | — | %
Reported: |  |  |  |  |  |  |
SG&A expenses as a % of gross profit: |  |  |  |  |  |  |
Compensation | 49.4 | % |  | 53.5 | % |  | 410 | bps |
Advertising | 4.1 | % |  | 4.5 | % |  | 40 | bps |
Rent | 3.9 | % |  | 5.0 | % |  | 110 | bps |
Other | 15.8 | % |  | 18.5 | % |  | 270 | bps |
Total SG&A expenses as a % of gross profit | 73.2 | % |  | 81.5 | % |  | 830 | bps |
Adjustments: |  |  |  |  |  |  |
Gain on franchise disposals | 6.3 | % |  | 5.5 | % |  |  |  |
Legal and storm damage charges | — | % |  | (0.7) | % |  |  |  |
Long-term compensation charges | (0.9) | % |  | (4.5) | % |  |  |  |
Lease exit charges | — | % |  | (0.3) | % |  |  |  |
Total effect of adjustments | 5.4 | % |  | — | % |  |  |  |
Adjusted: |  |  |  |  |  |  |
Total adjusted SG&A expenses as a % of gross profit | 78.6 | % |  | 81.5 | % |  | 290 | bps |

Non-GAAP Continuing Operations EPS Reconciliation

| Three Months Ended June 30, 2019 |  |  |  |  |  | Three Months Ended June 30, 2018 |  |  |  |
| Weighted- Average Shares |  | Amount |  | Per Share Amount |  | Weighted- Average Shares |  | Amount |  | Per Share Amount
| (In thousands, except per share amounts) |  |  |  |  |  |  |  |  |  |
Diluted earnings (loss) and shares from continuing operations | 43,230 |  | $ | 26,751 |  | $ | 0.62 |  | 42,920 |  | $ | 17,122 |  | $ | 0.40
Pre-tax items of interest: |  |  |  |  |  |  |  |  |  |  |
Gain on franchise disposals |  |  | $ | — |  |  |  |  |  | $ | (38,048) |  |
Legal and storm damage charges |  |  | — |  |  |  |  |  | 3,064 |  |
Long-term compensation charges |  |  | — |  |  |  |  |  | 23,333 |  |
Impairment charges |  |  | — |  |  |  |  |  | 10,315 |  |
Lease exit charges |  |  | — |  |  |  |  |  | (2,579) |  |
Tax effect of above items |  |  | — |  |  |  |  |  | 1,617 |  |
Adjusted diluted earnings (loss) and shares from continuing operations | 43,230 |  | $ | 26,751 |  | $ | 0.62 |  | 42,920 |  | $ | 14,824 |  | $ | 0.35

| Six Months Ended June 30, 2019 |  |  |  |  |  | Six Months Ended June 30, 2018 |  |  |  |
| Weighted- Average Shares |  | Amount |  | Per Share Amount |  | Weighted- Average Shares |  | Amount |  | Per Share Amount
| (In thousands, except per share amounts) |  |  |  |  |  |  |  |  |  |
Diluted earnings (loss) and shares from continuing operations | 43,060 |  | $ | 69,100 |  | $ | 1.60 |  | 42,948 |  | $ | 15,108 |  | $ | 0.35
Pre-tax items of interest: |  |  |  |  |  |  |  |  |  |  |
Gain on franchise disposals |  |  | $ | (46,680) |  |  |  |  |  | $ | (39,239) |  |
Legal and storm damage charges |  |  | — |  |  |  |  |  | 4,564 |  |
Long-term compensation charges |  |  | — |  |  |  |  |  | 32,522 |  |
Executive transition costs |  |  | 6,264 |  |  |  |  |  | — |  |
Impairment charges |  |  | 1,926 |  |  |  |  |  | 13,958 |  |
Lease exit charges |  |  | — |  |  |  |  |  | 2,235 |  |
Tax effect of above items |  |  | 12,902 |  |  |  |  |  | (3,276) |  |
Adjusted diluted earnings (loss) and shares from continuing operations | 43,060 |  | $ | 43,512 |  | $ | 1.01 |  | 42,948 |  | $ | 25,872 |  | $ | 0.60