All right, so we're going to get a move it on. Switching gears from the OEM suppliers that we've heard from this morning. It's my pleasure to introduce Sonic Automotive, who is a leading automotive retailer operating about 133 new vehicle franchises from about 141 stores across the U.S. Apart from that. They also sell used vehicles through their EchoPark segment. And then. They've also entered into the Powersports market, which they sell new and used motorcycles, personal watercrafts, all-terrain vehicles. They have 22 Class A shares, 12.12 million Class B shares, closed around price around $62, so about a $2 billion market cap. About $1.5 billion debt, and about $100 million net cash. So it's my pleasure to introduce. CFO Heath Byrd and. Senior Vice President of Investor Relations, Danny Wieland. All right, so just to get started, if you guys do not mind, just give a quick five-minute, about five-minute overview of the company just for the people in the audience who might not be familiar with the story. Sure. Okay, so Sonic Automotive is basically three different segments. The larger segment is the franchise business, where we have anything from Porsche, Audi, BMW, Mercedes-Benz, Honda, imports, as well as domestic across country. The second segment is a used car-only segment. It's called EchoPark, very similar to a CarMax, Carvana model. And then, as we mentioned in the introduction, we have a third segment, which is the Powersports segment. We got into that one recently. We see opportunities in that sector from a standpoint of very, very low multiples relative to the other two segments, so acquisitions have a higher return. We also see it as a—it looks a lot like 1990 automotive retail. We've done a good job of that on the franchise side, and there's a lot of opportunities, same opportunities in that segment around consolidation. There's really no sophistication in marketing, etc., and opportunity in new—excuse me—used and service. It's our smaller segment, but a good opportunity for growth in that one. Three different segments focusing on new franchise business, EchoPark is a used business, and then the Powersports business. Perfect. Thank you for that. Just given some of the new developments in the finance and subprime markets, can you just describe to us the current health of the F&I loan, your loan book, in light of broader tightening in subprime credit? Yeah, I think we're hearing about more delinquencies. Especially in the subprime market. Both our—all of our sectors, our FICO in the franchise is around 710, and our average FICO in EchoPark is very equivalent. But we are seeing a higher percentage in the subprime. That's the fastest growing segment. There is definitely concern. I think there is tightening. We just talked about now we're at EchoPark, we're about 55% of approval rates in finance. We haven't seen anything right at the operational level that's been detrimental to this point. It absolutely is a concern that we're watching and monitoring. Perfect. Thank you. Yeah, with some of the recent bankruptcies, what differences in underwriting or collateral structure gives you confidence in the portfolio? Again, we do indirect lending. We do not have our own FINCO. There is more risk, obviously, on our third-party lenders. It is tightening, but it has not been something that has been detrimental materially to our business to date. Have you made any changes to credit standards or approval rates on your end? From an underwriting perspective? Yeah. No. Again, the underwriting risk is with the third-party lender. There have been no changes from our offering of products, etc. Gotcha. Moving on to some of the newer used environment on the franchise business, how would you describe the current retail environment for new vehicles, especially with the resilience of the customer and later the $50,000+ price? If you look at it overall, the way that a lot of people look at it is a SAAR. I think the projections are still in the 15.8-16.2, which is more than last year, a little bit more than last year. That is a very healthy market for us. That is one of the highest and something that we can operate very well in. If you look at things that are driving that, if you look at inventory, everybody is concerned about inventory with the new vehicles. It is really normalized. I think we are at an 89-day supply nationally, if you look across, which is really similar to pre-COVID. It is different by brand. If you look at the Hondas, Toyota, Lexus, very tight day supply, they have been very disciplined how they have come back. That allows them to maintain their prices and margin, which is very good for us. You get the other end of the spectrum, which is the Chrysler, Mercedes-Benz, Audi that are a little bit higher. We expect those individual brands will be required to bring incentives to really push metal in the fourth quarter. Inventory-wise, it is pretty much in good shape. We talked about on the earnings call some concern with the luxury brand. What is driving that is if you look at Mercedes-Benz, BMW, and Audi, the activity did slow down in October. We saw that. For the full year, we are still up on each of those brands year over year. It really got slow in October. We were really trying to send a message to the manufacturers, "You need to get your incentives in place and do it quickly." We are seeing that happen. I think that is going to really help the fourth quarter sales. That was one of the issues with there is really more inventory than we needed based on the activity. Those incentives will spur that, we believe. To add one more. Yeah, go ahead. Point to that. Obviously, in the third quarter, there was a big push for electric vehicle penetration. Ended up near 12% of our mix, about 10.5% of the industry had been running in the 6.5%-7% range. That's heavily concentrated in those luxury brands, those German luxury brands in particular, especially for Sonic's portfolio, which is more than 50% of our revenue comes from those luxury brands. There is also a little bit of cadence or pacing distortion. As we move into the fourth quarter, typically BMW, Mercedes-Benz, Lexus, Audi all push to have a strong year-end closeout. We were really fortunate to right-size our electric vehicle inventory mix down to about 4% of our inventory at the end of the third quarter. It had historically been running in the 10%-15% mix, which is what puts pressure on GPU. There is some opportunity in those brands in particular now that we've removed that electric vehicle headwind. I think from an overall consumer perspective, I think incentives are going to help move vehicles. The concern is that you do see slower spending by the consumer. You do see consumer sentiment was down in October. I think it is the things that we all see. It is the concerns about the shutdown, overall economic conditions, the impact of tariffs. The one thing that we are going to find out if it is true, I do believe there was a lot of pull forward in the second and third quarter, the second quarter, because people were trying to buy before the tariffs, and then the third quarter because of the EV tax credit being eliminated. There is a theory that a lot of the demand that you would expect in the last half has been pulled forward. We are hoping that the incentives are going to override that and continue to have the quarters that we expect in the fourth. Heath, I put up a number beforehand for the $50,000 average transaction price. Even though we've seen incentives rise, we're still a consumer contending with higher interest rates. Compared to two years ago, a used vehicle price has declined. Maybe talk about vehicle affordability and whether you think we're pushing any of the real boundaries of what, at least on the new side. Again, you're dealing with a consumer that's a higher FICO score. Right. That a consumer can actually afford. I think it's a real concern, to be quite honest. I mean, now your average monthly payment, I think on new is $750 a month. Actual rates for automotive went up in October. I would assume at some point, if the Fed keeps continuing to bring down rates, that that's going to flow through to the buyer on the interest rates of automotive. I think it is a concern, and it even dwindles down into the affordability of used vehicles as well. At the price we are now, again, materially, right now, we're not seeing that. We still have a really strong consumer. We are 50% luxury, so it's a different segment overall. I do think that we're going to get to a point that manufacturers, I think there's two cars made today that are under $30,000, two or three in total. I do think there's going to be an opportunity for some manufacturer to hit that group because affordability is becoming an issue from my perspective. Do you see that at all in areas like C-Class or 3 Series or maybe some of the lower-tiered Mercedes-Benz or BMW vehicles where maybe you're seeing softness relative to maybe some of the more expensive SUVs that they're selling? Yeah, it's a good question. From a brand perspective, I wouldn't have the data to tell you exactly if it's softer in that area, which would indicate that it is only the higher-end consumer and the higher vehicle models that are actually, I guess, hiding some of the softness that would be in those lower models. It would make sense to me. Again, I'd have to look at that specific data to tell you. You mentioned your gross profit per unit earlier. Can you just talk about what's happening between those in the new and used businesses and then where you think kind of sustainable margins will look like in the future? Yeah, I think we ended up at, you said new vehicle margin, right? Yeah. Yeah. And so I think we ended up at $3,000. Up. Down from $3,050 a year. Exactly. We have said for a long time, we believe that Q4 and for a full year of 2025, we will end up around $3,100-$3,200. We have said from way back that we think when it normalizes, it is going to be higher than pre-COVID and in the $2,500-$3,000 range. It is going to be interesting to see what happens. We do think that as inventories normalize, the margins are going to get into that range. It is going to be interesting to see what happens with this chip issue and with China and the things that are happening there. Honda just reported that they are slowing their production of certain models because of that issue. If it continues, it could actually affect more manufacturers, obviously. We are right back into the case where new vehicles are scarce and margins, they went up to what, $6,522, I believe. I do not think it is going to be like that, but it is interesting that we all keep thinking it is going to normalize and be back the way it was. Something happens every single time. I think to that point, if you went backwards a year and said that we were going to be down 2% year over year in new vehicle GPU, people would have thought that we were crazy. Looking at that outlook. There has been far more stability in new GPUs relative to those who are newer to the story. Relative to 2019 levels, we generally ran between $2,000-$2,100 a unit in GPU. Again, targeting $3,100-$3,200 for full year and fourth quarter this year. Even if we fall into the $2,500-$3,000 range, you are seeing significant sustained upside. If you think about normalization of GPU from a margin perspective, not the dollar perspective, you are actually pretty close on either an ATP or an MSRP basis to where you were pre-pandemic. Obviously, the incentive dollars that are still relatively lower as a percent of ATPs can provide some opportunity to help balance out the supply-demand mismatch with whatever slowdown in affordability or challenges from affordability there may be. That gets back to the affordability because what you're seeing is the mix of vehicles. They're producing the higher margin vehicles, more expensive SUVs and trucks is a bigger percentage of what we're selling. Therefore, that margin is remaining. On a similar following on the, I guess, the used car GPU portion of that question, we saw similar trends as used car pricing went up. You saw a little bit of expansion from used GPU. We went from a $1,300 unit range up into the $1,600-$1,700 range at peak, still running around $1,500. Expect that to come down. Again, due to some scarcity in supply, this is the tightest year for off-lease maturities. In 2026 through 2029, off-lease maturities should begin to rebuild back toward 2019 pre-pandemic levels. It will be a slow build, but it should be. We have seen lesser headwinds in used supply in recent quarters, but we will actually start to see supply tailwinds here, which should benefit volume. That is where we make a strategic pricing trade-off on GPU versus sales volume and total gross profit. Yeah, I mean, I just got a note just for the sake of the Zoom. Could you move the microphone just a touch closer to you? That'd be closer to me. That'd be helpful. Yep. I just wanted to ask the audience, did any questions before moving on towards? Hey, you guys had made the comment on the call a couple of weeks ago about seeing that luxury trend softening. I think you were just talking to maybe some of it is mix related. Do you see any actual consumer softness? I mean, is it on a BMW was outperforming Audi because they had a better product line? Are you seeing any shift even for the stronger brands? Is this like an economic indicator? Not sure if I understand the question, but is there a consumer softness issue? Is luxury soft because of the brand mix and what's available, or is it soft because of the consumer? It's a little bit of both. I think the number one, it's the aligning the EV and the ICE vehicles. The demand for EV is obviously down. Getting that aligned is a part of it. I do think that there is a part of it that there's affordability and consumer softness. That's the reason we're already seeing now that the incentives are starting to come. BMW has signaled that they're coming. Hyundai just came out with one that's a very small part of our mix, but we're starting to see those come. Really, it wasn't just Sonic. If you look at Q3, Sonic was number one in units new, number one in GP growth for new, and overall growth of all of our peer group on the same store basis. As we were talking to our peer group during October, everyone was seeing these big decreases in Mercedes-Benz, BMW, Audi. I do think it's a combination of both getting the right inventory, getting the EVs out because there's not a big demand now that the tax credit is gone. I think there's also overall economic softness in the consumer. One caveat to follow on that. We've seen the fourth quarter, obviously, is the largest quarter. December is the largest single month for those luxury brands. We've seen where we've had unexpected softness early in the quarter, and ultimately the quarter ends up as good or better. It's just too soon to tell from where we sat three weeks ago or three weeks into the fourth quarter, but it was lighter than anticipated as we came out of 3Q. Yep. Oh, Brian. One follow-up to that question. With regard to what you're seeing, maybe the softness in the higher end, is there anything geographically that's noticeable? My second question, you mentioned the potential pull forward in demand Q2 to Q3. Given the diversity of your business, is that just new, or do you also think you see that dynamic within the pre-owned business? Actually, our pre-owned business is very strong, so I don't think that it's been strong into the fourth quarter. I don't think that we're seeing the same kind of dynamics in the used. In theory, if there is softening, you've got individuals that would be buying new that end up buying the used vehicle or fixing their vehicle, which also is beneficial for us. The first part of the question again? Just geographically. I haven't seen anything material. I don't know if you have. I think the only component there would be from a California exposure. That's about 25% of our business. And the EV penetration historically has been three, three and a half times the national average there. Oddly enough, there's a couple of our big California, BMW, and Mercedes-Benz stores who are raising their hands saying they need more electric vehicles, which hasn't been something we thought we would hear for several years. It's going to be a matter of kind of matching the right inventory with those customers by market, I think, as the manufacturers figure out what their go-forward production mix looks like. Yeah, so moving along to some of the other segments, can you just talk about the EchoPark segment and how that operating environment has changed over the last few years and then what you expect the opportunities in the future? Sure. We started actually EchoPark in 2014. And we actually grew it, and it started being some of our most profitable stores into 2019. Obviously, COVID changed a lot for all the used-only providers. The sustained change has happened. And at one point, we had 50 locations. At that point, because there were no lease deals being done, the fact that there were fewer new cars being produced, there really was not a big enough inventory in the company or in the country, excuse me, to optimize our inventory of 50 locations. And so we shut down to we now have 14 locations. 18 EchoPark? Yes. 14 Powersports. Yeah, 18 EchoPark, 14 Powersports, excuse me. And went from 50 to 18. That's when you started seeing the profitability come back. We're able to optimize those with the current supply of used vehicles. What you're going to see is this is the trough of lease deals. Going forward into 2026, 2027, 2028, I think it takes to 2028 to get back to pre-COVID. Those return lease deals are a big source of what we are doing. We think that's going to be a tailwind going forward. That's one of the reasons that we've halted expansion and start back again in 2026 because we think there's enough supply to be able to optimize inventory across new stores. How much, when you look at the landscape, and you're certainly not alone in this, to seeing how Carvana has outgrown the industry, how much of their growth do you think is consumers wanting an online-only purchase versus wanting the in-store experience that you provide, that the largest competitor provides, etc.? Speaking in my own opinion, not the company's, I think that I do not think it has anything to do with the online experience. I think it has more to do with, number one, I think Carvana's biggest asset is a brand. I think that if you're looking for a used car, you're going to go and go to Carvana and shop that. At EchoPark, we literally are $3,000-$4,000 cheaper for the relatively same car. The reason that we do not have that Carvana customer is because of the brand. As we grow, we have to create that brand to pull them. I do think that every consumer wants to get through the process online. We still see that the vast majority want to see the used vehicle, especially, and drive that vehicle before they actually commit to it. However, we are pivoting as well as we're looking at, should we start delivering directly to their homes as well? That is still on our roadmap as we continue to expand. I think the biggest pull is not related to an online purchase because most all of us can do everything up until the delivery. I think it's the brand name. In many cases, I think it's because it's a challenged credit individual with Carvana. They approve 99% of their loans. I will not get into the reasons, but they do. I think this is the one location that they can go to. I think that's a part of it as well. To add to that, if you look at CarMax, who's less than 3% national share from a used car volume, Carvana is growing quickly, still running about half the quarterly volume. We do not have to compete directly with them. There are plenty of transactions available. The brand awareness is key to have consumers find us higher in their search funnel. We were targeting a different age, make, mileage, price point on vehicle. Our relative pricing, the market is different. We are strategically differentiating ourselves from those other two larger competitors. It provides the growth opportunity within Sonic. It is 15% of our revenues today. 85% still comes from the core business that, as Heath said, has been performing at or near the top of the peer group for the last four quarters. The core business allows us to invest in and be disciplined about the growth, with significant upside potential from EchoPark. One of the great opportunities at EchoPark is their brand does not just sell cars. It allows them to buy cars. Just like CarMax and Carvana will buy your car. That is the biggest issue we all have, which is supply. I think that is a big advantage Carvana has, that as we continue to buy more and more off the street rather than going to auction, that gives you a bigger margin opportunity. A smaller but area you guys see opportunity in the Powersports segment. Can you just talk about the rationale about entering into that market and then kind of just the operating environment today and where you see it's going? Sure. I mentioned it a little bit at the beginning, but basically, when you look at the Powersports segment across the country, it looks very similar to the 1990s retail automotive. It is very fragmented. It is very unsophisticated in its operational model and its marketing campaigns, etc. Very similar to what retail automotive looked like when Roger Penske and O. Bruton Smith and everyone went out and started consolidating those and modernizing those. That is one of the main drivers. Secondly, if we are buying a, if we go out and buy BMW stores, I am paying 10x EBIT. If I buy a Ford store, I am paying five, maybe. Toyota actually is probably 10x now, but used to be 7x. These stores trade for 3x EBIT, 3x or 4x EBIT. You can actually get in at a lower multiple and a better valuation. Those two things combined are the things that are motivating us. We are still trying to build a foundation of predictable, repeatable, sustainable processes, technologies before we really grow that a lot. The other concerns are we want to see where Harley-Davidson is going to go with the leadership, be sure that we are comfortable with that going forward. The biggest challenge and the biggest difference between the franchise of automotive and Powersports is one is a want to have, the other one is a need to have. That definitely changes the seasonality of that sector or segment. Perfect. And then just really quickly on capital allocation plan, can you talk about how you're prioritizing capital allocation between organic investments, shareholder returns, and acquisitions? Yeah, I think this year you'll see that the vast majority will be in acquisitions. We did five large Chad Lynn River dealership acquisitions recently. We have been given our dividend went up, I think, two quarters ago. We continue to look at a dividend increase as it is. We want to be paying out about 20%-25% of earnings in our dividends. We are very committed to that. Again, the organic growth, I think you're going to see capital allocations start transitioning to that category as we grow EchoPark going forward. In 2026. Perfect. We are coming up to the end of the time. I really appreciate you guys coming to Las Vegas and presenting here and hope for the best. Thank you very much. Appreciate your time. Thanks for having us. Heath, thank you. Danny, thank you very much.