| Segment Information |
Segment Information As of December 31, 2019, we had two operating segments: (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 our 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 revenues, segment income (loss), impairment charges, depreciation and amortization, floor plan interest expense, interest expense, other, net, capital expenditures and assets are as follows:
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
| Segment revenues |
(In thousands) |
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| Franchised Dealerships Segment revenues: |
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| New vehicles |
$ |
4,889,171 |
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$ |
4,974,097 |
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$ |
5,295,051 |
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| Used vehicles |
2,493,467 |
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2,370,799 |
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2,406,407 |
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| Wholesale vehicles |
180,020 |
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197,184 |
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161,581 |
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| Parts, service and collision repair |
1,366,550 |
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1,364,559 |
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1,401,802 |
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| Finance, insurance and other, net |
363,117 |
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344,814 |
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348,058 |
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| Franchised Dealerships Segment revenues |
$ |
9,292,325 |
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$ |
9,251,453 |
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$ |
9,612,899 |
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| EchoPark Segment revenues: |
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| Used vehicles |
$ |
996,504 |
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$ |
602,698 |
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$ |
215,646 |
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| Wholesale vehicles |
22,927 |
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20,443 |
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9,483 |
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| Parts, service and collision repair |
28,753 |
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16,327 |
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14,208 |
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| Finance, insurance and other, net |
113,834 |
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60,709 |
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14,972 |
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| EchoPark Segment revenues |
$ |
1,162,018 |
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$ |
700,177 |
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$ |
254,309 |
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| Total consolidated revenues |
$ |
10,454,343 |
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$ |
9,951,630 |
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$ |
9,867,208 |
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
| Segment income (loss) (1) |
(In thousands) |
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| Franchised Dealerships Segment (2) |
$ |
211,267 |
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$ |
157,413 |
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$ |
138,468 |
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| EchoPark Segment (3) |
9,146 |
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(52,587) |
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(20,950) |
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| Total segment income (loss) |
$ |
220,413 |
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$ |
104,826 |
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$ |
117,518 |
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| Impairment charges (4) |
(20,768) |
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(29,514) |
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(9,394) |
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| Income (loss) from continuing operations before taxes |
$ |
199,645 |
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$ |
75,312 |
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$ |
108,124 |
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| Retail new and used vehicle unit sales volume: |
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| Franchised Dealerships Segment |
226,760 |
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232,885 |
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248,534 |
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| EchoPark Segment |
49,520 |
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29,437 |
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10,618 |
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| Total retail new and used vehicle unit sales volume |
276,280 |
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262,322 |
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259,152 |
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(1) Segment income (loss) for each segment is defined as income (loss) from continuing operations before taxes and impairment charges.
(2) For the year ended December 31, 2019, the above amount includes approximately $76.0 million of net gain on the disposal of franchised dealerships, offset partially by approximately $7.2 million of loss on the extinguishment of debt, approximately $6.3 million of executive transition costs and approximately $1.1 million of impairment charges. For the year ended December 31, 2018, the above amount includes approximately $38.9 million of net gain on the disposal of franchised dealerships, offset partially by approximately $27.9 million of impairment charges, approximately $4.0 million of storm-related physical damage costs, approximately $1.7 million of legal costs, approximately $1.6 million of executive transition costs and approximately $1.4 million of lease exit charges. For the year ended December 31, 2017, the above amount includes approximately $14.6 million of net loss on the extinguishment of debt, approximately $8.9 million of storm-related physical damage and legal costs, approximately $7.5 million of impairment charges, approximately $0.7 million of double-carry interest and approximately $0.3 million of lease exit charges, offset partially by approximately $10.0 million of net gain on the disposal of franchised dealerships.
(3) For the year ended December 31, 2019, the above amount includes approximately $19.7 million of impairment charges related to building and land held for sale at former EchoPark locations. For the year ended December 31, 2018, the above amount includes approximately $32.5 million of long-term compensation-related charges and approximately $1.6 million of impairment charges. For the year ended December 31, 2017, the above amount includes approximately $1.9 million of impairment charges, approximately $1.3 million of long-term compensation-related charges, approximately $0.6 million of lease exit charges and approximately $0.2 million of storm-related physical damage and legal costs.
(4) For the year ended December 31, 2019, the above amount includes approximately $1.1 million of impairment charges for the Franchised Dealerships Segment and approximately $19.7 million of impairment charges for the EchoPark Segment. For the year ended December 31, 2018, the above amount includes approximately $27.9 million of impairment charges for the Franchised Dealerships Segment and approximately $1.6 million of impairment charges for the EchoPark Segment. For the year ended December 31, 2017, the above amount includes approximately $7.5 million of impairment charges for the Franchised Dealerships Segment and approximately $1.9 million of impairment charges for the EchoPark Segment.
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
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(In thousands) |
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| Impairment charges: |
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| Franchised Dealerships Segment |
$ |
1,101 |
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$ |
27,932 |
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$ |
7,491 |
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| EchoPark Segment |
19,667 |
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1,582 |
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1,903 |
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| Total impairment charges |
$ |
20,768 |
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$ |
29,514 |
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$ |
9,394 |
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
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(In thousands) |
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| Depreciation and amortization: |
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| Franchised Dealerships Segment |
$ |
82,636 |
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$ |
85,849 |
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$ |
83,741 |
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| EchoPark Segment |
10,533 |
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7,774 |
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5,203 |
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| Total depreciation and amortization |
$ |
93,169 |
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$ |
93,623 |
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$ |
88,944 |
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
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(In thousands) |
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| Floor plan interest expense: |
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| Franchised Dealerships Segment |
$ |
45,055 |
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$ |
46,126 |
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$ |
35,030 |
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| EchoPark Segment |
3,464 |
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2,272 |
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1,365 |
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| Total floor plan interest expense |
$ |
48,519 |
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$ |
48,398 |
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$ |
36,395 |
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
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(In thousands) |
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| Interest expense, other, net: |
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| Franchised Dealerships Segment |
$ |
51,231 |
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$ |
52,396 |
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$ |
51,548 |
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| EchoPark Segment |
1,722 |
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1,663 |
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976 |
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| Total interest expense, other, net |
$ |
52,953 |
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$ |
54,059 |
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$ |
52,524 |
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Year Ended December 31, |
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2019 |
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2018 |
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2017 |
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(In thousands) |
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| Capital expenditures: |
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| Franchised Dealerships Segment |
$ |
89,332 |
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$ |
116,854 |
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$ |
195,220 |
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| EchoPark Segment |
36,244 |
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46,765 |
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39,025 |
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| Total capital expenditures |
$ |
125,576 |
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$ |
163,619 |
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$ |
234,245 |
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December 31, |
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2019 |
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2018 |
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(In thousands) |
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| Assets: |
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| Franchised Dealerships Segment |
$ |
3,797,878 |
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$ |
3,485,280 |
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| EchoPark Segment |
244,054 |
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305,673 |
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| Corporate and other: |
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| Cash and cash equivalents |
29,103 |
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5,854 |
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| Total assets |
$ |
4,071,035 |
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$ |
3,796,807 |
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