CHARLOTTE, N.C. -

Sonic Automotive generated the largest used-vehicle retail volume in company history during the second quarter as the company’s dealerships turned 27,528 units, up from 26,799 units in the year-ago span.

The volume jump helped Sonic to post a 4-percent gain in used-vehicle revenue, according to the company’s financial statement released on Monday.

Sonic’s second-quarter earnings from continuing operations came in at $27.5 million for a 20-percent increase over the prior-year results. The company determined earnings from continuing operations per diluted share increased 21 percent to 46 cents compared to 38 cents in the prior-year quarter.

Jeff Dyke, the company’s executive vice of president of operations noted, “We are extremely pleased with our double-digit revenue growth driven partially by record used-vehicle unit volume. 

“New- and used-vehicle unit volume growth fueled our fixed operations and F&I business lines which were able to collectively increase gross profit by $13.2 million,” Dyke calculated. “We are continuing to see the benefits of our technology and training investments.  We believe the consistent execution of our processes coupled with our dedication to highly qualified associates will allow us to drive profitability and provide an exceptional customer experience.”

Sonic determined that its dealerships averaged 87 used retail sales per month during the second quarter, up from last year’s average of 79 units. The company indicated about 26 percent of its used retail sales stemmed from moving a certified pre-owned model; a level Dyke said was “in line with strategy.”

Sonic also moved more vehicles through its wholesale channels during the second quarter than a year earlier. The company’s Q2 wholesale figure was 7,939 units, up from 6,310 units a year earlier.

One particular element of Sonic’s used-vehicle performance drew the attention of an investment analyst who participated in the company’s conference call on Monday. The individual wondered why gross profit per used vehicle softened a bit in the second quarter, dropping to about $1,300 per unit from $1,400 or more that was seen in previous quarters.

“We came out of March with a lot of current model year and one-year old Honda and Toyota product,” Dyke pointed out. “Honda and Toyota are running incredible specials on their new-vehicle Camrys and Accords and Corollas. It’s put a lot of pressure on that product, almost where you can sell new cheaper than you can sell used. It created a little bit of a mess for us.

“I think you’ll see margin shrinkage in a lot of places, not just ours,” he continued. “I expect it to bounce back to the $1,400 mark. That’s what we target. That’s our sweet spot. We’re already seeing the numbers back up, $75, maybe even $100 a car. It will keep marching up. It was a bit of a blip there for us.”

In other segments of its balance sheet, Sonic tabulated that its parts and service revenue moved up 3.2 percent year-over-year while its SG&A to gross profit percent ticked up slightly to 77.8 percent from 77.5 percent in the prior-year quarter

Sonic president Scott Smith pointed out that second-quarter included the unfavorable effect of approximately 3 cents per fully diluted share related to a loss recorded on the repurchase of $20.2 million principal amount of Sonic’s 5 percent Convertible Senior Notes and the favorable effect of approximately 6 cents per fully diluted share related to the settlement of certain tax matters.

“We continue to make progress improving all aspects of our business,” Smith emphasized. “During the second quarter, we have taken actions to improve our capital structure through the issuance of low-cost, long-term debt and the associated outstanding tender offer for our remaining 5 percent Convertible Senior Notes. We have also settled an outstanding tax matter on terms favorable and acceptable to us.

"All the while, we have continued to lay the foundation to become one of America’s best places to work and shop. Our dedication to customers we serve and our associates led to the results achieved this quarter," he went on to say.

Subsequent to the end of the second quarter, Sonic’s board of directors authorized an additional $100 million to be used in the company’s share repurchase program.

When combined with previously unused authorized amounts, Sonic has approximately $130 million of total authorization from its board of directors to repurchase shares of the company’s Class A Common Stock.