Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.10.0.1
Segment Information
 6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Segment Information
Segment Information
As of June 30, 2018, 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) stand-alone pre-owned vehicle specialty retail locations that buy and sell used vehicles, perform vehicle repair and maintenance services, and arrange finance and insurance products under the EchoPark and other pre-owned brands (the “Pre-Owned Stores Segment”).
The operating 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 and President; (2) the Company’s Executive Vice President and Chief Financial Officer; and (3) the Company’s Executive Vice President of Operations. Sonic has determined that its operating segments also represent its reportable segments.
Reportable segment revenues and segment income (loss) for the three and six months ended June 30, 2018 and 2017 are as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Revenues:
 
 
 
 
 
 
 
Franchised Dealerships Segment
$
2,325,583

 
$
2,356,692

 
$
4,594,852

 
$
4,602,717

Pre-Owned Stores Segment
180,166

 
49,054

 
311,671

 
90,851

Total consolidated revenues
$
2,505,749

 
$
2,405,746

 
$
4,906,523

 
$
4,693,568

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(In thousands)
Segment income (loss) (1):
 
 
 
 
 
 
 
Franchised Dealerships Segment (2)
$
66,049

 
$
40,598

 
$
89,885

 
$
74,067

Pre-Owned Stores Segment (3)
(27,347
)
 
(7,571
)
 
(41,672
)
 
(12,978
)
Total segment income (loss)
38,702

 
33,027

 
48,213

 
61,089

Interest expense, other, net
(13,375
)
 
(12,764
)
 
(26,831
)
 
(26,172
)
Other income (expense), net
17

 
7

 
106

 
(14,495
)
Income (loss) from continuing operations before taxes
$
25,344

 
$
20,270

 
$
21,488

 
$
20,422

(1)
Segment income (loss) for each segment is defined as operating income (loss) less interest expense, floor plan.
(2)
For the three months ended June 30, 2018, the above amount includes a benefit of approximately $38.0 million of net gain on the disposal of franchised dealerships and approximately $2.6 million of lease exit benefit, offset partially by approximately $3.1 million of storm-related physical damage and legal costs and approximately $10.3 million of impairment expense. For the three months ended June 30, 2017, the above amount includes approximately $5.6 million of storm-related physical damage and legal costs and approximately $0.3 million of lease exit charges.
For the six months ended June 30, 2018, the above amount includes a benefit of approximately $39.2 million of net gain on the disposal of franchised dealerships, offset partially by approximately $4.6 million of storm-related physical damage and legal costs, approximately $2.2 million of lease exit charges and approximately $14.0 million of impairment expense. For the six months ended June 30, 2017, the above amount includes approximately $6.9 million of storm-related physical damage and legal costs and approximately $0.3 million of lease exit charges.
(3)
For the three months ended June 30, 2018, the above amount includes approximately $23.3 million of non-recurring compensation-related charges. For the three months ended June 30, 2017, the above amount includes approximately $0.7 million of lease exit charges.
For the six months ended June 30, 2018, the above amount includes approximately $32.5 million of non-recurring compensation-related charges. For the six months ended June 30, 2017, the above amount includes approximately $0.7 million of lease exit charges.