Sonic Automotive Inc: Form 10-Q for the period ended Oct 29, 2026

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto, as well as the consolidated financial statements and related notes thereto, “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Unless otherwise noted, we present the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations on a consolidated basis. To the extent that we believe a discussion of the differences among reportable segments will enhance a reader’s understanding of our financial condition, cash flows and other changes in financial condition and results of operations, the differences are discussed separately. Certain amounts and percentages may not compute due to rounding.

Unless otherwise noted, all discussions of increases or decreases are for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025. The following discussion of Franchised Dealerships Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating franchised dealership stores are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition. The following discussion of EchoPark Segment used vehicles, wholesale vehicles, and finance, insurance and other, net is on a same market basis, except where otherwise noted. All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. The following discussion of Powersports Segment new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. All currently operating stores in the Powersports Segment are included within the same store group as of the first full month following the first anniversary of the store’s opening or acquisition.

Overview

We are one of the largest automotive retailers in the U.S. (as measured by reported total revenue). As a result of the way we manage our business, we had three reportable segments as of September 30, 2026: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of September 30, 2026, we operated 108 stores in the Franchised Dealerships Segment, 18 stores in the EchoPark Segment and 20 stores in the Powersports Segment. The Franchised Dealerships Segment consists of 128 new vehicle franchises (representing 24 different brands of cars and light trucks) and 15 collision repair centers in 17 states. The EchoPark Segment consists of 18 stores in 10 states. The Powersports Segment consists of 46 franchises at 20 locations (16 full-service dealerships and four authorized retail outlets) in five states.

The Franchised Dealerships Segment provides comprehensive sales and services, including (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of third-party financing, extended warranties, service contracts, insurance and other aftermarket products (collectively, “F&I”) for our guests. The EchoPark Segment sells used cars and light trucks and arranges third-party F&I product sales for our guests in pre-owned vehicle specialty retail locations and does not offer customer-facing Fixed Operations services. The Powersports Segment offers guests: (1) sales of both new and used powersports vehicles (such as motorcycles, personal watercraft and all-terrain vehicles); (2) Fixed Operations activities; and (3) F&I services. All three segments generally operate independently of one another with the exception of certain shared back-office functions and corporate overhead costs.

Executive Summary

Retail Automotive Industry Performance

The U.S. retail automotive industry’s total new vehicle (retail and fleet combined) seasonally adjusted annual rate of unit sales volume (the “total new vehicle SAAR”) increased 1% and decreased 1% for the three and nine months ended September 30, 2026, respectively, to approximately 16.4 million and 16.1 million vehicles, respectively, compared to approximately 16.3 million vehicles for both the three and nine months ended September 30, 2025, according to the Power Information Network (“PIN”) from J.D. Power. We currently estimate the 2026 new vehicle industry volume will be between 15.8 million vehicles (a decrease of 3% compared to 2025) and 16.2 million vehicles (a decrease of 1% compared to 2025). The effects of tariffs and trade policies, interest rates, changes in consumer confidence, availability of consumer financing, manufacturer inventory production levels, incentive levels from automotive manufacturers or shifts in such levels, or timing of consumer demand in response to economic conditions, geopolitical disruptions, energy prices, natural disasters or other unforeseen circumstances could cause the actual 2026 new vehicle industry volume to vary from expectations. Many factors, including brand and geographic concentrations as well as the industry sales mix between retail and fleet new vehicle unit sales volume, have caused our past results to differ from the industry’s overall trend. Our new vehicle sales strategy focuses on our retail new vehicle sales (as opposed to fleet new vehicle sales) and, as a result, we believe it is appropriate to compare our retail new vehicle unit sales volume to the industry retail new vehicle seasonally adjusted annual rate of unit sales volume (the “retail new vehicle SAAR”) (which excludes fleet new vehicle sales). According to PIN from J.D. Power, the retail new vehicle SAAR decreased 1% and 2% to approximately 13.5 million and 13.3 million vehicles for the three and nine months ended September 30, 2026, respectively, from approximately 13.6 million vehicles for both the three and nine months ended September 30, 2025.

Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores in 2025 and 2026, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

Same store retail new vehicle revenue decreased 7% during the three months ended September 30, 2026, driven by a 7% decrease in retail new vehicle unit sales volume. Same store retail new vehicle revenue decreased 5% during the nine months ended September 30, 2026, primarily driven by a 6% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit decreased 7% and 13% during the three and nine months ended September 30, 2026, respectively, due primarily to increased price competition as a result of increasing levels of available inventory and higher inventory invoice costs, which combined to drive lower retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit remained flat at $3,000 per unit during the three months ended September 30, 2026. Retail new vehicle gross profit per unit decreased $226 per unit, or 7%, to $2,957 per unit during the nine months ended September 30, 2026. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment new vehicle inventory days’ supply was approximately 65 days as of September 30, 2026, compared to 51 days as of September 30, 2025.

Same store retail used vehicle revenue increased 7% and 6% during the three and nine months ended September 30, 2026, respectively, driven primarily by a 3% and 4% increase in retail used vehicle unit sales volume, respectively, coupled with a 4% and 2% increase in used vehicle average selling price. Retail used vehicle gross profit remained flat and decreased 3% during the three and nine months ended September 30, 2026, respectively, primarily due to lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $42 per unit, or 3%, to $1,506 per unit during the three months ended September 30, 2026. Retail used vehicle gross profit per unit decreased $104 per unit, or 7%, to $1,480 per unit during the nine months ended September 30, 2026. Same store wholesale vehicle gross loss worsened by approximately $2.4 million to a gross loss of approximately $5.2 million during the three months ended September 30, 2026, due primarily to a $462 per unit, or 91%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. Same store wholesale vehicle gross loss worsened by approximately $5.3 million, to a gross loss of approximately $9.7 million during the nine months ended September 30, 2026, due primarily to a $409 per unit, or 166%, worsening of wholesale vehicle gross loss per unit as a result of changes in pricing and demand for vehicles at wholesale auction. We generally focus on maintaining Franchised Dealerships Segment used vehicle inventory days’ supply in the 25- to 35-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported Franchised Dealerships Segment used vehicle inventory days’ supply was approximately 34 days as of both September 30, 2026 and September 30, 2025.

Same store Fixed Operations revenue increased 1% and 3% during the three and nine months ended September 30, 2026, respectively, driven primarily by increased service capacity as a result of additional technician headcount, and higher parts and labor costs that were passed along to consumers. Same store Fixed Operations gross profit increased 1% and 3% during the three and nine months ended September 30, 2026, respectively, driven primarily by higher customer pay revenue contribution and higher warranty and internal, sublet and other gross margin contribution. Same store Fixed Operations gross margin increased 20 basis points, to 51.4% during the three months ended September 30, 2026, and increased 10 basis points, to 51.2%, during the nine months ended September 30, 2026.

Same store F&I revenue remained flat during both the three and nine months ended September 30, 2026, respectively, driven by a 2% increase and 1% increase in F&I gross profit per retail unit, respectively, partially offset by a 2% decrease and 1% decrease in retail new and used vehicle unit sales volume, respectively. Same store F&I gross profit per retail unit increased $63 per unit, or 2%, to $2,630 per unit during the three months ended September 30, 2026 primarily due to higher gross profit per service contract and changes to our F&I product cost structure. Same store F&I gross profit per retail unit increased $35 per unit, or 1%, to $2,615 per unit during the nine months ended September 30, 2026, due primarily to higher gross profit per service and other aftermarket contracts, increases in finance contract and service contract penetration rates, and changes to our F&I product cost structure.

EchoPark Segment

Same market total revenues increased 14% and 11% during the three and nine months ended September 30, 2026, respectively, attributable to a 20% and 12% increase in total vehicle unit sales volume (retail used vehicles plus wholesale used vehicles) in the three and nine months ended September 30, 2026, respectively. Same market total gross profit increased 8% and 6% during the three and nine months ended September 30, 2026, respectively, primarily driven by the increase in total vehicle unit sales volume in both the three and nine months ended September 30, 2026, partially offset by decreases in used vehicle and wholesale vehicle average selling prices during the three and nine months ended September 30, 2026.

Same market retail used vehicle revenue increased 16% and 12% during the three and nine months ended September 30, 2026, respectively, driven primarily by a 22% and 13% increase in retail used vehicle unit sales volume in the three and nine months ended September 30, 2026, respectively, partially offset by a 5% and 1% decrease in used vehicle average selling price. F&I revenue increased 3% and 4% during the three and nine months ended September 30, 2026, respectively, driven primarily by the increase in retail used vehicle unit sales during the three and nine months ended September 30, 2026, partially offset by a 15% and 8% decrease in F&I gross profit per unit in the three and nine months ended September 30, 2026, respectively. Same market combined retail used vehicle and F&I gross profit per unit decreased $396 per unit, or 12%, to $2,979 for the three months ended September 30, 2026, due primarily to a decrease in F&I gross profit per unit. Same market combined retail used vehicle and F&I gross profit per unit decreased $259 per unit, or 7%, to $3,264 for the nine months ended September 30, 2026, due primarily to a decrease in F&I gross profit per unit.

Same market wholesale vehicle gross profit improved by approximately $0.2 million and $1.2 million during the three and nine months ended September 30, 2026, respectively, primarily due to a 40% and 83% increase in wholesale vehicle gross profit per unit during the three and nine months ended September 30, 2026, respectively. We generally focus on maintaining EchoPark Segment used vehicle inventory days’ supply in the 30- to 40-day range, which may fluctuate seasonally, in order to limit our exposure to market pricing volatility. On a trailing quarter cost of sales basis, our reported EchoPark Segment used vehicle inventory days’ supply was approximately 41 and 37 days as of September 30, 2026 and 2025, respectively. The higher days’ supply as of September 30, 2026, reflected a deliberate increase in inventory levels to support higher retail unit sales.

Powersports Segment

Same store retail new vehicle revenue increased 9% and 10% during the three and nine months ended September 30, 2026, respectively, driven by a 6% and 7% increase in retail new vehicle unit sales volume, respectively, coupled with a 2% increase in retail new vehicle average selling price during both the three and nine months ended September 30, 2026. Retail new vehicle gross profit decreased 3% in the three months ended September 30, 2026, primarily driven by an 8% decrease in retail new gross profit per unit, partially offset by a 6% increase in retail new vehicle unit sales volume. Retail new vehicle gross profit increased 6% during the nine months ended September 30, 2026, primarily driven by a 7% increase in retail new vehicle unit sales volume. Retail new vehicle gross profit per unit decreased $306 per unit, or 8%, to $3,349 per unit for the three months ended September 30, 2026. Retail new vehicle gross profit per unit decreased $50 per unit, or 2%, to $3,090 per unit for the nine months ended September 30, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment new vehicle inventory days’ supply was approximately 83 and 75 days as of September 30, 2026 and 2025, respectively, varying based on manufacturer production levels and consumer demand.

Same store used vehicle revenue increased 22% and 36% during the three and nine months ended September 30, 2026, respectively, driven primarily by a 21% and 16% increase in average used vehicle selling price, respectively, coupled with a 1% and 17% increase in retail used vehicle unit sales volume, respectively. Retail used vehicle gross profit decreased 14% in the three months ended September 30, 2026, driven by a 12% decrease in retail used vehicle gross profit per unit. Retail used vehicle gross profit increased 13% during the nine months ended September 30, 2026, driven by a 16% increase in average used vehicle selling price, partially offset by a 3% decrease in retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $251 per unit, or 12%, to $1,797 per unit for the three months ended September 30, 2026. Retail used vehicle gross profit per unit decreased $67 per unit, or 3%, to $1,923 per unit for the nine months ended September 30, 2026. On a trailing quarter cost of sales basis, our reported Powersports Segment used vehicle inventory days’ supply was approximately 65 and 45 days as of September 30, 2026 and 2025, respectively.

Same store Fixed Operations revenue decreased 3% and gross profit remained flat during the three months ended September 30, 2026, primarily driven by lower volume in customer pay contracts. Fixed Operations revenue increased 1% and gross profit increased 5% during the nine months ended September 30, 2026, primarily driven by higher parts and labor costs that were passed along to customers. Fixed Operations gross margin increased 130 basis points to 48.0% during the three months ended September 30, 2026, primarily due to a more favorable revenue mix, including improved gross margins on wholesale parts and internal, sublet and other repairs. Fixed Operations gross margin increased 140 basis points to 48.5% during the nine months ended September 30, 2026, primarily due to a more favorable revenue mix, including improved gross margins on customer pay repairs, wholesale parts, and internal, sublet and other repairs.

Same store F&I revenue increased 6% and 13% during the three and nine months ended September 30, 2026, respectively, driven primarily by a 4% and 11% increase in combined retail new and used vehicle unit sales volume, coupled with increases in F&I gross profit per retail unit for the three and nine months ended September 30, 2026. F&I gross profit per retail unit increased $22 per unit, or 2%, to $1,088 per unit for the three months ended September 30, 2026. F&I gross profit per retail unit increased $28 per unit, or 3%, to $1,012 per unit for the nine months ended September 30, 2026.

Results of Operations – Consolidated

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores, EchoPark stores, and powersports stores in 2025 and 2026, the change in consolidated reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores.

New Vehicles – Consolidated

New vehicle revenues include the sale of new vehicles, including new powersports vehicles, to retail customers, as well as the sale of fleet vehicles to businesses for use in their operations. New vehicle revenues and gross profit can be influenced by vehicle manufacturer incentives to consumers (which vary from cash-back incentives to low interest rate financing, among other things), the availability of consumer credit and the level and type of manufacturer-to-dealer incentives, as well as manufacturers providing adequate inventory allocations to our dealerships to meet consumer demand. The automobile manufacturing industry is cyclical and historically has experienced periodic downturns characterized by oversupply and weak demand, both within specific brands and in the industry as a whole. As an automotive retailer, we seek to mitigate the effects of this sales cycle by maintaining a diverse brand mix of dealerships. Our brand diversity allows us to offer a broad range of products at a wide range of prices from lower-priced economy automobiles to luxury automobiles and powersports vehicles.

The following table depicts the breakdown of our Franchised Dealerships Segment new vehicle revenues by brand for the three and nine months ended September 30, 2026 and 2025:

(1) Includes Jaguar, MINI, Polestar and Volvo.

(2) Includes Hyundai, Nissan and Subaru.

(3) Includes Buick, Chevrolet and GMC.

The U.S. retail automotive industry’s new vehicle unit sales volume below reflects all brands marketed or sold in the U.S. This industry sales volume includes brands we do not sell and markets in which we do not operate, therefore, changes in our new vehicle unit sales volume may not trend directly in line with changes in the industry new vehicle unit sales volume. We believe that the industry retail new vehicle unit sales volume is a more meaningful metric for comparing our new vehicle unit sales volume to the industry due to our minimal fleet vehicle business.

U.S. retail new vehicle SAAR, fleet new vehicle seasonally adjusted annual rate of unit sales volume (the “fleet new vehicle SAAR”) and total new vehicle SAAR were as follows:

(In millions of vehicles)

(1) Source: PIN from J.D. Power

Our consolidated reported new vehicle results (combined retail and fleet data) were as follows:

(In millions, except unit and per unit data)

26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit and per unit data)

For further analysis of new vehicle results on a segment basis, see the tables and discussion under the headings “New Vehicles - Franchised Dealerships Segment” and “New Vehicles - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

Used Vehicles – Consolidated

Used vehicle revenues include the sale of used vehicles, including used powersports vehicles, to retail customers and at wholesale. Used vehicle revenues are directly affected by a number of factors, including consumer demand for used vehicles, the pricing and level of manufacturer incentives on new vehicles, the number and quality of trade-ins and lease turn-ins available to our dealerships, the availability and pricing of used vehicles acquired at wholesale auction, and the availability of consumer credit. Depending on the mix of inventory sourcing (trade-ins or purchases from customers versus wholesale auction), the days’ supply of used vehicle inventory, and the pricing strategy employed by the dealership, retail used vehicle gross profit per unit and retail used vehicle gross profit as a percentage of revenue may vary significantly from historical levels given recent trends in the used vehicle environment.

Our consolidated reported retail used vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

For further analysis of used vehicle results on a segment basis, see the tables and discussion under the headings “Used Vehicles - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “Used Vehicles - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Wholesale Vehicles – Consolidated

Wholesale vehicle revenues are influenced by several factors, including retail new and used vehicle unit sales volume, associated trade-in volume, and short-term, temporary, and seasonal fluctuations in wholesale auction pricing. In recent years, wholesale vehicle prices and supply at auction have experienced periods of volatility, impacting our wholesale vehicle revenues and related gross profit (loss), as well as our retail used vehicle revenues and related gross profit. We believe that the current wholesale vehicle price environment is not sustainable in the long term and expect that average wholesale vehicle pricing and related gross profit (loss) will continue to return toward long-term normalized levels in the long run, but may continue to experience volatility during 2026 or beyond. Wholesale vehicle revenues are also significantly affected by our corporate inventory management strategy and policies, which are designed to optimize our total used vehicle inventory and expected gross profit levels and minimize inventory carrying risks.

Our consolidated reported wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

For further analysis of wholesale vehicle results on a segment basis, see the tables and discussion under the headings “Wholesale Vehicles – Franchised Dealerships Segment,” “Wholesale Vehicles – EchoPark Segment” and “Wholesale Vehicles – Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Fixed Operations – Consolidated

Parts, service and collision repair revenues consist of repairs and maintenance requested and paid by customers (“customer pay”), warranty repairs (manufacturer-paid), wholesale parts (sales of parts and accessories to third-party automotive repair businesses), and internal, sublet and other. Parts and service revenue is driven by the volume and mix of warranty repairs versus customer pay repairs, available service capacity (a combination of service bay count and technician availability), vehicle quality, manufacturer recalls, customer loyalty, and prepaid or manufacturer-paid maintenance programs. Internal, sublet and other primarily relates to preparation and reconditioning work performed on vehicles in inventory that are later sold to a third party and may vary based on used vehicle inventory and sales volume from period to period. When that work is performed by one of our dealerships or stores, the work is classified as internal. In the event the work is performed by a third party on our behalf, it is classified as sublet.

We believe that, over time, vehicle quality will continue to improve, but vehicle complexity and the associated demand for repairs by qualified technicians at manufacturer-affiliated dealerships may result in market share gains that could offset any revenue lost from improvement in vehicle quality. We also believe that, over the long term, we have the ability to continue to optimize service capacity and customer retention at our dealerships and stores to further increase Fixed Operations revenues. Manufacturers continue to extend new vehicle warranty periods (in particular for battery electric vehicles) and have also begun to include regular maintenance items in the warranty or complimentary maintenance program coverage. These factors, over the long term, combined with the extended manufacturer warranties on certified pre-owned vehicles, should facilitate growth in our parts and service business. Barriers to long-term growth may include reductions in the rate paid by manufacturers to dealers for warranty repair work performed, as well as the improved quality and design of vehicles that may affect the level and frequency of future customer pay or warranty-related repair revenues.

Our consolidated reported Fixed Operations results were as follows:

(In millions)

(In millions)

For further analysis of Fixed Operations results on a segment basis, see the tables and discussion under the headings “Fixed Operations - Franchised Dealerships Segment” and “Fixed Operations - Powersports Segment” in the Franchised Dealerships Segment and Powersports Segment sections, respectively, below.

F&I – Consolidated

Finance, insurance and other, net revenues include commissions for arranging third-party vehicle financing and insurance, sales of third-party extended warranties and service contracts for vehicles, and sales of other aftermarket products. In connection with vehicle financing, extended warranties and service contracts, other aftermarket products and insurance contracts, we receive commissions from the third-party providers for originating these contracts. We do not have direct credit risk for the vehicle financing, extended warranties and service contracts that we sell. F&I revenues are recognized net of actual and estimated future chargebacks and other costs associated with originating contracts (as a result, reported F&I revenues and F&I gross profit are the same amount, resulting in a 100% gross margin for F&I). F&I revenues are affected by the level of new and retail used vehicle unit sales volume, the age and average selling price of vehicles sold, the level of manufacturer financing specials or leasing incentives, and our F&I penetration rate for each type of F&I product. The F&I penetration rate represents the number of finance contracts, extended warranties and service contracts, other aftermarket products or insurance contracts that we are able to originate per vehicle sold, expressed as a percentage.

Yield spread premium is another term for the commission earned by our dealerships for arranging vehicle financing for consumers. The amount of the commission could be zero, a flat fee or an actual spread between the interest rate charged to the consumer and the interest rate provided by the third-party direct financing source (e.g., a commercial bank, credit union or manufacturer captive finance company). We have established caps on the potential yield spread premium our dealerships can earn with all finance sources. We believe the yield spread premium we earn for arranging vehicle financing represents value to the consumer in numerous ways, including the following:

• lower cost, below-market financing is often available only from the manufacturers’ captives and franchised dealers;
• ease of access to multiple high-quality lending sources;
• lease-financing alternatives are largely available only from manufacturers’ captives or other indirect lenders;
• guests with substandard credit frequently do not have direct access to potential sources of sub-prime financing; and
• guests with significant “negative equity” in their current vehicle (i.e., the guest’s current vehicle is worth less than the balance of their vehicle loan or lease obligation) frequently are unable to pay off the loan on their current vehicle and finance the purchase or lease of a replacement new or used vehicle without the assistance of a franchised dealership’s network of lending sources.

Our consolidated reported F&I results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

For further analysis of F&I results on a segment basis, see the tables and discussion under the headings “F&I - Franchised Dealerships Segment,” “Used Vehicles and F&I - EchoPark Segment” and “F&I - Powersports Segment” in the Franchised Dealerships Segment, EchoPark Segment and Powersports Segment sections, respectively, below.

Results of Operations – Franchised Dealerships Segment

As a result of the acquisition, disposition, termination or closure of certain franchised dealership stores in 2025 and 2026, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. Please refer to the same store tables and discussion on the following pages for a more meaningful comparison and discussion of financial results on a comparable store basis.

New Vehicles – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for new vehicles:

(In millions, except unit data)

33

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit data)

34

Our Franchised Dealerships Segment reported new vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

35

Our Franchised Dealerships Segment same store new vehicle results were as follows:

(In millions, except unit and per unit data)

36

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit and per unit data)

Same Store Franchised Dealerships Segment Retail New Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Retail new vehicle revenue decreased $123.6 million, or 7%, due primarily to a 7% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit decreased $5.8 million, or 7%, due primarily to a 7% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit per unit increased $3 per unit, remaining flat, to $3,000 per unit.

Same Store Franchised Dealerships Segment Retail New Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Retail new vehicle revenue decreased $242.3 million, or 5%, due primarily to a 6% decrease in retail new vehicle unit sales volume, offset partially by a 1% increase in retail new vehicle average selling prices. Retail new vehicle gross profit decreased $33.9 million, or 13%, due primarily to a 7% decrease in retail new vehicle gross profit per unit, coupled with the 6% decrease in retail new vehicle unit sales volume. Retail new vehicle gross profit per unit decreased $226, or 7%, per unit to $2,957 per unit, due primarily to increased price competition resulting from higher inventory availability and higher inventory invoice costs.

Used Vehicles – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for retail used vehicles:

(In millions, except unit data)

(In millions, except unit data)

38

Our Franchised Dealerships Segment reported retail used vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Our Franchised Dealerships Segment same store retail used vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

39

Same Store Franchised Dealerships Segment Retail Used Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Retail used vehicle revenue increased $52.6 million, or 7%, driven primarily by a 3% increase in retail used vehicle unit sales volume and an increase in retail used vehicle revenue per unit of 4%. Retail used vehicle gross profit decreased $0.1 million, remaining flat, driven primarily by a 3% decrease in retail used vehicle gross profit per unit, offset by a 3% increase in retail used vehicle unit sales volume.

Same Store Franchised Dealerships Segment Retail Used Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Retail used vehicle revenue increased $129.1 million, or 6%, driven primarily by a 4% increase in retail used vehicle unit sales volume and an increase in retail used vehicle revenue per unit of 2%. Retail used vehicle gross profit decreased $3.3 million, or 3%, driven primarily by a $104 per unit, or 7%, decrease in retail used vehicle gross profit per unit, partially offset by a 4% increase in retail used vehicle unit sales volume.

Wholesale Vehicles – Franchised Dealerships Segment

See the discussion under the heading “Results of Operations – Consolidated” for additional discussion of the macro drivers of wholesale vehicle revenues.

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for wholesale vehicles:

(In millions, except unit data)

40

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit data)

Our Franchised Dealerships Segment reported wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

41

Our Franchised Dealerships Segment same store wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Same Store Franchised Dealerships Segment Wholesale Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Wholesale vehicle revenue decreased approximately $4.9 million, or 10%, driven primarily by a 3% decrease in wholesale vehicle unit sales volume and a 7% decrease in revenue per unit. Wholesale vehicle gross loss worsened by approximately $2.4 million, driven primarily by a $462 worsening of wholesale vehicle gross loss per unit.

Same Store Franchised Dealerships Segment Wholesale Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Wholesale vehicle revenue decreased approximately $31.8 million, or 20%, driven primarily by a 16% decrease in wholesale vehicle unit sales volume and a 5% decrease in revenue per unit. Wholesale vehicle gross loss worsened by approximately $5.3 million, driven primarily by a $409 worsening of wholesale vehicle gross loss per unit.

Fixed Operations – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for Fixed Operations:

(In millions)

NM = Not Meaningful

(In millions)

NM = Not Meaningful

Our Franchised Dealerships Segment reported Fixed Operations results were as follows:

(In millions)

(In millions)

44

Our Franchised Dealerships Segment same store Fixed Operations results were as follows:

(In millions)

(In millions)

45

Same Store Franchised Dealerships Segment Fixed Operations – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Fixed Operations revenue increased approximately $4.7 million, or 1%, and Fixed Operations gross profit increased approximately $3.2 million, or 1%. Customer pay revenue increased approximately $3.9 million, or 2%, and customer pay gross profit increased approximately $0.5 million, or remained flat. Warranty revenue decreased approximately $0.4 million, or remained flat and warranty gross profit increased approximately $0.8 million, or 1%. Wholesale parts revenue increased approximately $0.4 million, or 1%, and wholesale parts gross profit remained flat. Internal, sublet and other revenue increased approximately $0.8 million, or 1%, and internal, sublet and other gross profit increased approximately $1.9 million, or 3%. Our Fixed Operations business has benefited from a higher level of vehicle recalls, as well as additional technician headcount that has driven an increase in customer pay service capacity.

Same Store Franchised Dealerships Segment Fixed Operations – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Fixed Operations revenue increased approximately $39.1 million, or 3%, and Fixed Operations gross profit increased approximately $21.3 million, or 3%. Customer pay revenue increased approximately $23.5 million, or 4%, and customer pay gross profit increased approximately $8.3 million, or 2%. Warranty revenue increased approximately $6.5 million, or 3%, and warranty gross profit increased approximately $5.9 million, or 4%. Wholesale parts revenue increased approximately $4.4 million, or 3%, and wholesale parts gross profit increased approximately $0.1 million, or remained flat. Internal, sublet and other revenue increased approximately $4.7 million, or 1%, and internal, sublet and other gross profit increased approximately $7.0 million, or 4%. Our Fixed Operations business has benefited from a higher level of vehicle recalls and warranty repairs, as well as additional technician headcount that has driven an increase in customer pay service capacity.

F&I – Franchised Dealerships Segment

The following tables provide a reconciliation of Franchised Dealerships Segment reported basis and same store basis for F&I:

(In millions, except unit and per unit data)

46

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit and per unit data)

Our Franchised Dealerships Segment reported F&I results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

47

Our Franchised Dealerships Segment same store F&I results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Same Store Franchised Dealerships Segment F&I – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

F&I revenue increased $0.2 million, or remained flat, primarily due to a 2% increase in F&I gross profit per retail unit, partially offset by a 2% decrease in total combined retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $63 per unit, to $2,630 per unit, primarily due to changes to our F&I product cost structure, higher gross profit per service contract and aftermarket product, and higher penetration rate for service contracts, partially offset by lower gross profit per finance contract and lower penetration rates for finance contracts and aftermarket products.

Finance contract revenue for combined retail new and used vehicles decreased 4%, due primarily to a 4% decrease in finance contract volume, a 100 basis point decrease in finance contract penetration rate, and a 1% decrease in gross profit per finance contract. Service contract revenue for combined retail new and used vehicles increased 9%, due primarily to a 10% increase in gross profit per service contract and a 100 basis point increase in service contract penetration rate. Aftermarket product revenue for combined retail new and used vehicles decreased 15%, due primarily to a 2,590 basis point decrease in aftermarket product penetration rate, which helped drive a 19% decrease in aftermarket product sales volume, partially offset by a 5% increase in gross profit per aftermarket product.

Same Store Franchised Dealerships Segment F&I – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

F&I revenue increased $0.7 million, or remained flat, due primarily to a 1% increase in F&I gross profit per retail unit, partially offset by a 1% decrease in total combined retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $35 per unit, to $2,615 per unit, due primarily to changes to our F&I product cost structure, higher gross profit per finance contract, service contract, and aftermarket product, and increases in finance contract and service contract penetration rates, offset by a lower penetration rate for aftermarket products.

Finance contract revenue for combined retail new and used vehicles remained flat, due primarily to a 100 basis point increase in finance contract penetration rate, partially offset by the decrease in total combined new and used retail sales units. Service contract revenue for combined retail new and used vehicles increased 6%, due primarily to a 6% increase in gross profit per service contract and a 60 basis point increase in service contract penetration rate, partially offset by the decrease in total combined new and used retail sales units. Aftermarket product revenue for combined retail new and used vehicles decreased 10%, due primarily to a 1,980 basis point decrease in the aftermarket product penetration rate, which helped drive a 14% decrease in total aftermarket product sales volume, partially offset by a 4% increase in gross profit per aftermarket product.

Results of Operations – EchoPark Segment

All currently operating EchoPark stores in a local geographic market are included within the same market group as of the first full month following the first anniversary of the market’s opening or acquisition. Same market results may vary significantly from reported results due to the closure of stores that are no longer included in same market results.

Used Vehicles and F&I – EchoPark Segment

Our EchoPark operating strategy focuses on maximizing total used vehicle-related gross profit (based on a combination of retail used vehicle unit sales volume, front-end retail used vehicle gross profit (loss) per unit and F&I gross profit per retail unit sold) rather than realizing traditional levels of front-end retail used vehicle gross profit per unit. As such, we believe the best per unit measure of gross profit performance at our EchoPark stores is a combined total gross profit (loss) per retail unit, which includes both front-end retail used vehicle gross profit (loss) and F&I gross profit per retail unit sold. See the discussion under the heading “Results of Operations - Consolidated” for additional discussion of the macro drivers of used vehicle revenues and F&I revenues.

All Fixed Operations activity at our EchoPark stores supports our used vehicle inventory reconditioning operations and EchoPark stores do not currently perform customer pay repairs or maintenance work and are not permitted to perform manufacturer-paid warranty repairs. As such, reconditioning amounts that are classified as Fixed Operations revenues and cost of sales in our Franchised Dealerships Segment are presented as used vehicle cost of sales for the EchoPark Segment.

The following tables provide a reconciliation of EchoPark Segment reported basis, same market basis, and new market/closed market basis for retail used vehicles:

(In millions, except unit data)

49

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit data)

The following tables provide a reconciliation of EchoPark Segment reported basis, same market basis, and new market/closed market basis for F&I:

(In millions)

(In millions)

50

Our EchoPark Segment reported retail used vehicle and F&I results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Our EchoPark Segment same market retail used vehicle and F&I results were as follows:

(In millions, except unit and per unit data)

51

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit and per unit data)

Same Market EchoPark Segment Retail Used Vehicles and F&I – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Retail used vehicle revenue increased $70.7 million, or 16%, due primarily to a 22% increase in retail used vehicle unit sales volume, partially offset by a $1,260, or 5%, decrease in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased $4.1 million, or 7%, due primarily to the increase in retail used vehicle unit sales volume, offset partially by a $396, or 12%, decrease in combined retail used vehicle and F&I gross profit per unit. The decrease in combined retail used vehicle and F&I gross profit per unit was due primarily to a $493 decrease in F&I gross profit per unit, driven by lower F&I penetration rates, offset partially by higher retail used vehicle gross profit per unit as well as changes to our F&I product cost structure, improvements in inventory acquisition costs as a result of sourcing a higher percentage of inventory from non-auction sources, and expanding our inventory to include older vehicles, which typically earn a higher gross profit per unit.

Same Market EchoPark Segment Retail Used Vehicles and F&I – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Retail used vehicle revenue increased $160.4 million, or 12%, due primarily to a 13% increase in retail used vehicle unit sales volume, partially offset by a $328, or 1%, decrease in retail used vehicle revenue per unit. Combined retail used vehicle gross profit and F&I revenue increased $9.2 million, or 5%, due primarily to the increase in retail used vehicle unit sales volume, offset partially by a $259, or 7%, decrease in combined retail used vehicle and F&I gross profit per unit. The decrease in combined retail used vehicle and F&I gross profit per unit was due primarily to a $273 decrease in F&I gross profit per unit, driven by lower F&I penetration rates, offset partially by higher retail used vehicle gross profit per unit as well as changes to our F&I product cost structure, improvements in inventory acquisition costs as a result of sourcing a higher percentage of inventory from non-auction sources, and expanding our inventory to include older vehicles, which typically earn a higher gross profit per unit.

Wholesale Vehicles – EchoPark Segment

See the discussion under the heading “Results of Operations – Consolidated” for additional discussion of the macro drivers of wholesale vehicle revenues.

The following tables provide a reconciliation of EchoPark Segment reported basis, same market basis, and new market/closed market basis for wholesale vehicles:

(In millions, except unit data)

(In millions, except unit data)

53

Our EchoPark Segment reported wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Our EchoPark Segment same market wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

54

Same Market EchoPark Segment Wholesale Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Wholesale vehicle revenue increased approximately $0.8 million, or 3%, due primarily to an 8% increase in wholesale vehicle unit sales volume, offset partially by a 5% decrease in wholesale vehicle revenue per unit. As we adjust the inventory mix of nearly-new versus older model year vehicles sold at retail going forward, the levels of wholesale vehicle revenue and gross profit may vary.

Same Market EchoPark Segment Wholesale Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Wholesale vehicle revenue increased approximately $1.1 million, or 1%, due primarily to a 6% increase in wholesale vehicle unit sales volume, offset partially by a 5% decrease in wholesale vehicle revenue per unit. As we adjust the inventory mix of nearly-new versus older model year vehicles sold at retail going forward, the levels of wholesale vehicle revenue and gross profit may vary.

Results of Operations – Powersports Segment

As a result of the acquisition or termination of certain powersports stores in 2025 and 2026, the change in reported amounts from period to period may not be indicative of the current or future operational or financial performance of our current group of operating stores. The following discussion of new vehicles, used vehicles, wholesale vehicles, parts, service and collision repair, and finance, insurance and other, net is on a same store basis, except where otherwise noted. Our Powersports Segment results are subject to seasonal variations, such that the second and third quarters are generally expected to contribute higher revenues and segment income than the first and fourth quarters.

New Vehicles – Powersports Segment

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for retail new vehicles:

(In millions, except unit data)

55

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit data)

Our Powersports Segment reported retail new vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

56

Our Powersports Segment same store retail new vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Same Store Powersports Segment Retail New Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Retail new vehicle revenue increased $3.3 million, or 9%, primarily due to a 6% increase in retail new vehicle unit sales volume and a 2% increase in retail new vehicle average selling prices. Retail new vehicle gross profit decreased $0.2 million, or 3%, due primarily to an 8% decrease in retail new vehicle gross profit per unit, partially offset by a 6% increase in retail new vehicle unit sales volume. Retail new vehicle gross profit per unit decreased $306 per unit to $3,349 per unit.

Same Store Powersports Segment Retail New Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Retail new vehicle revenue increased $8.3 million, or 10%, due primarily to a 7% increase in retail new vehicle unit sales volume and a 2% increase in retail new vehicle average selling prices. Retail new vehicle gross profit increased $0.7 million, or 6%, due primarily to a 7% increase in retail new vehicle unit sales volume, partially offset by a 2% decrease in retail new vehicle gross profit per unit. Retail new vehicle gross profit per unit decreased $50 per unit to $3,090 per unit.

Used Vehicles – Powersports Segment

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for retail used vehicles:

(In millions, except unit data)

NM = Not Meaningful

(In millions, except unit data)

58

Our Powersports Segment reported retail used vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Our Powersports Segment same store retail used vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

59

Same Store Powersports Segment Retail Used Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Retail used vehicle revenue increased 22%, due primarily to a 21% increase in retail used vehicle average selling price, and a 1% increase in retail used vehicle unit sales volume. Retail used vehicle gross profit decreased $0.4 million, or 14%, as a result of lower retail used vehicle gross profit per unit. Retail used vehicle gross profit per unit decreased $251 per unit, or 12%, to $1,797 per unit.

Same Store Powersports Segment Retail Used Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Retail used vehicle revenue increased 36%, due primarily to a 17% increase in retail used vehicle unit sales volume, and a 16% increase in retail used vehicle average selling prices. Retail used vehicle gross profit increased $0.7 million, or 13%, as a result of higher retail used vehicle unit sales volume. Retail used vehicle gross profit per unit decreased $67 per unit, or 3%, to $1,923 per unit.

Wholesale Vehicles – Powersports Segment

See the discussion under the heading “Results of Operations – Consolidated” for additional discussion of the macro drivers of wholesale vehicle revenues.

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for wholesale vehicles:

(In millions, except unit data)

60

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit data)

Our Powersports Segment reported wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

61

Our Powersports Segment same store wholesale vehicle results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Same Store Powersports Segment Wholesale Vehicles – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Wholesale vehicle revenue remained flat and wholesale vehicle gross loss improved by $0.1 million, driven by changes in wholesale unit sales volume and wholesale gross loss per unit.

Same Store Powersports Segment Wholesale Vehicles – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Wholesale vehicle revenue increased $0.2 million, or 10%, and wholesale vehicle gross loss remained flat, driven by changes in revenue per unit, partially offset by wholesale unit sales volume and wholesale gross loss per unit.

Fixed Operations – Powersports Segment

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for Fixed Operations:

(In millions)

NM = Not Meaningful

(In millions)

NM = Not Meaningful

Our Powersports Segment reported Fixed Operations results were as follows:

(In millions)

(In millions)

64

Our Powersports Segment same store Fixed Operations results were as follows:

(In millions)

65

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions)

Same Store Powersports Segment Fixed Operations – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Fixed Operations revenue decreased approximately $0.6 million, or 3%, and Fixed Operations gross profit remained flat. Customer pay revenue decreased approximately $0.2 million, or 6%, and customer pay gross profit decreased approximately $0.2 million, or 13%. Warranty revenue increased approximately $0.2 million, or 14%, and warranty gross profit remained flat. Wholesale parts revenue increased approximately $0.1 million, or 50%, and wholesale parts gross profit increased approximately $0.1 million, or 100%. Internal, sublet and other revenue decreased approximately $0.7 million, or 4%, and internal, sublet and other gross profit increased approximately $0.1 million, or 1%.

Same Store Powersports Segment Fixed Operations – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Fixed Operations revenue increased approximately $0.6 million, or 1%, and Fixed Operations gross profit increased approximately $0.9 million, or 5%. Customer pay revenue remained flat, and customer pay gross profit increased approximately $0.2 million, or 7%. Warranty revenue remained flat, and warranty gross profit remained flat. Wholesale parts revenue increased approximately $0.3 million, or 75%, and wholesale parts gross profit increased approximately $0.1 million, or 100%. Internal, sublet and other revenue increased approximately $0.3 million, or 1%, and internal, sublet and other gross profit increased approximately $0.6 million, or 4%.

F&I – Powersports Segment

The following tables provide a reconciliation of Powersports Segment reported basis and same store basis for F&I:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Our Powersports Segment reported F&I results were as follows:

(In millions, except unit and per unit data)

67

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit and per unit data)

Our Powersports Segment same store F&I results were as follows:

(In millions, except unit and per unit data)

(In millions, except unit and per unit data)

Same Store Powersports Segment F&I – Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

F&I revenue increased $0.2 million, or 6%, due primarily to a 2% increase in F&I gross profit per retail unit, and a 4% increase in retail new and used vehicle unit sales volume. F&I gross profit per retail unit increased $22 per unit, to $1,088 per unit, primarily due to higher penetration rates for finance contracts, service contracts, and aftermarket products, partially offset by lower gross profit per finance contract, service contract, and aftermarket product, and changes to our F&I product cost structure.

Finance contract revenue for combined retail new and used vehicles increased 28%, due primarily to a 3,950 basis point increase in finance contract penetration rate, which drove a 141% increase in finance contract sales volume, partially offset by a 47% decrease in gross profit per finance contract. Service contract revenue for combined retail new and used vehicles increased 2%, due primarily to a 1,540 basis point increase in service contract penetration rate, which drove a 101% increase in service contract sales volume, partially offset by a 49% decrease in gross profit per service contract. Aftermarket product revenue for combined retail new and used vehicles decreased 7%, due primarily to a 67% decrease in gross profit per aftermarket product, partially offset by a 3,770 basis point increase in aftermarket product penetration rate, which drove a 182% increase in aftermarket product sales volume.

Same Store Powersports Segment F&I – Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

F&I revenue increased $0.9 million, or 13%, due primarily to an 11% increase in retail new and used vehicle unit sales volume, and a 3% increase in F&I gross profit per retail unit. F&I gross profit per retail unit increased $28 per unit, to $1,012 per unit, primarily due to higher penetration rates for finance contracts, service contracts, and aftermarket products, partially offset by lower gross profit per finance contract, service contract, and aftermarket product, and changes to our F&I product cost structure.

Finance contract revenue for combined retail new and used vehicles increased 40%, due primarily to a 2,830 basis point increase in finance contract penetration rate, which drove a 96% increase in finance contract volume, offset partially by a 29% decrease in gross profit per finance contract. Service contract revenue for combined retail new and used vehicles increased 4%, due primarily to a 1,010 basis point increase in service contract penetration rate, which drove a 65% increase in service contract sales volume, offset partially by a 37% decrease in gross profit per service contract. Aftermarket product revenue for combined retail new and used vehicles increased 11%, due primarily to a 2,710 basis point increase in the aftermarket product penetration rate, which drove a 111% increase in aftermarket product sales volume, offset partially by a 48% decrease in gross profit per aftermarket product.

Segment Results Summary

In the following tables of financial data, total segment income (loss) (defined as income (loss) before taxes and impairment charges for each reportable segment) of the reportable segments is reconciled to consolidated income (loss) before taxes and impairment charges. See above for tables and discussion of results by reportable segment. Due to rounding, segment level financial data may not sum to consolidated results.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(In millions, except unit data)

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

(2) For the three months ended September 30, 2026, amount includes approximately $0.9 million of pre-tax charges related to property damages, approximately $1.0 million in pre-tax proceeds from legal settlements, and approximately $0.6 million in pre-tax charges related to lease exits. For the three months ended September 30, 2025, amount includes approximately $2.8 million of pre-tax loss related to the disposal of franchises and approximately $0.7 million of pre-tax legal expenses.

(3) For the three months ended September 30, 2026, amount includes approximately $0.6 million in pre-tax charges related to lease exits. For the three months ended September 30, 2025, amount includes approximately $0.1 million of pre-tax loss on dispositions.

(4) For the three months ended September 30, 2025, amount includes approximately $0.2 million of pre-tax charges related to dispositions.

(In millions, except unit data)

71

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

(2) For the nine months ended September 30, 2026, amount includes approximately $5.1 million of pre-tax gain related to dispositions, approximately $2.1 million of pre-tax charges related to property damages, approximately $0.6 million in pre-tax charges related to lease exits, and approximately $1.0 million in pre-tax proceeds related to legal settlements. For the nine months ended September 30, 2025, amount includes $40.0 million of pre-tax benefit from cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024, approximately $5.0 million of pre-tax charges related to storm damage, approximately $5.5 million of pre-tax loss related to dispositions, and approximately $0.7 million of pre-tax legal expenses.

(3) For the nine months ended September 30, 2026, amount includes approximately $3.0 million of pre-tax gain on lease terminations. For the nine months ended September 30, 2025, amount includes approximately $0.9 million of pre-tax gain on dispositions.

(4) For the nine months ended September 30, 2025, amount includes approximately $1.1 million of pre-tax charges related to dispositions. Due to rounding, segment level financial data may not sum to consolidated results.

(5) For the nine months ended September 30, 2026, amount includes approximately $0.4 million of non-cash pre-tax impairment charges related to construction-in-progress projects for the Franchised Dealerships Segment. For the nine months ended September 30, 2025, amount includes approximately $0.2 million of non-cash pre-tax property and equipment impairment charges for real estate held for sale in the EchoPark Segment, approximately $7.2 million of non-cash pre-tax franchise asset impairment charges for the Powersports Segment, $0.4 million of non-cash pre-tax property, equipment and right-of-use asset impairment charges for the Powersports Segment, and approximately $165.9 million of non-cash pre-tax franchise asset impairment charges for the Franchised Dealerships Segment.

Selling, General and Administrative (“SG&A”) Expenses – Consolidated

SG&A expenses are comprised of four major groups: compensation expense, advertising expense, rent expense and other expense. Compensation expense primarily relates to store personnel who are paid a commission or a salary plus commission and support personnel who are generally paid a fixed salary. Commissions paid to store personnel typically vary depending on gross profits realized and sales volume objectives. Due to the salary component for certain store and corporate personnel, gross profits and compensation expense do not change in direct proportion to one another. Advertising expense and other expense vary based on the level of actual or anticipated business activity and the number of dealerships in operation. Rent expense typically varies with the number of store locations owned, investments made for facility improvements and interest rates. Other expense includes various fixed and variable expenses, including gain on the disposal of franchises, certain customer-related costs such as gasoline and service loaners, and insurance, training, legal and information technology expenses, which may not change in proportion to gross profit levels. Typically, SG&A expenses as a percentage of gross profit are highest in the first quarter of the year, due to the seasonal nature of our business and the effects of certain payroll taxes and fringe benefits that occur early in the year.

Consolidated Reported SG&A Expenses

The following tables set forth information related to our consolidated reported SG&A expenses:

(In millions)

(In millions)

Consolidated Reported SG&A - Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Overall SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher other fixed expenses and higher compensation expense. Compensation expense increased in both dollar amount and as a percentage of gross profit, due to higher overall gross profit and based on the variable nature of our sales associate pay plans. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to lease exits during the current quarter. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher information technology expenses and higher customer-related costs.

Consolidated Reported SG&A - Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Overall SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to a $40.0 million pre-tax benefit from cyber insurance proceeds related to the CDK outage recorded in other SG&A expenses during the prior year period. Compensation expense increased in both dollar amount and as a percentage of gross profit, due to higher overall gross profit and based on the variable nature of our sales associate pay plans. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to the increase in leased dealerships as a result of acquisitions during the prior year, offset slightly by lease exits during the current quarter. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to the $40.0 million benefit of cyber insurance proceeds received in the prior year as well as higher customer-related costs.

Franchised Dealerships Segment Reported SG&A Expenses

The following tables set forth information related to our Franchised Dealerships Segment reported SG&A expenses:

(In millions)

(In millions)

74

Franchised Dealerships Segment SG&A - Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

The Franchised Dealerships Segment’s total SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher other SG&A expenses. Compensation expense remained flat in dollar amount and increased as a percentage of gross profit due to a decrease in overall gross profit. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense decreased in dollar amount and as a percentage of gross profit, primarily due to lease exits during the current quarter. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit primarily due to higher customer-related costs.

For the Franchised Dealerships Segment, SG&A expenses for the three months ended September 30, 2026 include approximately $0.9 million of pre-tax charges related to storm damage, approximately $0.6 million of pre-tax lease exit charges, and approximately $1.0 million of pre-tax benefit related to legal settlements. For the three months ended September 30, 2025, amount includes approximately $2.8 million of pre-tax charges related to dispositions, and approximately $0.7 million of pre-tax legal expenses.

Franchised Dealerships Segment SG&A - Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

The Franchised Dealerships Segment’s total SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to a $40.0 million pre-tax benefit from cyber insurance proceeds related to the CDK outage recorded in other SG&A expenses during the prior year. Compensation expense increased in both dollar amount and as a percentage of gross profit due to acquisitions in the Franchised Dealerships Segment, an increase in supervisor compensation expense, absentee wages, and an increase in fixed operations sales compensation related to the increase in fixed operations sales. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in dollar amount and as a percentage of gross profit, primarily due to the increase in leased dealerships as a result of acquisitions, offset slightly by lease exits during the current quarter. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit primarily due to the benefit of cyber insurance proceeds received in the prior year.

For the Franchised Dealerships Segment, SG&A expenses for the nine months ended September 30, 2026 include approximately $2.1 million of pre-tax charges related to storm damage, approximately $5.1 million of pre-tax benefit related to dispositions, approximately $0.6 million of pre-tax lease exit charges, and approximately $1.0 million of pre-tax benefit related to legal settlements. For the nine months ended September 30, 2025, amount includes $40.0 million of pre-tax benefit from cyber insurance proceeds related to a cybersecurity incident impacting certain of our information systems provided by CDK Global in the second quarter of 2024, approximately $5.0 million of pre-tax charges related to storm damage, approximately $5.5 million of pre-tax charges related to dispositions, and approximately $0.7 million of pre-tax legal expenses.

EchoPark Segment Reported SG&A Expenses

The following tables set forth information related to our EchoPark Segment reported SG&A expenses:

(In millions)

(In millions)

EchoPark Segment SG&A - Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

The EchoPark Segment’s total SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to increased compensation expense. Compensation expense increased in both dollar amount and as a percentage of gross profit due primarily to an increase in used vehicles sales compensation related to the increase in used vehicles sales. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to an increase in rental rates as compared to prior year and a decrease in sublease income. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit primarily due to higher information technology expenses.

For the three months ended September 30, 2026, amount includes approximately $0.6 million of pre-tax lease exit charges. For the three months ended September 30, 2025, amount includes approximately $0.1 million of pre-tax loss on dispositions.

EchoPark Segment SG&A - Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

The EchoPark Segment’s total SG&A expenses increased in dollar amount and was flat as a percentage of gross profit, primarily due to higher compensation expense, partially offset by a gain on lease terminations. Compensation expense increased in both dollar amount and as a percentage of gross profit due primarily to an increase in used vehicles sales compensation related to the increase in used vehicles sales. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense decreased in both dollar amount and as a percentage of gross profit, primarily due to a gain on lease terminations. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit as a result of higher information technology expenses as well as a gain on the sale of real estate during the prior year period.

For the EchoPark Segment, SG&A expenses for the nine months ended September 30, 2026 include approximately $3.0 million of pre-tax gain on exit of leased dealerships. For the nine months ended September 30, 2025, amount includes approximately $0.9 million of pre-tax gain on dispositions.

Powersports Segment Reported SG&A Expenses

The following tables set forth information related to our Powersports Segment reported SG&A expenses:

(In millions)

(In millions)

77

Powersports Segment SG&A - Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

The Powersports Segment’s total SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to increased compensation expense. Compensation expense increased in both dollar amount and as a percentage of gross profit due primarily to an increase in sales compensation expenses due to higher overall retail activity, supervisor compensation expense and bonus expense. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to a decrease in rental income. Other SG&A expenses increased in both dollar amount and as a percentage of gross profit, primarily due to higher insurance expenses.

For the three months ended September 30, 2025, amount includes approximately $0.2 million of pre-tax charges related to dispositions.

Powersports Segment SG&A - Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

The Powersports Segment’s total SG&A expenses increased in dollar amount and decreased as a percentage of gross profit, primarily due to higher levels of gross profit that better leverage fixed expenses. Compensation expense increased in dollar amount due primarily to higher overall retail activity, and decreased as a percentage of gross profit as a result of higher overall gross profit and favorable gross profit mix shifts in Fixed Operations and F&I. Advertising expense increased in both dollar amount and as a percentage of gross profit, as a result of adapting our advertising spending to current retail automotive market conditions. Rent expense increased in both dollar amount and as a percentage of gross profit, primarily due to a decrease in rental income. Other SG&A expenses increased in dollar amount despite losses related to dispositions in the prior year and decreased as a percentage of gross profit, primarily related to higher overall gross profit.

For the nine months ended September 30, 2025, amount includes approximately $1.1 million of pre-tax charges related to dispositions.

Impairment Charges – Consolidated

There were no impairment charges for the three months ended September 30, 2026. Impairment charges were approximately $0.4 million for the nine months ended September 30, 2026. These charges were primarily related to the write-off of construction-in-progress assets within our Franchised Dealerships Segment. There were no impairment charges for the three months ended September 30, 2025. Impairment charges were approximately $173.8 million for the nine months ended September 30, 2025. These charges primarily reflect the results of our annual franchise asset impairment test as of April 30, 2025, which required an impairment charge of $172.4 million.

Depreciation and Amortization – Consolidated

Depreciation and amortization expense decreased approximately $2.9 million, or 7%, and $4.7 million, or 4%, during the three and nine months ended September 30, 2026, respectively, due primarily to changes in estimates related to the useful lives of certain buildings and improvements, resulting in lower depreciation expense.

Interest Expense, Floor Plan – Consolidated

We typically maintain a floor plan deposit balance (as shown in the table below under the heading “Liquidity and Capital Resources”) that earns interest income based on the used floor plan interest rate, effectively reducing net used vehicle floor plan interest expense. The floor plan deposit balance was $190.0 million and $175.0 million as of September 30, 2026 and September 30, 2025, respectively, and was $300.0 million and $340.0 million as of December 31, 2025 and December 31, 2024, respectively. Our interest expense, floor plan fluctuates with changes in our outstanding borrowings and associated interest rates, which are variable based on one-month Term SOFR or the U.S. prime rate, plus credit spreads specified in the applicable agreements.

Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025

Interest expense, floor plan for new vehicles increased $0.2 million. The average new vehicle floor plan notes payable balance increased $210.6 million, driving $2.9 million of the overall increase. The average interest rate applied to the new vehicle floor plan decreased in the three months ended September 30, 2026, offsetting $2.7 million of the overall increase.

Interest expense, floor plan for used vehicles increased $0.3 million, including the effect of interest income earned on the floor plan deposit balance, offsetting $0.6 million of the increase. Excluding the effect of the floor plan deposit balance, interest expense, floor plan for used vehicles increased $0.9 million. The average used vehicle floor plan notes payable balance increased $102.3 million, driving $1.7 million of that increase. The average interest rate applied to the used vehicle floor plan decreased in the three months ended September 30, 2026, offsetting $0.8 million of that increase.

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Interest expense, floor plan for new vehicles decreased $0.3 million. The average interest rate applied to the new vehicle floor plan decreased in the nine months ended September 30, 2026, driving $7.3 million of the overall decrease. The average new vehicle floor plan notes payable balance increased $172.6 million, offsetting $7.0 million of the overall decrease.

Interest expense, floor plan for used vehicles increased $2.7 million including the effect of interest income earned on the floor plan deposit balance, which drove $1.9 million of the increase. Excluding that effect, interest expense, floor plan for used vehicles increased $0.8 million. The average used vehicle floor plan notes payable balance increased $75.8 million, driving $3.8 million of that increase. The average interest rate applied to the used vehicle floor plan decreased in the nine months ended September 30, 2026, offsetting $3.0 million of that increase.

Interest Expense, Other, Net – Consolidated

Interest expense, other, net is summarized in the tables below:

(In millions)

(In millions)

Interest expense, other, net increased approximately $3.1 million, or 11%, during the three months ended September 30, 2026, and increased approximately $6.7 million, or 8%, during the nine months ended September 30, 2026. The $3.1 million increase is primarily due to interest expense for the three months ended September 30, 2026 of $2.4 million related to the Bridge Facility entered into on March 27, 2026 and $2.2 million related to the Sidecar Facility draw on October 24, 2025, partially offset by decreases related to regular principal repayments. The $6.7 million increase is primarily due to interest expense for the nine months ended September 30, 2026 of $4.8 million related to the Bridge Facility entered into on March 27, 2026 and $6.5 million related to the Sidecar Facility draw on October 24, 2025, partially offset by decreases related to regular principal repayments.

Income Taxes

The overall effective income tax rate was 28.5% for both the three and nine months ended September 30, 2026, compared to 34.3% and 27.9% for the three and nine months ended September 30, 2025, respectively. Sonic’s effective income tax rate generally 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. We generally expect our overall effective tax rate to range from 27% to 30%. The effective income tax rate in the three and nine month periods ended September 30, 2025 was impacted by the effect of the non-cash impairment charges related to indefinite-lived franchise assets, the effect of certain permanent items on relatively low pre-tax income amounts and discrete tax charges.

Liquidity and Capital Resources

We require cash to service debt, meet lease obligations, manage working capital requirements, make facility and other capital improvements, pay dividends on our common stock, finance acquisitions and otherwise invest in our business. We rely on cash flows from operations, borrowings under our revolving credit and floor plan facilities, real estate mortgage financing, asset sales and offerings of debt and equity securities to meet these requirements. However, our liquidity could be negatively affected by business performance and could result in a failure to comply with the financial covenants in our existing debt obligations or lease arrangements. Cash flows provided by our dealerships are derived from various sources including, primarily, individual consumers, automobile manufacturers, automobile manufacturers’ captive finance subsidiaries and other financial institutions. Disruptions in these cash flows could have a material adverse impact on our operations and overall liquidity.

Because the majority of our consolidated assets are held by our dealership subsidiaries, the majority of our cash flows from operations are generated by these subsidiaries. As a result, our cash flows and our ability to service our obligations depend to a substantial degree on the results of operations of these subsidiaries, their contractual obligations and capital requirements, and their ability to provide us with cash.

We had the following liquidity resources available as of September 30, 2026 and December 31, 2025:

(In millions)

We maintain a floor plan deposit balance (as shown in the table above) that offsets interest based on the agreed upon floor plan interest rate, effectively reducing the net used vehicle floor plan interest expense. This deposit balance is not designated as a prepayment of notes payable - floor plan, nor is it our intent to use this amount to settle principal amounts owed under notes payable - floor plan in the future, although we have the right and ability to do so. The deposit balances of $190.0 million as of September 30, 2026 and $300.0 million as of December 31, 2025 are classified as other current assets in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025.

Floor Plan Facilities

The weighted-average interest rates for our combined new and used vehicle floor plan facilities were 5.02% and 5.65% for the three months ended September 30, 2026 and 2025, respectively, and 4.99% and 5.66% for the nine months ended September 30, 2026 and 2025, respectively. Excluding the effect of interest income earned on the floor plan deposit balance, the weighted-average interest rates for our combined new and used vehicle floor plan facilities were 5.05% and 5.67% for the three months ended September 30, 2026 and 2025, respectively, and 5.03% and 5.70% for the nine months ended September 30, 2026 and 2025, respectively.

We receive floor plan assistance in the form of direct payments or credits from certain manufacturers. Floor plan assistance received is capitalized in inventory and recorded as a reduction of cost of sales when the associated inventory is sold. We received $17.2 million and $17.3 million in manufacturer assistance in the three months ended September 30, 2026 and 2025, respectively, and $47.3 million and $49.3 million in manufacturer assistance in the nine months ended September 30, 2026 and 2025, respectively. We recognized in cost of sales $15.9 million and $17.2 million in manufacturer assistance in the three months ended September 30, 2026 and 2025, respectively and $46.5 million and $49.0 million in manufacturer assistance in the nine months ended September 30, 2026 and 2025, respectively. Interest payments under each of our floor plan facilities are due monthly and we are generally not required to make principal repayments prior to the sale of the associated vehicles. The total notes payable - floor plan balance of approximately $2.3 billion as of September 30, 2026 is classified as current liabilities in the accompanying unaudited condensed consolidated balance sheet as of such date.

Long-Term Debt and Credit Facilities

See Note 6, “Long-Term Debt,” to the accompanying unaudited condensed consolidated financial statements for a discussion of our senior notes, mortgage notes and credit facilities and compliance with debt covenants.

Capital Expenditures

Our capital expenditures include the purchase of land and buildings, the construction of new franchised dealerships, EchoPark and powersports stores and collision repair centers, building improvements and equipment purchased for use in our franchised dealerships and EchoPark and powersports stores. We selectively construct new or improve existing franchised dealership facilities to maintain compliance with manufacturers’ image requirements. We typically finance these projects through cash flows from operations, new mortgages or our credit facilities.

Capital expenditures in the nine months ended September 30, 2026 were approximately $223.7 million, including approximately $206.1 million related to our Franchised Dealerships Segment, approximately $14.1 million related to our EchoPark Segment and approximately $3.5 million related to our Powersports Segment. Of the total capital expenditures, approximately $67.7 million was related to facility construction projects, approximately $97.2 million was related to real estate projects (buildings and improvements) and approximately $58.8 million was for other fixed assets utilized in our operations.

All of the $223.7 million in gross capital expenditures in the nine months ended September 30, 2026 was funded through existing cash balances. As of September 30, 2026, commitments for facility construction projects totaled approximately $81.3 million, nearly all of which is expected to be completed or paid in the next 12 months.

Share Repurchase Program

Our Board of Directors has authorized us to repurchase shares of our Class A Common Stock. Historically, we have used share repurchases to offset dilution resulting from the exercise of stock options or the vesting of equity compensation awards and to maintain our desired capital structure. During the three months ended September 30, 2026, we did not repurchase any shares of our Class A Common Stock. During the nine months ended September 30, 2026, we repurchased 2.2 million shares of our Class A Common Stock for $142.0 million in open-market transactions at prevailing market prices and in connection with tax withholding on the vesting of equity compensation awards. As of September 30, 2026, our total remaining share repurchase authorization was $527.9 million. Under the Credit Facilities and Senior Notes, share repurchases are permitted to the extent that no continuing Event of Default exists and we do not exceed the restrictions set forth within.

Our share repurchase activity is subject to the business judgment of our Board of Directors and management, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements and covenant compliance, the current economic environment and other factors considered by our Board of Directors and management to be relevant. These factors are considered each quarter and will be scrutinized as our Board of Directors and management determine our share repurchase policy in the future.

Dividends

During the three months ended September 30, 2026, our Board of Directors approved a cash dividend of $0.41 per share on all outstanding shares of Class A and Class B Common Stock as of September 15, 2026, which was paid on October 15, 2026. Subsequent to September 30, 2026, our Board of Directors approved a cash dividend of $0.41 per share on all outstanding shares of Class A and Class B Common Stock as of December 15, 2026 to be paid on January 15, 2027. The Credit Facilities and Senior Notes permit quarterly cash dividends on our Class A and Class B Common Stock up to certain limits so long as no continuing Event of Default has occurred and provided that we remain in compliance with all financial covenants therein. Dividends in excess of those limits are subject to the limitations on restricted payments set forth in the Credit Facilities and Senior Note Indentures. The declaration and payment of any future dividend is subject to the business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements and covenant compliance, share repurchases, the current economic environment and other factors considered to be relevant. These factors are considered each quarter and will be scrutinized as our Board of Directors determines our dividend policy in the future. There is no guarantee that additional dividends will be declared and paid at any time in the future. See Note 6, “Long-Term Debt,” to the accompanying unaudited condensed consolidated financial statements for a description of restrictions on the payment of dividends.

Cash Flows

Cash Flows from Operating Activities – Net cash used in operating activities in the nine months ended September 30, 2026 was approximately $14.5 million. This use of cash was comprised primarily of an increase in inventories, partially offset by net income adjusted for non-cash items, decreases in receivables and other assets, an increase in trade accounts payable and other liabilities, and an increase in notes payable – floorplan – trade. Net cash provided by operating activities in the nine months ended September 30, 2025 was approximately $500.5 million. This provision of cash was comprised primarily of net income adjusted for non-cash items, a decrease in receivables and an increase in trade accounts payable and other liabilities.

We arrange our inventory floor plan financing through both manufacturer captive finance companies and a syndicate of manufacturer-affiliated finance companies and commercial banks. Our floor plan financed with manufacturer captives is recorded in the accompanying unaudited condensed consolidated balance sheets as notes payable - floor plan - trade (with the change in balance being reflected in operating cash flows). Our dealerships that obtain floor plan financing from a syndicate of manufacturer-affiliated finance companies and commercial banks record their obligation in the accompanying unaudited condensed consolidated balance sheets as notes payable - floor plan - non-trade (with the change in balance being reflected in financing cash flows).

Net cash provided by combined trade and non-trade floor plan financing was approximately $465.3 million in the nine months ended September 30, 2026. Net cash provided by combined trade and non-trade floor plan financing was approximately $222.1 million in the nine months ended September 30, 2025. Accordingly, if all changes in floor plan notes payable were classified as an operating activity (to align changes in floor plan liability balances with the associated changes in inventory balances for cash flow classification), the result would have been net cash provided by operating activities of approximately $424.2 million and $729.7 million in the nine months ended September 30, 2026 and 2025, respectively.

Cash Flows from Investing Activities – Net cash used in investing activities in the nine months ended September 30, 2026 was approximately $329.7 million. This use of cash was comprised primarily of the purchases of land, property, and equipment and the purchase of businesses, net of cash acquired, partially offset by proceeds from sales of dealerships and proceeds from sales of property and equipment. Net cash used in investing activities in the nine months ended September 30, 2025 was approximately $494.3 million. This use of cash was comprised primarily of the purchase of businesses, net of cash acquired, and land, property and equipment.

Cash Flows from Financing Activities – Net cash provided by financing activities in the nine months ended September 30, 2026 was approximately $348.6 million. This provision of cash was comprised primarily of net borrowings on notes payable – floor plan – non-trade and proceeds from borrowings, partially offset by purchases of treasury stock, principal payments on long-term debt, principal payments on long-term lease liabilities, and payments of dividends. Net cash provided by financing activities in the nine months ended September 30, 2025 was approximately $39.2 million. This provision of cash was comprised primarily of net borrowings on notes payable – floor plan – non-trade, partially offset by payments on long-term debt, purchases of treasury stock and payments of dividends.

One metric that management uses to measure operating performance is Adjusted EBITDA (a non-GAAP financial measure) for each of the Company’s reportable segments and on a consolidated basis. We believe Adjusted EBITDA enables our operating performance to be compared across reporting periods on a consistent basis by excluding non-floor plan financing costs, non-cash items such as depreciation and amortization, stock-based compensation expense, and impairment charges, and other items that may affect the comparability of reporting periods, including, but not limited to, gains or losses from acquisitions or dispositions, facility exit costs, severance and long-term compensation charges, and storm damage charges. This non-GAAP financial measure is reconciled to net income (the most directly comparable GAAP financial measure) in the table below:

(In millions)

Note: Due to rounding, segment level financial data may not sum to consolidated results.

(1) Includes the following line items from the accompanying unaudited condensed consolidated statements of operations, net of any amortization of debt issuance costs or net debt discount/premium included in footnote (2) below: interest expense, other, net.

(2) Includes the following line items from the accompanying unaudited condensed consolidated statements of cash flows: depreciation and amortization of property and equipment; debt issuance cost amortization; and debt discount amortization, net of premium and other amortization.

(3) Adjusted EBITDA is a non-GAAP financial measure.

(In millions)

83

Note: Due to rounding, segment level financial data may not sum to consolidated results.

(1) Includes the following line items from the accompanying unaudited condensed consolidated statements of operations, net of any amortization of debt issuance costs or net debt discount/premium included in footnote (2) below: interest expense, other, net.

(2) Includes the following line items from the accompanying unaudited condensed consolidated statements of cash flows: depreciation and amortization of property and equipment; debt issuance cost amortization; and debt discount amortization, net of premium and other amortization.

(3) Adjusted EBITDA is a non-GAAP financial measure.

Seasonality

Our operations are subject to seasonal variations. Due in part to our franchised dealerships brand mix and the seasonal nature of automotive retail, the first quarter historically has contributed less operating profit than the second and third quarters, while the fourth quarter historically has contributed the highest operating profit of any quarter. Weather conditions and the timing of manufacturer incentive programs and model changeovers cause seasonality and may adversely affect vehicle demand and, consequently, our profitability. Comparatively, parts and service demand has historically remained stable throughout the year.

Future Liquidity Outlook

We believe our best sources of liquidity for operations and debt service remain cash flows generated from operations combined with availability under our Credit Facilities (including the Floor Plan Facilities), Mortgage Facility and Sidecar Facility (or any replacements thereof), Bridge Facility, real estate mortgage financing, selected dealership and other asset sales, along with our ability to raise funds in the capital markets through offerings of debt or equity securities. Because the majority of our consolidated assets are held by our dealership subsidiaries, the majority of our cash flows from operations are generated by these subsidiaries. As a result, our cash flows and our ability to service our obligations depend to a substantial degree on the results of operations of these subsidiaries, their contractual obligations and capital requirements, and their ability to provide us with cash.

We do not currently anticipate any materially negative changes to our cost of, or access to, capital over the next 12 months.

Off-Balance Sheet Arrangements

Guarantees and Indemnification Obligations

In connection with the operation and disposition of our dealerships, we have entered into various guarantees and indemnification obligations. When we sell dealerships, we attempt to assign any related lease to the buyer of the dealership to eliminate any future liability. However, if we are unable to assign the related leases to the buyer, we will attempt to sublease the leased properties to the buyer at a rate equal to the terms of the original leases. In the event we are unable to sublease the properties to the buyer with terms at least equal to our leases, we may be required to record lease exit accruals. As of September 30, 2026, our future gross minimum lease payments related to properties subleased to buyers of sold dealerships totaled approximately $1.3 million. Future sublease payments expected to be received related to these lease payments were approximately $0.9 million at September 30, 2026.

In accordance with the terms of agreements entered into for the sale of our dealerships, we generally agree 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 our exposure with respect to environmental remediation is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $13.7 million as of September 30, 2026 and $3.0 million as of December 31, 2025. These indemnifications typically expire within a period of one to three years following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at September 30, 2026.

We expect the aggregate amount of the obligations we guarantee to fluctuate based on dealership disposition activity. Although we seek to mitigate our exposure in connection with these matters, these guarantees and indemnification obligations, including environmental exposures and the financial performance of lease assignees and sublessees, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on our liquidity and capital resources. See Note 7, “Commitments and Contingencies,” to the accompanying unaudited condensed consolidated financial statements and Note 12, “Commitments and Contingencies,” to the consolidated financial statements in our Annual

Report on Form 10-K for the year ended December 31, 2025 for further discussion regarding these guarantees and indemnification obligations.