Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.20.2
Segment Information
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment Information 10. Segment Information
As of September 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 nine months ended September 30, 2020 and 2019 are as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Segment Revenues:
Franchised Dealerships Segment revenues:
New vehicles $ 1,098,302  $ 1,258,018  $ 2,957,794  $ 3,529,106 
Used vehicles 615,565  648,006  1,718,151  1,889,045 
Wholesale vehicles 48,526  44,517  119,474  140,770 
Parts, service and collision repair 310,035  343,820  886,534  1,027,382 
Finance, insurance and other, net 91,035  96,142  254,465  266,171 
Franchised Dealerships Segment revenues $ 2,163,463  $ 2,390,503  $ 5,936,418  $ 6,852,474 
EchoPark Segment revenues:
Used vehicles $ 330,463  $ 266,266  $ 886,806  $ 731,219 
Wholesale vehicles 7,976  7,025  18,747  15,581 
Parts, service and collision repair 10,894  8,227  28,133  21,407 
Finance, insurance and other, net 35,749  30,699  98,383  85,258 
EchoPark Segment revenues $ 385,082  $ 312,217  $ 1,032,069  $ 853,465 
Total consolidated revenues $ 2,548,545  $ 2,702,720  $ 6,968,487  $ 7,705,939 

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands, except unit data)
Segment Income (Loss) (1):
Franchised Dealerships Segment (2) $ 80,460  $ 38,417  $ 138,805  $ 134,727 
EchoPark Segment 239  3,247  4,912  7,047 
Total segment income (loss) $ 80,699  $ 41,664  $ 143,717  $ 141,774 
Impairment charges (3) (26) (1,124) (268,859) (3,076)
Income (loss) from continuing operations before taxes $ 80,673  $ 40,540  $ (125,142) $ 138,698 
Retail New and Used Vehicle Unit Sales Volume:
Franchised Dealerships Segment 50,463  59,394  142,089  169,070 
EchoPark Segment 15,127  13,206  42,320  36,844 
Total retail new and used vehicle unit sales volume 65,590  72,600  184,409  205,914 

(1)Segment income (loss) for each segment is defined as income (loss) from continuing operations before taxes and impairment charges.
(2)For the three and nine months ended September 30, 2020, the above amount includes a pre-tax gain on the disposal of a franchised dealership of approximately $3.2 million. For the nine months ended September 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 September 30, 2019, the above amount includes approximately $1.1 million of impairment expenses related to real estate assets held for sale at former EchoPark locations. For the nine months ended September 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 $0.9 million related to the abandonment of certain construction projects. For the nine months ended September 30, 2019, the above amount includes approximately $3.1 million of pre-tax impairment expense related to real estate assets held for sale at former EchoPark locations.
Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Impairment Charges:
Franchised Dealerships Segment $ 26  $ —  $ 268,859  $ 26 
EchoPark Segment —  1,124  —  3,050 
Total impairment charges $ 26  $ 1,124  $ 268,859  $ 3,076 

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Depreciation and Amortization:
Franchised Dealerships Segment $ 20,170  $ 20,967  $ 59,654  $ 62,348 
EchoPark Segment 2,764  2,698  8,225  7,772 
Total depreciation and amortization $ 22,934  $ 23,665  $ 67,879  $ 70,120 

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Floor Plan Interest Expense:
Franchised Dealerships Segment $ 4,234  $ 10,679  $ 19,517  $ 34,781 
EchoPark Segment 765  959  2,304  2,601 
Total floor plan interest expense $ 4,999  $ 11,638  $ 21,821  $ 37,382 

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Interest Expense, Other, Net:
Franchised Dealerships Segment $ 10,615  $ 12,607  $ 30,771  $ 38,214 
EchoPark Segment 147  406  752  1,280 
Total interest expense, other, net $ 10,762  $ 13,013  $ 31,523  $ 39,494 

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In thousands)
Capital Expenditures:
Franchised Dealerships Segment $ 18,237  $ 21,141  $ 70,875  $ 62,819 
EchoPark Segment 12,085  2,174  21,181  11,730 
Total capital expenditures $ 30,322  $ 23,315  $ 92,056  $ 74,549