Segment Information

3 Months Ended

Mar. 31, 2020

10. Segment Information

As of March 31, 2020, Sonic had two operating segments comprised of: (1) retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products (the “Franchised Dealerships Segment”); and (2) pre-owned vehicle specialty retail locations that provide customers an opportunity to search our nationwide inventory, purchase a pre-owned vehicle, select finance and insurance products and sell their current vehicle to us (the “EchoPark Segment”). 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.

Reportable segment financial information for the three months ended March 31, 2020 and 2019 are as follows:


	Three Months Ended March 31,
	2020		2019
Segment Revenues:	(In thousands, except unit data)
Franchised Dealerships Segment revenues:
New vehicles	$	959,489	$	1,066,334
Used vehicles	566,888		603,949
Wholesale vehicles	42,440		52,533
Parts, service and collision repair	324,501		336,225
Finance, insurance and other, net	83,029		80,521
Franchised Dealerships Segment revenues	$	1,976,347	$	2,139,562

EchoPark Segment revenues:
Used vehicles	$	283,164	$	216,417
Wholesale vehicles	6,103		2,237
Parts, service and collision repair	10,179		5,205
Finance, insurance and other, net	32,263		25,717
EchoPark Segment revenues	$	331,709	$	249,576

Total consolidated revenues	$	2,308,056	$	2,389,138


	Three Months Ended March 31,
	2020		2019
Segment Income (Loss) (1):	(In thousands)
Franchised Dealerships Segment (2)	$	22,656	$	61,182
EchoPark Segment	2,096		2,106
Total segment income (loss)	$	24,752	$	63,288
Impairment charges (3)	(268,000)		(1,952)
Income (loss) from continuing operations before taxes	$	(243,248)	$	61,336

Retail New and Used Vehicle Unit Sales Volume:
Franchised Dealerships Segment	47,762		52,609
EchoPark Segment	13,986		11,051
Total retail new and used vehicle unit sales volume	61,748		63,660

(1)Segment income (loss) for each segment is defined as income (loss) from continuing operations before taxes and impairment charges.

(2)For the three months ended March 31, 2019, the above amount includes a pre-tax net gain on the disposal of franchised dealerships of approximately $46.7 million, offset partially by approximately $6.3 million of pre-tax executive transition costs.

(3)For the three months ended March 31, 2020, the above amount includes a pre-tax impairment charge of approximately $268.0 million related to adjustments in fair value of goodwill for the Franchised Dealerships Segment as a result of the economic disruptions due to the worldwide spread of COVID-19 which has adversely affected our business. For the three months ended March 31, 2019, the above amount includes approximately $1.9 million of pre-tax fair value adjustments to real estate at former EchoPark locations classified as held for sale.


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Impairment Charges:
Franchised Dealerships Segment	$	268,000	$	26
EchoPark Segment	—		1,926
Total impairment charges	$	268,000	$	1,952


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Depreciation and amortization:
Franchised Dealerships Segment	$	19,589	$	20,237
EchoPark Segment	2,708		2,412
Total depreciation and amortization	$	22,297	$	22,649


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Floor Plan Interest Expense:
Franchised Dealerships Segment	$	9,608	$	12,505
EchoPark Segment	900		721
Total floor plan interest expense	$	10,508	$	13,226


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Interest Expense, Other, Net:
Franchised Dealerships Segment	$	10,599	$	12,414
EchoPark Segment	366		439
Total interest expense, other, net	$	10,965	$	12,853


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Capital expenditures:
Franchised Dealerships Segment	$	17,249	$	25,229
EchoPark Segment	2,556		5,390
Total capital expenditures	$	19,805	$	30,619