Sonic Automotive, Inc. 4th Quarter Earnings Up 29%

CHARLOTTE, N.C., Feb. 21, 2006 -- Sonic Automotive, Inc. , a leader in automotive retailing, today reported that its 2005 fourth quarter income from continuing operations was $25.2 million, or $0.58 per diluted share, compared to $19.3 million, or $0.45 per diluted share, in the prior year period. For the full year 2005, income from continuing operations was $101.8 million, or $2.33 per diluted share, compared to $93.3 million, or $2.16 per diluted share, in the prior year.

Commenting on fourth quarter performance, Chairman and Chief Executive Officer O. Bruton Smith said, "Sonic Automotive's earnings reflect the strength of our operating model as performance improved in a difficult industry environment. Our strong brand mix yielded a 40 basis point gross margin improvement over the prior year quarter along with reduced costs as SG&A as a percentage of gross profit declined 350 basis points over the prior year quarter. The Sonic management team executed on our strategic operating initiatives and exceeded the targets previously communicated to the marketplace."

"Our operating results highlight the benefits of our long-term portfolio enrichment strategy," said President and Chief Operating Officer Jeffrey C. Rachor. "During December 2005 and early 2006 we closed on three acquisitions representing $280 million in annual revenues. These larger luxury and import dealerships are in key existing markets for Sonic Automotive. They exemplify the criteria we have outlined in our overall acquisition strategy."

Looking ahead to 2006, Mr. Rachor said, "It is likely that we will add targeted acquisitions with aggregate annualized revenues of approximately $400 million to $700 million, which will help offset the effect of rising interest rates on our business. We expect operating execution to continue to improve as process standardization, technology and management infrastructure mature. Accordingly, we are targeting earnings per share from continuing operations to be between $2.40 and $2.50 for 2006."

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 177 franchises and 38 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.

Results of Operations (unaudited) (in thousands, except per share, unit data and percentage amounts) For the Year Ended 12/31/2005 12/31/2004 Revenues Retail new vehicles $4,498,010 $4,093,679 Fleet vehicles 319,707 282,609 Total new vehicles 4,817,717 4,376,287 Used vehicles 1,238,586 1,141,431 Wholesale vehicles 540,977 481,873 Total vehicles 6,597,280 5,999,591 Parts, service and collision repair 1,091,172 994,263 Finance, insurance and other 196,390 183,728 Total revenues 7,884,842 7,177,582 Total gross profit 1,211,258 1,102,436 SG&A expenses 939,177 867,450 Depreciation 21,297 16,303 Operating income 250,784 218,683 Interest expense, floor plan 40,209 25,864 Interest expense, other 46,448 42,431 Other income 54 48 Income from continuing operations before taxes 164,181 150,436 Income taxes 62,390 57,152 Income from continuing operations 101,791 93,284 Discontinued operations: Loss from operations and the sale of discontinued franchises (13,439) (10,623) Income tax benefit 3,509 3,410 Loss from discontinued operations (9,930) (7,213) Net income $91,861 $86,071 Diluted: Weighted average common shares outstanding 45,533 45,217 Earnings per share from continuing operations $2.33 $2.16 Loss per share from discontinued operations ($0.21) ($0.16) Earnings per share $2.12 $2.00 Gross Margin Data: Retail new vehicles 7.5% 7.6% Fleet vehicles 3.0% 2.8% Total new vehicles 7.2% 7.3% Used vehicles retail 10.6% 10.4% Total vehicles retail 7.9% 7.9% Parts, service and collision repair 49.2% 48.7% Finance, insurance and other 100.0% 100.0% Overall gross margin 15.4% 15.4% SG&A Expenses: Personnel 546,425 505,695 Advertising 64,721 59,258 Facility rent 92,620 78,641 Other 235,411 223,856 Total 939,177 867,450 Unit Data: New retail units 143,757 134,567 Fleet units 14,363 12,420 Total new units 158,120 146,987 Used units 68,392 64,911 Total units retailed 226,512 211,898 Wholesale units 61,244 57,570 Average price per unit: New retail vehicles 31,289 30,421 Fleet vehicles 22,259 22,754 Total new vehicles 30,469 29,773 Used vehicles 18,110 17,585 Wholesale vehicles 8,833 8,370 Other Data: Floorplan assistance (continuing operations) $37,795 $36,621 Same store revenue percentage changes: New retail 4.4% Fleet 13.4% Total new 5.0% Used 3.9% Parts, service and collision repair 3.1% Finance, insurance and other 4.1% Total 4.7% Consolidated Balance Sheet Data: 12/31/2005 12/31/2004 ASSETS Current Assets: Cash $7,566 $9,991 Receivables, net 396,225 357,403 Inventories 1,016,457 1,024,342 Assets held for sale 73,837 98,530 Construction in progress expected to be sold in sale-leaseback transactions 95,131 77,285 Other current assets 27,484 21,910 Total current assets 1,616,700 1,589,461 Property and Equipment, Net 148,267 134,490 Goodwill, Net 1,122,538 1,056,924 Other Intangibles, Net 88,696 84,777 Other Assets 49,300 33,877 TOTAL ASSETS $3,025,501 $2,899,529 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable - floor plan - trade $579,022 $609,422 Notes payable - floor plan - non-trade 410,296 375,127 Trade accounts payable 91,101 88,616 Accrued interest 17,378 15,421 Other accrued liabilities 167,060 175,511 Liabilities held for sale - trade 41,675 54,513 Liabilities held for sale - non-trade 11,215 11,796 Current maturities of long-term debt 2,747 2,970 Total current liabilities 1,320,494 1,333,376 LONG-TERM DEBT 712,311 668,826 OTHER LONG-TERM LIABILITIES 29,479 28,888 DEFERRED INCOME TAXES 132,419 98,752 STOCKHOLDERS' EQUITY Class A common stock 403 397 Class B common stock 121 121 Paid-in capital 433,654 441,503 Retained earnings 542,374 470,663 Accumulated other comprehensive income/(loss) 20 (1,228) Deferred compensation related to restricted stock (1,829) (3,408) Treasury stock, at cost (143,945) (138,361) Total stockholders' equity 830,798 769,687 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,025,501 $2,899,529 Balance Sheet Data: Current Ratio 1.22 1.19 Debt to Total Capital, Net of Cash 46.0% 46.2% LTM Return on Stockholders' Equity 11.4% 11.7%