Sonic Automotive, Inc. Reports Solid First Quarter Earnings

Sets New Car Market Share Records, Raises its Annualized Cost Reduction Target to $135 Million

CHARLOTTE, N.C., May 8 /PRNewswire-FirstCall/ -- Sonic Automotive, Inc. (NYSE: SAH), the nation's third-largest automotive retailer, today reported that 2009 first quarter earnings from continuing operations were $5.4 million, or $0.13 per diluted share, before adoption of APB 14-1. The Company's first quarter of 2009 also included pretax expense of $2.0 million, or $0.03 per diluted share, related to the Company's successful debt restructuring efforts. Excluding these restructuring charges, first-quarter profit from continuing operations was $0.16 per diluted share before the adoption of APB 14-1, as shown in the attached reconciliation table.

B. Scott Smith, the Company's President said, "Our continued focus on executing the basic blocking and tackling of our playbook produced solid results in the most difficult automotive business environment in at least a generation. We made money and moved the business forward, demonstrating the power of Sonic's ongoing business strategy. Our playbook execution, including Pre-Owned, e-Commerce and Fixed Operations, provided the needed support as the new vehicle environment continued to struggle."

"We are very pleased that despite the adversity in the new vehicle environment, Sonic set all-time new car market share records during the quarter. Our advertising and internet marketing initiatives resulted in 83 of our dealerships taking share by exceeding their local markets for the quarter. Our used vehicle business continues to outperform the industry confirming the fact that our pre-owned strategic initiatives are having a positive impact on our overall revenue mix and generating the intended results. Traffic to our internet websites was up 36%, and we posted the fourth highest customer pay quarter in our service department history."

Mr. Smith continued, "On the cost front, our SG&A expenses were down over $23 million compared to the first quarter of last year. Adjusting our business model to respond to the current economy continues to be a primary focus. We made significant additional progress after announcing our cost reduction initiatives in March, and have raised our targeted annualized cost reductions to $135 million compared to our previously disclosed projection of $125 million. We believe that when SG&A is adjusted for rent, we are a top-performer among our peers."

"We have lowered our number of associates by roughly 10% over the last six months. We now have fewer people making more money. As a result, we're proud to say that our associate turnover is at an all-time low and associate satisfaction levels have never been higher, all of which complement our all-time high customer satisfaction scores."

Presentation materials for the Company's May 8, 2009 earnings conference call at 11:00 A.M. (Eastern) 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 right side of the monitor.

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

A live audio of the 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, Conference ID: 98605797, International callers dial (706) 645-9291.

About Sonic Automotive

Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is the nation's third-largest automotive retailer, operating 159 franchises. Sonic can be reached on the web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements with respect to cost reduction plans. 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 annual report on Form 10-K for the year ended December 31, 2008. 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)

                                 Three Months Ended
                             3/31/2009          3/31/2008
                             ---------          ---------
    Revenues
    --------                  --------          --------
      New retail vehicles     $573,275          $832,950
      -------------------     --------          --------
      Fleet vehicles            16,991            64,729
      --------------            ------            ------
        Total new vehicles     590,266           897,679
        ------------------     -------           -------
      Used vehicles            290,256           320,713
      -------------            -------           -------
      Wholesale vehicles        32,180            69,966
      ------------------        ------            ------
        Total vehicles         912,702         1,288,358
      ----------------         -------         ---------
      Parts, service and
       collision repair        240,724           249,987
      ------------------       -------           -------
      Finance, insurance
       and other                31,971            44,841
      ------------------        ------            ------
        Total revenues       1,185,397         1,583,186
        --------------       ---------         ---------
    Total gross profit         218,242           259,071
    ------------------         -------           -------
    SG&A expenses             (181,535)         (204,675)
    -------------             --------          --------
    Goodwill and other
     asset impairments             (32)             (156)
    ------------------             ---              ----
    Depreciation                (7,788)           (6,723)
    -------------               ------            ------
    Operating income            28,887            47,517
    ----------------            ------            ------
    Interest expense,
     floor plan                 (4,303)          (11,048)
    -----------------           ------           -------
    Interest expense, FSP
     APB 14-1                   (2,566)           (2,639)
    ---------------------       ------            ------
    Interest expense, other    (14,810)          (10,665)
    -----------------------    -------           -------
    Other income                    41                63
    ------------                    --                --
    Income from continuing
     operations before
     taxes                       7,249            23,228
    ----------------------       -----            ------
    Income taxes                (3,262)           (9,292)
    ------------                ------            ------
    Income from continuing
     operations                  3,987            13,936
    Discontinued
     operations:                ------            ------
      Loss from operations
       and the sale of
       discontinued
       franchises               (3,078)           (1,273)
      --------------------      ------            ------
      Income tax benefit /
       (provision)                 769               (38)
      ---------------------        ---               ---
      Loss from
       discontinued
       operations               (2,309)           (1,311)
    ---------------             ------            ------
    Net income                  $1,678           $12,625
    ----------                  ------           -------

    Basic:
    ------                      ------            ------
      Weighted average
       common shares
       outstanding              40,099            40,774
      ----------------          ------            ------

      Earnings per share
       from continuing
       operations                $0.10             $0.34
      ------------------         -----             -----
      Loss per share from
       discontinued
       operations               ($0.06)           ($0.03)
      -------------------       ------            ------
      Earnings per share         $0.04             $0.31
      ------------------         -----             -----

    Diluted:
    --------
      Weighted average
       common shares
       outstanding              40,338            41,069
      ----------------          ------            ------

      Earnings per share
       from continuing
       operations                $0.10             $0.34
      ------------------         -----             -----
      Loss per share from
       discontinued
       operations               ($0.06)           ($0.03)
      -------------------       ------            ------
      Earnings per share         $0.04             $0.31
      ------------------         -----             -----


    Gross Margin Data (Continuing Operations):
    ------------------------------------------


      Retail new vehicles          7.0%              7.3%
      -------------------          ---               ---
      Fleet vehicles              (0.2%)             0.8%
      --------------              ----               ---
          Total new
           vehicles                6.8%              6.8%
          ---------                ---               ---
      Used vehicles retail         9.4%              9.3%
      --------------------         ---               ---
        Total vehicles
         retail                    7.6%              7.5%
      ----------------             ---               ---
      Wholesale vehicles          (0.4%)            (1.5%)
      ------------------          ----              ----
      Parts, service and
       collision repair           49.5%             49.7%
      ------------------          ----              ----
      Finance, insurance
       and other                 100.0%            100.0%
      ------------------         -----             -----
        Overall gross
         margin                   18.4%             16.4%
        -------------             ----              ----


    SG&A Expenses (Continuing Operations):
    --------------------------------------


      Personnel               $102,633          $116,001
      ---------               --------          --------
      Advertising                9,498            13,644
      -----------                -----            ------
      Facility rent and
       related expenses         31,305            31,327
      -----------------         ------            ------
      Other                     38,099            43,703
      -----                     ------            ------
        Total                 $181,535          $204,675
        -----                 --------          --------


    SG&A Expenses as % of Gross Profit
    ----------------------------------

      Personnel                   47.0%             44.7%
      ---------                   ----              ----
      Advertising                  4.4%              5.3%
      -----------                  ---               ---
      Facility rent and
       related expenses           14.3%             12.1%
      -----------------           ----              ----
      Other                       17.5%             16.9%
      -----                       ----              ----
        Total                     83.2%             79.0%
        -----                     ----              ----

    Operating Margin %             2.4%              3.0%
    ------------------             ---               ---



    Unit Data (Continuing          Three Months Ended
     Operations):            3/31/2009          3/31/2008
    ---------------------    ---------          ---------

                                ------            ------
      New retail units          16,801            24,116
      ----------------          ------            ------
      Fleet units                  643             2,409
      -----------
      Used units                15,155            15,782
      ----------                ------            ------
      Wholesale units            5,362             8,342
      ---------------            -----             -----
      Average price per
       unit:
      -----------------        -------           -------
        New retail vehicles    $34,121           $34,539
        -------------------    -------           -------
        Fleet vehicles          26,425            26,870
        --------------          ------            ------
        Used vehicles           19,152            20,321
        -------------           ------            ------
        Wholesale vehicles       6,001             8,387
        ------------------       -----             -----


    Other Data:
    -----------

      Same store revenue
       percentage changes:
      --------------------       -----
        New retail               (31.6%)
        ----------               -----
        Fleet                    (73.7%)
        -----                    -----
          Total New
           Vehicles              (34.6%)
          ---------              -----
        Used                      (9.8%)
        ----                      ----
        Parts, service and
         collision repair         (4.3%)
        ------------------        ----
        Finance, insurance
         and other               (28.3%)
        ------------------       -----
          Total                  (25.5%)
          -----                  -----


    Balance Sheet Data:
    --------------------
                             3/31/2009       12/31/2008  (1)
                             ---------       ---------------
    ASSETS
    ------
    Current Assets:
    ---------------
      Cash and cash
       equivalents                $614            $6,971
      -------------               ----            ------
      Receivables, net         205,957           247,025
      ----------------         -------           -------
      Inventories              802,830           916,837
      -----------              -------           -------
      Assets held for sale     365,452           406,576
      --------------------     -------           -------
      Other current assets      23,523            16,822
      --------------------      ------            ------
        Total current
         assets              1,398,376         1,594,231
      ---------------        ---------         ---------
    Property and
     Equipment, Net            382,129           369,892
    ---------------            -------           -------
    Goodwill, Net              327,007           327,007
    -------------              -------           -------
    Other Intangibles, Net      81,914            82,328
    ----------------------      ------            ------
    Other Assets                22,195            32,087
    ------------                ------            ------
    TOTAL ASSETS            $2,211,621        $2,405,545
    ------------            ----------        ----------


    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------
    Current Liabilities:
    --------------------
      Floor plan notes
       payable                $780,102          $921,023
      ----------------        --------          --------
      Other current
       liabilities             204,869           277,938
      -------------            -------           -------
      Liabilities
       associated with
       assets held for sale    149,990           199,482
      ---------------------    -------           -------
      Current maturities
       of long-term debt       211,584           738,447
      ------------------       -------           -------
        Total current
         liabilities         1,346,545         2,136,890
      ---------------        ---------         ---------
    LONG-TERM DEBT             557,278                 -
    --------------             -------         ---------
    OTHER LONG-TERM
     LIABILITIES                90,689            71,132
    ----------------            ------            ------
    STOCKHOLDERS' EQUITY       217,109           197,523
    ---------------------      -------           -------
    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY   $2,211,621        $2,405,545
    ---------------------   ----------        ----------

    (1) Restated for the adoption effects of FSP APB 14-1.


SOURCE Sonic Automotive, Inc.