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Research Alert: Sonic Automotive: Better-than-expected Margins Lead To Big Q1 Beat

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-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

Sonic Automotive (SAH) posted Q1 adjusted EPS of $1.62 vs. $1.48 (+9%), well ahead of the $1.40 consensus. Revenue rose 1% to $3.69B ($40M below consensus) but gross margin expanded 70 bps to 16.2% (50 bps ahead of consensus). The quarter benefited from record adjusted EBITDA in the EchoPark segment (used vehicle sales). Higher price realizations were behind the top line increase, as SAH's total vehicle sales (excluding wholesale) volumes were down 3% to 52,165 units. SAH's new vehicle sales fell by 8% and wholesale units were down 24%, partially offset by a 4% increase in used vehicle retail units. SAH repurchased 2.1M shares for $135.7M in Q1, representing a 6% reduction in its share count. The company also announced an 8% increase in its quarterly dividend to $0.41/share, or $1.64 annualized. The company's balance sheet remains robust with over $770M in total liquidity. In our view, this was a solid release, highlighted by much better-than-expected margin performance and a notable increase in buybacks.

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