2026Q2FALSE0001043509--12-31—6000.004.8751.500.0320.085.07.00.120.180.184.875500.04.8754.8754.8754.8754.8754.8754.6254.6254.6254.6254.6250.180.184.6254.87577.695.0500.04.6254.8754.6254.875320.01.252.250.251.250.18500.0350.0400.02.62.9401.251.8750.04.80.30.00.00.10.3no0.0zero0.02.500.50.10263.213.2400.056.1253.517.031.52.92.502.25P1Y3.0500.00.3Accumulated Other Comprehensive Income (Loss)

For further discussion of Sonic’s accumulated other comprehensive income (loss), see Note 13, “Accumulated Other Comprehensive Income (Loss),” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025. For further discussion of Sonic’s defined benefit pension plan, see Note 10, “Employee Benefit Plans,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025.

10. Subsequent Events

Subsequent to June 30, 2026, in an effort to expand and diversify our business, we acquired one business (consisting of six locations) in our Powersports Segment for an aggregate gross purchase price of $66.2 million, including goodwill, inventory, real estate and other assets. The businesses were acquired as of April 13, 2026 and April 20, 2026 and dealership locations include San Diego Harley-Davidson (San Diego, California), Falcon’s Fury Harley-Davidson (Conyers, Georgia), Space Coast Harley-Davidson (Palm Bay, Florida), Treasure Coast Harley-Davidson (Stuart, Florida), Raging Bull Harley-Davidson (Durham, North Carolina), in addition to one authorized retail outlet location, Cocoa Beach Harley-Davidson (Cocoa Beach, Florida).

Additionally, subsequent to March 31, 2026, we repurchased approximately 0.1 million shares of our Class A Common Stock for approximately $6.2 million. During this period, Sonic’s Board of Directors increased the Company’s share repurchase authorization by $500.0 million for future repurchases of shares of our Class A Common Stock, resulting in current remaining availability of approximately $528.0 million.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-13395

______________________________________

SONIC AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

______________________________________


Delaware						56-2010790
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


4401 Colwick Road		28211
Charlotte,	North Carolina
(Address of principal executive offices)		(Zip Code)

(704) 566-2400

(Registrant’s telephone number, including area code)

______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.01 per share

SAH

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 28, 2026, there were 19,585,427 shares of the registrant’s Class A Common Stock, par value $0.01 per share, and 12,029,375 shares of the registrant’s Class B Common Stock, par value $0.01 per share, outstanding.

UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION

This report contains, and written or oral statements made from time to time by us or by our authorized officers may contain, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address our future objectives, plans and goals, as well as our intent, beliefs and current expectations regarding future operating performance, results and events, and can generally be identified by words such as “may,” “will,” “should,” “could,” “believe,” “expect,” “estimate,” “anticipate,” “intend,” “plan,” “foresee” and other similar words or phrases.

These forward-looking statements are based on our current estimates and assumptions and involve various risks and uncertainties. As a result, you should not place undue reliance on these statements, and you are cautioned that these forward-looking statements are not guarantees of future performance, and that actual results could differ materially from those projected in these forward-looking statements. Factors which may cause actual results to differ materially from our projections include those risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 and in “Item 1A. Risk Factors” of this report and elsewhere herein, as well as:

•high levels of competition in the retail automotive industry, which not only create pricing pressures on the products and services we offer, but also on businesses we may seek to acquire;

•challenges to the business model of our franchised dealerships from existing manufacturers and new technology-focused companies;

•the inability of vehicle manufacturers and their suppliers to obtain, produce and deliver vehicles or parts and accessories to meet demand at our franchised dealerships for sale and use in our parts, service and collision repair operations;

•general economic conditions in the markets in which we operate, including fluctuations in interest rates, inflation, vehicle valuations, employment levels, the level of consumer spending and consumer credit availability;

•obstacles that prevent the efficient acquisition and liquidation of used vehicle inventory;

•the number of new and used vehicles sold in the United States, including hybrid electric vehicles and battery electric vehicles, as compared to our expectations and the expectations of the market;

•our ability to generate sufficient cash flows or to obtain additional financing to fund our business expansion, capital expenditures, our share repurchase program, dividends on our common stock, acquisitions and general operating activities;

•our business and growth strategies, including, but not limited to, our EchoPark store operations and investment in new technologies;

•the reputation and financial condition of vehicle manufacturers whose brands we represent, the financial incentives vehicle manufacturers offer and their ability to design, manufacture, deliver and market their vehicles successfully;

•our relationships with vehicle manufacturers, which may affect our ability to obtain desirable new vehicle models in inventory or to complete additional acquisitions or dispositions;

•the adverse resolution of one or more significant legal proceedings against us or our subsidiaries;

•changes in laws and regulations governing the operation of automobile franchises, accounting standards, taxation requirements and environmental laws;

•cybersecurity incidents and other disruptions to our information systems;

•changes in vehicle and parts import quotas, duties, tariffs or other restrictions, including supply shortages that could be caused by global political and economic factors or other supply chain disruptions;

•our ability to make and integrate acquisitions;

•our ability to obtain debt on commercially favorable terms;

•the rate and timing of recovery from, and the impact of future cybersecurity incidents on our business;

•the significant control that our principal stockholders exercise over us and our business matters; and

•the rate and timing of overall economic expansion or contraction.

These forward-looking statements speak only as of the date of this report or when made, and we undertake no obligation to revise or update these statements to reflect subsequent events or circumstances, except as required under the federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission.

SONIC AUTOMOTIVE, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Operations	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	87
Item 4.	Controls and Procedures	88
PART II – OTHER INFORMATION		89
Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	90
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 5.	Other Information	92
Item 6.	Exhibits	93
SIGNATURES		94

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(Dollars and shares in millions, except per share amounts)
Revenues:
Retail new vehicles	$	1,769.3	$	1,666.1	$	3,376.8	$	3,322.4
Fleet new vehicles	24.8		29.4		45.4		51.5
Total new vehicles	1,794.1		1,695.5		3,422.2		3,373.9
Used vehicles	1,329.7		1,180.7		2,599.3		2,405.7
Wholesale vehicles	70.5		83.3		142.1		166.1
Total vehicles	3,194.3		2,959.5		6,163.6		5,945.7
Parts, service and collision repair	530.2		495.6		1,046.9		970.0
Finance, insurance and other, net	209.5		202.1		412.0		392.8
Total revenues	3,934.0		3,657.2		7,622.5		7,308.5
Cost of sales (1):
Retail new vehicles	(1,677.9)		(1,566.9)		(3,200.9)		(3,133.8)
Fleet new vehicles	(24.3)		(28.9)		(44.6)		(50.4)
Total new vehicles	(1,702.2)		(1,595.8)		(3,245.5)		(3,184.2)
Used vehicles	(1,283.1)		(1,132.6)		(2,504.3)		(2,311.3)
Wholesale vehicles	(73.7)		(84.9)		(146.9)		(168.8)
Total vehicles	(3,059.0)		(2,813.3)		(5,896.7)		(5,664.3)
Parts, service and collision repair	(258.8)		(241.7)		(510.9)		(475.5)
Total cost of sales	(3,317.8)		(3,055.0)		(6,407.6)		(6,139.8)
Gross profit	616.2		602.2		1,214.9		1,168.7
Selling, general and administrative expenses	(444.6)		(412.6)		(871.6)		(792.9)
Impairment charges	—		(172.4)		(0.4)		(173.8)
Depreciation and amortization	(40.0)		(40.5)		(78.6)		(80.4)
Operating income (loss)	131.6		(23.3)		264.3		121.6
Other income (expense):
Interest expense, floor plan	(20.9)		(18.3)		(40.2)		(38.3)
Interest expense, other, net	(30.4)		(27.4)		(58.7)		(55.0)
Other income (expense), net	—		(0.1)		—		—
Total other income (expense)	(51.3)		(45.8)		(98.9)		(93.3)
Income (loss) before taxes	80.3		(69.1)		165.4		28.3
Provision for income taxes - benefit (expense)	(22.9)		23.5		(47.1)		(3.3)





Net income (loss)	$	57.4	$	(45.6)	$	118.3	$	25.0

Basic earnings per common share:


Earnings per common share	$	1.82	$	(1.34)	$	3.63	$	0.74
Weighted-average common shares outstanding	31.6		34.1		32.6		34.0
Diluted earnings per common share:


Earnings per common share	$	1.79	$	(1.34)	$	3.58	$	0.72
Weighted-average common shares outstanding	32.1		34.1		33.0		34.7

(1)Cost of sales is exclusive of depreciation and amortization shown separately below.

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(In millions)
Net income (loss)	$	57.4	$	(45.6)	$	118.3	$	25.0
Other comprehensive income (loss) before taxes:
Change in fair value and amortization of interest rate cap agreements	0.1		(0.7)		0.4		(2.0)

Total other comprehensive income (loss) before taxes	0.1		(0.7)		0.4		(2.0)
Provision for income tax benefit (expense) related to components of other comprehensive income (loss)	—		0.2		—		0.6
Other comprehensive income (loss)	0.1		(0.5)		0.4		(1.4)
Comprehensive income	$	57.5	$	(46.1)	$	118.7	$	23.6

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2026		December 31, 2025
	(Dollars in millions, except per share amounts)
ASSETS
Current Assets:
Cash and cash equivalents	$	19.2	$	6.3
Receivables, net	425.6		469.0
Inventories	2,324.5		2,012.9
Other current assets	329.9		344.3
Total current assets	3,099.2		2,832.5
Property and Equipment, net	1,673.7		1,562.9
Goodwill	432.4		421.8
Other Intangible Assets, net	436.9		454.1
Operating Right-of-Use Lease Assets	262.2		279.1
Finance Right-of-Use Lease Assets	337.2		328.4
Other Assets	140.6		91.9
Total Assets	$	6,382.2	$	5,970.7

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable - floor plan - trade	$	216.2	$	184.6
Notes payable - floor plan - non-trade	2,023.4		1,748.1
Trade accounts payable	156.2		151.0
Operating short-term lease liabilities	30.5		33.5
Finance short-term lease liabilities	29.9		19.2

Other accrued liabilities	414.4		409.1
Current maturities of long-term debt	193.3		52.4
Total current liabilities	3,063.9		2,597.9
Long-Term Debt	1,565.5		1,563.0
Other Long-Term Liabilities	114.2		114.4
Operating Long-Term Lease Liabilities	251.1		268.3
Finance Long-Term Lease Liabilities	361.9		359.0

Commitments and Contingencies
Stockholders’ Equity:
Class A Convertible Preferred Stock, none issued	—		—
Class A Common Stock, $0.01 par value; 100,000,000 shares authorized; 70,407,601 shares issued and 19,579,455 shares outstanding at June 30, 2026; 70,135,011 shares issued and 21,546,627 shares outstanding at December 31, 2025	0.7		0.7
Class B Common Stock, $0.01 par value; 30,000,000 shares authorized; 12,029,375 shares issued and outstanding at June 30, 2026 and December 31, 2025	0.1		0.1
Paid-in-Capital	914.5		908.2
Retained earnings	1,573.9		1,481.1
Accumulated other comprehensive income (loss)	(0.3)		(0.7)
Treasury stock, at cost; 50,828,146 Class A Common Stock shares held at June 30, 2026 and 48,588,384 Class A Common Stock shares held at December 31, 2025	(1,463.3)		(1,321.3)
Total Stockholders’ Equity	1,025.6		1,068.1
Total Liabilities and Stockholders’ Equity	$	6,382.2	$	5,970.7

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at March 31, 2025	69.7	$	0.7	(47.8)	$	(1,274.2)	12.0	$	0.1	$	890.6	$	1,470.7	$	2.9	$	1,090.8
Shares awarded under stock compensation plans	0.4	—		—	—		—	—		—		—		—		—
Purchases of treasury stock	—	—		(0.2)	(8.8)		—	—		—		—		—		(8.8)
Effect of cash flow hedge instruments, net of tax benefit of $0.2	—	—		—	—		—	—		—		—		(0.5)		(0.5)
Stock compensation expense	—	—		—	—		—	—		5.6		—		—		5.6
Net loss	—	—		—	—		—	—		—		(45.6)		—		(45.6)

Class A dividends declared ($0.35 per share)	—	—		—	—		—	—		—		(7.7)		—		(7.7)
Class B dividends declared ($0.35 per share)	—	—		—	—		—	—		—		(4.2)		—		(4.2)
Balance at June 30, 2025	70.1	$	0.7	(48.0)	$	(1,283.0)	12.0	$	0.1	$	896.2	$	1,413.2	$	2.4	$	1,029.6



	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at March 31, 2026	70.3	$	0.7	(50.7)	$	(1,457.0)	12.0	$	0.1	$	908.5	$	1,529.4	$	(0.4)	$	981.3
Shares awarded under stock compensation plans	0.1	—		—	—		—	—		—		—		—		—
Purchases of treasury stock	—	—		(0.1)	(6.3)		—	—		—		—		—		(6.3)
Effect of cash flow hedge instruments, net of tax expense	—	—		—	—		—	—		—		—		0.1		0.1
Stock compensation expense	—	—		—	—		—	—		6.0		—		—		6.0
Net income	—	—		—	—		—	—		—		57.4		—		57.4
Cumulative effect of change in accounting principle	—	—		—	—		—	—		—		—		—		—
Class A dividends declared ($0.41 per share)	—	—		—	—		—	—		—		(8.4)		—		(8.4)
Class B dividends declared ($0.41 per share)	—	—		—	—		—	—		—		(4.5)		—		(4.5)
Balance at June 30, 2026	70.4	$	0.7	(50.8)	$	(1,463.3)	12.0	$	0.1	$	914.5	$	1,573.9	$	(0.3)	$	1,025.6

See notes to unaudited condensed consolidated financial statements.



	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at December 31, 2024	69.4	$	0.7	(47.3)	$	(1,238.9)	12.0	$	0.1	$	884.6	$	1,412.0	$	3.8	$	1,062.3
Shares awarded under stock compensation plans	0.7	—		—	—		—	—		0.1		—		—		0.1
Purchases of treasury stock	—	—		(0.7)	(44.1)		—	—		—		—		—		(44.1)
Effect of cash flow hedge instruments, net of tax benefit of $0.6	—	—		—	—		—	—		—		—		(1.4)		(1.4)
Stock compensation expense	—	—		—	—		—	—		11.5		—		—		11.5
Net income	—	—		—	—		—	—		—		25.0		—		25.0

Class A dividends declared ($0.70 per share)	—	—		—	—		—	—		—		(19.6)		—		(19.6)
Class B dividends declared ($0.70 per share)	—	—		—	—		—	—		—		(4.2)		—		(4.2)
Balance at June 30, 2025	70.1	$	0.7	(48.0)	$	(1,283.0)	12.0	$	0.1	$	896.2	$	1,413.2	$	2.4	$	1,029.6



	Class A Common Stock			Class A Treasury Stock			Class B Common Stock			Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
	(Dollars and shares in millions, except per share amounts)
Balance at December 31, 2025	70.1	$	0.7	(48.6)	$	(1,321.3)	12.0	$	0.1	$	908.2	$	1,481.1	$	(0.7)	$	1,068.1
Shares awarded under stock compensation plans	0.3	—		—	—		—	—		—		—		—		—
Purchases of treasury stock	—	—		(2.2)	(142.0)		—	—		—		—		—		(142.0)
Effect of cash flow hedge instruments, net of tax expense	—	—		—	—		—	—		—		—		0.4		0.4
Stock compensation expense	—	—		—	—		—	—		11.1		—		—		11.1
Cash settlement of shares awarded under stock compensation plans	—	—		—	—		—	—		(4.8)		—		—		(4.8)
Net income	—	—		—	—		—	—		—		118.3		—		118.3

Class A dividends declared ($0.79 per share)	—	—		—	—		—	—		—		(16.0)		—		(16.0)
Class B dividends declared ($0.79 per share)	—	—		—	—		—	—		—		(9.5)		—		(9.5)
Balance at June 30, 2026	70.4	$	0.7	(50.8)	$	(1,463.3)	12.0	$	0.1	$	914.5	$	1,573.9	$	(0.3)	$	1,025.6

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2026		2025
	(Dollars in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	118.3	$	25.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	67.0		69.4


Debt issuance cost amortization	3.7		3.2

Stock-based compensation expense	11.1		11.5
Deferred income taxes	(7.3)		(55.2)

Asset impairment charges	0.4		173.8
Loss (gain) on disposal of dealerships and property and equipment	(1.1)		3.8


Other	0.3		0.6
Changes in assets and liabilities that relate to operations:
Receivables	52.3		105.2
Inventories	(314.3)		(26.5)
Other assets	2.2		7.1
Notes payable - floor plan – trade	31.6		(3.3)
Trade accounts payable and other liabilities	(28.9)		18.0
Total adjustments	(183.0)		307.6
Net cash provided by (used in) operating activities	(64.7)		332.6
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of businesses, net of cash acquired	(66.3)		(359.9)
Purchases of land, property and equipment	(154.5)		(79.1)
Proceeds from sales of property and equipment	19.5		17.1
Proceeds from sales of dealerships	40.5		—
Net cash used in investing activities	(160.8)		(421.9)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on notes payable - floor plan - non-trade	300.4		299.5
Borrowings on revolving credit facilities	24.6		10.2
Repayments on revolving credit facilities	(24.6)		(10.2)
Proceeds from borrowings	190.0		—
Debt issuance costs	(1.5)		(0.9)
Principal payments of long-term debt	(48.9)		(69.9)
Principal payments of long-term lease liabilities	(34.3)		(5.2)
Purchases of treasury stock	(142.0)		(44.1)

Issuance of shares under stock compensation plans	—		0.1
Dividends paid	(25.3)		(23.8)
Net cash provided by financing activities	238.4		155.7
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	12.9		66.4
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	6.3		44.0
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	19.2	$	110.4



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest, including amounts capitalized	$	97.1	$	93.0
Income taxes	$	52.4	$	8.1

See notes to unaudited condensed consolidated financial statements.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (collectively referred to herein as “Sonic,” the “Company,” “we,” “us” or “our”) for the three and six months ended June 30, 2026 and 2025 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (the “U.S.”) (“GAAP”) for interim financial information and applicable rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all material normal, recurring adjustments necessary to fairly state the financial position, results of operations and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025. Due to rounding, segment level financial data may not sum to consolidated results.

Recent Accounting Pronouncements – Please refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of recent accounting pronouncements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (ASC Topic 740): Improvements to Income Tax Disclosures.” The amendments require the disclosure of a reconciliation between income tax expense from continuing operations and the amount computed by multiplying income from continuing operations before income taxes by the applicable statutory rate as well as an annual disaggregation of the income tax rate reconciliation between certain specified categories by both percentage and reported amounts, along with other changes to income tax disclosure requirements. The standard will be effective for fiscal years beginning after December 15, 2024, and interim periods for fiscal years beginning after December 15, 2025. We have implemented the provisions of ASU 2023-09. See Note 7, “Income Taxes,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025 for the additional disclosures required by ASC Topic 740.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)”. The amendments require the disclosure of specified information about certain costs and expenses including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion, and amortization recognized as part of oil and gas producing activities. It also requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The standard will be effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The bill contains a range of tax reforms affecting businesses, including the immediate expensing of research and development expenditures, 100% bonus depreciation on qualified property, and various other provisions effective in tax years 2026 through 2029. After evaluating the OBBBA’s provisions, we have determined that the impact of these changes on our consolidated financial statements for the current reporting period is immaterial. Provisions taking effect in 2026 will affect the deductibility of executive compensation and charitable contributions and will contribute to a higher overall income tax rate. We will continue to monitor future guidance and assess any additional implications for subsequent periods.

Principles of Consolidation – All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying unaudited condensed consolidated financial statements. All material intercompany balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. Certain amounts and percentages may not compute due to rounding.

Revenue Recognition – Revenue is recognized when a customer obtains control of promised goods or services and in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. We do not include the cost of obtaining contracts within the related revenue streams since we elected the practical expedient to expense the costs to obtain a contract when incurred.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Management has evaluated our established business processes, revenue transaction streams and accounting policies, and identified our material revenue streams to be: (1) the sale of new vehicles; (2) the sale of used vehicles to retail customers; (3) the sale of wholesale used vehicles at third-party auctions; (4) the arrangement of third-party vehicle financing and the sale of third-party service, warranty and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. The transaction price for a retail vehicle sale is specified in the contract with the customer and encompasses both cash and non-cash considerations. In the context of a retail vehicle sale, customers frequently trade in their existing vehicles. The value of this trade-in is determined based on its stand-alone selling price as specified in the contract, utilizing various third-party pricing sources. There are no other non-cash forms of consideration associated with retail sales, and sales are reported net of sales tax and other similar assets. Generally, performance obligations are satisfied when the associated vehicle is either delivered to a customer and customer acceptance has occurred, over time as the maintenance and repair services are performed, or at the time of wholesale and retail parts sales. We do not have any revenue streams with significant financing components as payments are typically received within a short period of time following completion of the performance obligation(s).

Retrospective finance and insurance revenues (“F&I retro revenues”) are recognized when the product contract has been executed with the end customer and the transaction price is estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

We record revenue when vehicles are delivered to customers, as vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and it being probable that the proceeds from the sale will be collected.

The accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 include approximately $9.8 million and $7.0 million, respectively, related to contract assets from F&I retro revenues recognition, which are recorded in receivables, net. In addition, we recorded approximately $9.3 million and $10.2 million related to contract assets from F&I retro revenues recognition in other assets as of June 30, 2026 and December 31, 2025, respectively. Changes in contract assets from December 31, 2025 to June 30, 2026 were primarily due to ordinary business activity, including the receipt of cash for amounts earned and recognized in prior periods. Please refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of our revenue recognition policies and processes.

Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of outstanding restricted stock units, restricted stock and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards).

2. Business Acquisitions and Dispositions

Acquisitions

During the six months ended June 30, 2026, in an effort to expand and diversify our business, we acquired one business (consisting of six locations) in our Powersports Segment for an aggregate gross purchase price of approximately $66.3 million. The dealership locations include Falcons Fury Harley-Davidson (Conyers, Georgia), Raging Bull Harley-Davidson (Durham, North Carolina), San Diego Harley-Davidson (San Diego, California), Space Coast Harley-Davidson (Palm Bay, Florida), Treasure Coast Harley-Davidson (Stuart, Florida) in addition to one authorized retail outlet location, Cocoa Beach Harley-Davidson (Cocoa Beach, Florida). The preliminary allocation of the aggregate gross purchase price included inventory of approximately $13.2 million, property and equipment of approximately $0.8 million, real estate of approximately $40.3 million, goodwill of approximately $13.6 million, other assets of approximately $0.1 million, right-of-use assets of $7.9 million, lease liabilities of $8.0 million, and other liabilities of approximately $1.6 million.

The accompanying consolidated statements of operations include revenue and earnings attributable to the business acquired during the six months ended June 30, 2026 of approximately $19.0 million and $1.0 million, respectively. Acquisition costs recognized as an expense in the consolidated statements of operations related to this acquisition were immaterial. Additionally, the total amount of goodwill and other intangibles from the acquisition that is expected to be deductible for tax purposes related to the acquisition is approximately $13.6 million.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma summary presents consolidated information as if the acquisition had occurred on January 1, 2025:


		Twelve Months Ended December 31, 2025
	(In millions)
Revenue		$	15,263.5
Income before taxes		$	174.1

The supplemental pro forma information for revenue and income before taxes of the Company as though the business combination had occurred on January 1, 2026 is impracticable to provide due to the fact that carve-out financial information for the acquired business prior to the acquisition was not available.

During the six months ended June 30, 2025, we acquired four businesses in our Franchised Dealerships Segment and were awarded one franchise in our Powersports Segment, which was previously an authorized retail outlet in Sturgis, South Dakota. The businesses acquired were Jaguar Land Rover Los Angeles, Jaguar Land Rover Newport Beach, Jaguar Land Rover San Jose and Land Rover Pasadena for an aggregate gross purchase price of approximately $359.9 million.

Dispositions

During the six months ended June 30, 2026, we disposed of three mid-line import franchised dealerships, one domestic franchised dealership, and one collision center. The disposal of these five locations and related real estate generated net cash of approximately $40.5 million and $19.5 million, respectively, for combined gross proceeds of $60.0 million and generated a pre-tax gain on disposal of approximately $5.1 million. During the six months ended June 30, 2025, we terminated one domestic franchised dealership and one powersports dealership.

3. Inventories

Inventories consist of the following:


	June 30, 2026		December 31, 2025
	(In millions)
New vehicles	$	1,274.5	$	1,140.1
Used vehicles	671.2		523.8
Service loaners (1)	257.5		233.1
Parts, accessories and other	121.3		115.9
Inventories	$	2,324.5	$	2,012.9

(1)Service loaner inventory includes approximately $36.1 million and $35.7 million as of June 30, 2026 and December 31, 2025, respectively, related to vehicles that are leased directly from the manufacturer on a short-term basis. A corresponding liability is included within notes payable - floor plan - trade on the accompanying unaudited condensed consolidated balance sheets.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. Property and Equipment

Property and equipment, net consists of the following:


	June 30, 2026		December 31, 2025
	(In millions)
Land	$	522.1	$	470.1
Buildings and improvements	1,594.3		1,556.8
Furniture, fixtures and equipment	585.0		565.7
Construction in progress	113.1		59.3
Total, at cost	2,814.5		2,651.9
Less accumulated depreciation	(1,140.0)		(1,087.0)
Subtotal	1,674.5		1,564.9
Less assets held for sale (1)	(0.8)		(2.0)
Property and equipment, net	$	1,673.7	$	1,562.9

(1)Classified in other current assets in the accompanying unaudited condensed consolidated balance sheets.

Capital expenditures were approximately $117.6 million and $154.5 million in the three and six months ended June 30, 2026, respectively, and in the three and six months ended June 30, 2025 capital expenditures were approximately $34.1 million and $79.1 million, respectively. Capital expenditures in all periods were primarily related to construction of new franchised dealerships and powersports stores, and building improvements and equipment purchased for use in our franchised dealerships, EchoPark and powersports stores. Certain capital expenditures are recognized in the Franchised Dealerships Segment to better monitor project development costs prior to transferring the capitalized asset balance to the appropriate entity or operating segment upon project completion. Assets held for sale as of June 30, 2026 and December 31, 2025 consisted of real property not currently used in operations that we expect to dispose of in the next 12 months.

Fixed asset impairment charges for the six months ended June 30, 2026 were approximately $0.4 million, which was related to the impairment of a construction project that was canceled. Fixed asset impairment charges for the six months ended June 30, 2025 were approximately $0.2 million, which was related to property held for sale.

During the current quarter, the estimated useful lives of buildings and improvement assets were evaluated based on historical experience and industry practices. As a result, certain building and improvement assets were adjusted, resulting in a reduction of approximately $4.6 million and $9.2 million in depreciation expense for the three and six months ended June 30, 2026, respectively.

5. Goodwill and Intangible Assets

In accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other,” we test goodwill for impairment at least annually (as of April 30 of each year) or more frequently if indications of impairment exist. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary. We evaluated our Franchised Dealership Segment reporting unit on a qualitative basis as substantial cushion existed between the calculated fair value and associated carrying values in the prior year evaluation and there were not any meaningful events or trends which would significantly erode this cushion. We evaluated our Powersports Segment reporting unit on a quantitative basis.

In performing the quantitative test in the Powersports Segment reporting unit for impairment of goodwill, we primarily used the income approach method of valuation that includes the discounted cash flow (“DCF”) method that utilizes inputs, including projected revenues, margin, terminal growth rates, discount rates and a market capitalization reconciliation. We completed our annual impairment testing as of April 30, 2026 and determined there was no impairment of goodwill in either reporting unit evaluated.

In evaluating the recoverability of our indefinite lived franchise assets, we utilized a multi-period excess earnings method (“MPEEM”) model using unobservable inputs (Level 3) to estimate the fair value of the franchise assets for each of our franchises with recorded franchise assets. The significant assumptions in our MPEEM model include projected revenue, projected operating margins, a discount rate (and estimates in the discount rate inputs) and residual growth rates. We completed our annual impairment testing as of April 30, 2026 and determined there was no impairment in any of our indefinite lived franchise assets.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The changes in the carrying amount of goodwill for the year ended December 31, 2025 and the six months ended June 30, 2026 were as follows:


	Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total
	(In millions)
Balance at December 31, 2024 (1)	$	331.2	$	—	$	27.3	$	358.5
Additions through current-year acquisitions	64.2		—		—		64.2
Reductions from dispositions	(0.7)		—		—		(0.7)

Prior year acquisition allocations	(0.2)		—		—		(0.2)
Balance at December 31, 2025 (1)	$	394.5	$	—	$	27.3	$	421.8
Additions through current-year acquisitions (2)	—		—		13.6		13.6
Reductions from dispositions	(3.0)		—		—		(3.0)


Balance at June 30, 2026 (1)	$	391.5	$	—	$	40.9	$	432.4

(1)Net of accumulated impairment losses of $1.1 billion and $202.9 million related to the Franchised Dealerships Segment and the EchoPark Segment, respectively.

(2)Purchase accounting allocations for current-year acquisitions are preliminary. Amounts will be allocated from goodwill to franchise assets once the overall purchase accounting allocation is finalized.

The changes in the carrying amount of franchise assets for the year ended December 31, 2025 and the six months ended June 30, 2026 were as follows:


	Franchised Dealerships Segment		EchoPark Segment		Powersports Segment		Total
	(In millions)
Balance at December 31, 2024	$	382.6	$	—	$	47.7	$	430.3
Additions through current-year acquisitions	202.0		—		—		202.0
Reductions from dispositions	(5.1)		—		(0.7)		(5.8)
Reductions from impairment	(165.9)		—		(6.5)		(172.4)

Balance at December 31, 2025	$	413.6	$	—	$	40.5	$	454.1

Reductions from dispositions	(17.2)		—		—		(17.2)


Balance at June 30, 2026	$	396.4	$	—	$	40.5	$	436.9

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Long-Term Debt

Long-term debt consists of the following:


	June 30, 2026		December 31, 2025
	(In millions)
Revolving Credit Facility (1)	$	—	$	—
4.625% Senior Notes due 2029 (the “4.625% Notes”)	650.0		650.0
4.875% Senior Notes due 2031 (the “4.875% Notes”)	500.0		500.0
Mortgage Facility and Sidecar Facility (2)	421.6		455.8
Bridge Facility (3)	150.0		—
Notes to finance companies - fixed rate, bearing interest at 4.40%	14.6		29.4
Notes to finance companies - variable rate, bearing interest at 1.5% above one-month term SOFR	40.0		—

Subtotal	$	1,776.2	$	1,635.2
Debt issuance costs	(17.4)		(19.8)
Total debt	1,758.8		1,615.4
Less current maturities	(193.3)		(52.4)
Long-term debt	$	1,565.5	$	1,563.0

(1)The interest rate on the Revolving Credit Facility (as defined below) was 125 basis points above one-month Adjusted Term SOFR (as defined in the Credit Facilities) at both June 30, 2026 and December 31, 2025.

(2)The interest rate on the Mortgage Facility and Sidecar Facility (each as defined below) was 150 basis points above one-month Adjusted Term SOFR (as defined in each of the Mortgage Facility and Sidecar Facility) at both June 30, 2026 and December 31, 2025.

(3)The interest rate on the Bridge Facility (as defined below) was 250 basis points above one-month Term SOFR (as defined in the Bridge Facility) at June 30, 2026.

Credit Facilities

Our Credit Agreement, originally dated as of April 14, 2021, entered into by, among others, the Company and Bank of America, N.A., as administrative agent (as amended to date, the “Credit Agreement”), provides for a syndicated revolving credit facility (the “Revolving Credit Facility”) and syndicated new and used vehicle floor plan facilities (the “Floor Plan Facilities” and, together with the Revolving Credit Facility, the “Credit Facilities”). The Credit Facilities are guaranteed by the Company and certain of its subsidiaries and are secured by a pledge of substantially all of the guarantors’ assets subject to certain exceptions, including floor plan agreements with various manufacturer-affiliated captive finance companies.

On March 13, 2024, we amended and restated our Credit Agreement (the “Sixth Credit Facility Amendment”) to extend the maturity date to March 13, 2029, with an optional one-year extension. The Sixth Credit Facility Amendment currently includes aggregate commitments of $2.4 billion as well as an accordion feature allowing for an increase in future commitments of up to $450.0 million allocated between the three facilities on a pro rata basis. Under the Sixth Credit Facility Amendment, the Revolving Credit Facility commitment can neither be reduced below $50.0 million nor consist of more than 40% of the aggregate commitments under the Credit Facilities.

In addition, the Sixth Credit Facility Amendment increased the basket for unrestricted quarterly dividends from $0.12 to $0.18 per share of qualified capital stock, provided additional flexibility for the Company to make asset sales and repurchases of its qualified capital stock, removed the consolidated liquidity ratio covenant, and clarified that “Adjusted Term SOFR” (as defined in the Credit Agreement) is inclusive of a 10 basis point credit spread adjustment. Amounts outstanding under the Credit Facilities bear interest at Adjusted Term SOFR plus credit spreads indicated by our Consolidated Total Lease Adjusted Leverage Ratio (as defined in the Credit Agreement).

As of June 30, 2026, the aggregate commitments consisted of $1.5 billion for the new vehicle floor plan, $550.0 million for the used vehicle floor plan and $350.0 million for the Revolving Credit Facility. Availability under the Revolving Credit Facility is calculated as the lesser of the $350.0 million commitment or a borrowing base collateralized by eligible assets, less any outstanding letters of credit and borrowings. As of June 30, 2026, the Revolving Borrowing Base was $298.5 million and we had $11.6 million in outstanding letters of credit and no borrowings, resulting in $286.9 million of availability.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Senior Notes

On October 27, 2021, we issued two series of Senior Notes: $650.0 million bearing interest at 4.625% and maturing on November 15, 2029 (the “4.625% Notes”) and $500.0 million bearing interest at 4.875% and maturing on November 15, 2031 (the “4.875% Notes” and together with the 4.625% Notes, the “Senior Notes”). We used the net proceeds from the issuances to fund the acquisition of RFJ Auto Partners, Inc. and its subsidiaries and to repay existing debt.

The Senior Notes are unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Company’s domestic operating subsidiaries. Under certain circumstances, the guarantees of the subsidiaries comprising the EchoPark Business (as defined in the indentures governing the Senior Notes (the “Indentures”)) may be released. The Indentures contain customary restrictive covenants and default provisions. Interest on the Senior Notes is payable semi-annually in arrears on May 15 and November 15 of each year.

The Senior notes are redeemable, in whole or in part, at any time during the twelve-month period beginning on November 15 of each year at the redemption prices (expressed as percentages of the principal amount thereof) set forth below:


	Redemption Price
Year	4.625% Notes		4.875% Notes
2025	101.156	%	No Call
2026	100.000	%	102.438	%
2027	100.000	%	101.625	%
2028	100.000	%	100.813	%
2029 and thereafter			100.000	%

Before November 15, 2026, we may redeem all or part of the 4.875% Notes, subject to a make-whole premium.

Mortgage Facility and Sidecar Facility

On November 22, 2019, we entered into an agreement between, among others, the Company and PNC Bank, N.A., as administrative agent, providing for both revolving credit and delayed draw term loans (as amended to date, the “Mortgage Facility”).

On March 22, 2024, we amended the Mortgage Facility to conform to the terms of the Sixth Credit Facility Amendment.

On May 17, 2024, we incurred a $78.0 million term loan as required under the Mortgage Facility in order to achieve full term loan utilization.

On December 27, 2024, we entered into an agreement, which established a syndicated mortgage loan facility (the “Sidecar Facility”) providing an incremental $149.1 million of term loan commitments. Though the Sidecar Facility is distinct and separate from the Mortgage Facility, the two facilities contain similar terms and conditions, are coterminous, and use one month Adjusted Term SOFR as a base rate with the same pricing grid.

On October 24, 2025, we incurred an additional $149.1 million term loan as required under the Sidecar Facility in order to achieve full utilization.

Interest on the Mortgage Facility and Sidecar Facility is paid monthly in arrears. Amortizing principal payments are 1.875% of the cumulative amount drawn on the term loan portion of Mortgage Facility and Sidecar Facility each quarter end through September 30, 2027, with the remaining balances due on the November 17, 2027 maturity date. We have the right to prepay outstanding principal on either facility at any time without premium or penalty provided that the prepayment amount exceeds $0.5 million.

As of June 30, 2026, we had $284.0 million of outstanding term borrowings and $95.0 million available for revolving loans under the Mortgage Facility. In addition, we had $137.5 million of outstanding term borrowings under the Sidecar Facility.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Bridge Facility

On March 27, 2026, we entered into a Bridge Facility Credit Agreement with PNC Bank, N.A. as administrative agent and lender, which provided for a senior unsecured term loan facility in an aggregate principal amount of $150.0 million (the “Bridge Facility”). We borrowed the full $150.0 million available on the closing date. The Bridge Facility contains certain covenants and events of default which are similar to the Mortgage Facility and Sidecar Facility and will mature on the earlier of the date that is 364 days after the closing date or the occurrence of a refinancing of the Mortgage Facility. Amounts outstanding under the Bridge Facility bear interest at a rate equal to Term SOFR plus 2.50% per annum which is paid monthly in arrears. We have the right to prepay outstanding principal under the Bridge Facility at any time without premium or penalty provided that the prepayment amount exceeds $0.5 million.

Notes to Finance Companies

Our notes to finance companies (excluding the Mortgage Facility, Sidecar Facility, and Bridge Facility) had a weighted-average interest rate of 4.95% and a combined principal balance of $54.6 million as of June 30, 2026. These notes require monthly payments of principal and interest through their respective maturities, are secured by underlying properties or other collateral and contain certain cross-default provisions. These notes mature between 2028 and 2034.

Covenants

The Credit Facilities, Mortgage Facility, Sidecar Facility, Bridge Facility and Senior Notes each contain covenants which could prohibit the issuance of additional indebtedness, the payment of dividends over certain limits, other restricted payments such as share repurchases, certain types of capital expenditures and asset purchases and material dispositions and acquisitions. They also contain other covenants and default provisions, including cross defaults to other material indebtedness, change of control events and other events of default customary for commercial credit facilities. Upon the occurrence of an event of default, we could be required to repay all outstanding amounts under these facilities.

Financial covenants for the Credit Facilities, Mortgage Facility, Sidecar Facility and Bridge Facility include a minimum Consolidated Fixed Charge Coverage Ratio (as defined in each agreement) of 1.20 to 1.00 and a maximum Consolidated Total Lease Adjusted Leverage Ratio (as defined in each agreement) of 5.75 to 1.00. Similar financial covenants apply to our Senior Notes as well as to certain facility leases and their related guaranty agreements. We remain in compliance with all restrictive covenants as of June 30, 2026.

Derivative Instruments and Hedging Activities

As of June 30, 2026, we had interest rate cap agreements with the following notional amounts, cap rates and maturities to help limit our exposure to potentially increasing interest rates on the Floor Plan Facilities and Mortgage Facility. Settlements are evaluated monthly and paid by the counterparties when one-month Term SOFR exceeds the cap rate. Payments are calculated based on the notional amounts multiplied by the difference between one-month Term SOFR and the cap rates and are recognized as a reduction in interest expense. The total unamortized premium amount related to the outstanding interest rate caps was $2.5 million as of June 30, 2026 which will be amortized as a reduction in interest expense over each cap’s remaining term. The fair value of the outstanding interest rate caps was $0.2 million at June 30, 2026 included in other assets in the accompanying unaudited condensed consolidated balance sheets.

Notional Amount

Cap Rate (1)

Receive Rate (1)

Start Date

Maturing Date

(In millions)

400.0

5.500%

one-month Term SOFR

March 13, 2025

December 31, 2026

200.0

5.500%

one-month Term SOFR

March 17, 2025

November 17, 2027

400.0

5.500%

one-month Term SOFR

March 13, 2025

December 29, 2028

(1) One-month Term SOFR was approximately 3.65% at June 30, 2026.

The interest rate caps have been designated and qualify as cash flow hedges and, as a result, changes in the fair value of these instruments are recorded in total other comprehensive income (loss) before taxes in the accompanying consolidated statements of comprehensive operations.

For further discussion, see Note 6, “Long-Term Debt,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Commitments and Contingencies

Guarantees and Indemnification Obligations

In accordance with the terms of our operating lease agreements, our dealership subsidiaries, acting as lessees, generally agree to indemnify the lessor from certain exposure arising as a result of the use of the leased premises, including environmental exposure and repairs to leased property upon termination of the lease. In addition, we have generally agreed to indemnify the lessor in the event of a breach of the lease by the lessee.

In connection with dealership dispositions and facility relocations, certain of our subsidiaries have assigned or sublet to the buyer their interests in real property leases associated with such dealerships. In general, the subsidiaries retain responsibility for the performance of certain obligations under such leases, including rent payments and repairs to leased property upon termination of the lease, to the extent that the assignee or the sublessee does not perform. In the event an assignee or a sublessee does not perform its obligations, Sonic remains liable for such obligations.

In accordance with the terms of agreements entered into for the sales of our dealerships, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While our exposure with respect to environmental remediation is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $13.7 million as of June 30, 2026 and $3.0 million as of December 31, 2025. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at June 30, 2026.

Legal Matters

Sonic is involved, and expects to continue to be involved, in various legal and administrative proceedings arising out of the conduct of its business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although Sonic vigorously defends itself in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of Sonic’s business, including litigation with customers, employment-related lawsuits, contractual disputes, class actions, purported class actions and actions brought by governmental authorities, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on Sonic’s business, financial condition, results of operations, cash flows or prospects.

There were no significant liabilities recorded related to legal matters as of June 30, 2026 and December 31, 2025.

8. Fair Value Measurements

Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 were as follows:


	Fair Value Based on Significant Other Observable Inputs (Level 2)
	June 30, 2026		December 31, 2025
	(In millions)
Assets:
Cash surrender value of life insurance policies (1)	$	57.4	$	53.2
Interest rate caps designated as hedges (2)	0.2		0.1
Total assets	$	57.6	$	53.3

(1)Included in other assets in the accompanying unaudited condensed consolidated balance sheets.

(2)Included in other current assets in the accompanying unaudited condensed consolidated balance sheets.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2026 and December 31, 2025, the fair values of Sonic’s financial instruments, including receivables, notes receivable from finance contracts, notes payable – floor plan, trade accounts payable and borrowings under our variable interest rate credit facilities and variable interest notes to finance companies approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates.

As of June 30, 2026 and December 31, 2025, the fair value and the carrying value of Sonic’s significant fixed rate long-term debt were as follows:


	June 30, 2026				December 31, 2025
	Fair Value		Carrying Value		Fair Value		Carrying Value
	(In millions)

4.875% Notes (1)	$	480.0	$	500.0	$	478.8	$	500.0
4.625% Notes (1)	$	635.4	$	650.0	$	630.5	$	650.0
Notes to Finance Companies - Fixed Rate (2)	$	14.4	$	14.6	$	28.7	$	29.4

(1)As determined by market quotations from similar securities as of June 30, 2026 and December 31, 2025, respectively (Level 2).

(2)As determined by the DCF method (Level 2).

For further discussion of Sonic’s fair value measurements, see Note 11, “Fair Value Measurements,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025.

9. Segment Information

As of June 30, 2026, Sonic had three operating segments: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. Refer to Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the consolidated financial statements in Sonic’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional discussion of our operating segments. 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. The chief operating decision makers evaluate segment performance and allocate resources using metrics such as segment gross profit and segment income. These segment profit metrics are consistent across all segments and align with the way we measure profit on a consolidated basis. The accounting policies applied to segments follow those for the Company as a whole.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reportable segment financial information for the three and six months ended June 30, 2026 and 2025 were as follows:

Franchised Dealerships Segment - Reported


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(In millions)
Revenues:
Retail new vehicles	$	1,731.4	$	1,639.1	$	3,316.6	$	3,276.1
Fleet new vehicles	24.8		29.5		45.4		51.5

Used vehicles	814.3		744.9		1,582.9		1,490.6
Wholesale vehicles	43.7		57.8		87.8		112.2
Parts, service and collision repair	515.5		484.9		1,024.8		952.4
Finance, insurance and other, net	147.9		144.3		287.2		274.9

Cost of sales:
Retail new vehicles	(1,645.5)		(1,543.9)		(3,149.5)		(3,094.1)
Fleet new vehicles	(24.4)		(28.9)		(44.5)		(50.4)

Used vehicles	(777.3)		(705.4)		(1,505.4)		(1,411.2)
Wholesale vehicles	(46.6)		(58.7)		(92.5)		(114.1)

Parts, service and collision repair	(251.7)		(236.0)		(499.9)		(466.3)










Segment gross profit	$	532.1	$	527.6	$	1,052.9	$	1,021.6
Selling, general and administrative expenses:
Compensation	(239.7)		(232.3)		(479.9)		(458.7)
Advertising	(19.7)		(16.7)		(38.4)		(32.6)
Rent	(12.0)		(9.4)		(24.4)		(19.1)
Other (1)	(111.5)		(101.8)		(214.6)		(175.7)


Depreciation and amortization	(31.9)		(34.1)		(63.7)		(67.5)

Other income (expense):
Interest expense, floor plan	(17.3)		(15.3)		(33.3)		(31.6)
Interest expense, other, net	(29.2)		(26.3)		(56.5)		(52.9)
Other income (expense), net	(0.1)		(0.1)		—		0.1

Segment income	$	70.7	$	91.6	$	142.1	$	183.6

(1)Other selling, general and administrative expenses include various fixed and variable expenses, including gain or loss on disposal of franchises, facility repairs and maintenance, utilities, property taxes, certain customer-related costs such as gasoline and service loaners, and insurance, training, legal and information technology expenses.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EchoPark Segment - Reported


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(In millions)
Revenues:

Used vehicles	$	499.0	$	427.4	$	990.8	$	901.1
Wholesale vehicles	25.8		25.4		53.1		52.8


Finance, insurance and other, net	58.1		55.8		119.5		114.5

Cost of Sales:



Used vehicles	(492.6)		(420.5)		(978.1)		(888.8)
Wholesale vehicles	(26.0)		(26.0)		(53.0)		(53.6)










Segment gross profit	$	64.3	$	62.1	$	132.3	$	126.0
Selling, general and administrative expenses:
Compensation	(27.3)		(25.2)		(54.2)		(51.1)
Advertising	(8.2)		(7.3)		(16.5)		(15.1)
Rent	(1.1)		(0.7)		1.7		(1.4)
Other (1)	(10.7)		(9.0)		(21.0)		(19.4)


Depreciation and amortization	(6.3)		(5.2)		(12.1)		(10.5)

Other income (expense):
Interest expense, floor plan	(3.2)		(2.6)		(6.2)		(5.8)
Interest expense, other, net	(0.3)		(0.4)		(0.6)		(0.8)
Other income (expense), net	—		—		—		0.1

Segment income	$	7.2	$	11.7	$	23.4	$	22.0

(1)Other selling, general and administrative expenses include various fixed and variable expenses, including facility repairs and maintenance, utilities, property taxes, certain customer-related costs such as gasoline, and insurance, training, legal and information technology expenses.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Powersports Segment - Reported


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(In millions)
Revenues:
Retail new vehicles	$	37.9	$	26.9	$	60.2	$	46.3
Used vehicles	16.4		8.3		25.6		14.0
Wholesale vehicles	1.0		0.3		1.2		1.1

Parts, service and collision repair	14.7		10.6		22.1		17.6
Finance, insurance and other, net	3.5		2.0		5.3		3.4

Cost of Sales:
Retail new vehicles	(32.4)		(23.0)		(51.4)		(39.7)


Used vehicles	(13.2)		(6.7)		(20.8)		(11.3)
Wholesale vehicles	(1.1)		(0.3)		(1.4)		(1.1)

Parts, service and collision repair	(7.1)		(5.6)		(11.0)		(9.2)








Segment gross profit	$	19.7	$	12.5	$	29.8	$	21.1
Selling, general and administrative expenses:
Compensation	(10.0)		(7.3)		(17.3)		(13.5)
Advertising	(0.6)		(0.3)		(1.0)		(0.6)
Rent	—		0.3		—		0.4
Other (1)	(3.9)		(2.9)		(6.0)		(6.1)


Depreciation and amortization	(1.7)		(1.2)		(2.9)		(2.5)

Other income (expense):
Interest expense, floor plan	(0.3)		(0.4)		(0.7)		(0.9)
Interest expense, other, net	(0.8)		(0.7)		(1.6)		(1.4)
Other income (expense), net	(0.1)		—		—		—

Segment income (loss)	$	2.3	$	—	$	0.3	$	(3.5)

(1)Other selling, general and administrative expenses include various fixed and variable expenses, including gain or loss on disposal of franchises, facility repairs and maintenance, utilities, property taxes, certain customer-related costs such as gasoline, insurance, training, legal and information technology expenses.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(In millions)
Segment Income (Loss) (1):
Franchised Dealerships Segment (2)	$	70.7	$	91.6	$	142.1	$	183.6
EchoPark Segment (3)	7.2		11.7		23.4		22.0
Powersports Segment (4)	2.3		—		0.3		(3.5)
Total segment income	$	80.2	$	103.3	$	165.8	$	202.1
Impairment charges (5)	—		(172.4)		(0.4)		(173.8)
Income (loss) before taxes	$	80.3	$	(69.1)	$	165.4	$	28.3

(1)Segment income (loss) for each segment is defined as income (loss) before taxes and impairment charges. Due to rounding, segment level financial data may not sum to consolidated results.

(2)For the three months ended June 30, 2026, amount includes approximately $1.2 million of pre-tax charges related to storm damages. For the three months ended June 30, 2025, amount includes approximately $2.4 million of pre-tax loss related to the termination of a franchise, approximately $4.1 million of pre-tax charges related to storm damage. and $10.0 million of pre-tax benefit from cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024. For the six months ended June 30, 2026, approximately $5.1 million of pre-tax gain related to dispositions. For the six months ended June 30, 2025, amount includes $40.0 million of pre-tax benefit from cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024, approximately $5.0 million of pre-tax charges related to storm damage, and approximately $2.7 million of pre-tax charges related to dispositions. Due to rounding, segment level financial data may not sum to consolidated results.

SONIC AUTOMOTIVE, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(3)For the three months ended June 30, 2025, amount includes approximately $0.8 million of pre-tax gain on sale of real estate. For the six months ended June 30, 2026, amount includes approximately $3.6 million of pre-tax gain on lease terminations. For the six months ended June 30, 2025, amount includes approximately $1.0 million of pre-tax gain on sale of real estate.

(4)For the six months ended June 30, 2025, amount includes approximately $0.9 million of pre-tax charges related to dispositions. Due to rounding, segment level financial data may not sum to consolidated results.

(5)For the three months ended June 30, 2025, amount includes approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment and approximately $6.5 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment. For the six months ended June 30, 2026, amount includes approximately $0.4 million of non-cash pre-tax impairment charges related to construction-in-progress projects for the Franchised Dealerships Segment. For the six months ended June 30, 2025, amount includes approximately $0.2 million of non-cash pre-tax property and equipment impairment charges for real estate held for sale in the EchoPark Segment and approximately $7.2 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment, $0.4 million of non-cash pre-tax property, equipment and right-of-use asset impairment charges for the Powersports Segment, and approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
	(In millions)
Segment Capital Expenditures:
Franchised Dealerships Segment	$	110.3	$	32.5	$	141.6	$	77.0
EchoPark Segment	6.0		0.3		11.2		0.5
Powersports Segment	1.3		1.3		1.7		1.6
Total capital expenditures	$	117.6	$	34.1	$	154.5	$	79.1


	June 30, 2026		December 31, 2025
	(In millions)
Segment Assets:
Franchised Dealerships Segment	$	5,154.4	$	4,933.9
EchoPark Segment	589.1		506.1
Powersports Segment	344.5		224.4
Corporate and other:
Cash and cash equivalents	19.2		6.3
Floor plan deposit balance	275.0		300.0



Total assets	$	6,382.2	$	5,970.7

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto, as well as the consolidated financial statements and related notes thereto, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Unless otherwise noted, we present the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis. To the extent that we believe a discussion of the differences among reportable segments will enhance a reader’s understanding of our financial condition, cash flows and other changes in financial condition and results of operations, the differences are discussed separately. Certain amounts and percentages may not compute due to rounding.

Unless otherwise noted, all discussions of increases or decreases are for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. The following discussion of Franchised Dealerships Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition. The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a same market basis, except where otherwise noted. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. The following discussion of Powersports Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Overview

We are one of the largest automotive retailers in the U.S. (as measured by reported total revenue). As a result of the way we manage our business, we had three reportable segments as of June 30, 2026: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of June 30, 2026, we operated 107 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 20 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 127 new vehicle franchises (representing 24 different brands of cars and light trucks) and 15 collision repair centers in 17 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of 46 franchises at 20 locations (16 full-service dealerships and four authorized retail outlets) in five states.

The Franchised Dealerships Segment provides comprehensive sales and services, including (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of third-party financing, extended warranties, service contracts, insurance and other aftermarket products (collectively, “F&I”) for our guests. The EchoPark Segment sells used cars and light trucks and arranges third-party F&I product sales for our guests in pre-owned vehicle specialty retail locations and does not offer customer-facing Fixed Operations services. The Powersports Segment offers guests: (1) sales of both new and used powersports vehicles (such as motorcycles, personal watercraft and all-terrain vehicles); (2) Fixed Operations activities; and (3) F&I services. All three segments generally operate independently of one another with the exception of certain shared back-office functions and corporate overhead costs.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Summary

Retail Automotive Industry Performance

The U.S. retail automotive industry’s total new vehicle (retail and fleet combined) seasonally adjusted annual rate of unit sales volume (the “total new vehicle SAAR”) increased 2% and decreased 2% for the three and six months ended June 30, 2026, respectively, to approximately 16.3 million and 15.9 million vehicles, respectively, compared to approximately 16.0 million and 16.3 million vehicles for the three and six months ended June 30, 2025, respectively, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2026 new vehicle industry volume will be between 15.5 million vehicles (a decrease of 5% compared to 2025) and 16.0 million vehicles (a decrease of 2% compared to 2025). The effects of tariffs and trade policies, interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand in response to economic conditions, geopolitical disruptions, energy prices, natural disasters or other unforeseen circumstances could cause the actual 2026 new vehicle industry volume to vary from expectations. Many factors, including brand and geographic concentrations as well as the industry sales mix between retail and fleet new vehicle unit sales volume, have caused our past results to differ from the industry’s overall trend. Our new vehicle sales strategy focuses on our retail new vehicle sales (as opposed to fleet new vehicle sales) and, as a result, we believe it is appropriate to compare our retail new vehicle unit sales volume to the industry retail new vehicle seasonally adjusted annual rate of unit sales volume (the “retail new vehicle SAAR”) (which excludes fleet new vehicle sales). According to PIN from J.D. Power, the retail new vehicle SAAR increased 1% and decreased 4% to approximately 13.6 million and 13.2 million vehicles for the three and six months ended June 30, 2026, respectively, from approximately 13.4 million and 13.7 million vehicles for the three and six months ended June 30, 2025, respectively.

Franchised Dealerships Segment

Same store retail new vehicle revenue increased 1% during the three months ended June 30, 2026, driven by a 1% increase in average selling price per new retail unit. Same store retail new vehicle revenue decreased 4% during the six months ended June 30, 2026, primarily driven by a 5% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit decreased 17% and 15% during the three and six months ended June 30, 2026, respectively, due primarily to increased price competition as a result of increasing levels of available inventory and higher inventory invoice costs, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $559, or 16%, to $2,872 per unit during the three months ended June 30, 2026. Retail new vehicle gross profit per unit decreased $349 per unit, or 11%, to $2,934 per unit during the six months ended June 30, 2026. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 56 days as of June 30, 2026, compared to 54 days as of June 30, 2025.

Same store retail used vehicle revenue increased 9% and 5% during the three and six months ended June 30, 2026, respectively, driven primarily by a 7% and 5% increase in retail used vehicle unit sales volume, respectively. Retail used vehicle gross profit decreased 8% and 4% during the three and six months ended June 30, 2026, respectively, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $214 per unit, or 13%, to $1,401 per unit during the three months ended June 30, 2026. Retail used vehicle gross profit per unit decreased $136 per unit, or 8%, to $1,467 per unit during the six months ended June 30, 2026. Same store wholesale vehicle gross loss worsened by approximately $2.0 million to a gross loss of approximately $2.8 million during the three months ended June 30, 2026, due primarily to a $456 per unit, or 404%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. Same store wholesale vehicle gross loss worsened by approximately $3.0 million, to a gross loss of approximately $4.5 million during the six months ended June 30, 2026, due primarily to a $352 per unit, or 277%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. We generally focus on maintaining Franchised Dealerships Segment used vehicle inventory days’ supply in the 25- to 35-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 35 days as of both June 30, 2026 and June 30, 2025.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same store Fixed Operations revenue increased 3% and 4% during the three and six months ended June 30, 2026, respectively, driven primarily by increased service capacity as a result of additional technician headcount, and higher parts and labor costs that were passed along to consumers. Same store Fixed Operations gross profit increased 2% and 4% during the three and six months ended June 30, 2026, respectively, driven primarily by higher customer pay revenue contribution and higher warranty and internal, sublet and other gross margin contribution. Same store Fixed Operations gross margin decreased 30 basis points, to 51.0% during the three months ended June 30, 2026, and increased 10 basis points, to 51.1%, during the six months ended June 30, 2026.

Same store F&I revenue decreased 1% and remained flat during the three and six months ended June 30, 2026, respectively, driven by a 4% decrease and 1% increase in F&I gross profit per retail unit, respectively, partially offset by a 3% increase and 1% decrease in retail new and used vehicle unit sales volume, respectively. Same store F&I gross profit per retail unit decreased $108 per unit, or 4%, to $2,619 per unit during the three months ended June 30, 2026 primarily due to lower penetration rates for other aftermarket product contracts, which was partially offset by a higher penetration rate for finance contracts, higher gross profit per service contract, and changes to our F&I product cost structure. Same store F&I gross profit per retail unit increased $20 per unit, or 1%, to $2,607 per unit during the six months ended June 30, 2026, due primarily to higher gross profit per finance, service and other aftermarket contracts, increases in finance contract and service contract penetration rates, and changes to our F&I product cost structure.

EchoPark Segment

Same market total revenues increased 15% and 9% during the three and six months ended June 30, 2026, respectively, attributable to a 16% and 9% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles) in the three and six months ended June 30, 2026, respectively. Same market total gross profit increased 3% and 5% during the three and six months ended June 30, 2026, respectively, primarily driven by the increase in total vehicle unit sales volume in both the three and six months ended June 30, 2026, partially offset by a 12% and 5% decrease in combined used and F&I gross profit per retail unit during the three and six months ended June 30, 2026, respectively.

Same market retail used vehicle revenue increased 17% and 10% during the three and six months ended June 30, 2026, respectively, driven primarily by a 17% and 10% increase in retail used vehicle unit sales volume in the three and six months ended June 30, 2026, respectively. F&I revenue increased 4% during both the three and six months ended June 30, 2026, driven primarily by the increase in retail used vehicle unit sales during the three and six months ended June 30, 2026, partially offset by an 11% and 5% decrease in F&I gross profit per unit in the three and six months ended June 30, 2026, respectively. Same market combined retail used vehicle and F&I gross profit per unit decreased $466 per unit, or 12%, to $3,303 for the three months ended June 30, 2026, due primarily to decreases in both used vehicle gross profit per unit and F&I gross profit per unit. Same market combined retail used vehicle and F&I gross profit per unit decreased $181 per unit, or 5%, to $3,410 for the six months ended June 30, 2026, due primarily to decreases in both used vehicle gross profit per unit and F&I gross profit per unit.

Same market wholesale vehicle gross profit improved by approximately $0.5 million and $1.0 million during the three and six months ended June 30, 2026, respectively, primarily due to a 75% and 109% increase in wholesale vehicle gross profit per unit during the three and six months ended June 30, 2026, respectively. We generally focus on maintaining EchoPark Segment used vehicle inventory days’ supply in the 30- to 40-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported EchoPark Segment used vehicle inventory days’ supply was approximately 47 and 41 days as of June 30, 2026 and 2025, respectively. The higher days’ supply as of June 30, 2026, reflected a deliberate increase in inventory levels to support higher retail unit sales. This differed from a typical quarter, during which we generally maintain inventory within our targeted 30- to 40-day range.

Powersports Segment

Same store retail new vehicle revenue increased 6% and 11% during the three and six months ended June 30, 2026, respectively, driven by a 3% and 8% increase in retail new vehicle unit sales volume, respectively, coupled with a 3% increase in retail new vehicle average selling price during both the three and six months ended June 30, 2026. Retail new vehicle gross profit increased 8% and 12% during the three and six months ended June 30, 2026, respectively, as a result of the increase in retail new vehicle unit sales volume and a 4% and 5% increase in same store retail new vehicle gross profit per unit, respectively. Retail new vehicle gross profit per unit increased $103 per unit, or 4%, to $2,925 per unit for the three months ended June 30, 2026. Retail new vehicle gross profit per unit increased $134 per unit, or 5%, to $2,910 per unit for the six months ended June 30, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 160 and 135 days as of June 30, 2026 and 2025, respectively, varying based on manufacturer production levels and consumer demand.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Same store used vehicle revenue increased 40% and 54% during the three and six months ended June 30, 2026, respectively, driven primarily by a 19% and 34% increase in retail used vehicle unit sales volume, respectively, and a 17% and 15% increase in average used vehicle selling price during the three and six months ended June 30, 2026, respectively. Retail used vehicle gross profit increased 25% and 42% during the three and six months ended June 30, 2026, respectively, driven by the increase in used vehicle unit sales volume and a 4% and 5% increase in retail used vehicle gross profit per unit, respectively. Retail used vehicle gross profit per unit increased $78 per unit, or 4%, to $2,092 per unit for the three months ended June 30, 2026. Retail used vehicle gross profit per unit increased $92 per unit, or 5%, to $2,021 per unit for the six months ended June 30, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 103 and 102 days as of June 30, 2026 and 2025, respectively.

Same store Fixed Operations revenue increased 5% and 7% during the three and six months ended June 30, 2026, respectively, while gross profit increased 12% and 11%, respectively. These increases were primarily driven by higher repair order volume. Fixed Operations gross margin increased 330 basis points to 49.8% during the three months ended June 30, 2026, primarily due to a more favorable revenue mix, including increased contribution from higher-margin internal, sublet, and other services, as well as improved gross margins on customer pay repairs, warranty work, wholesale parts, and internal, sublet and other repairs. Fixed Operations gross margin increased 150 basis points to 49.1% during the six months ended June 30, 2026, primarily due to a more favorable revenue mix, including increased contribution from high-margin internal, sublet, and other services, as well as improved gross margins on customer pay repairs, wholesale parts, and internal, sublet and other repairs.

Same store F&I revenue increased 20% and 24% during the three and six months ended June 30, 2026, respectively, driven primarily by a 9% and 18% increase in combined retail new and used vehicle unit sales volume, coupled with increases in F&I gross profit per retail unit for the three and six months ended June 30, 2026. F&I gross profit per retail unit increased $105 per unit, or 12%, to $995 per unit for the three months ended June 30, 2026. F&I gross profit per retail unit increased $40 per unit, or 4%, to $955 per unit for the six months ended June 30, 2026.

Results of Operations – Consolidated

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores, EchoPark stores, and powersports stores in 2025 and 2026, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

New Vehicles – Consolidated

New vehicle revenues include the sale of new vehicles, including new powersports vehicles, to retail customers, as well as the sale of fleet vehicles to businesses for use in their operations. New vehicle revenues and gross profit can be influenced by vehicle manufacturer incentives to consumers (which vary from cash-back incentives to low interest rate financing, among other things), the availability of consumer credit and the level and type of manufacturer-to-dealer incentives, as well as manufacturers providing adequate inventory allocations to our dealerships to meet consumer demand. The automobile manufacturing industry is cyclical and historically has experienced periodic downturns characterized by oversupply and weak demand, both within specific brands and in the industry as a whole. As an automotive retailer, we seek to mitigate the effects of this sales cycle by maintaining a diverse brand mix of dealerships. Our brand diversity allows us to offer a broad range of products at a wide range of prices from lower-priced economy automobiles to luxury automobiles and powersports vehicles.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three and six months ended June 30, 2026 and 2025:


	Three Months Ended June 30,				Six Months Ended June 30,
New Vehicle Brand	2026		2025		2026		2025
Luxury:
BMW	22	%	23	%	22	%	23	%
Mercedes	12	%	13	%	12	%	14	%
Land Rover	9	%	5	%	10	%	5	%
Lexus	6	%	6	%	6	%	6	%
Audi	4	%	5	%	4	%	5	%
Porsche	4	%	4	%	4	%	4	%
Cadillac	4	%	4	%	3	%	3	%
Other Luxury (1)	1	%	1	%	1	%	2	%
Total Luxury	62	%	61	%	62	%	62	%
Mid-line Import:
Honda	11	%	12	%	11	%	12	%
Toyota	10	%	9	%	9	%	9	%
Volkswagen	1	%	1	%	1	%	1	%
Other Mid-line Imports (2)	1	%	2	%	2	%	2	%
Total Mid-line Import	23	%	24	%	23	%	24	%
Domestic:
General Motors (3)	7	%	7	%	7	%	6	%
Ford	5	%	3	%	5	%	3	%
Chrysler	3	%	5	%	3	%	5	%
Total Domestic	15	%	15	%	15	%	14	%
Total	100	%	100	%	100	%	100	%

(1)Includes Jaguar, MINI, Polestar and Volvo.

(2)Includes Hyundai, Nissan and Subaru.

(3)Includes Buick, Chevrolet and GMC.

The U.S. retail automotive industry’s new vehicle unit sales volume below reflects all brands marketed or sold in the U.S. This industry sales volume includes brands we do not sell and markets in which we do not operate, therefore, changes in our new vehicle unit sales volume may not trend directly in line with changes in the industry new vehicle unit sales volume. We believe that the industry retail new vehicle unit sales volume is a more meaningful metric for comparing our new vehicle unit sales volume to the industry due to our minimal fleet vehicle business.

U.S. retail new vehicle SAAR, fleet new vehicle seasonally adjusted annual rate of unit sales volume (the “fleet new vehicle SAAR”) and total new vehicle SAAR were as follows:


	Three Months Ended June 30,		Better / (Worse)		Six Months Ended June 30,		Better / (Worse)
	2026	2025	% Change		2026	2025	% Change
	(In millions of vehicles)
U.S. Retail new vehicle SAAR (1)	13.6	13.4	1	%	13.2	13.7	(4)	%
U.S. Fleet new vehicle SAAR	2.7	2.6	4	%	2.7	2.6	4	%
U.S. Total new vehicle SAAR (1)	16.3	16.0	2	%	15.9	16.3	(2)	%

(1)Source: PIN from J.D. Power

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported new vehicle results (combined retail and fleet data) were as follows:


	Three Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	1,769.3		$	1,666.1		$	103.2	6	%
Fleet new vehicle revenue	24.8			29.4			(4.6)		(16)	%
Total new vehicle revenue	$	1,794.1		$	1,695.5		$	98.6	6	%

Retail new vehicle gross profit	$	91.4		$	99.2		$	(7.8)	(8)	%
Fleet new vehicle gross profit	0.5			0.5			—		—	%
Total new vehicle gross profit	$	91.9		$	99.7		$	(7.8)	(8)	%

Retail new vehicle unit sales	30,178			29,478			700		2	%
Fleet new vehicle unit sales	452			571			(119)		(21)	%
Total new vehicle unit sales	30,630			30,049			581		2	%

Revenue per new retail unit	$	58,629		$	56,519		$	2,110	4	%
Revenue per new fleet unit	$	54,870		$	51,607		$	3,263	6	%
Total revenue per new unit	$	58,574		$	56,425		$	2,149	4	%

Gross profit per new retail unit	$	3,029		$	3,365		$	(336)	(10)	%
Gross profit per new fleet unit	$	962		$	918		$	44	5	%
Total gross profit per new unit	$	2,999		$	3,318		$	(319)	(10)	%

Retail gross profit as a % of revenue	5.2		%	6.0		%	(80)		bps
Fleet gross profit as a % of revenue	1.8		%	1.8		%	—		bps
Total new vehicle gross profit as a % of revenue	5.1		%	5.9		%	(80)		bps

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



	Six Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions, except unit and per unit data)
Reported new vehicle:
Retail new vehicle revenue	$	3,376.8		$	3,322.4		$	54.4	2	%
Fleet new vehicle revenue	45.4			51.5			(6.1)		(12)	%
Total new vehicle revenue	$	3,422.2		$	3,373.9		$	48.3	1	%

Retail new vehicle gross profit	$	175.9		$	188.6		$	(12.7)	(7)	%
Fleet new vehicle gross profit	0.8			1.1			(0.3)		(27)	%
Total new vehicle gross profit	$	176.7		$	189.7		$	(13.0)	(7)	%

Retail new vehicle unit sales	57,132			58,553			(1,421)		(2)	%
Fleet new vehicle unit sales	789			954			(165)		(17)	%
Total new vehicle unit sales	57,921			59,507			(1,586)		(3)	%

Revenue per new retail unit	$	59,105		$	56,741		$	2,364	4	%
Revenue per new fleet unit	$	57,637		$	53,980		$	3,657	7	%
Total revenue per new unit	$	59,085		$	56,697		$	2,388	4	%

Gross profit per new retail unit	$	3,078		$	3,221		$	(143)	(4)	%
Gross profit per new fleet unit	$	1,091		$	1,129		$	(38)	(3)	%
Total gross profit per new unit	$	3,051		$	3,187		$	(136)	(4)	%

Retail gross profit as a % of revenue	5.2		%	5.7		%	(50)		bps
Fleet gross profit as a % of revenue	1.9		%	2.1		%	(20)		bps
Total new vehicle gross profit as a % of revenue	5.2		%	5.6		%	(40)		bps

For further analysis of new vehicle results on a segment basis, see the tables and discussion under the headings “New Vehicles - Franchised Dealerships Segment” and “New Vehicles - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

Used Vehicles – Consolidated

Used vehicle revenues include the sale of used vehicles, including used powersports vehicles, to retail customers and at wholesale. Used vehicle revenues are directly affected by a number of factors, including consumer demand for used vehicles, the pricing and level of manufacturer incentives on new vehicles, the number and quality of trade-ins and lease turn-ins available to our dealerships, the availability and pricing of used vehicles acquired at wholesale auction, and the availability of consumer credit. Depending on the mix of inventory sourcing (trade-ins or purchases from customers versus wholesale auction), the days’ supply of used vehicle inventory, and the pricing strategy employed by the dealership, retail used vehicle gross profit per unit and retail used vehicle gross profit as a percentage of revenue may vary significantly from historical levels given recent trends in the used vehicle environment.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported retail used vehicle results were as follows:


	Three Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	1,329.7		$	1,180.7		$	149.0	13	%
Gross profit	$	46.6		$	48.1		$	(1.5)	(3)	%
Unit sales	47,362			42,512			4,850		11	%
Revenue per unit	$	28,075		$	27,773		$	302	1	%
Gross profit per unit	$	983		$	1,131		$	(148)	(13)	%
Gross profit as a % of revenue	3.5		%	4.1		%	(60)		bps



	Six Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions, except unit and per unit data)
Reported retail used vehicle:
Revenue	$	2,599.3		$	2,405.7		$	193.6	8	%
Gross profit	$	95.0		$	94.4		$	0.6	1	%
Unit sales	93,855			87,329			6,526		7	%
Revenue per unit	$	27,695		$	27,547		$	148	1	%
Gross profit per unit	$	1,012		$	1,081		$	(69)	(6)	%
Gross profit as a % of revenue	3.7		%	3.9		%	(20)		bps

For further analysis of used vehicle results on a segment basis, see the tables and discussion under the headings “Used Vehicles - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “Used Vehicles - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Wholesale Vehicles – Consolidated

Wholesale vehicle revenues are influenced by several factors, including retail new and used vehicle unit sales volume, associated trade-in volume, and short-term, temporary, and seasonal fluctuations in wholesale auction pricing. In recent years, wholesale vehicle prices and supply at auction have experienced periods of volatility, impacting our wholesale vehicle revenues and related gross profit (loss), as well as our retail used vehicle revenues and related gross profit. We believe that the current wholesale vehicle price environment is not sustainable in the long term and expect that average wholesale vehicle pricing and related gross profit (loss) will continue to return toward long-term normalized levels in the long run, but may continue to experience volatility during 2026 or beyond. Wholesale vehicle revenues are also significantly affected by our corporate inventory management strategy and policies, which are designed to optimize our total used vehicle inventory and expected gross profit levels and minimize inventory carrying risks.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported wholesale vehicle results were as follows:


	Three Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	70.5		$	83.3		$	(12.8)	(15)	%
Gross profit (loss)	$	(3.2)		$	(1.6)		$	(1.6)	(100)	%
Unit sales	8,539			9,368			(829)		(9)	%
Revenue per unit	$	8,251		$	8,900		$	(649)	(7)	%
Gross profit (loss) per unit	$	(373)		$	(165)		$	(208)	(126)	%
Gross profit (loss) as a % of revenue	(4.5)		%	(1.9)		%	(260)		bps


	Six Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions, except unit and per unit data)
Reported wholesale vehicle:
Revenue	$	142.1		$	166.1		$	(24.0)	(14)	%
Gross profit (loss)	$	(4.8)		$	(2.7)		$	(2.1)	(78)	%
Unit sales	16,428			18,773			(2,345)		(12)	%
Revenue per unit	$	8,652		$	8,850		$	(198)	(2)	%
Gross profit (loss) per unit	$	(293)		$	(146)		$	(147)	(101)	%







Gross profit (loss) as a % of revenue	(3.4)		%	(1.7)		%	(170)		bps

For further analysis of wholesale vehicle results on a segment basis, see the tables and discussion under the headings “Wholesale Vehicles – Franchised Dealerships Segment,” “Wholesale Vehicles – EchoPark Segment” and “Wholesale Vehicles – Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Fixed Operations – Consolidated

Parts, service and collision repair revenues consist of repairs and maintenance requested and paid by customers (“customer pay”), warranty repairs (manufacturer-paid), wholesale parts (sales of parts and accessories to third-party automotive repair businesses), and internal, sublet and other. Parts and service revenue is driven by the volume and mix of warranty repairs versus customer pay repairs, available service capacity (a combination of service bay count and technician availability), vehicle quality, manufacturer recalls, customer loyalty, and prepaid or manufacturer-paid maintenance programs. Internal, sublet and other primarily relates to preparation and reconditioning work performed on vehicles in inventory that are later sold to a third party and may vary based on used vehicle inventory and sales volume from period to period. When that work is performed by one of our dealerships or stores, the work is classified as internal. In the event the work is performed by a third party on our behalf, it is classified as sublet.

We believe that, over time, vehicle quality will continue to improve, but vehicle complexity and the associated demand for repairs by qualified technicians at manufacturer-affiliated dealerships may result in market share gains that could offset any revenue lost from improvement in vehicle quality. We also believe that, over the long term, we have the ability to continue to optimize service capacity and customer retention at our dealerships and stores to further increase Fixed Operations revenues. Manufacturers continue to extend new vehicle warranty periods (in particular for battery electric vehicles) and have also begun to include regular maintenance items in the warranty or complimentary maintenance program coverage. These factors, over the long term, combined with the extended manufacturer warranties on certified pre-owned vehicles, should facilitate growth in our parts and service business. Barriers to long-term growth may include reductions in the rate paid by manufacturers to dealers for warranty repair work performed, as well as the improved quality and design of vehicles that may affect the level and frequency of future customer pay or warranty-related repair revenues.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated reported Fixed Operations results were as follows:



	Three Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	243.7		$	229.5		$	14.2	6	%
Warranty	93.0			84.6			8.4		10	%
Wholesale parts	50.1			45.4			4.7		10	%
Internal, sublet and other	143.4			136.1			7.3		5	%
Total revenue	$	530.2		$	495.6		$	34.6	7	%

Gross profit
Customer pay	$	135.2		$	128.6		$	6.6	5	%
Warranty	59.2			53.2			6.0		11	%
Wholesale parts	8.7			7.9			0.8		10	%
Internal, sublet and other	68.3			64.2			4.1		6	%
Total gross profit	$	271.4		$	253.9		$	17.5	7	%

Gross profit as a % of revenue
Customer pay	55.5		%	56.1		%	(60)		bps
Warranty	63.6		%	63.0		%	60		bps
Wholesale parts	17.4		%	17.4		%	—		bps
Internal, sublet and other	47.6		%	47.2		%	40		bps
Total gross profit as a % of revenue	51.2		%	51.2		%	—		bps

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



	Six Months Ended June 30,						Better / (Worse)
	2026			2025			Change		% Change
	(In millions)
Reported Fixed Operations:
Revenue
Customer pay	$	479.6		$	444.8		$	34.8	8	%
Warranty	190.9			170.9			20.0		12	%
Wholesale parts	101.0			92.1			8.9		10	%
Internal, sublet and other	275.4			262.2			13.2		5	%
Total revenue	$	1,046.9		$	970.0		$	76.9	8	%

Gross profit
Customer pay	$	267.1		$	249.3		$	17.8	7	%
Warranty	121.3			107.3			14.0		13	%
Wholesale parts	17.4			16.0			1.4		9	%
Internal, sublet and other	130.2			121.9			8.3		7	%
Total gross profit	$	536.0		$	494.5		$	41.5	8	%

Gross profit as a % of revenue
Customer pay	55.7		%	56.0		%	(30)		bps
Warranty	63.5		%	62.8		%	70		bps
Wholesale parts	17.2		%	17.4		%	(20)		bps
Internal, sublet and other	47.3		%	46.5		%	80		bps
Total gross profit as a % of revenue	51.2		%	51.0		%	20		bps

For further analysis of Fixed Operations results on a segment basis, see the tables and discussion under the headings “Fixed Operations - Franchised Dealerships Segment” and “Fixed Operations - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

F&I – Consolidated

Finance, insurance and other, net revenues include commissions for arranging third-party vehicle financing and insurance, sales of third-party extended warranties and service contracts for vehicles, and sales of other aftermarket products. In connection with vehicle financing, extended warranties and service contracts, other aftermarket products and insurance contracts, we receive commissions from the third-party providers for originating these contracts. We do not have direct credit risk for the vehicle financing, extended warranties and service contracts that we sell. F&I revenues are recognized net of actual and estimated future chargebacks and other costs associated with originating contracts (as a result, reported F&I revenues and F&I gross profit are the same amount, resulting in a 100% gross margin for F&I). F&I revenues are affected by the level of new and retail used vehicle unit sales volume, the age and average selling price of vehicles sold, the level of manufacturer financing specials or leasing incentives, and our F&I penetration rate for each type of F&I product. The F&I penetration rate represents the number of finance contracts, extended warranties and service contracts, other aftermarket products or insurance contracts that we are able to originate per vehicle sold, expressed as a percentage.

Yield spread premium is another term for the commission earned by our dealerships for arranging vehicle financing for consumers. The amount of the commission could be zero, a flat fee or an actual spread between the interest rate charged to the consumer and the interest rate provided by the third-party direct financing source (e.g., a commercial bank, credit union or manufacturer captive finance company). We have established caps on the potential yield spread premium our dealerships can earn with all finance sources. We believe the yield spread premium we earn for arranging vehicle financing represents value to the consumer in numerous ways, including the following:

•lower cost, below-market financing is often available only from the manufacturers’ captives and franchised dealers;

•ease of access to multiple high-quality lending sources;

•lease-financing alternatives are largely available only from manufacturers’ captives or other indirect lenders;

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

•guests with substandard credit frequently do not have direct access to potential sources of sub-prime financing; and

•guests with significant “negative equity” in their current vehicle (i.e., the guest’s current vehicle is worth less than the balance of their vehicle loan or lease obligation) frequently are unable to pay off the loan on their current vehicle and finance the purchase or lease of a replacement new or used vehicle without the assistance of a franchised dealership’s network of lending sources.

Our consolidated reported F&I results were as follows:



	Three Months Ended June 30,				Better / (Worse)
	2026		2025		Change		% Change
	(In millions, except unit and per unit data)
Reported F&I:
Revenue	$	209.5	$	202.1	$	7.4	4	%
Total combined retail new and used vehicle unit sales	77,540		71,990		5,550		8	%
Gross profit per retail unit (excludes fleet)	$	2,702	$	2,807	$	(105)	(4)	%



	Six Months Ended June 30,				Better / (Worse)
	2026		2025		Change		% Change
	(In thousands, except per unit data)
Reported F&I:
Revenue	$	412.0	$	392.8	$	19.2	5	%
Total combined retail new and used vehicle unit sales	150,987		145,882		5,105		3	%
Gross profit per retail unit (excludes fleet)	$	2,728	$	2,693	$	35	1	%

For further analysis of F&I results on a segment basis, see the tables and discussion under the headings “F&I - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “F&I - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations – Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores in 2025 and 2026, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. Please refer to the same store tables and discussion on the following pages for a more meaningful comparison and discussion of financial results on a comparable store basis.

SONIC AUTOMOTIVE, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

New Vehicles – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for new vehicles:


	Three Months Ended June 30,				Better / (Worse)
	2026		2025		Change		% Change
	(In millions, except unit data)
Retail new vehicle revenue:
Same store	$	1,633.2	$	1,620.4	$	12.8	1	%
Acquisitions, open points, dispositions and holding company	98.2		18.7		79.5		NM
Total as reported	$	1,731.4	$	1,639.1	$	92.3	6	%

Fleet new vehicle revenue:
Same store	$	23.8	$	29.5	$	(5.7)	(19)	%
Acquisitions, open points, dispositions and holding company	1.0		—		1.0		NM
Total as reported	$	24.8	$	29.5	$	(4.7)	(16)	%

Total new vehicle revenue:
Same store	$	1,657.0	$	1,649.9	$	7.1	—	%
Acquisitions, open points, dispositions and holding company	99.2		18.7		80.5		NM
Total as reported	$	1,756.2	$	1,668.6	$	87.6	5	%

Retail new vehicle gross profit:
Same store	$	79.0	$	94.7	$	(15.7)	(17)	%
Acquisitions, open points, dispositions and holding company	6.9		0.5		6.4		NM
Total as reported	$	85.9	$	95.2	$	(9.3)	(10)	%

Fleet new vehicle gross profit:
Same store	$	0.4	$	0.5	$	(0.1)	(20)	%
Acquisitions, open points, dispositions and holding company	—		0.1		(0.1)		NM
Total as reported	$	0.4	$	0.6	$	(0.2)	(33)	%

Total new vehicle gross profit:
Same store	$	79.5	$	95.3	$	(15.8)	(17)	%
Acquisitions, open points, dispositions and holding company	6.8		0.5		6.3		NM
Total as reported	$	86.3	$	95.8	$	(9.5)	(10)	%

Retail new vehicle unit sales:
Same store	27,515		27,613		(98)		—	%
Acquisitions, open points, dispositions and holding company	888		471		417		NM
Total as reported	28,403		28,084		319		1	%

Fleet new vehicle unit sales:
Same store	443		571		(128)		(22)	%
Acquisitions, open points, dispositions and holding company	9		—		9		NM
Total as reported	452

SONIC AUTOMOTIVE INC 10-Q