Sonic Automotive, Inc. Operating Initiatives Continue Their Positive Impact on Results; Earnings up 9.4%

CHARLOTTE, N.C., Oct. 30 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that third quarter 2007 earnings from continuing operations were $31.8 million, or $0.70 per diluted share, compared to $29.0 million, or $0.66 per diluted share, in the prior year period.

"In a volatile new vehicle sales environment, we continue to demonstrate the validity and flexibility of our business model," said President and Chief Strategic Officer, B. Scott Smith. "Our focus on the higher-margin areas of our business continues to drive both revenue and gross profit growth. Our same store used vehicle revenues were up over 11% compared to the third quarter of last year along with continued growth in our parts, service and F&I departments. These strategic operating initiatives, coupled with further reductions in our SG&A expenses as a percentage of gross profit, resulted in a very strong quarter for us. We expect the benefits of these strategies to continue and, as a result, we are reaffirming our full year 2007 earnings per share from continuing operations target of $2.50 to $2.60."

Sonic's Board of Directors has authorized an additional $40 million to be used in the Company's ongoing share repurchase program. Scott Smith said, "We were able to take advantage of both the proceeds from the sale of our Cornerstone subsidiary and the relatively low stock price to significantly increase our share repurchase activity during the third quarter without materially impacting our overall leverage structure. We will continue to execute this program in conjunction with our stated objectives of profitable acquisition growth and managing the Company's capital structure."

Presentation materials for the Company's earnings conference call at 11:00 A.M. (Eastern) on October 30, 2007 can be accessed on the Company's website at www.sonicautomotive.com by clicking on the "For Investors" tab and choosing "Webcasts & Presentations" on the left side of the screen.

To access the live broadcast of the conference call over the Internet go to: www.sonicautomotive.com.

A live audio of the conference call will be accessible to the public by calling (877) 791-3416. International callers dial (706) 643-0958. Callers should dial in approximately 10 minutes before the call begins.

A conference call replay will be available one hour following the call for seven days and can be accessed by calling: (800) 642-1687 (domestic) or (706) 645-9291 (international), conference call ID # 20685101.

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 174 franchises and 36 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements with respect to anticipated benefits of our operating strategy, anticipated earnings per share from continuing operations and potential future share repurchases. There are many factors that affect management's views about future events and trends of the Company's business. These factors involve risk and uncertainties that could cause actual results or trends to differ materially from management's view, including without limitation, economic conditions, risks associated with acquisitions and the risk factors described in the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2007. The Company does not undertake any obligation to update forward-looking information.



    Sonic Automotive, Inc.
    Results of Operations (Unaudited)
    (in thousands, except per share, unit data and percentage amounts)


                                 Third Quarter Ended       Nine Months Ended
                                9/30/2007   9/30/2006   9/30/2007   9/30/2006
    Revenues
      New retail vehicles      $1,242,597  $1,190,843  $3,482,359  $3,396,784
      Fleet vehicles               99,606      88,831     289,361     272,462
      Used vehicles               376,373     325,182   1,073,000     980,882
      Wholesale vehicles          108,787     127,324     331,400     391,204
        Total vehicles          1,827,363   1,732,180   5,176,120   5,041,332
      Parts, service and
       collision repair           303,313     283,969     889,669     838,156
      Finance, insurance and
       other                       55,199      51,681     157,880     142,331
        Total revenues          2,185,875   2,067,830   6,223,669   6,021,819
    Total gross profit            334,953     315,978     969,207     923,236
    SG&A expenses                 249,101     236,461     729,749     718,117
    Depreciation                    5,684       5,638      20,146      17,263
    Operating income               80,168      73,879     219,312     187,856
    Interest expense, floor
     plan                          17,271      15,435      50,928      43,682
    Interest expense, other        10,877      10,067      28,429      30,635
    Other (expense) / income           (1)         20          94        (646)
    Income from continuing
     operations before taxes       52,019      48,397     140,049     112,893
    Income taxes                   20,263      19,367      54,619      44,977
    Income from continuing
     operations                    31,756      29,030      85,430      67,916
    Discontinued operations:
      Loss from operations and
       the sale of
       discontinued franchises     (8,070)       (676)    (18,520)    (15,800)
      Income tax benefit            2,421         254       5,556       5,762
      Loss from discontinued
       operations                  (5,649)       (422)    (12,964)    (10,038)
    Net income                    $26,107     $28,608     $72,466     $57,878

    Diluted:
      Weighted average common
       shares outstanding          46,978      45,682      47,631      46,051

      Earnings per share from
       continuing operations        $0.70       $0.66       $1.86       $1.54
      Loss per share from
       discontinued operations     ($0.12)     ($0.01)     ($0.27)     ($0.21)
      Earnings per share            $0.58       $0.65       $1.59       $1.33

    Gross Margin Data
     (Continuing Operations):

      Retail new vehicles            7.4%        7.6%        7.4%        7.7%
      Fleet vehicles                 1.5%        2.4%        2.1%        2.7%
      Total new vehicles             7.0%        7.3%        7.0%        7.3%
      Used vehicles retail           8.8%        9.4%        9.3%        9.7%
        Total vehicles retail        7.4%        7.7%        7.5%        7.8%
      Wholesale vehicles            (1.0%)      (1.0%)      (0.3%)      (0.4%)
      Parts, service and
       collision repair             50.7%       50.0%       50.6%       50.0%
      Finance, insurance and
       other                       100.0%      100.0%      100.0%      100.0%
        Overall gross margin        15.3%       15.3%       15.6%       15.3%

    SG&A Expenses (Continuing
     Operations):

      Personnel                  $138,823    $135,803    $414,032    $411,629
      Advertising                  17,757      16,760      49,925      47,576
      Facility rent                25,967      24,898      77,839      74,454
      Other                        66,554      59,000     187,953     184,458
      Total                      $249,101    $236,461    $729,749    $718,117

    SG&A Expenses as % of
     Gross Profit

      Personnel                     41.4%       43.0%       42.7%       44.6%
      Advertising                    5.3%        5.3%        5.2%        5.2%
      Facility rent                  7.8%        7.9%        8.0%        8.1%
      Other                         19.9%       18.6%       19.4%       19.9%
      Total                         74.4%       74.8%       75.3%       77.8%

    Operating Margin %               3.7%        3.6%        3.5%        3.1%



    Unit Data (Continuing               Third Quarter Ended  Nine Months Ended
    Operations):                      9/30/2007  9/30/2006 9/30/2007 9/30/2006

       New retail units                  37,156     37,653   104,317   106,270
       Fleet units                        4,312      3,974    12,724    12,388
       Used units                        18,778     17,334    54,040    51,281
       Wholesale units                   12,105     14,390    36,694    41,688
       Average price per unit:
         New retail vehicles            $33,443    $31,627   $33,382   $31,964
         Fleet vehicles                  23,100     22,353    22,741    21,994
         Used vehicles                   20,043     18,760    19,856    19,128
         Wholesale vehicles               8,987      8,848     9,031     9,384

    Other Data:

       Same store revenue percentage
        changes:
         New retail                       (1.8%)               (0.5%)
         Fleet                            12.1%                 5.2%
         Total New Vehicles               (0.8%)               (0.1%)
         Used                             11.1%                 6.8%
         Parts, service and
          collision repair                 2.3%                 3.3%
         Finance, insurance and
          other                            3.4%                 9.1%
         Total                             0.7%                 0.8%

    Balance Sheet Data:
                                      9/30/2007  12/31/2006
    ASSETS
    Current Assets:
       Cash and cash equivalents        $15,687     $12,696
       Receivables, net                 326,444     385,849
       Inventories                    1,048,059     991,984
       Assets held for sale             109,002     160,571
       Construction in progress
        expected to be sold               5,673      26,198
       Other current assets              31,780      35,834
         Total current assets         1,536,645   1,613,132
    Property and Equipment, Net         280,017     220,551
    Goodwill, Net                     1,274,443   1,155,428
    Other Intangibles, Net              112,279      94,136
    Other Assets                         26,747      41,517
    TOTAL ASSETS                     $3,230,131  $3,124,764

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities:
       Floor plan notes payable      $1,059,133  $1,064,458
       Other current liabilities        281,047     268,236
       Liabilities associated with
        assets held for sale             64,116      96,292
       Current maturities of long-
        term debt                         3,169       2,707
         Total current liabilities    1,407,465   1,431,693
    LONG-TERM DEBT                      687,493     598,627
    OTHER LONG-TERM LIABILITIES         199,750     190,604
    STOCKHOLDERS' EQUITY                935,423     903,840
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY            $3,230,131  $3,124,764


    Balance Sheet Ratios:
       Current Ratio                       1.09        1.13
       Debt to Total Capital, Net of
        Cash                               41.9%       39.4%

SOURCE Sonic Automotive, Inc.