All right. Next up, we have Sonic Automotive. Sonic's one of the largest automotive retailers in the U.S., operating three businesses, the franchise dealership, used vehicle retailer EchoPark, and their powersports dealership. The company's diversified business model provides exposure to several areas of the automotive retail market, each with its own operating dynamics and growth opportunities, which we'll hear more about right now. Happy to introduce Danny Wieland, Senior Vice President of Investor Relations and Financial Reporting, and Cody Karns, Senior Manager, Investor Relations and Capital Strategy. Thank you, Eddie, and thanks for having us, and thanks everyone for joining. Just a real quick overview of Sonic's business. We've got three segments, roughly $15 billion in annual revenues across our 108 franchise dealership locations. That's the new vehicle franchised dealership business, about 80% of our revenue mix. Within that, 3/4 of the gross profit that we generate comes from parts and service and F&I, so not vehicle dependent. High-margin businesses, very much more stable through the economic cycle. We've also got our EchoPark pre-owned business, which is a growth potential, currently at 18 locations, about 15% of our revenue. That's a big growth opportunity in our pre-owned market, as we kind of offset and hedge against some of the cyclicality of the franchise business. On the powersports side, that's a new adjacent segment for us, 20 locations, roughly 2% of our revenue to date, but it's a consolidation opportunity, think very fragmented, like auto retail was back in the late 1990s when the consolidators started to come together. Yeah, you have those three businesses, each with their own unique opportunities in the market. How do you look at managing a diversified portfolio like this, and what are your thoughts on the long-term mix when it comes to balancing these three businesses? Yeah, at this point, we do like that it diversifies us relative to the average auto retailer and our five public franchise peers. Even compared to the pre-owned only, it gives us a much broader range of revenue streams within the franchise business, but then also additionally in those adjacent segments. We do like our brand exposure. We're heavily luxury exposed on the franchise side. Over 60% of our mix comes from the high-end luxury brands, BMW, Mercedes, Jaguar Land Rover, three of our largest. And then as well as our footprint across California and Texas, and then throughout the Southeast and Mid-Atlantic. We get good brand and geographic diversification, but also we have the ability from a capital allocation strategy to grow via acquisition on the franchise side, to grow via powersports acquisition. We're currently paying about a 2.5% dividend, and then obviously, as share repurchases become attractive at today's stock price levels, that's always balanced with acquisition growth capital needs. You guys reported your third quarter results last week. Maybe just talk to us about kind of the two or three most important things you want investors to walk away with. Yeah, we had a good operational quarter from a top-line perspective. We were the only one of the public franchise peers to grow our new vehicle GPU, our used vehicle GPU, and our F&I per unit sequentially from 2Q to 3Q, which is counter to some of the other trends we've seen in the industry. So, I think that was a differentiation for us. We obviously were able to grow EchoPark used unit volume 22% in the third quarter year-over-year, following 18% growth in the second quarter, both of which well outpaced the industry growth in used. But if you looked at the bottom line results, we've got an opportunity to better leverage our expense structure to let this strong consumer demand and top-line growth flow through to the profit margin growth perspective. And that's something where we've already put some actions in place, and we believe that it's a little bit easier for us to control the expense side of it than it is to necessarily go manufacture demand, particularly in a challenged affordability environment like this. So if we turn to some of the industry outlooks and consumer trends, you guided to 15.5 million- 16 million new vehicle sales for 2026. So what are you seeing in your stores this fall, and then kind of early thoughts on 2027? Yeah, so we're very positive going into Q4. Demand's held up relatively strong. I think our luxury mix does insulate us a bit, and the K-shaped economy helps our business model. We're essentially flat year-over-year. We're actually up year-over-year in new vehicle sales if you exclude the EV sales this past quarter from 2025 due to the EV credit expiration. There's about 2,200 EV sales that materialized last year that didn't this year, again, due to that credit expiration. So, we're feeling very good coming out of the quarter with the momentum going into Q4. The OEMs are giving us good indications that it will be a strong demand holiday season. We've already been stocking up with vehicles in anticipation of a strong demand holiday season. And then the OEMs, specifically Mercedes and BMW, have both indicated that we're expecting to see higher incentive monies in Q4 this year, again, as those OEMs fight for the luxury crown in the U.S. So, it's a good outlook for the fourth quarter. 2027's still a little bit early to give any projections on, but for Q4, we're feeling very good. Looking at the consumer, through your F&I business, you see the consumer's credit profile every day. So where is the stress building, and is it spreading beyond subprime buyers today? Yeah, it's actually been interesting. I mean, it's been several years now where the new and used car buying public has been surprisingly resilient given the affordability challenges. You've got near $50,000 average selling price on new vehicles nationwide. For us, with our luxury mix, it's north of $60,000 ASP. Used affordability has become a bit more attractive, and as Cody alluded to, there are some former new car buyers that are actually priced out of the new car market, and that's why we're seeing this kind of 16 million SAAR environment. But from a credit availability, credit quality, you've actually seen surprising strength in the buyers that are in market. We do believe that there are some buyers that are sidelined currently due to negative equity positions, given anybody that bought a vehicle in the 2021, 2022, 2023 kind of run up, particularly on used car pricing at that point, you're standing a little bit more in the negative equity balance. There's still 16+ million new car buyers. Our penetration rates on finance and our third-party lenders have held steady. Even the other F&I product attachment, extended warranties, et cetera, we've seen it's been more difficult to add the additional and upsell the additional product on those vehicles, but you haven't seen any degradation in that take rate. All of those are encouraging, and really, the F&I per unit remains one of the stronger portions of our business and most predictable portions, and something that we have a bit more control over than obviously vehicle-related gross profit. Cody, you mentioned earlier on the impact of the federal tax credit expired on EVs. Just looking at EV demand today, how has that changed at your stores, and is EV inventory a margin risk? Yeah, we're about 10% EV mix, again, given our heavy luxury mix in our geographic presence in California. Historically, EVs had been a bigger headwind on our blended GPU, but that's gotten a lot better over the past two years as manufacturers have more aligned supply with demand, and obviously through the last six months as oil prices have risen. It's less of a headwind now as it was, again, a few years ago. It's about $125 year-to-date on a blended GPU headwind. But EVs, especially on the used side, are a hot demand right now. Used EVs were the only increase in wholesale pricing over the last quarter across the vehicle segment mix. Still a lot of demand out there for the used side of EVs, and we're getting a lot of used EVs coming off lease, so it's easy for us to match those off-lease vehicles with consumers given the demand. Looking at your three businesses, I want to start with EchoPark since it is one of the central growth pillars for Sonic in the future. Looking at the business, it's been in operation since 2014. Could you walk us through the history there, including the 2023 decision to scale back on the footprint and where that stands today? Yeah, absolutely. We think that EchoPark is in as good a position as it's ever been, and obviously went through some challenges. From the initial formation of EchoPark as a concept, it was a way for us to take our expertise in used vehicle inventory management. We built our own inventory management and pricing system internally almost 15 years ago now, because there was nothing available off-shelf to let us scale as we thought we would be able to or needed to in order to compete on a national level, with at that time CarMax as the only other national used car retailer. Since then, we've got some new entrants in the space, and the space continues to get more focused and evolve. Really, the important thing for us is that we collectively look at it as an opportunity to differentiate our EchoPark value proposition to the customer via our inventory offering, via our pricing, typically we're as much as $2,500 below market. Really, the way that we monetize that into the business model is via higher warranty penetration on those vehicles, and really maximizing the F&I per unit, as we just talked about on the franchise side, and really being a high volume throughput structure with EchoPark, where we're selling 370, 380 units per rooftop per month, compared to our franchise stores that are in the 80 to 85 units per rooftop range. So a lot higher throughput. Really what we've evolved through and the challenges that we, anybody in the used car space, had to deal with from 2020 up until the end of last year was a tight supply of nearly new off-lease vehicles, pretty significant inflation in used vehicle pricing as a result of the new vehicle supply constraints in 2022, 2023. Ultimately, we were trying to grow too fast in the face of those industry headwinds. Ultimately, we rescaled our business down to the 18 EchoPark locations today, expected to do in the high 70,000 annual unit run rate this year, and are beginning to see improvement in off-lease supply. We've also improved our non-auction sourcing mix to close to 50/50 between auction sourced and non-auction, which gives us more flexibility in terms of the way we price and the type of inventory we offer, but it also allows us to go find more attractively priced, higher mileage, lower priced vehicles to address some of the affordability concerns in auto retail today. From where we sit, have gone over the last five years, we are beginning this quarter to expand EchoPark's footprint again, opening a new market in Orlando, Florida in December. Expect to open two to four locations next year, and this quarter, in the fourth quarter, we're beginning to invest in a brand campaign for EchoPark. We believe that we've got the best priced vehicles on the market. We've got objectively the best guest experience as rated by a national firm in the used car space. The only reason that we're not being able to grow at an even faster rate than we are has to be an awareness issue. That's the third leg of this growth plan for us, is to begin to educate consumers as to what the EchoPark brand offers and what that means for Sonic and EchoPark as a whole in terms of the growth potential to where EchoPark could be as big or bigger than our Sonic franchise business from a revenue perspective in the medium to long term. Danny, this is Brian Sponheimer. Thanks for joining us today. You mentioned something in your prior remarks that I think bears mentioning about the off-lease supply and the inflection taking place there. Can you talk a little bit about what that means for that off-lease supply to begin to grow again, not only for your EchoPark franchises, but also for your typical new vehicle franchises? Yeah, absolutely. Last year, 2025, was the trough of absolute lease maturities coming off of depressed new vehicle SAAR and depressed new vehicle lease penetration in 2022. This year, in 2026, there's about a half a million more lease maturities coming into market, and that's relatively evenly balanced on those incremental units between internal combustion vehicles and electric vehicles, which were generally sold at a higher lease penetration, higher lease rate than an ICE or a hybrid vehicle would have been. As we've seen those come through, we've seen a couple of things. One is it's benefited both pricing, if you look at the Manheim Used Vehicle Value Index, look at the three year index specifically, down considerably year-to-date, which is helping with affordability. Two, on the EV mix side, it's actually introduced a lot of potential EV buyers from a used vehicle perspective, where the acquisition cost on an off-lease nearly new used vehicle, used EV may be 40%-50% of what it was new. At that price point, you're seeing a lot of interest there. As we expect to go into next year, there's another roughly half a million units of increased lease maturities, and it'll be 2028, maybe even early 2029 before you get back to pre-pandemic levels, which is roughly 4.5 million lease maturities a year. All of those are aligning with what we anticipated or hoped for in terms of not just easing headwinds, but beginning to see tailwinds in the used car space to ramp our EchoPark growth. Our franchise used business is benefiting. We've got three consecutive quarters of year-over-year same store volume growth, diversifying ourselves away from the new business that's obviously a little bit of affordability constraint, but also outperforming the broader industry and the peer set from a used volume growth. As that supply continues to improve, it's good for our business, it's good for consumers from a pricing perspective, and ultimately sets us up for some further growth runway here in the next 12, 18, 24 months. I appreciate that. You touched on affordability. It's something that we've talked about already today, but something we're going to talk about quite a bit. What are you seeing notably with your EchoPark consumers that may be a little bit different than you see your traditional new vehicle franchises, and where, if any, spots are you seeing strain as it relates to customers looking to potentially come in and get one vehicle and end up trading down and finding another? Yeah, we absolutely believe that there is some trade-down occurring, particularly out of new and into used. It's one that's very difficult to quantify and track from any kind of level of data precision because it's normal course for that to happen, but it does make sense given where average selling prices are and the relative monthly payment gap, despite the fact that you've got manufacturer finance incentives on new that don't exist on used. When the used average selling price is less than half of what the new average selling price is, that's a pretty large payment gap that's driving more and more customers into the used market. Overall, I think that we're seeing, again, pretty good, maybe surprisingly good credit availability, but it does feel like the shoppers that are in market are in a better equity position in their existing vehicle or have already been part of this deferral or this pent-up demand over the last four years because of either pricing or inventory shortages, and you're starting to see those come back through. But ultimately, we believe that this kind of 16 million new vehicle SAAR environment is kind of a new normal, but there's still runway on the used vehicle side of it to where that industry number in the 38.5 million transactions annually still has room to grow back to its previous high at close to 42 million. So taking a step back and looking at the industry as a whole on the used side, who do you see as EchoPark's real competition there? Is it Carvana, CarMax, franchise dealers, the used operation there? And where do you win on there? Yeah, so it is CarMax, Carvana, such a fragmented space, the used car landscape. Carvana is now at about 2% of market share now. I think CarMax around 3%, 4%. EchoPark, we feel strongly that we should be the third in that segment. And the three of us, CarMax, Carvana, EchoPark, could easily make up 10% of the market and operate just fine. We do not see a lot of pressure from those peers, kind of the pressure just because of how fragmented the space is. It is going to be more your mom and pops just because there are more of them. But EchoPark, once again, differentiates itself as the low-cost leader. We are 90%, 95% of market pricing, and as Danny mentioned earlier, we have the best customer experience. Those are the two pieces that are helping drive our volume growth. Again, 22% year-over-year for Q3 and 18% year-over-year for Q2. We feel, again, strong that this is the right time to continue to EchoPark, investing in the brand and growing out that piece of the business. Recently within the segment, volume growth did come with lower GPUs. How do you balance growth against kind of per unit profitability, and where do you expect GPUs to settle relative to your $3,100 - $3,300 target goal? Yeah, it's been interesting because it has, as you said, it's been a function of higher volume growth by virtue of adding more high mileage, therefore more affordable vehicles to EchoPark's mix. In doing that, generally, those are non-auction sourced. So on average, we're saving about $1,200 in acquisition cost on a non-auction source unit versus an auction source unit. The downside is that the F&I attachment, particularly the extended warranty attachment on a high mileage vehicle, doesn't have the same consumer value proposition. So we've done a couple of things, so that's put pressure on F&I per unit. We've done a couple of things, introducing and tweaking the actual warranty offerings on not just high mileage, but also electric vehicles, kind of overcoming the consumer perception that EVs have less long-term maintenance or repair risk. We're actually seeing that the average repair order cost on an electric vehicle is about 50% more than an ICE vehicle today. While there's fewer moving parts, there's less frequency of visits, there's still major mechanical failure. In many cases, it's the entire, as an example, drive motor that gets replaced as opposed to components at a much lower cost. So, we're working on some different products and how we grow that F&I attachment on those incremental units as that inventory mix shift has occurred. But also, we've got the opportunity to claw back some of that total GPU compression via better front-end gross profit per unit. Today, we're running in the $200- $300 range, and that's by design to be a low price, again, 90%, 95% of market As we build more EchoPark brand awareness and brand value and trust, who's to say that that $2,500 discount to market couldn't be $2,200 or $2,000 to still drive the volume, but then add some incremental front end. On the volumes that we do, even $100 worth of front-end GPU leverages the bottom line very efficiently, much more so than it would in a franchise model because of our relatively fixed cost structure. Very excited about the growth opportunities ahead EchoPark, but just moving along to the franchise dealerships. Talking about the new vehicle industry affordability, obviously it's become a headwind with the average monthly payment above $800, and roughly one in five of your customers paying more than $1,000 per month. Just talk about the industry's ability to sustain this level and what has to give, if anywhere. Yeah, to be clear, that's an industry figure. 20% of new vehicle monthly payments are over $1,000. Over 70% are 72 month or longer terms. The way that the new vehicle buyer has adopted to the challenges and the all-time high average selling price, again, in that $50,000 range is to extend term to get that payment to a more manageable level. We believe that that's part of the reason that 16 million might be the new normal kind of high-end new vehicle SAAR, as opposed to every once in a while we would dip into the 17.5 million range. Ultimately though, a stable 16 million provides a lot more visibility and a lot more stability for us and the manufacturers in terms of their production allocations and production decisions. It reduces the need for OEMs to come out of pocket with significant incentive money in order to support an oversupplied, or relatively weakened demand new vehicle environment. It feels like given the current product segment mix, which is heavily skewed towards light truck and SUV, you're not going to get a lot of price reduction on new vehicles unless the OEMs decide or gas prices remain persistently high and they go back to some of these more entry-level or compact, more fuel-efficient vehicles. Even that's a long-term time to redesign and reallocate production lines. It feels like there's an opportunity to maintain kind of the current segment mix at that 16 million level, while also taking advantage of, that's 1 million- 1.5 million former new car buyers who are now in the used car market of the nearly new used car market, which is both our franchise and EchoPark's sweet spot in terms of the used car offerings. Danny, what is the attach rate difference for someone over a buyer that's willing to pay cash versus those that are taking a 72 or 84 month loan from a parts and service perspective? Are you able to capture potentially more of the life cycle of a customer that's potentially taking a longer life loan in order to basically keep up their vehicle to factor respects? Yeah, it's interesting. We really don't see a divergence in behavior in terms of that return to dealer, return to franchise dealer service life, in terms of the behavior from the consumer, whether they're a cash buyer or a finance buyer. To your point, one of the reasons that we've been able to expand our average vehicle service age to about five and a half years is because of longer loan terms, and in some cases, longer manufacturer warranties, particularly on electrified product. You get more retention via that tie-back for the manufacturer warranty to the franchise dealer. That's good from a long-term perspective. Obviously, the vast majority of our parts and service gross profit comes from that kind of four to eight year-old vehicle. The one to three year is relatively lighter, except for any warranty or recall pay from the manufacturers. Ultimately, what we want to do is make sure that we are value price competitive on light maintenance and routine maintenance and service work, and that's something we've refocused on beginning in the second quarter of this year. Also focused on customer satisfaction and the guest experience. I think a lot of the investment that we're making in AI and utilizing additional technologies is with a view towards more efficient marketing to that service customer as opposed to a vehicle buyer, as well as then more efficiently managing our combination of stall capacity and technician capacity to better load the shop to alleviate some of those capacity constraints that historically are what put a ceiling on parts and service growth. Just investing in AI is something we're going to talk about today, tomorrow, and well into the future. Do you envision when you all are doing any financial planning, any major changes that AI can bring to your SG&A to gross percentage, and what are the buckets that you think that it can most readily impact? Yeah, interestingly, it's a little bit on both the cost saving as well as the gross generation or efficiency and optimization of gross generation. We're about 8 years into our robotic process and automation in back office processes, so we've got a pretty good head start there, and we've done a lot of headcount avoidance as we've rolled in and centralized some back office processes. Obviously, the technology that the LLMs and other agentic AI tools offer us today can give even more tasks and workflows that can be rolled into that automation effort. So we're really focused on that from a back office and efficiency. Even as simply as service scheduling, the industry number is something to the effect of 60% of inbound service scheduling calls go unanswered, right? If we can use AI agents in order to not just schedule, but also begin to see in plain English what is the problem that you are coming to see us for, and we can almost, in some ways, preload the technician and the service advisor to say, "Here is what we think it is. Let us make sure we have got parts on hand. Let us make sure we assign this vehicle to the right level of technician to make it most efficient from our resource use, but also better guest experience, less time in shop, less time waiting on diagnostics." Those are a couple of the options or the opportunities ahead of us and are in early pilot phase. Some of the others are going to come with the way that people begin to buy and shop for vehicles. Right now, it is more so of a AI-supported research on what is the pricing, find me comparable pricing, look at this in this market, or if you are looking for a specific vehicle, you can whittle down on some of that. Also, it is an evolution too in how we reach those customers and how what used to be SEO and SEM importance is now answer engine optimization for our websites to make sure that the AI tools are reading them in a way that not only drives us to be recognized, but also drives the credibility of that as a source. That becomes a forward momentum process, and that is one of the things we have kind of laid the groundwork for, particularly with EchoPark ahead of this brand launch, to make sure that we are reaching consumers how they are beginning to shop differently, as well as down the road as that continues to evolve. Staying on capital allocation, leverage remains within your target at around 2.5 x. Just talk about how you are balancing returning capital to shareholders against investing in growth at the company. Sure. As Danny mentioned earlier, we're paying a pretty heavy dividend, Mayor Pierce said, of about 2.5% dividend yield, which again, we're very happy to do. Capital allocation, we look at M&A and share buybacks out of the same bucket. We certainly like to invest in the long-term business, and there are plenty of great opportunities in the M&A landscape right now. We're seeing some of the most opportunities in the last decade and some of the best opportunities in the last decade. When I say best, I mean 7- 15 size platform stores in the right geographies and the right brand mix. You can see us in the next few quarters looking at some of these larger acquisitions, again, as we like to invest in the business. If we do so, then we'll likely be on the sidelines for buybacks, but we do understand our share price is trading at a pretty attractive rate right now. If M&A is off the table, we'll likely be back in the market looking at buybacks. On the M&A side, looking across the franchise and powersports segment, and then as well as EchoPark store openings, where do you see the best risk-adjusted return today? Yeah. EchoPark remodel is a great opportunity. We really have a lot of confidence in the long-term play for EchoPark. Really, our only constraint is really finding the land to develop new stores on in the right markets. That's what's causing the slowdown. We're still planning to open one new store in Orlando in December, and then hopefully two to four stores next year. So we enjoy building out that organic growth opportunity there. On the M&A side, powersports are relatively cheap. You can buy those stores for two to four times earnings. On the franchise side, it varies by domestic versus import versus luxury, what multiple you're going to pay. But once again, when the right opportunity comes around, we weigh each of those options against each other, and I think we've done a good job thus far on differentiating, providing a differentiated business to our investors across EchoPark, franchise, and powersports. All right. We are running up on our 30 minutes time here, but Danny and Cody, just want to thank you guys for presenting at the 50th Annual Automotive Symposium this year. Thank you very much. Thank you. We appreciate it. Thanks, everyone. Okay.