Financial Analysis

Business Acquisitions and Dispositions Acquisitions During the six months ended June 30, 2026, in an effort to expand and diversify our business, we acquired one business (consisting of six locations) in our Powersports Segment for an aggregate gross purchase price of approximately $66.3 million. The dealership locations include Falcons Fury Harley-Davidson (Conyers, Georgia), Raging Bull Harley-Davidson (Durham, North Carolina), San Diego Harley-Davidson (San Diego, California), Space Coast Harley-Davidson (Palm Bay, Florida), Treasure Coast Harley-Davidson (Stuart, Florida) in addition to one authorized retail outlet location, Cocoa Beach Harley-Davidson (Cocoa Beach, Florida). The preliminary allocation of the aggregate gross purchase price included inventory of approximately $13.2 million, property and equipment of approximately $0.8 million, real estate of approximately $40.3 million, goodwill of approximately $13.6 million, other assets of approximately $0.1 million, right-of-use assets of $7.9 million, lease liabilities of $8.0 million, and other liabilities of approximately $1.6 million. The accompanying consolidated statements of operations include revenue and earnings attributable to the business acquired during the six months ended June 30, 2026 of approximately $19.0 million and $1.0 million, respectively. Acquisition costs recognized as an expense in the consolidated statements of operations related to this acquisition were immaterial. Additionally, the total amo …

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8. Fair Value Measurements Assets and liabilities recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 were as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) June 30, 2026 December 31, 2025 (In millions) Assets: Cash surrender value of life insurance policies (1) $ 57.4 $ 53.2 Interest rate caps designated as hedges (2) 0.2 0.1 Total assets $ 57.6 $ 53.3 (1) Included in other assets in the accompanying unaudited condensed consolidated balance sheets. (2) Included in other current assets in the accompanying unaudited condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, the fair values of Sonics financial instruments, including receivables, notes receivable from finance contracts, notes payable floor plan, trade accounts payable and borrowings under our variable interest rate credit facilities and variable interest notes to finance companies approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates. As of June 30, 2026 and December 31, 2025, the fair value and the carrying value of Sonics significant fixed rate long-term debt were as follows: June 30, 2026 December 31, 2025 Fair Value Carrying Value Fair Value Carrying Value (In millions) 4.875% Notes (1) $ 480.0 $ 500.0 $ 478.8 $ 500.0 4.625% Notes (1) $ 635.4 $ 650.0 $ 630.5 $ 650.0 Notes to Finance Co …

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5. Goodwill and Intangible Assets In accordance with Accounting Standards Codification (ASC) Topic 350, Intangibles - Goodwill and Other, we test goodwill for impairment at least annually (as of April 30 of each year) or more frequently if indications of impairment exist. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary. We evaluated our Franchised Dealership Segment reporting unit on a qualitative basis as substantial cushion existed between the calculated fair value and associated carrying values in the prior year evaluation and there were not any meaningful events or trends which would significantly erode this cushion. We evaluated our Powersports Segment reporting unit on a quantitative basis. In performing the quantitative test in the Powersports Segment reporting unit for impairment of goodwill, we primarily used the income approach method of valuation that includes the discounted cash flow (DCF) method that utilizes inputs, including projected revenues, margin, terminal growth rates, discount rates and a market capitalization reconciliation. We completed our annual impairment testing as of April 30, 2026 and determined there was no impairment of goodwill in either reporting unit evaluated. In evaluating the recoverability of our indefinite lived f …

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Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services and in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. We do not include the cost of obtaining contracts within the related revenue streams since we elected the practical expedient to expense the costs to obtain a contract when incurred. Management has evaluated our established business processes, revenue transaction streams and accounting policies, and identified our material revenue streams to be: (1) the sale of new vehicles; (2) the sale of used vehicles to retail customers; (3) the sale of wholesale used vehicles at third-party auctions; (4) the arrangement of third-party vehicle financing and the sale of third-party service, warranty and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. The transaction price for a retail vehicle sale is specified in the contract with the customer and encompasses both cash and non-cash considerations. In the context of a retail vehicle sale, customers frequently trade in their existing vehicles. The value of this trade-in is determined based on its stand-alone selling price as specified in the contract, utilizing various third-party pricing sources. There are no other non-cash forms of consideration associated with retail sales, and sales are reported net of sales tax and other …

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9. Segment Information As of June 30, 2026, Sonic had three operating segments: (1) the Franchised Dealerships Segment; (2) the EchoPark Segment; and (3) the Powersports Segment. Refer to Note 1, Description of Business and Summary of Significant Accounting Policies, to the consolidated financial statements in Sonics Annual Report on Form 10-K for the year ended December 31, 2025 for additional discussion of our operating segments. Sonic has determined that its operating segments also represent its reportable segments. The reportable segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by Sonic s chief operating decision maker to assess operating performance and allocate resources. Sonics chief operating decision maker is a group of three individuals consisting of: (1) the Companys Chief Executive Officer; (2) the Companys President; and (3) the Companys Chief Financial Officer. The chief operating decision makers evaluate segment performance and allocate resources using metrics such as segment gross profit and segment income. These segment profit metrics are consistent across all segments and align with the way we measure profit on a consolidated basis. The accounting policies applied to segments follow those for the Company as a whole. …

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10. Subsequent Events Subsequent to June 30, 2026, in an effort to expand and diversify our business, we acquired one business (consisting of six locations) in our Powersports Segment for an aggregate gross purchase price of $66.2 million, including goodwill, inventory, real estate and other assets. The businesses were acquired as of April 13, 2026 and April 20, 2026 and dealership locations include San Diego Harley-Davidson (San Diego, California), Falcons Fury Harley-Davidson (Conyers, Georgia), Space Coast Harley-Davidson (Palm Bay, Florida), Treasure Coast Harley-Davidson (Stuart, Florida), Raging Bull Harley-Davidson (Durham, North Carolina), in addition to one authorized retail outlet location, Cocoa Beach Harley-Davidson (Cocoa Beach, Florida). Additionally, subsequent to March 31, 2026, we repurchased approximately 0.1 million shares of our Class A Common Stock for approximately $6.2 million. During this period, Sonics Board of Directors increased the Companys share repurchase authorization by $500.0 million for future repurchases of shares of our Class A Common Stock, resulting in current remaining availability of approximately $528.0 million. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing