Charlotte, N.C. — Sonic Automotive Inc. announced that its 2006 fourth quarter earnings from continuing operations were up 6.3 percent at $28.4 million, or $0.63 per diluted share, compared to $26.7 million, or $0.61 per diluted share, in the prior year period. The company is finalizing its conclusions regarding hedge accounting treatment for its 2005 convertible notes which it does not currently believe will have a material impact on reported results. The results for the quarter ended December 31, 2006 include $0.01 per diluted share of stock option expense related to the company's adoption of SFAS 123R.

Total revenue for the fourth quarter of 2006 increased 6.5 percent with overall same store revenue up 2.7 percent. Luxury brands accounted for 54 percent of our total revenue, a new record for Sonic Automotive. Inventory days supply remains in good condition with new vehicles at 48 days and used vehicles at 37 days. Selling, general and administrative expenses as a percentage of gross profit improved to 73.9 percent for the quarter compared to 74.7 percent a year ago. The company's operating margin was 3.8 percent, up 20 basis points from the fourth quarter of last year. The company's debt-to-capital ratio was 39.5 percent at December 31, 2006, down from 46.0 percent at December 31, 2005.

"We ended 2006 on a strong note by continuing our trend of consistent same store sales performance while maintaining margins and controlling expenses," said President and COO Jeffrey C. Rachor. "We are proud of the operating progress we made in 2006. As we look ahead to 2007, we believe our standardized processes, continued operating execution, and lower leverage put us in a favorable position for disciplined growth. Specifically, we expect to add to our luxury and import brand mix by targeting acquisitions of 10 percent to 15 percent of annual revenues in 2007. This acquisition growth is not included in our 2007 earnings guidance."

Commenting further on 2007, Rachor said, "We expect to see a stable operating environment with overall same store revenues increasing between two and four percent. We are targeting earnings per share from continuing operations of $2.48 to $2.58 in 2007, which does not include any potential acquisitions. We completed a number of facility projects in the second half of 2006 to increase the service capacity in several of our luxury stores. We anticipate that some of our 2007 operating improvement will be offset by higher rent expense as we grow into this additional capacity. Also included in our guidance is approximately $0.08 of share dilution to account for our contingently convertible notes issued in 2005. All of these items will be discussed in further detail on our quarterly earnings call."