Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 29, 2020 | |
Document Information [Line Items] | ||
Entity Registrant Name | SONIC AUTOMOTIVE, INC. | |
Entity Central Index Key | 0001043509 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | SAH | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
City Area Code | (704) | |
Entity Address, Address Line One | 4401 Colwick Road | |
Entity Address, Postal Zip Code | 28211 | |
Entity Tax Identification Number | 56-2010790 | |
Local Phone Number | 566-2400 | |
Entity File Number | 1-13395 | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Address, City or Town | Charlotte, | |
Entity Address, State or Province | NC | |
Document Quarterly Report | true | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 30,890,395 | |
Class B common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,029,375 |
Details
Details | 3 Months Ended |
Mar. 31, 2020 | |
Document Information [Line Items] | |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Security Exchange Name | NYSE |
Entity Incorporation, State or Country Code | DE |
Document Transition Report | false |
Title of 12(b) Security | Class A Common Stock, par value $0.01 per share |
Entity Small Business | false |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Revenues | $ 2,308,056,000 | $ 2,389,138,000 |
Cost of Sales: | ||
Cost of Sales | (1,957,478,000) | (2,030,127,000) |
Gross profit | 350,578,000 | 359,011,000 |
Selling, general and administrative expenses | (282,156,000) | (247,095,000) |
Impairment charges | (268,000,000) | (1,952,000) |
Depreciation and amortization | (22,297,000) | (22,649,000) |
Operating income (loss) | (221,875,000) | 87,315,000 |
Other income (expense): | ||
Interest expense, floor plan | (10,508,000) | (13,226,000) |
Interest expense, other, net | (10,965,000) | (12,853,000) |
Other income (expense), net | 100,000 | 100,000 |
Total other income (expense) | (21,373,000) | (25,979,000) |
Income (loss) from continuing operations before taxes | (243,248,000) | 61,336,000 |
Provision for income taxes for continuing operations - benefit (expense) | 44,117,000 | (18,987,000) |
Income (loss) from continuing operations | (199,131,000) | 42,349,000 |
Discontinued operations: | ||
Income (loss) from discontinued operations before taxes | (285,000) | (180,000) |
Provision for income taxes for discontinued operations - benefit (expense) | 83,000 | 52,000 |
Income (loss) from discontinued operations | (202,000) | (128,000) |
Net income (loss) | $ (199,333,000) | $ 42,221,000 |
Basic earnings (loss) per common share: | ||
Earnings (loss) per share from continuing operations (usd per share) | $ (4.67) | $ 0.99 |
Earnings (loss) per share from discontinued operations (usd per share) | (0.01) | (0.01) |
Earnings (loss) per common share (usd per share) | $ (4.68) | $ 0.98 |
Weighted average common shares outstanding | 42,615 | 42,838 |
Diluted earnings (loss) per common share: | ||
Earnings (loss) per share from continuing operations (usd per share) | $ (4.67) | $ 0.99 |
Earnings (loss) per share from discontinued operations (usd per share) | (0.01) | (0.01) |
Earnings (loss) per common share (usd per share) | $ (4.68) | $ 0.98 |
Weighted average common shares outstanding | 42,615 | 42,888 |
Total vehicles | ||
Revenues: | ||
Revenues | $ 1,858,084,000 | $ 1,941,470,000 |
Cost of Sales: | ||
Cost of Sales | (1,780,696,000) | (1,851,933,000) |
New vehicles | ||
Revenues: | ||
Revenues | 959,489,000 | 1,066,334,000 |
Cost of Sales: | ||
Cost of Sales | (914,074,000) | (1,012,538,000) |
Used vehicles | ||
Revenues: | ||
Revenues | 850,052,000 | 820,366,000 |
Cost of Sales: | ||
Cost of Sales | (817,922,000) | (783,358,000) |
Wholesale vehicles | ||
Revenues: | ||
Revenues | 48,543,000 | 54,770,000 |
Cost of Sales: | ||
Cost of Sales | (48,700,000) | (56,037,000) |
Parts, service and collision repair | ||
Revenues: | ||
Revenues | 334,680,000 | 341,430,000 |
Cost of Sales: | ||
Cost of Sales | (176,782,000) | (178,194,000) |
Finance, insurance and other, net | ||
Revenues: | ||
Revenues | $ 115,292,000 | $ 106,238,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (199,333) | $ 42,221 |
Other comprehensive income (loss) before taxes: | ||
Change in fair value of interest rate swap and interest rate cap agreements | 361 | (2,349) |
Amortization of terminated interest rate swap agreements | (797) | (288) |
Total other comprehensive income (loss) before taxes | (436) | (2,637) |
Provision for income tax benefit (expense) related to components of other comprehensive income (loss) | 164 | 776 |
Other comprehensive income (loss) | (272) | (1,861) |
Comprehensive income (loss) | $ (199,605) | $ 40,360 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 181,780 | $ 29,103 |
Receivables, net | 200,876 | 432,742 |
Inventories | 1,608,218 | 1,517,875 |
Other current assets | 138,912 | 37,890 |
Total current assets | 2,129,786 | 2,017,610 |
Property and Equipment, net | 1,092,385 | 1,097,247 |
Goodwill | 207,791 | 475,791 |
Other Intangible Assets, net | 64,300 | 64,300 |
Right-of-use asset | 344,148 | 337,842 |
Right-of-use asset | 50,698 | 34,691 |
Other Assets | 87,636 | 43,554 |
Total Assets | 3,976,744 | 4,071,035 |
Current Liabilities: | ||
Notes payable - floor plan - trade | 827,292 | 860,871 |
Notes payable - floor plan - non-trade | 719,446 | 678,223 |
Trade accounts payable | 78,394 | 135,217 |
Operating Lease, Liability, Current | 43,139 | 43,332 |
Finance Lease, Liability, Current | 20,225 | 1,564 |
Accrued interest | 6,534 | 10,830 |
Other accrued liabilities | 237,211 | 266,211 |
Current maturities of long-term debt | 80,803 | 69,908 |
Total current liabilities | 2,013,044 | 2,066,156 |
Long-Term Debt | 830,839 | 636,978 |
Other Long-Term Liabilities | 66,287 | 73,746 |
Operating Lease, Liability, Noncurrent | 311,371 | 304,151 |
Finance Lease, Liability, Noncurrent | 33,216 | 36,313 |
Deferred Income Taxes | 0 | 8,927 |
Commitments and Contingencies | ||
Stockholders' Equity: | ||
Class A convertible preferred stock, none issued | 0 | 0 |
Paid-in capital | 758,327 | 755,904 |
Retained Earnings (Accumulated Deficit) | 586,511 | 790,158 |
Accumulated other comprehensive income (loss) | (2,334) | (2,062) |
Treasury stock, at cost; 33,476,159 Class A common stock shares held at September 30, 2018 and 32,290,493 Class A common stock shares held at December 31, 2017 | (621,290) | (600,004) |
Total Stockholders' Equity | 721,987 | 944,764 |
Total Liabilities and Stockholders' Equity | 3,976,744 | 4,071,035 |
Class A Common Stock | ||
Stockholders' Equity: | ||
Common stock, value | 652 | 647 |
Class B common stock | ||
Stockholders' Equity: | ||
Common stock, value | $ 121 | $ 121 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Convertible preferred stock issued | 0 | 0 |
Class A Common Stock | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 65,199,247 | 64,733,667 |
Common stock, shares outstanding | 30,834,793 | 31,105,000 |
Treasury stock, shares | 34,364,454 | 33,628,667 |
Class B common stock | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 12,029,375 | 12,029,375 |
Common stock, shares outstanding | 12,029,375 | 12,029,375 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Class A Common Stock | Class A Common StockCommon Stock | Class A Common StockTreasury Stock | Class A Common StockRetained Earnings | Class B Common Stock | Class B Common StockCommon Stock | Class B Common StockRetained Earnings |
Beginning balance at Dec. 31, 2018 | $ 823,116 | $ 745,052 | $ 670,691 | $ 4,233 | $ 642 | $ (597,623) | $ 121 | ||||
Beginning balance (shares) at Dec. 31, 2018 | 64,197 | 33,476 | 12,029 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Shares awarded under stock compensation plan | 59 | 54 | $ 5 | ||||||||
Shares awarded under stock compensation plan (shares) | 480 | ||||||||||
Purchase of treasury stock | (2,333) | $ (2,333) | |||||||||
Purchases of treasury stock (shares) | (149) | ||||||||||
Change in fair value of interest rate swap and interest rate cap agreements, net of tax expense of $1,563 | (1,861) | (1,861) | |||||||||
Restricted stock amortization | 2,814 | 2,814 | |||||||||
Net income (loss) | 42,221 | 42,221 | |||||||||
Dividends, Common Stock | $ 3,099 | $ 3,099 | $ 1,203 | $ 1,203 | |||||||
Ending balance at Mar. 31, 2019 | 852,286 | 747,920 | 701,182 | 2,372 | $ 647 | $ (599,956) | $ 121 | ||||
Ending balance (shares) at Mar. 31, 2019 | 64,677 | 33,625 | 12,029 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Retained Earnings (Accumulated Deficit) | ASU 2014-09 | (7,428) | ||||||||||
Retained Earnings (Accumulated Deficit) | 790,158 | ||||||||||
Beginning balance at Dec. 31, 2019 | 944,764 | 755,904 | 790,158 | (2,062) | $ 647 | $ (600,004) | $ 121 | ||||
Beginning balance (shares) at Dec. 31, 2019 | 64,734 | 33,629 | 12,029 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Shares awarded under stock compensation plan | 1 | (4) | $ 5 | ||||||||
Shares awarded under stock compensation plan (shares) | 465 | ||||||||||
Purchase of treasury stock | (21,286) | $ (21,286) | |||||||||
Purchases of treasury stock (shares) | (735) | ||||||||||
Change in fair value of interest rate swap and interest rate cap agreements, net of tax expense of $1,563 | (272) | (272) | |||||||||
Restricted stock amortization | 2,427 | 2,427 | |||||||||
Net income (loss) | (199,333) | (199,333) | |||||||||
Dividends, Common Stock | $ 3,111 | $ 3,111 | $ 1,203 | $ 1,203 | |||||||
Ending balance at Mar. 31, 2020 | 721,987 | $ 758,327 | $ 586,511 | $ (2,334) | $ 652 | $ (621,290) | $ 121 | ||||
Ending balance (shares) at Mar. 31, 2020 | 65,199 | 34,364 | 12,029 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Retained Earnings (Accumulated Deficit) | $ 586,511 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (199,333) | $ 42,221 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization of property and equipment | 21,540 | 22,198 |
Provision for bad debt expense | 134 | 159 |
Debt issuance cost amortization | 557 | 591 |
Stock-based compensation expense | 2,427 | 2,814 |
Deferred income taxes | (53,999) | (2,816) |
Net distributions from equity investee | 448 | 379 |
Asset impairment charges | 268,000 | 1,952 |
Loss (gain) on disposal of dealerships and property and equipment | (39) | (46,785) |
Loss (gain) on exit of leased dealerships | 0 | (170) |
Changes in assets and liabilities that relate to operations: | ||
Receivables | 231,732 | 66,814 |
Inventories | (90,342) | (40,210) |
Other assets | (89,114) | (66,967) |
Notes payable - floor plan - trade | (33,579) | (57,984) |
Trade accounts payable and other liabilities | (105,630) | (16,525) |
Total adjustments | 152,135 | (136,550) |
Net cash provided by (used in) operating activities | (47,198) | (94,329) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of land, property and equipment | (19,805) | (30,619) |
Proceeds from sales of property and equipment | 194 | 1,125 |
Proceeds from sales of dealerships | 0 | 121,700 |
Net cash provided by (used in) investing activities | (19,611) | 92,206 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net (repayments) borrowings on notes payable - floor plan - non-trade | (41,223) | 9,841 |
Borrowings on revolving credit facilities | 460,916 | 126,185 |
Repayments on revolving credit facilities | (250,916) | (126,185) |
Debt issuance costs | (24) | 0 |
Principal payments and repurchase of long-term debt | (5,777) | (6,011) |
Purchases of treasury stock | (21,286) | (2,333) |
Finance Lease, Principal Payments | 337 | 0 |
Issuance of shares under stock compensation plans | 1 | 59 |
Dividends paid | (4,314) | (2,565) |
Net cash provided by (used in) financing activities | 219,486 | (1,009) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 152,677 | (3,132) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 29,103 | 5,854 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 181,780 | 2,722 |
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | ||
Change in fair value of interest rate swap and interest rate cap agreements (net of tax expense of $1,563 and $1,099 in the nine months ended September 30, 2018 and 2017, respectively) | (272) | (1,861) |
Cash paid (received) during the period for: | ||
Interest, including amount capitalized | 25,359 | 26,945 |
Income taxes | $ 3 | $ 10,277 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Tax effect on fair value of interest rate swap and rate cap agreements | $ (1,726) | $ 1,563 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (“Sonic,” the “Company,” “we,” “us” or “our”) for the three months ended March 31, 2020 and 2019 are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. 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 operating results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year or future interim periods, because the first quarter historically has contributed less operating profit than the second, third and fourth quarters. Additionally, the continued magnitude and impact of COVID-19 pandemic could impact earnings in the second, third and fourth quarters of 2020. 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, 2019. COVID 19 – The COVID-19 pandemic negatively impacted the global economy. As of March 31, 2020, the impact on the economy is primarily affecting demand as many countries around the world and states in the United States ("U.S.") have mandated restrictions on citizen movements (stay-at-home orders) or on retail trade at physical locations. As a result, many businesses have curtailed operations and furloughed or terminated many positions. In the U.S., the government passed several measures through the legislature that were signed by the President and enacted into law. Those measures include the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Families First Coronavirus Response Act. Both Acts attempt to provide short-term relief to families and businesses as a result of the economic impacts of the COVID-19 pandemic. Specifically related to Sonic, all our stores have been impacted by the crisis. As of March 31, 2020, the majority of our stores are not permitted to conduct retail sales of new and used vehicles at our physical locations. Those locations can offer virtual sales transactions with “contactless” delivery to customers. Due to the critical nature of automotive repair, our fixed operations have been deemed “essential” by governmental agencies and were able to continue to conduct business, but must maintain certain local standards for “social distancing”. As a result, in the last several weeks of March of 2020, we experienced 30%-50% declines in unit sales of new and used vehicles (as compared to the prior year period) and 15%-30% reductions in repair order activity in fixed operations. These trends have continued into April of 2020 and are expected to continue until at least through mid-May of 2020. Based on these events, we evaluated our long-lived assets for impairment. This evaluation included reviews of fixed assets and related right-of-use assets, franchise assets and goodwill. As a result of this evaluation, we determined the carrying values of all long-lived assets to be recoverable at March 31, 2020 with the exception of goodwill related to our franchised dealership reporting unit. One of the primary factors which contributed to the conclusion that goodwill was impaired was the market value of Sonic's stock between the announcement date of the pandemic on March 11, 2020 to March 31, 2020. See Note 5 for further discussion. The effects of the COVID-19 pandemic continue to evolve. While we currently expect to begin to see recovery in the last half of 2020, the outbreak may cause changes in customer behaviors, including a potential reduction in consumer spending for vehicles and automotive repairs. This may lead to increased asset recovery and valuation risks, such as impairment of additional long-lived assets. The uncertainties in the global economy may negatively impact our suppliers and other business partners, which may interrupt our supply chain and require other changes to our operations. These and other factors may adversely impact our revenues, operating income and earnings per share financial measures. As a result of the pandemic and related stay-at-home orders, we have transitioned many of our teammates to remote work arrangements. In situations where the role does not permit remote work (ie. technicians), we have implemented staggered work hours and other social distancing measures to promote the health and safety of our teammates and guests. As a result of the systems and infrastructure we had in place prior to the pandemic, we have been able to effectively maintain our back-office operations, financial reporting and internal control processes with minimal disruption. Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Accounting Standards Codification (“ASC”) Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendment in this update replaced the previous incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. This ASU is effective for fiscal years beginning after December 15, 2019. We adopted this ASU as of January 1, 2020 and the effects of this ASU did not materially impact our unaudited condensed consolidated financial statements. Principles of Consolidation – All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying unaudited condensed consolidated financial statements, except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. 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. ASC Topic 606, “Revenue from Contracts with Customers,” applies a five-step model that includes: (1) identifying the contract(s) with the customer; (2) identifying the performance obligation(s) in the contract(s); (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract(s); and (5) recognizing revenue as the performance obligation(s) are satisfied. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. 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. 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 vehicle financing and the sale of service, warranty and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. Generally, performance conditions are satisfied when the associated vehicle is either delivered or returned to a customer and customer acceptance has occurred, or over time as the maintenance and repair services are performed. 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). Certain retrospective finance and insurance revenue is earned in periods subsequent to the completion of the initial performance obligation (“F&I retro revenues”). F&I retro revenues are recognized when the product contract has been executed with the end customer and are estimated each reporting period based on the expected value method using historical and projected data, which results in the acceleration of revenue recognition. F&I retro revenues, which represent variable consideration, subject to constraint, are to be included in the transaction price and recognized when or as the performance obligation is satisfied. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We record revenue when vehicles are delivered to customers, when vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and the sales price must be reasonably expected to be collected. Receivables, net in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 include approximately $3.6 million and $5.1 million, respectively, related to work in process and contract assets related to F&I retro revenues of approximately $5.2 million and $12.9 million, respectively. Changes in contract assets from December 31, 2019 to March 31, 2020 were primarily due to ordinary business activity, including the receipt of cash for amounts earned and recognized in prior periods. 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, 2019 for further discussion of our revenue recognition policies and processes. Income Tax Expense – The overall effective tax rate from continuing operations was 18.2% for the three months ended March 31, 2020, and 31.0% for the three months ended March 31, 2019. Income tax expense for the three months ended March 31, 2020 includes a $51.3 million benefit, including the effect of non-deductible amounts, related to the $268.0 million goodwill impairment charge, a $0.5 million discrete benefit related to vested or exercised stock compensation awards, offset partially by a $0.1 million discrete charge related to changes in uncertain tax positions. Income tax expense for the three months ended March 31, 2019 includes a $1.5 million discrete charge for non-deductible executive officer compensation related to executive transition costs, a $0.2 million discrete charge related to changes in uncertain tax positions, and a $0.2 million discrete charge related to vested or exercised stock compensation awards. Sonic’s effective tax rate varies from year to year based on the level of taxable income, the distribution of taxable income between states in which the Company operates and other tax adjustments. Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of restricted stock units, restricted stock awards and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards). |
Business Acquisitions and Dispo
Business Acquisitions and Dispositions | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Acquisitions and Dispositions | Business Dispositions We did not dispose of any dealerships during the three months ended March 31, 2020. We disposed of one luxury franchised dealership and three mid-line import franchised dealerships during the three months ended March 31, 2019 that generated net cash of approximately $121.7 million. The results of operations of each of these disposed dealerships remain in continuing operations in the accompanying unaudited condensed consolidated statements of income. Revenues and other activities associated with disposed franchised dealerships that remain in continuing operations were as follows: Three Months Ended March 31, 2020 2019 (In thousands) Income (loss) from operations $ (160) $ (2,553) Gain (loss) on disposal 2 46,750 Lease exit accrual adjustments and charges — 170 Pre-tax income (loss) $ (158) $ 44,367 Total revenues $ — $ 106,774 Revenues and other activities associated with disposed franchised dealerships classified as discontinued operations were as follows: Three Months Ended March 31, 2020 2019 (In thousands) Income (loss) from operations $ (285) $ (180) Lease exit accrual adjustments and charges — — Pre-tax income (loss) $ (285) $ (180) Total revenues $ — $ — |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: March 31, 2020 December 31, 2019 (In thousands) New vehicles $ 1,072,318 $ 983,123 Used vehicles 324,526 319,791 Service loaners 152,254 152,278 Parts, accessories and other 59,120 62,683 Net inventories $ 1,608,218 $ 1,517,875 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net consists of the following: March 31, 2020 December 31, 2019 (In thousands) Land $ 373,963 $ 373,301 Building and improvements 976,904 969,609 Furniture, fixtures and equipment 352,574 346,260 Construction in progress 53,214 50,928 Total, at cost 1,756,655 1,740,098 Less accumulated depreciation (638,030) (616,611) Subtotal 1,118,625 1,123,487 Less assets held for sale (1) (26,240) (26,240) Property and equipment, net $ 1,092,385 $ 1,097,247 (1) Classified in other current assets in the accompanying unaudited condensed consolidated balance sheets. In the three months ended March 31, 2020 and 2019, capital expenditures were approximately $19.8 million and $30.6 million, respectively. Capital expenditures in all periods were primarily related to real estate acquisitions, construction of new franchised dealerships and EchoPark stores, building improvements and equipment purchased for use in our franchised dealerships and EchoPark stores. Assets held for sale as of March 31, 2020 and December 31, 2019 consists of real property not currently used in operations that we expect to dispose of in the next 12 months. There were no fixed asset impairment charges for the three months ended March 31, 2020. Impairment charges for the three months ended March 31, 2019, were approximately $2.0 million, related to fair value adjustments of real estate at former EchoPark locations classified as held for sale. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible AssetsPursuant to the applicable accounting pronouncements, we were required to evaluate the recoverability of our long-lived assets at the end of the first quarter of 2020 as a result of the effects of the COVID-19 pandemic on our operations and market value. Based on this evaluation, we determined the carrying value of our franchised dealership reporting unit goodwill was greater than the fair value of the reporting unit. Accordingly, we recorded a non-cash goodwill impairment charge of $268.0 million and a corresponding income tax benefit of $51.3 million to reduce the carrying value to fair value as of March 31, 2020. We utilized the Discounted Cash Flows ("DCF") method, using unobservable inputs (Level 3) to estimate Sonic's enterprise value as of March 31, 2020 and reconciled the discounted cash flows to Sonic's market capitalization, using quoted market price inputs (Level 1). The significant assumptions in our DCF model include projected earnings, a discount rate (and estimates in the discount rate inputs), control premium factors and residual growth rates.The carrying amount of goodwill was approximately $207.8 million and $475.8 million as of March 31, 2020 and December 31, 2019, respectively. The carrying amount of goodwill for our franchised dealership reporting unit was $147.8 million and $415.8 million as of March 31, 2020 and December 31, 2019, respectively. The carrying amount of goodwill for our EchoPark reporting unit was $60.0 million as of March 31, 2020 and December 31, 2019. The total carrying amount of goodwill is net of accumulated impairment losses of approximately $1.1 billion and $797.6 million as of March 31, 2020 and December 31, 2019, respectively. The carrying amount of franchise assets was approximately $64.3 million as of both March 31, 2020 and December 31, 2019, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal and Other Proceedings Sonic is involved, and expects to continue to be involved, in various legal and administrative proceedings arising out of the conduct of its business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although Sonic vigorously defends itself in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of Sonic’s business, including litigation with customers, employment-related lawsuits, contractual disputes, class actions, purported class actions and actions brought by governmental authorities, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on Sonic’s business, financial condition, results of operations, cash flows or prospects. Included in other accrued liabilities and other long-term liabilities in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2020 was approximately $0.4 million and $0.2 million, respectively, in reserves that Sonic was holding for pending proceedings. Included in other accrued liabilities and other long-term liabilities in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2019 was approximately $1.2 million and $0.3 million, respectively, for such reserves. Except as reflected in such reserves, Sonic is currently unable to estimate a range of reasonably possible loss, or a range of reasonably possible loss in excess of the amount accrued, for pending proceedings. Guarantees and Indemnification Obligations In accordance with the terms of Sonic’s operating lease agreements, Sonic’s dealership subsidiaries, acting as lessees, generally agree to indemnify the lessor from certain exposure arising as a result of the use of the leased premises, including environmental exposure and repairs to leased property upon termination of the lease. In addition, Sonic has generally agreed to indemnify the lessor in the event of a breach of the lease by the lessee. In connection with dealership dispositions and facility relocations, certain of Sonic’s subsidiaries have assigned or sublet to the buyer their interests in real property leases associated with such dealerships or facilities. In general, the subsidiaries retain responsibility for the performance of certain obligations under such leases, including rent payments and repairs to leased property upon termination of the lease, to the extent that the assignee or sublessee does not perform. In the event an assignee or a sublessee does not perform its obligations, Sonic remains liable for such obligations. In accordance with the terms of agreements entered into for the sale of Sonic’s dealerships, Sonic generally agrees to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreements. While Sonic’s exposure with respect to environmental remediation and repairs is difficult to quantify, Sonic’s maximum exposure associated with these general indemnifications was approximately $43.3 million and $46.5 million at March 31, 2020 and December 31, 2019, respectively. These indemnifications typically expire within a period of one Sonic also guarantees the floor plan commitments of its 50%-owned joint venture, the amount of which was approximately $4.3 million at both March 31, 2020 and December 31, 2019. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements In determining fair value, Sonic uses various valuation approaches, including market, income and/or cost approaches. “Fair Value Measurements and Disclosures” in the ASC establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of Sonic. Unobservable inputs are inputs that reflect Sonic’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that Sonic has the ability to access. Assets utilizing Level 1 inputs include marketable securities that are actively traded, including Sonic’s stock or public bonds. Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Assets and liabilities utilizing Level 2 inputs include cash flow swap instruments and deferred compensation plan balances. Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating fair value of non-financial assets and non-financial liabilities in purchase acquisitions, those used in assessing impairment of right-of-use assets ("ROU assets"), property, plant and equipment and other intangibles and those used in the reporting unit valuation in the goodwill impairment evaluation. The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required by Sonic in determining fair value is greatest for assets and liabilities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input (Level 3 being the lowest level) that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, Sonic’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. Sonic uses inputs that are current as of the measurement date, including during periods when the market may be abnormally high or abnormally low. Accordingly, fair value measurements can be volatile based on various factors that may or may not be within Sonic’s control. Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) March 31, 2020 December 31, 2019 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 32,209 $ 32,799 Interest rate caps designated as hedges (2) 88 97 Total assets $ 32,297 $ 32,896 Liabilities: Deferred compensation plan (3) $ 17,934 $ 17,890 Total liabilities $ 17,934 $ 17,890 (1) Included in other assets in the accompanying unaudited condensed consolidated balance sheets. (2) As of both March 31, 2020 and December 31, 2019, approximately $0.1 million was included in other assets in the accompanying unaudited condensed consolidated balance sheet. (3) Included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets. There were $268.0 million of impairment charges related to long-lived intangible assets assessed during the three months ended March 31, 2020 which required a fair value measurement of assets ordinarily measured at fair value on a non-recurring basis. Goodwill has been adjusted for fair value through impairment charges using Level 1 and Level 3 fair value inputs as discussed in Note 5, "Goodwill and Intangible Assets." Remaining intangible and long-lived assets will be evaluated as of the annual valuation assessment date of October 1, 2020 or as events or changes in circumstances require. As of March 31, 2020 and December 31, 2019, the fair values of Sonic’s financial instruments, including receivables, notes receivable from finance contracts, notes payable – floor plan, trade accounts payable, borrowings under the revolving credit facilities and certain mortgage notes, approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates. At March 31, 2020 and December 31, 2019, the fair value and carrying value of Sonic’s significant fixed rate long-term debt were as follows: March 31, 2020 December 31, 2019 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 6.125% Notes (1) $ 207,500 $ 250,000 $ 261,250 $ 250,000 Mortgage Notes (2) $ 194,265 $ 191,248 $ 195,962 $ 194,535 (1) As determined by market quotations as of March 31, 2020 and December 31, 2019, respectively (Level 1). (2) As determined by discounted cash flows (Level 3) based on estimated current market interest rates for comparable instruments. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2020 are as follows: Gains and Defined Total (In thousands) Balance at December 31, 2019 $ (1,326) $ (736) $ (2,062) Other comprehensive income (loss) before reclassifications (1) 294 — 294 Amounts reclassified out of accumulated other comprehensive income (loss) (2) (566) — (566) Net current-period other comprehensive income (loss) (272) — (272) Balance at March 31, 2020 $ (1,598) $ (736) $ (2,334) (1) Net of tax expense of $67 related to cash flow hedges. (2) Net of tax benefit of $231 related to cash flow hedges. See the heading “Derivative Instruments and Hedging Activities” in Note 6, “Long-Term Debt,” for further discussion of Sonic’s cash flow hedges. 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, 2019. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 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 |
Leases, Codification Topic 842
Leases, Codification Topic 842 | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases of Lessee Disclosure [Text Block] | 11. Lease Accounting The majority of our leases are related to dealership properties that are subject to long-term lease arrangements. In addition, we have certain equipment leases and contracts containing embedded leased assets that have been evaluated and included in the recorded ROU asset and lease liabilities as appropriate. As a result of the adoption of ASC 842, “Leases,” on January 1, 2019, we are required to recognize a ROU asset and a lease liability in the accompanying unaudited condensed consolidated balance sheets at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at reduced cost using the effective interest method. The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred or previously recognized favorable lease assets, less any lease incentives received or previously recognized lease exit accruals. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is reduced using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers ownership of the underlying asset to us or we are reasonably certain to exercise an option to purchase the underlying asset. In those cases, the ROU asset is reduced over the expected useful life of the underlying asset. Expense related to the reduction of the ROU asset is recognized and presented separately from interest expense on the lease liability. Variable lease payments associated with our leases are recognized when the event, activity or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as operating expense in our unaudited condensed consolidated statements of income in the same line item as expense arising from fixed lease payments (operating leases) or expense related to the reduction of the ROU asset (finance leases). ROU assets for operating and finance leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC 360, “Property, Plant, and Equipment,” to determine whether the ROU asset is impaired and, if so, the amount of the impairment loss to recognize. We regularly monitor events or changes in circumstances that may require a reassessment of one of our leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss. Key estimates and judgments related to the measurement and recording of ROU assets and lease liabilities include how we determine: (1) the discount rate used to discount the unpaid lease payments to present value; and (2) the expected lease term, including any extension options. ASC 842, “Leases,” requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, we cannot determine the interest rate implicit in the lease because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we generally use our incremental borrowing rate as the discount rate for the lease. We determined the discount rate for our leases based on the risk-free rate as of the measurement date for varying maturities corresponding to the remaining lease term, adjusted for the risk-premium attributed to Sonic’s corporate credit rating for a secured or collateralized instrument. Many of our lease arrangements have one or more existing renewal options to extend the lease term (typically in five- to ten-year increments), which were considered in the calculation of the ROU assets and lease liabilities if we determined that it was reasonably certain that an extension option would be exercised. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by our option to extend the lease that we are reasonably certain to exercise. We determined the probability of the exercise of a lease extension option based on our long-term strategic business outlook and the condition and remaining useful life of the fixed assets at the location subject to the lease agreement, among other factors. The majority of our lease agreements require fixed monthly payments (subject to either specific or index-based escalations in future periods) while other agreements require variable lease payments based on changes in LIBOR or any replacement thereof. Lease payments included in the measurement of the lease liability comprise the: (1) fixed lease payments, including in-substance fixed payments, owed over the lease term, which include termination penalties we would owe if the estimated lease term assumes that we would be likely to exercise a termination option prior to the earliest expiration date; (2) variable lease payments that depend on an index or rate, initially measured using the index or rate at the lease commencement date; and (3) the exercise price of our option to purchase the underlying asset if we are reasonably certain to exercise the option. Our leases do not typically contain residual value guarantees. In certain situations, we have entered into sublease agreements whereby we sublease all or a portion of a leased real estate asset to a third party. To the extent that we have a sublease related to a lease agreement for an asset that we are no longer using in operations, we have reduced the ROU asset by any applicable net deficiency in expected cash flows from that sublease (either due to partial monthly sublease proceeds or a sublease term less than the remaining master lease term). Following is information related to changes in our ROU asset and lease liability balances and other financial information for the three months ended March 31, 2020: As Reported December 31, 2019 New Modifications (1) Reduction / Amortization As Reported March 31, 2020 (In thousands) ROU Assets: Finance Leases $ 34,691 $ — $ 16,763 $ (756) $ 50,698 Operating Leases 337,842 — 17,191 (10,885) 344,148 Total ROU Assets $ 372,533 $ — $ 33,954 $ (11,641) $ 394,846 Current Lease Liabilities: Finance Leases $ 1,564 $ — $ 18,588 $ 73 $ 20,225 Operating Leases 43,332 — 402 (595) 43,139 Total Current Lease Liabilities $ 44,896 $ — $ 18,990 $ (522) $ 63,364 Long-Term Lease Liabilities: Finance Leases $ 36,313 $ — $ (2,687) $ (410) $ 33,216 Operating Leases 304,151 — 17,651 (10,431) 311,371 Total Long-Term Lease Liabilities $ 340,464 $ — $ 14,964 $ (10,841) $ 344,587 (1) Includes the impact of remeasurements related to lease terminations and changes in assumptions around the probability of exercise of extension options. Three Months Ended March 31, 2020 2019 (In thousands) Lease Expense: Finance lease expense: Reduction of ROU assets $ 756 $ 709 Interest on lease liabilities 1,344 1,176 Operating lease expense (1) 16,610 17,997 Short-term lease expense (1) 420 427 Variable lease expense 718 114 Sublease income (3,099) (3,578) Total $ 16,749 $ 16,845 (1) Included in operating cash flows in the accompanying unaudited condensed consolidated statement of cash flows as of March 31, 2020. Three Months Ended March 31, 2020 2019 (In thousands) Other Information: Cash paid for amounts included in the measurement of lease liabilities Financing cash flows for finance leases $ 337 $ 281 Operating cash flows for finance leases $ 1,344 $ 1,176 Operating cash flows for operating leases $ 16,753 $ 18,469 ROU assets obtained in exchange for lease liabilities Finance leases $ 6,728 $ 9,983 Operating leases (1) $ 27,226 $ (10,711) (1) Includes the impact of reclassification of ROU assets from operating leases to finance leases due to remeasurement. March 31, 2020 March 31, 2019 Other Information: Weighted-average remaining lease term (in years) Finance leases 7.8 11.4 Operating leases 9.6 9.8 Weighted-average discount rate Finance leases 16.52 % 18.31 % Operating leases 6.56 % 6.86 % Undiscounted Lease Cash Flows Under ASC 842 as of March 31, 2020 Finance Operating Receipts from Subleases Year Ending December 31, (In thousands) Remainder of 2020 $ 23,572 $ 48,808 $ (8,343) 2021 6,075 60,674 (8,228) 2022 6,083 54,358 (6,103) 2023 6,144 52,687 (6,103) 2024 6,263 47,219 (5,042) Thereafter 43,103 223,118 (4,270) Total $ 91,240 $ 486,864 $ (38,089) Less: Present value discount (37,799) (132,354) Lease liabilities $ 53,441 $ 354,510 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 1 Months Ended | 3 Months Ended |
Mar. 31, 2020 | Mar. 31, 2020 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | Basis of Presentation – The accompanying unaudited condensed consolidated financial statements of Sonic Automotive, Inc. and its wholly owned subsidiaries (“Sonic,” the “Company,” “we,” “us” or “our”) for the three months ended March 31, 2020 and 2019 are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. 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 operating results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year or future interim periods, because the first quarter historically has contributed less operating profit than the second, third and fourth quarters. Additionally, the continued magnitude and impact of COVID-19 pandemic could impact earnings in the second, third and fourth quarters of 2020. 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, 2019. | |
Recent Accounting Pronouncements | COVID 19 – The COVID-19 pandemic negatively impacted the global economy. As of March 31, 2020, the impact on the economy is primarily affecting demand as many countries around the world and states in the United States ("U.S.") have mandated restrictions on citizen movements (stay-at-home orders) or on retail trade at physical locations. As a result, many businesses have curtailed operations and furloughed or terminated many positions. In the U.S., the government passed several measures through the legislature that were signed by the President and enacted into law. Those measures include the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Families First Coronavirus Response Act. Both Acts attempt to provide short-term relief to families and businesses as a result of the economic impacts of the COVID-19 pandemic. Specifically related to Sonic, all our stores have been impacted by the crisis. As of March 31, 2020, the majority of our stores are not permitted to conduct retail sales of new and used vehicles at our physical locations. Those locations can offer virtual sales transactions with “contactless” delivery to customers. Due to the critical nature of automotive repair, our fixed operations have been deemed “essential” by governmental agencies and were able to continue to conduct business, but must maintain certain local standards for “social distancing”. As a result, in the last several weeks of March of 2020, we experienced 30%-50% declines in unit sales of new and used vehicles (as compared to the prior year period) and 15%-30% reductions in repair order activity in fixed operations. These trends have continued into April of 2020 and are expected to continue until at least through mid-May of 2020. Based on these events, we evaluated our long-lived assets for impairment. This evaluation included reviews of fixed assets and related right-of-use assets, franchise assets and goodwill. As a result of this evaluation, we determined the carrying values of all long-lived assets to be recoverable at March 31, 2020 with the exception of goodwill related to our franchised dealership reporting unit. One of the primary factors which contributed to the conclusion that goodwill was impaired was the market value of Sonic's stock between the announcement date of the pandemic on March 11, 2020 to March 31, 2020. See Note 5 for further discussion. The effects of the COVID-19 pandemic continue to evolve. While we currently expect to begin to see recovery in the last half of 2020, the outbreak may cause changes in customer behaviors, including a potential reduction in consumer spending for vehicles and automotive repairs. This may lead to increased asset recovery and valuation risks, such as impairment of additional long-lived assets. The uncertainties in the global economy may negatively impact our suppliers and other business partners, which may interrupt our supply chain and require other changes to our operations. These and other factors may adversely impact our revenues, operating income and earnings per share financial measures. As a result of the pandemic and related stay-at-home orders, we have transitioned many of our teammates to remote work arrangements. In situations where the role does not permit remote work (ie. technicians), we have implemented staggered work hours and other social distancing measures to promote the health and safety of our teammates and guests. As a result of the systems and infrastructure we had in place prior to the pandemic, we have been able to effectively maintain our back-office operations, financial reporting and internal control processes with minimal disruption. Recent Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Accounting Standards Codification (“ASC”) Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendment in this update replaced the previous incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit | |
Principles of Consolidation | Principles of Consolidation – All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying unaudited condensed consolidated financial statements, except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying unaudited condensed consolidated financial statements. | |
Revenue from Contract with Customers | 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. ASC Topic 606, “Revenue from Contracts with Customers,” applies a five-step model that includes: (1) identifying the contract(s) with the customer; (2) identifying the performance obligation(s) in the contract(s); (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract(s); and (5) recognizing revenue as the performance obligation(s) are satisfied. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. 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. 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 vehicle financing and the sale of service, warranty and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. Generally, performance conditions are satisfied when the associated vehicle is either delivered or returned to a customer and customer acceptance has occurred, or over time as the maintenance and repair services are performed. 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). Certain retrospective finance and insurance revenue is earned in periods subsequent to the completion of the initial performance obligation (“F&I retro revenues”). F&I retro revenues are recognized when the product contract has been executed with the end customer and are estimated each reporting period based on the expected value method using historical and projected data, which results in the acceleration of revenue recognition. F&I retro revenues, which represent variable consideration, subject to constraint, are to be included in the transaction price and recognized when or as the performance obligation is satisfied. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We record revenue when vehicles are delivered to customers, when vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and the sales price must be reasonably expected to be collected. Receivables, net in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 include approximately $3.6 million and $5.1 million, respectively, related to work in process and contract assets related to F&I retro revenues of approximately $5.2 million and $12.9 million, respectively. Changes in contract assets from December 31, 2019 to March 31, 2020 were primarily due to ordinary business activity, including the receipt of cash for amounts earned and recognized in prior periods. 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, 2019 for further discussion of our revenue recognition policies and processes. | |
Income Tax Expense | Income Tax Expense – The overall effective tax rate from continuing operations was 18.2% for the three months ended March 31, 2020, and 31.0% for the three months ended March 31, 2019. Income tax expense for the three months ended March 31, 2020 includes a $51.3 million benefit, including the effect of non-deductible amounts, related to the $268.0 million goodwill impairment charge, a $0.5 million discrete benefit related to vested or exercised stock compensation awards, offset partially by a $0.1 million discrete charge related to changes in uncertain tax positions. Income tax expense for the three months ended March 31, 2019 includes a $1.5 million discrete charge for non-deductible executive officer compensation related to executive transition costs, a $0.2 million discrete charge related to changes in uncertain tax positions, and a $0.2 million discrete charge related to vested or exercised stock compensation awards. Sonic’s effective tax rate varies from year to year based on the level of taxable income, the distribution of taxable income between states in which the Company operates and other tax adjustments. Earnings Per Share – The calculation of diluted earnings per share considers the potential dilutive effect of restricted stock units, restricted stock awards and stock options granted under Sonic’s stock compensation plans (and any non-forfeitable dividends paid on such awards). | |
Unit Sale Decline Min | 30.00% | |
Unit Sale Decline Max | 50.00% | |
Fixed Ops Decline Min | 15.00% | |
Fixed Ops Decline Max | 30.00% |
Business Acquisitions and Dis_2
Business Acquisitions and Dispositions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Revenues and Other Activities Associated with Disposed Dealerships Classified as Discontinued Operations | Revenues and other activities associated with disposed franchised dealerships classified as discontinued operations were as follows: Three Months Ended March 31, 2020 2019 (In thousands) Income (loss) from operations $ (285) $ (180) Lease exit accrual adjustments and charges — — Pre-tax income (loss) $ (285) $ (180) Total revenues $ — $ — |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | Inventories consist of the following: March 31, 2020 December 31, 2019 (In thousands) New vehicles $ 1,072,318 $ 983,123 Used vehicles 324,526 319,791 Service loaners 152,254 152,278 Parts, accessories and other 59,120 62,683 Net inventories $ 1,608,218 $ 1,517,875 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Components of Property and Equipment, Net | Property and equipment, net consists of the following: March 31, 2020 December 31, 2019 (In thousands) Land $ 373,963 $ 373,301 Building and improvements 976,904 969,609 Furniture, fixtures and equipment 352,574 346,260 Construction in progress 53,214 50,928 Total, at cost 1,756,655 1,740,098 Less accumulated depreciation (638,030) (616,611) Subtotal 1,118,625 1,123,487 Less assets held for sale (1) (26,240) (26,240) Property and equipment, net $ 1,092,385 $ 1,097,247 (1) Classified in other current assets in the accompanying unaudited condensed consolidated balance sheets. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Instrument [Line Items] | |
Long-Term Debt | Long-term debt consists of the following: March 31, 2020 December 31, 2019 (In thousands) 2016 Revolving Credit Facility (1) $ 210,000 $ — 6.125% Senior Subordinated Notes due 2027 (the “6.125% Notes”) 250,000 250,000 2019 Mortgage Facility (2) 109,088 109,088 Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% 191,248 194,535 Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR 158,855 161,345 Subtotal $ 919,191 $ 714,968 Debt issuance costs (7,549) (8,082) Total debt 911,642 706,886 Less current maturities (80,803) (69,908) Long-term debt $ 830,839 $ 636,978 (1) The interest rate on the 2016 Revolving Credit Facility (as defined below) was 175 and 150 basis points above LIBOR at March 31, 2020 and December 31, 2019, respectively. (2) The interest rate on the 2019 Mortgage Facility (as defined below) was 175 and 200 basis points above the London Interbank Offer Rate ("LIBOR") at March 31, 2020 and December 31, 2019, respectively. |
Financial Covenants Include Required Specified Ratios | were in compliance with the financial covenants under the 2016 Credit Facilities and the 2019 Mortgage Facility as of March 31, 2020. Financial covenants include required specified ratios (as each is defined in the 2016 Credit Facilities and the 2019 Mortgage Facility) of: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Required ratio 1.05 1.20 5.75 March 31, 2020 actual 1.07 1.70 3.69 |
Summary of Interest Received and Paid under Term of Cash Flow Swap | Under the terms of the interest rate cap agreements, we will receive interest based on the following: Notional Cap Rate (1) Receive Rate (1) (2) Start Date End Date (In millions) $ 312.5 2.000% one-month LIBOR July 1, 2019 June 30, 2020 $ 250.0 3.000% one-month LIBOR July 1, 2019 June 30, 2020 $ 225.0 3.000% one-month LIBOR July 1, 2020 June 30, 2021 $ 150.0 2.000% one-month LIBOR July 1, 2020 July 1, 2021 $ 250.0 3.000% one-month LIBOR July 1, 2021 July 1, 2022 (1) Under these interest rate caps, no payment from the counterparty will occur unless the stated receive rate exceeds the stated cap rate, in which case a net payment to us from the counterparty, based on the spread between the receive rate and the cap rate, will be recognized as a reduction of interest expense, other, net in the accompanying unaudited condensed consolidated statements of income. (2) The one-month LIBOR rate was approximately 0.993% at March 31, 2020. |
6.125% Notes | |
Debt Instrument [Line Items] | |
Debt Instrument Redemption | We may redeem the 6.125% Notes, in whole or in part, at any time on or after March 15, 2022 at the following redemption prices, which are expressed as percentages of the principal amount: Redemption Price Beginning on March 15, 2022 103.063 % Beginning on March 15, 2023 102.042 % Beginning on March 15, 2024 101.021 % Beginning on March 15, 2025 and thereafter 100.000 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Recorded at Fair Value | Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) March 31, 2020 December 31, 2019 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 32,209 $ 32,799 Interest rate caps designated as hedges (2) 88 97 Total assets $ 32,297 $ 32,896 Liabilities: Deferred compensation plan (3) $ 17,934 $ 17,890 Total liabilities $ 17,934 $ 17,890 (1) Included in other assets in the accompanying unaudited condensed consolidated balance sheets. (2) As of both March 31, 2020 and December 31, 2019, approximately $0.1 million was included in other assets in the accompanying unaudited condensed consolidated balance sheet. (3) Included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets. |
Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt | At March 31, 2020 and December 31, 2019, the fair value and carrying value of Sonic’s significant fixed rate long-term debt were as follows: March 31, 2020 December 31, 2019 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 6.125% Notes (1) $ 207,500 $ 250,000 $ 261,250 $ 250,000 Mortgage Notes (2) $ 194,265 $ 191,248 $ 195,962 $ 194,535 (1) As determined by market quotations as of March 31, 2020 and December 31, 2019, respectively (Level 1). (2) As determined by discounted cash flows (Level 3) based on estimated current market interest rates for comparable instruments. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2020 are as follows: Gains and Defined Total (In thousands) Balance at December 31, 2019 $ (1,326) $ (736) $ (2,062) Other comprehensive income (loss) before reclassifications (1) 294 — 294 Amounts reclassified out of accumulated other comprehensive income (loss) (2) (566) — (566) Net current-period other comprehensive income (loss) (272) — (272) Balance at March 31, 2020 $ (1,598) $ (736) $ (2,334) (1) Net of tax expense of $67 related to cash flow hedges. |
Leases, Codification Topic 842
Leases, Codification Topic 842 (Tables) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Lease Expense [Abstract] | |||
Finance Lease, Right-of-Use Asset, Amortization | $ 756,000 | $ 709,000 | |
Finance Lease, Interest Expense | 1,344,000 | 1,176,000 | |
Operating Lease, Cost | 16,610,000 | 17,997,000 | |
Short-term Lease, Cost | 420,000 | 427,000 | |
Variable Lease, Cost | 718,000 | 114,000 | |
Sublease Income | 3,099,000 | 3,578,000 | |
Lease, Cost | $ 16,749,000 | $ 16,845,000 | |
Lease Other Information [Abstract] | |||
Weighted-average remaining lease term (in years): Finance leases | 7 years 9 months 18 days | 11 years 4 months 24 days | |
Weighted-average remaining lease term (in years): Operating leases | 9 years 7 months 6 days | 9 years 9 months 18 days | |
Weighted-average discount rate: Finance leases | 16.52% | 18.31% | |
Weighted-average discount rate: Operating leases | 6.56% | 6.86% | |
Finance Lease, Liability, Payment, Due [Abstract] | |||
Finance Lease, Liability, Payments, Due Next Twelve Months | $ 23,572,000 | ||
Finance Lease, Liability, Payments, Due Year Two | 6,075,000 | ||
Finance Lease, Liability, Payments, Due Year Three | 6,083,000 | ||
Finance Lease, Liability, Payments, Due Year Four | 6,144,000 | ||
Finance Lease, Liability, Payments, Due Year Five | 6,263,000 | ||
Thereafter | 43,103,000 | ||
Finance Lease, Liability, Payment, Due | 91,240,000 | ||
Finance Lease, Liability, Undiscounted Excess Amount | 37,799,000 | ||
Finance Lease, Liability | 53,441,000 | ||
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |||
Lessee, Operating Lease, Liability, Payments, Due Next Twelve Months | 48,808,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Two | 60,674,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Three | 54,358,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Four | 52,687,000 | ||
Lessee, Operating Lease, Liability, Payments, Due Year Five | 47,219,000 | ||
Thereafter | 223,118,000 | ||
Total | 486,864,000 | ||
Less: Present value discount | 132,354,000 | ||
Lease liabilities | 354,510,000 | ||
Lease, Cost [Abstract] | |||
Finance Lease, Principal Payments | 337,000 | $ 0 | |
Finance Lease, Interest Payment on Liability | 1,344,000 | 1,176,000 | |
Operating Lease, Payments | 16,753,000 | 18,469,000 | |
Right-of-use assets obtained in exchange for new lease liabilities: Finance leases | 6,728,000 | 9,983,000 | |
Right-of-use assets obtained in exchange for new lease liabilities: Operating leases | 27,226,000 | (10,711,000) | |
2019 Finance Lease Principal Payments | 281,000 | ||
Leases [Abstract] | |||
Right of Use Assets Total | 394,846,000 | $ 372,533,000 | |
Right-of-use asset | 50,698,000 | 34,691,000 | |
Lease Right of Use Asset New Lease Total | 0 | ||
Finance Lease, Right-of-Use Asset, New Leases | 0 | ||
Operating Lease, Right-of-Use Asset, New Leases | 0 | ||
Lease Liability Current New Lease Total | 0 | ||
Finance Lease, Liability, Current, New Leases | 0 | ||
Operating Lease, Liability, Current, New Leases | 0 | ||
Finance Lease, Liability, Noncurrent, New Leases | 0 | ||
Operating Lease, Liability, Noncurrent, New Leases | 0 | ||
Lease Liability Noncurrent New Lease Total | 0 | ||
Finance Lease, Right-of-Use Asset, Modifications | 16,763,000 | ||
Operating Lease, Right-of-Use Asset, Modifications | 17,191,000 | ||
Lease Right of Use Asset Modifications Total | 33,954,000 | ||
Lease Right of Use Asset Amortization Total | (11,641,000) | ||
Finance Lease, Liability, Current, Modifications | 18,588,000 | ||
Operating Lease, Liability, Current, Modifications | 402,000 | ||
Lease, Liability Current, Modifications Total | 18,990,000 | ||
Finance Lease, Liability, Noncurrent, Modifications | (2,687,000) | ||
Operating Lease, Liability, Noncurrent, Modifications | 17,651,000 | ||
Lease, Liability Noncurrent, Modifications Total | 14,964,000 | ||
Operating Lease, Right-of-Use Asset, Amortization | 10,885,000 | ||
Finance Lease, Right-of-Use Asset, Amortization | 756,000 | $ 709,000 | |
Finance Lease, Liability, Current, Amortization | (73,000) | ||
Operating Lease, Liability, Current, Amortization | 595,000 | ||
Lease, Liability, Current, Amortization Total | (522,000) | ||
Finance Lease, Liability, Noncurrent, Amortization | 410,000 | ||
Operating Lease, Liability, Noncurrent, Amortization | 10,431,000 | ||
Lease, Liability, Noncurrent, Amortization Total | (10,841,000) | ||
Lease Liability Current Total | 63,364,000 | 44,896,000 | |
Operating Lease, Liability, Current | 43,139,000 | 43,332,000 | |
Finance Lease, Liability, Current | 20,225,000 | 1,564,000 | |
Lease Liability Noncurrent Total | 344,587,000 | 340,464,000 | |
Operating Lease, Liability, Noncurrent | 311,371,000 | 304,151,000 | |
Finance Lease, Liability, Noncurrent | 33,216,000 | $ 36,313,000 | |
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract] | |||
Lessor, Operating Lease, Payments to be Received, Next Twelve Months | 8,343,000 | ||
Lessor, Operating Lease, Payments to be Received, Two Years | 8,228,000 | ||
Lessor, Operating Lease, Payments to be Received, Three Years | 6,103,000 | ||
Lessor, Operating Lease, Payments to be Received, Four Years | 6,103,000 | ||
Lessor, Operating Lease, Payments to be Received, Five Years | 5,042,000 | ||
Lessor, Operating Lease, Payments to be Received, Thereafter | 4,270,000 | ||
Lessor, Operating Lease, Payments to be Received | $ 38,089,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Cumulative Effect of Adjustments for Adoption of ASC 606 (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues: | |||
Revenues | $ 2,308,056,000 | $ 2,389,138,000 | |
Cost of Sales: | |||
Cost of Sales | (1,957,478,000) | (2,030,127,000) | |
Operating income (loss) | (221,875,000) | 87,315,000 | |
Assets: | |||
Receivables, net | 200,876,000 | $ 432,742,000 | |
Liabilities: | |||
Other accrued liabilities | 237,211,000 | 266,211,000 | |
Deferred income taxes | 0 | 8,927,000 | |
Stockholders' Equity: | |||
Retained Earnings (Accumulated Deficit) | 586,511,000 | 790,158,000 | |
Parts, service and collision repair | |||
Revenues: | |||
Revenues | 334,680,000 | 341,430,000 | |
Cost of Sales: | |||
Cost of Sales | (176,782,000) | (178,194,000) | |
Finance, insurance and other, net | |||
Revenues: | |||
Revenues | 115,292,000 | 106,238,000 | |
ASU 2014-09 | |||
Stockholders' Equity: | |||
Retained Earnings (Accumulated Deficit) | $ (7,428,000) | ||
ASU 2014-09 | Finance, insurance and other, net | |||
Assets: | |||
Contract assets | $ 5,200,000 | $ 12,900,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use asset | $ 50,698,000 | $ 34,691,000 |
Finance Lease, Liability | 53,441,000 | |
Intangible assets | 64,300,000 | 64,300,000 |
Right-of-use asset | $ 344,148,000 | $ 337,842,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Finance Lease, Right-of-Use Asset | $ 50,698 | $ 34,691 | |
Operating Lease, Right-of-Use Asset | 344,148 | $ 337,842 | |
Finance Lease, Right-of-Use Asset, Amortization | $ (756) | $ (709) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | ||
Right-of-use assets obtained in exchange for new lease liabilities: Finance leases | $ 6,728 | $ 9,983 |
Right-of-use assets obtained in exchange for new lease liabilities: Operating leases | $ (27,226) | $ 10,711 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Undiscounted Lease Cash Flows (Details) | Mar. 31, 2020USD ($) |
Finance Lease, Liability, Payment, Due [Abstract] | |
Total | $ 91,240,000 |
Finance Lease, Liability | 53,441,000 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Thereafter | 223,118,000 |
Lease liabilities | $ 354,510,000 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 |
Schedule of Equity Method Investments [Line Items] | |||
Discrete charge for non-deductible executive compensation, transition costs | $ 1,500 | ||
Percentage of dealership that is accounted for under the equity method | 50.00% | ||
Contract work in process | $ 5,100 | $ 3,600 | |
Effective tax rate from continuing operations | 18.20% | 31.00% | |
Tax expense for uncertain tax positions | $ 100 | $ 200 | |
Discrete benefit related to vested or exercised stock compensation | 500 | 200 | |
Income benefit | 44,117 | (18,987) | |
Impairment charges | 268,000 | $ 1,952 | |
Income Tax Benefit Goodwill Impairment | $ 51,300 | ||
Dealership | |||
Schedule of Equity Method Investments [Line Items] | |||
Percentage of dealership that is accounted for under the equity method | 50.00% | ||
ASU 2014-09 | Finance, insurance and other, net | |||
Schedule of Equity Method Investments [Line Items] | |||
Contract assets | $ 12,900 | $ 5,200 |
Business Acquisitions and Dis_3
Business Acquisitions and Dispositions - Additional Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)Business | Mar. 31, 2019USD ($)Business | |
Business Combinations [Abstract] | ||
Number of acquired franchises | 0 | |
Business Acquisition [Line Items] | ||
Number of franchises disposed | 3 | |
Number of franchises terminated | 0 | |
Proceeds from sales of dealerships | $ | $ 0 | $ 121,700 |
Luxury franchise | ||
Business Acquisition [Line Items] | ||
Number of franchises terminated | 1 | |
Mid-line import franchise | ||
Business Acquisition [Line Items] | ||
Net cash generated from disposition | $ | $ 121,700 |
Business Acquisitions and Dis_4
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships Classified as Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Pre-tax income (loss) | $ (285) | $ (180) |
Disposed dealerships classified as discontinued operations | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Income (loss) from operations | (285) | (180) |
Lease exit accrual adjustments and charges | 0 | 0 |
Pre-tax income (loss) | (285) | (180) |
Total revenues | $ 0 | $ 0 |
Business Acquisitions and Dis_5
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations (Details) - Disposed dealerships that remain in continuing operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Income (loss) from operations | $ (160) | $ (2,553) |
Gain (loss) on disposal | 2 | 46,750 |
Lease exit accrual adjustments and charges | 0 | 170 |
Pre-tax income (loss) | (158) | 44,367 |
Total revenues | $ 0 | $ 106,774 |
Inventories - Components of Inv
Inventories - Components of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
New vehicles | $ 1,072,318 | $ 983,123 |
Used vehicles | 324,526 | 319,791 |
Service loaners | 152,254 | 152,278 |
Parts, accessories and other | 59,120 | 62,683 |
Net inventories | $ 1,608,218 | $ 1,517,875 |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Less accumulated depreciation | $ (638,030) | $ (616,611) |
Subtotal | 1,118,625 | 1,123,487 |
Less assets held for sale | (26,240) | (26,240) |
Property and equipment, net | 1,092,385 | 1,097,247 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 373,963 | 373,301 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 976,904 | 969,609 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 352,574 | 346,260 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 53,214 | 50,928 |
Property, Plant and Equipment, Net, Excluding Capital Leased Assets | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 1,756,655 | $ 1,740,098 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Capital expenditures | $ 19,800 | $ 30,600 |
Impairment charges | 268,000 | 1,952 |
Impairment of Long-Lived Assets Held-for-use | $ 0 | |
Impairment of Long-Lived Assets to be Disposed of | $ 2,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 207,791 | $ 475,791 |
Net of accumulated impairment losses | 1,100,000 | 797,600 |
Income Tax Benefit Goodwill Impairment | 51,300 | |
Goodwill - Franchise Segment | 147,800 | 415,800 |
Goodwill - Preowned Segment | 60,000 | 60,000 |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | 207,791 | $ 475,791 |
Franchise assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Franchise assets | $ 64,300 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 10, 2017 |
Debt Instrument [Line Items] | |||
Subtotal | $ 919,191 | $ 714,968 | |
Debt issuance costs | (7,549) | (8,082) | |
Total debt | 911,642 | 706,886 | |
Less current maturities | (80,803) | (69,908) | |
Long-term debt | 830,839 | 636,978 | |
Mortgage notes | |||
Debt Instrument [Line Items] | |||
Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% | 191,248 | 194,535 | |
Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR | 158,855 | 161,345 | |
Subtotal | $ 350,100 | ||
Mortgage notes | Minimum | |||
Debt Instrument [Line Items] | |||
Mortgage notes to finance companies-fixed rate, percentage | 3.51% | ||
Mortgage notes to finance companies-variable rate, percentage | 1.50% | ||
Mortgage notes | Maximum | |||
Debt Instrument [Line Items] | |||
Mortgage notes to finance companies-fixed rate, percentage | 7.03% | ||
Mortgage notes to finance companies-variable rate, percentage | 2.90% | ||
2016 Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
2016 Revolving Credit Facility | $ 210,000 | $ 0 | |
Interest rate | 2.50% | 2.25% | |
5.0% Senior Subordinate Notes due 2023 | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 5.00% | ||
6.125% Senior Subordinate Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Senior Subordinated Notes | $ 250,000 | $ 250,000 | |
Total debt | $ 250,000 | 250,000 | |
Stated interest rate | 6.125% | 6.125% | |
2019 Mortgage Facility [Member] | |||
Debt Instrument [Line Items] | |||
Senior Subordinated Notes | $ 109,088 | $ 109,088 | |
Stated interest rate | 2.50% |
Long-Term Debt - Debt Redemptio
Long-Term Debt - Debt Redemption (Details) - 6.125% Notes | 3 Months Ended |
Mar. 31, 2020 | |
Period One | |
Debt Instrument, Redemption [Line Items] | |
Redemption percentage of principal amount | 103.063% |
Period Two | |
Debt Instrument, Redemption [Line Items] | |
Redemption percentage of principal amount | 102.042% |
Period Three | |
Debt Instrument, Redemption [Line Items] | |
Redemption percentage of principal amount | 101.021% |
Period Four | |
Debt Instrument, Redemption [Line Items] | |
Redemption percentage of principal amount | 100.00% |
Long-Term Debt - 2016 Credit Fa
Long-Term Debt - 2016 Credit Facilities (Details) - USD ($) | Nov. 30, 2016 | Mar. 31, 2020 | Dec. 31, 2019 |
2016 Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
2016 Revolving Credit Facility | $ 210,000,000 | $ 0 | |
Revolving Credit Facility | 2016 Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Increase (Decrease), Net | $ 25,000,000 | ||
Current borrowing capacity | 250,000,000 | ||
Maximum borrowing capacity | 300,000,000 | ||
Borrowing base | 196,500,000 | ||
Letters of credit outstanding amount | 13,000,000 | ||
Borrowing availability amount | 0 | ||
Revolving Credit Facility | 2016 Credit Facilities | |||
Line of Credit Facility [Line Items] | |||
2016 Revolving Credit Facility | 210,000,000 | ||
Revolving Credit Facility | 2016 New Vehicle Floor Plan Facility and 2016 Used Vehicle Floor Plan Facility | |||
Line of Credit Facility [Line Items] | |||
Current borrowing capacity | 1,015,000,000 | ||
Maximum borrowing capacity | $ 1,265,000,000 | ||
Maximum aggregate commitments allocated to commitments under the 2016 Used Vehicle Floor Plan Facility | 30.00% | ||
Revolving Credit Facility | Two Thousand Sixteen Vehicle Floor Plan Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Increase (Decrease), Net | $ 215,000,000 |
Long-Term Debt - Notes Narrativ
Long-Term Debt - Notes Narrative (Details) - USD ($) | Mar. 10, 2017 | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | |||
Debt Instrument Percentage Of Outstanding Principal Amount Redeemable Upon Event Of Default | 25.00% | ||
Debt outstanding | $ 919,191,000 | $ 714,968,000 | |
Maximum Borrowing 2019 Mortgage Facility | $ 112,200,000 | ||
Mortgage notes | |||
Debt Instrument [Line Items] | |||
Debt weighted average interest rate on note | 4.01% | ||
Debt outstanding | $ 350,100,000 | ||
5.0% Notes | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 5.00% | ||
6.125% Notes | |||
Debt Instrument [Line Items] | |||
Notes Redemption Price Percentage Of Par Value Due To Change Of Control | 101.00% | ||
Stated interest rate | 6.125% | 6.125% | |
Principal amount | $ 250,000,000 | ||
Notes issued, percent of principal | 100.00% | ||
Maximum dividend (usd per share) | $ 0.12 | ||
2019 Mortgage Facility [Member] | |||
Debt Instrument [Line Items] | |||
Stated interest rate | 2.50% | ||
Long Term Debt Prepayment | $ 500,000 | ||
Debt Instrument, Unused Borrowing Capacity, Amount | $ 3,100,000 | ||
Debt Instrument Maximum Allowed Dividends Per Share | $ 0.10 | ||
Percent of Collateralized Real Estate | 75.00% | ||
Minimum | 5.0% Notes | |||
Debt Instrument [Line Items] | |||
Debt Instrument Other Outstanding Indebtedness In Excess | $ 50,000,000 | ||
Minimum | 2019 Mortgage Facility [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||
Debt Instrument, Basis Spread LIBOR | 1.50% | ||
Maximum | 2019 Mortgage Facility [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | ||
Debt Instrument, Basis Spread LIBOR | 2.75% |
Long-Term Debt - Covenants (Det
Long-Term Debt - Covenants (Details) $ in Millions | Mar. 31, 2020USD ($) |
Line of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 107.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 170.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 369.00% |
2016 Credit Facilities | |
Line of Credit Facility [Line Items] | |
Net income and retained earnings free of restrictions | $ 274.1 |
Minimum EBTDAR to rent ratio | 580.00% |
Required ratio | |
Line of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 105.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 120.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 575.00% |
Required ratio | 2016 Credit Facilities | |
Line of Credit Facility [Line Items] | |
Minimum EBTDAR to rent ratio | 150.00% |
Long-Term Debt - Derivative Ins
Long-Term Debt - Derivative Instruments and Hedging Activities (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivatives, Fair Value [Line Items] | ||||
Derivative Cash Premium Paid | $ 2,500,000 | $ 2,800,000 | ||
Derivative Instrument, Unamortized Premium | $ 3,400,000 | $ 3,700,000 | ||
Incremental interest expense | 0 | $ 400,000 | ||
Net benefit expected to be reclassified | 700,000 | |||
Interest rate swap and interest rate cap | Derivative instruments and hedging activities | ||||
Derivatives, Fair Value [Line Items] | ||||
Fair value of derivative | 100,000 | $ 100,000 | ||
Net cash proceeds | $ 4,800,000 |
Long-Term Debt - Summary of Int
Long-Term Debt - Summary of Interest Received and Paid under Term of Cash Flow Swap (Details) | Mar. 31, 2020USD ($) |
Derivatives, Fair Value [Line Items] | |
One month LIBOR rate | 0.993% |
Cash Flow Swap D | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 312,500,000 |
Pay Rate | 2.00% |
Cash Flow Swap E | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 250,000,000 |
Pay Rate | 3.00% |
Cash Flow Swap F | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 225,000,000 |
Pay Rate | 3.00% |
Cash Flow Swap G | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 150,000,000 |
Pay Rate | 2.00% |
Cash Flow Swap H | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 250,000,000 |
Pay Rate | 3.00% |
Per Share Data and Stockholders
Per Share Data and Stockholders' Equity - Dilutive Effect on Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Weighted Average Shares | ||
Weighted average common shares outstanding | 42,615 | 42,838 |
Diluted earnings (loss) (shares) | 42,615 | 42,888 |
From Continuing Operations | ||
Earnings (loss) | $ (199,131) | $ 42,349 |
Basic earnings (loss) per share (usd per share) | $ (4.67) | $ 0.99 |
From Discontinued Operations | ||
Earnings (loss) | $ (202) | $ (128) |
Basic earnings (loss) per share (usd per share) | $ (0.01) | $ (0.01) |
Net Income (Loss) | ||
Earnings (loss) | $ (199,333) | $ 42,221 |
Basic earnings (loss) per share (usd per share) | $ (4.68) | $ 0.98 |
Effect of dilutive securities: | ||
Earnings (loss) per share from continuing operations (usd per share) | (4.67) | 0.99 |
Earnings (loss) per share from discontinued operations (usd per share) | (0.01) | (0.01) |
Earnings (loss) per common share (usd per share) | $ (4.68) | $ 0.98 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Other Commitments [Line Items] | ||
Maximum exposure associated with general indemnifications | $ 43.3 | $ 46.5 |
General indemnifications minimum expiration period | 1 year | |
General indemnifications maximum expiration period | 3 years | |
Percentage of dealership that is accounted for under the equity method | 50.00% | |
Contingent liability reserve balance after reduction | $ 4.3 | |
Other accrued liabilities | ||
Other Commitments [Line Items] | ||
Amount reserved for pending proceedings | 0.4 | 1.2 |
Other long-term liabilities | ||
Other Commitments [Line Items] | ||
Amount reserved for pending proceedings | $ 0.2 | $ 0.3 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Nonrecurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Tangible Asset Impairment Charges | $ 268,000 | ||
Fair Value Based on Significant Other Observable Inputs (Level 2) | |||
Assets: | |||
Cash surrender value of life insurance policies | $ 32,209 | $ 32,799 | |
Cash flow swaps and interest rate caps designated as hedges | 88 | 97 | |
Total assets | 32,297 | 32,896 | |
Liabilities: | |||
Deferred compensation plan | 17,934 | 17,890 | |
Total liabilities | 17,934 | 17,890 | |
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other assets | |||
Assets: | |||
Cash flow swaps and interest rate caps designated as hedges | $ 100 | ||
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other accrued liabilities | |||
Liabilities: | |||
Cash flow swaps and interest rate caps designated as hedges | 0 | ||
Fair Value Based on Significant Other Observable Inputs (Level 2) | Other long-term liabilities | |||
Liabilities: | |||
Cash flow swaps and interest rate caps designated as hedges | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value and Carrying Value of Significant Fixed Rate Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 10, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Carrying Value | $ 911,642 | $ 706,886 | |
Mortgage Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair Value | 194,265 | 195,962 | |
Carrying Value | $ 191,248 | 194,535 | |
5.0% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Stated interest rate | 5.00% | ||
6.125% Notes | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair Value | $ 207,500 | 261,250 | |
Carrying Value | $ 250,000 | $ 250,000 | |
Stated interest rate | 6.125% | 6.125% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 944,764,000 | $ 823,116,000 |
Other comprehensive income (loss) before reclassifications | 294,000 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | (566,000) | |
Other comprehensive income (loss) | (272,000) | (1,861,000) |
Ending balance | 721,987,000 | 852,286,000 |
Other comprehensive income (loss) before reclassifications, tax expense | 67 | |
Amounts reclassified out of accumulated other comprehensive income (loss), tax expense | (231) | |
Gains and Losses on Cash Flow Hedges | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (1,326,000) | |
Other comprehensive income (loss) before reclassifications | 294,000 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | (566,000) | |
Other comprehensive income (loss) | (272,000) | |
Ending balance | (1,598,000) | |
Defined Benefit Pension Plan | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (736,000) | |
Other comprehensive income (loss) before reclassifications | 0 | |
Amounts reclassified out of accumulated other comprehensive income (loss) | 0 | |
Other comprehensive income (loss) | 0 | |
Ending balance | (736,000) | |
Total Accumulated Other Comprehensive Income (Loss) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (2,062,000) | 4,233,000 |
Other comprehensive income (loss) | (272,000) | (1,861,000) |
Ending balance | $ (2,334,000) | $ 2,372,000 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2020Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Reportable Operating Segment (Details) | 3 Months Ended | |||
Mar. 31, 2020USD ($)retail_Units | Mar. 31, 2019USD ($)retail_Units | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Revenues: | ||||
Total consolidated revenues | $ 2,308,056,000 | $ 2,389,138,000 | ||
Segment income (loss): | ||||
Segment income (loss) | (221,875,000) | 87,315,000 | ||
Interest expense, other, net | (10,965,000) | (12,853,000) | ||
Other income (expense), net | 100,000 | 100,000 | ||
Income (loss) from continuing operations before taxes | (243,248,000) | 61,336,000 | ||
Executive transition costs | 6,300,000 | |||
Asset impairment charges | $ 268,000,000 | 1,952,000 | ||
Impairment of Long-Lived Assets to be Disposed of | $ 2,000,000 | |||
Retail Units | retail_Units | 61,748 | 63,660 | ||
Depreciation, Depletion and Amortization | $ 22,297,000 | $ 22,649,000 | ||
FloorPlanInterestExpense | 10,508,000 | 13,226,000 | ||
Interest Expense, Other | 10,965,000 | 12,853,000 | ||
Payments to Acquire Property, Plant, and Equipment | 19,805,000 | 30,619,000 | ||
Cash and cash equivalents | 181,780,000 | 2,722,000 | $ 29,103,000 | $ 5,854,000 |
Assets | 3,976,744,000 | 4,071,035,000 | ||
Gain on Franchise Disposal | 46,700,000 | |||
Executive transition costs | 6,300,000 | |||
Franchised Dealerships Segment | ||||
Revenues: | ||||
Total consolidated revenues | 1,976,347,000 | 2,139,562,000 | ||
Segment income (loss): | ||||
Interest expense, other, net | (10,599,000) | (12,414,000) | ||
Asset impairment charges | $ 268,000,000 | $ 26,000 | ||
Retail Units | retail_Units | 47,762 | 52,609 | ||
Depreciation, Depletion and Amortization | $ 19,589,000 | $ 20,237,000 | ||
FloorPlanInterestExpense | 9,608,000 | 12,505,000 | ||
Interest Expense, Other | 10,599,000 | 12,414,000 | ||
Payments to Acquire Property, Plant, and Equipment | 17,249,000 | 25,229,000 | ||
Assets | 3,550,745,000 | 3,797,878,000 | ||
EchoPark Segment | ||||
Revenues: | ||||
Total consolidated revenues | 331,709,000 | 249,576,000 | ||
Segment income (loss): | ||||
Interest expense, other, net | (366,000) | (439,000) | ||
Asset impairment charges | $ 0 | 1,926,000 | ||
Impairment of Long-Lived Assets to be Disposed of | $ 1,900,000 | |||
Retail Units | retail_Units | 13,986 | 11,051 | ||
Depreciation, Depletion and Amortization | $ 2,708,000 | $ 2,412,000 | ||
FloorPlanInterestExpense | 900,000 | 721,000 | ||
Interest Expense, Other | 366,000 | 439,000 | ||
Payments to Acquire Property, Plant, and Equipment | 2,556,000 | 5,390,000 | ||
Assets | 244,219,000 | $ 244,054,000 | ||
Operating segments | ||||
Segment income (loss): | ||||
Segment income (loss) | 24,752,000 | 63,288,000 | ||
Operating segments | Franchised Dealerships Segment | ||||
Segment income (loss): | ||||
Segment income (loss) | 22,656,000 | 61,182,000 | ||
Operating segments | EchoPark Segment | ||||
Segment income (loss): | ||||
Segment income (loss) | 2,096,000 | 2,106,000 | ||
Reconciling items | ||||
Segment income (loss): | ||||
Other income (expense), net | (243,248,000) | 61,336,000 | ||
Asset impairment charges | (268,000,000) | (1,952,000) | ||
New vehicles | ||||
Revenues: | ||||
Total consolidated revenues | 959,489,000 | 1,066,334,000 | ||
New vehicles | Franchised Dealerships Segment | ||||
Revenues: | ||||
Total consolidated revenues | 959,489,000 | 1,066,334,000 | ||
Used vehicles | ||||
Revenues: | ||||
Total consolidated revenues | 850,052,000 | 820,366,000 | ||
Used vehicles | Franchised Dealerships Segment | ||||
Revenues: | ||||
Total consolidated revenues | 566,888,000 | 603,949,000 | ||
Used vehicles | EchoPark Segment | ||||
Revenues: | ||||
Total consolidated revenues | 283,164,000 | 216,417,000 | ||
Wholesale vehicles | ||||
Revenues: | ||||
Total consolidated revenues | 48,543,000 | 54,770,000 | ||
Wholesale vehicles | Franchised Dealerships Segment | ||||
Revenues: | ||||
Total consolidated revenues | 42,440,000 | 52,533,000 | ||
Wholesale vehicles | EchoPark Segment | ||||
Revenues: | ||||
Total consolidated revenues | 6,103,000 | 2,237,000 | ||
Parts, service and collision repair | ||||
Revenues: | ||||
Total consolidated revenues | 334,680,000 | 341,430,000 | ||
Parts, service and collision repair | Franchised Dealerships Segment | ||||
Revenues: | ||||
Total consolidated revenues | 324,501,000 | 336,225,000 | ||
Parts, service and collision repair | EchoPark Segment | ||||
Revenues: | ||||
Total consolidated revenues | 10,179,000 | 5,205,000 | ||
Finance, insurance and other, net | ||||
Revenues: | ||||
Total consolidated revenues | 115,292,000 | 106,238,000 | ||
Finance, insurance and other, net | Franchised Dealerships Segment | ||||
Revenues: | ||||
Total consolidated revenues | 83,029,000 | 80,521,000 | ||
Finance, insurance and other, net | EchoPark Segment | ||||
Revenues: | ||||
Total consolidated revenues | $ 32,263,000 | $ 25,717,000 |
Leases, Codification Topic 84_2
Leases, Codification Topic 842 (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Right-of-use asset | $ 50,698,000 | $ 34,691,000 |
Lessor, Operating Lease, Payments to be Received, Five Years | 5,042,000 | |
Right-of-use asset | $ 344,148,000 | $ 337,842,000 |