Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.20.1
Segment Information
 3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Segment Information 10. Segment Information
As of March 31, 2020, Sonic had two operating segments comprised of: (1) retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products (the “Franchised Dealerships Segment”); and (2) pre-owned vehicle specialty retail locations that provide customers an opportunity to search our nationwide inventory, purchase a pre-owned vehicle, select finance and insurance products and sell their current vehicle to us (the “EchoPark Segment”). Sonic has determined that its operating segments also represent its reportable segments.
The reportable segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by Sonic's chief operating decision maker to assess operating performance and allocate resources. Sonic’s chief operating decision maker is a group of three individuals consisting of: (1) the Company’s Chief Executive Officer; (2) the Company’s President; and (3) the Company’s Chief Financial Officer.
Reportable segment financial information for the three months ended March 31, 2020 and 2019 are as follows:
Three Months Ended March 31,
2020 2019
Segment Revenues: (In thousands, except unit data)
Franchised Dealerships Segment revenues:
New vehicles $ 959,489    $ 1,066,334   
Used vehicles 566,888    603,949   
Wholesale vehicles 42,440    52,533   
Parts, service and collision repair 324,501    336,225   
Finance, insurance and other, net 83,029    80,521   
Franchised Dealerships Segment revenues $ 1,976,347    $ 2,139,562   
EchoPark Segment revenues:
Used vehicles $ 283,164    $ 216,417   
Wholesale vehicles 6,103    2,237   
Parts, service and collision repair 10,179    5,205   
Finance, insurance and other, net 32,263    25,717   
EchoPark Segment revenues $ 331,709    $ 249,576   
Total consolidated revenues $ 2,308,056    $ 2,389,138   

Three Months Ended March 31,
2020 2019
Segment Income (Loss) (1): (In thousands)
Franchised Dealerships Segment (2) $ 22,656    $ 61,182   
EchoPark Segment 2,096    2,106   
Total segment income (loss) $ 24,752    $ 63,288   
Impairment charges (3) (268,000)   (1,952)  
Income (loss) from continuing operations before taxes $ (243,248)   $ 61,336   
Retail New and Used Vehicle Unit Sales Volume:
Franchised Dealerships Segment 47,762    52,609   
EchoPark Segment 13,986    11,051   
Total retail new and used vehicle unit sales volume 61,748    63,660   

(1)Segment income (loss) for each segment is defined as income (loss) from continuing operations before taxes and impairment charges.
(2)For the three months ended March 31, 2019, the above amount includes a pre-tax net gain on the disposal of franchised dealerships of approximately $46.7 million, offset partially by approximately $6.3 million of pre-tax executive transition costs.
(3)For the three months ended March 31, 2020, the above amount includes a pre-tax impairment charge of approximately $268.0 million related to adjustments in fair value of goodwill for the Franchised Dealerships Segment as a result of the economic disruptions due to the worldwide spread of COVID-19 which has adversely affected our business. For the three months ended March 31, 2019, the above amount includes approximately $1.9 million of pre-tax fair value adjustments to real estate at former EchoPark locations classified as held for sale.
Three Months Ended March 31,
2020 2019
(In thousands)
Impairment Charges:
Franchised Dealerships Segment $ 268,000    $ 26   
EchoPark Segment —    1,926   
Total impairment charges $ 268,000    $ 1,952   

Three Months Ended March 31,
2020 2019
(In thousands)
Depreciation and amortization:
Franchised Dealerships Segment $ 19,589    $ 20,237   
EchoPark Segment 2,708    2,412   
Total depreciation and amortization $ 22,297    $ 22,649   

Three Months Ended March 31,
2020 2019
(In thousands)
Floor Plan Interest Expense:
Franchised Dealerships Segment $ 9,608    $ 12,505   
EchoPark Segment 900    721   
Total floor plan interest expense $ 10,508    $ 13,226   

Three Months Ended March 31,
2020 2019
(In thousands)
Interest Expense, Other, Net:
Franchised Dealerships Segment $ 10,599    $ 12,414   
EchoPark Segment 366    439   
Total interest expense, other, net $ 10,965    $ 12,853   

Three Months Ended March 31,
2020 2019
(In thousands)
Capital expenditures:
Franchised Dealerships Segment $ 17,249    $ 25,229   
EchoPark Segment 2,556    5,390   
Total capital expenditures $ 19,805    $ 30,619