Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.20.2
Segment Information
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Segment Information 10. Segment Information
As of June 30, 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 and six months ended June 30, 2020 and 2019 are as follows:
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Segment Revenues:
Franchised Dealerships Segment revenues:
New vehicles $ 900,003    $ 1,204,754    $ 1,859,492    $ 2,271,088   
Used vehicles 535,699    637,090    1,102,587    1,241,039   
Wholesale vehicles 28,509    43,720    70,948    96,253   
Parts, service and collision repair 251,998    347,337    576,499 683,563
Finance, insurance and other, net 80,401    89,507    163,429 170,028
Franchised Dealerships Segment revenues $ 1,796,610    $ 2,322,408    $ 3,772,955    $ 4,461,971   
EchoPark Segment revenues:
Used vehicles $ 273,178    $ 248,537    $ 556,343    $ 464,953   
Wholesale vehicles 4,666    6,319    10,770    8,557   
Parts, service and collision repair 7,060    7,975    17,239    13,179   
Finance, insurance and other, net 30,372    28,842    62,635    54,559   
EchoPark Segment revenues $ 315,276    $ 291,673    $ 646,987    $ 541,248   
Total consolidated revenues $ 2,111,886    $ 2,614,081    $ 4,419,942    $ 5,003,219   

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands, except unit data)
Segment Income (Loss) (1):
Franchised Dealerships Segment (2) $ 35,689    $ 35,129    $ 58,346    $ 96,310   
EchoPark Segment 2,577    1,693    4,672    3,800   
Total segment income (loss) $ 38,266    $ 36,822    $ 63,018    $ 100,110   
Impairment charges (3) (833)   —    (268,833)   (1,952)  
Income (loss) from continuing operations before taxes $ 37,433    $ 36,822    $ (205,815)   $ 98,158   
Retail New and Used Vehicle Unit Sales Volume:
Franchised Dealerships Segment 43,864    57,067    91,626    109,676   
EchoPark Segment 13,207    12,587    27,193    23,638   
Total retail new and used vehicle unit sales volume 57,071    69,654    118,819    133,314   

(1)Segment income (loss) for each segment is defined as income (loss) from continuing operations before taxes and impairment charges.
(2)For the six months ended June 30, 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 June 30, 2020, the above amount includes a pre-tax impairment charge of approximately $0.8 million related to the abandonment of certain construction projects. For the six months ended June 30, 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, as well as a pre-tax impairment charge of approximately $0.8 million related to the abandonment of certain construction projects. For the six months ended June 30, 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 June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Impairment Charges:
Franchised Dealerships Segment $ 833    $ —    $ 268,833    $ 26   
EchoPark Segment —    —    —    1,926   
Total impairment charges $ 833    $ —    $ 268,833    $ 1,952   

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Depreciation and Amortization:
Franchised Dealerships Segment $ 19,895    $ 21,144    $ 39,484    $ 41,381   
EchoPark Segment 2,752    2,662    5,460    5,075   
Total depreciation and amortization $ 22,647    $ 23,806    $ 44,944    $ 46,456   

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Floor Plan Interest Expense:
Franchised Dealerships Segment $ 5,675    $ 11,597    $ 15,283    $ 24,102   
EchoPark Segment 639    921    1,539    1,642   
Total floor plan interest expense $ 6,314    $ 12,518    $ 16,822    $ 25,744   

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Interest Expense, Other, Net:
Franchised Dealerships Segment $ 9,557    $ 13,192    $ 20,156    $ 25,606   
EchoPark Segment 240    436    606    875   
Total interest expense, other, net $ 9,797    $ 13,628    $ 20,762    $ 26,481   

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(In thousands)
Capital Expenditures:
Franchised Dealerships Segment $ 35,388    $ 16,449    $ 52,637    $ 41,678   
EchoPark Segment 6,540    4,165    9,096    9,556   
Total capital expenditures $ 41,928    $ 20,614    $ 61,733    $ 51,234