索尼克汽車次季扭虧為盈 淨利5740萬美元 收入增7.6%

sah-202607302026Q2FALSE0001043509--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.
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
OR
☐    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 classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01 per shareSAHNew 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,
2026202520262025
(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 vehicles24.8 29.4 45.4 51.5 
Total new vehicles1,794.1 1,695.5 3,422.2 3,373.9 
Used vehicles1,329.7 1,180.7 2,599.3 2,405.7 
Wholesale vehicles70.5 83.3 142.1 166.1 
Total vehicles3,194.3 2,959.5 6,163.6 5,945.7 
Parts, service and collision repair530.2 495.6 1,046.9 970.0 
Finance, insurance and other, net209.5 202.1 412.0 392.8 
Total revenues3,934.0 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 profit616.2 602.2 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 taxes80.3 (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 outstanding31.6 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 outstanding32.1 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.

1

SONIC AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(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 agreements0.1 (0.7)0.4 (2.0)

Total other comprehensive income (loss) before taxes0.1 (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.

2

SONIC AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

June 30, 2026December 31, 2025
(Dollars in millions, except per share amounts)
ASSETS
Current Assets:
Cash and cash equivalents$19.2 $6.3 
Receivables, net425.6 469.0 
Inventories2,324.5 2,012.9 
Other current assets329.9 344.3 
Total current assets3,099.2 2,832.5 
Property and Equipment, net1,673.7 1,562.9 
Goodwill432.4 421.8 
Other Intangible Assets, net436.9 454.1 
Operating Right-of-Use Lease Assets262.2 279.1 
Finance Right-of-Use Lease Assets337.2 328.4 
Other Assets140.6 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-trade2,023.4 1,748.1 
Trade accounts payable156.2 151.0 
Operating short-term lease liabilities30.5 33.5 
Finance short-term lease liabilities29.9 19.2 

Other accrued liabilities414.4 409.1 
Current maturities of long-term debt193.3 52.4 
Total current liabilities3,063.9 2,597.9 
Long-Term Debt1,565.5 1,563.0 
Other Long-Term Liabilities114.2 114.4 
Operating Long-Term Lease Liabilities251.1 268.3 
Finance Long-Term Lease Liabilities361.9 359.0 

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 earnings1,573.9 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.

3

SONIC AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

Class A 
Common StockClass A
Treasury StockClass B 
Common StockPaid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ Equity
SharesAmountSharesAmountSharesAmount
(Dollars and shares in millions, except per share amounts)
Balance at March 31, 202569.7 $0.7 (47.8)$(1,274.2)12.0 $0.1 $890.6 $1,470.7 $2.9 $1,090.8 
Shares awarded under stock compensation plans0.4 — — — — — — — — — 
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, 202570.1 $0.7 (48.0)$(1,283.0)12.0 $0.1 $896.2 $1,413.2 $2.4 $1,029.6 

Class A 
Common StockClass A
Treasury StockClass B 
Common StockPaid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ Equity
SharesAmountSharesAmountSharesAmount
(Dollars and shares in millions, except per share amounts)
Balance at March 31, 202670.3 $0.7 (50.7)$(1,457.0)12.0 $0.1 $908.5 $1,529.4 $(0.4)$981.3 
Shares awarded under stock compensation plans0.1 — — — — — — — — — 
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, 202670.4 $0.7 (50.8)$(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.

4

Class A 
Common StockClass A
Treasury StockClass B 
Common StockPaid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ Equity

SharesAmountSharesAmountSharesAmount
(Dollars and shares in millions, except per share amounts)
Balance at December 31, 202469.4 $0.7 (47.3)$(1,238.9)12.0 $0.1 $884.6 $1,412.0 $3.8 $1,062.3 
Shares awarded under stock compensation plans0.7 — — — — — 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, 202570.1 $0.7 (48.0)$(1,283.0)12.0 $0.1 $896.2 $1,413.2 $2.4 $1,029.6 

Class A 
Common StockClass A
Treasury StockClass B 
Common StockPaid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders’ Equity

SharesAmountSharesAmountSharesAmount
(Dollars and shares in millions, except per share amounts)
Balance at December 31, 202570.1 $0.7 (48.6)$(1,321.3)12.0 $0.1 $908.2 $1,481.1 $(0.7)$1,068.1 
Shares awarded under stock compensation plans0.3 — — — — — — — — — 
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, 202670.4 $0.7 (50.8)$(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.

5

SONIC AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
20262025
(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 equipment67.0 69.4 

Debt issuance cost amortization3.7 3.2 

Stock-based compensation expense11.1 11.5 
Deferred income taxes(7.3)(55.2)

Asset impairment charges0.4 173.8 
Loss (gain) on disposal of dealerships and property and equipment
(1.1)3.8 

Other0.3 0.6 
Changes in assets and liabilities that relate to operations:
Receivables52.3 105.2 
Inventories(314.3)(26.5)
Other assets2.2 7.1 
Notes payable - floor plan – trade31.6 (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 equipment19.5 17.1 
Proceeds from sales of dealerships40.5 — 
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 facilities24.6 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 activities238.4 155.7 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
12.9 66.4 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR6.3 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.

6

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.
7

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 revenu