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Letter to the Editor
Wednesday February 23
Sonic Automotive Announces Improved Q4 and Year End 2004 Results
Sonic Automotive, Inc. has reported that its 2004 fourth quarter income from continuing operations was $20.5 million, or $0.48 per diluted share, compared to $19.6 million, or $0.46 per diluted share, in the prior year period. Net income for the quarter was $14.6 million, or $0.35 per diluted share, compared to $13.8 million, or $0.33 per diluted share, in the prior year period.Revenue of $1.89 billion for the quarter increased 11.2 percent over the year-ago quarter, with all areas reporting significant growth. Parts and service experienced a 12.1 percent increase; used vehicles a 12.3 percent increase; new vehicles a 10.6 percent increase; and finance and insurance an 8.3 percent increase.
Commenting on fourth quarter performance, Chairman and Chief Executive Officer O. Bruton Smith said, "Sonic Automotive's earnings reflect a stronger than anticipated fourth quarter retail environment and our continued focus on improving operating efficiencies. We were pleased to be recognized at the Automotive News World Congress last month for achieving the industry's best shareholder returns in 2004."
For the year ended December 31, 2004, income from continuing operations was $95.7 million, or $2.22 per diluted share, compared to $87.3 million, or $2.04 per diluted share, in the prior year. Revenue for the full year of 2004 was $7.39 billion, compared to $6.95 billion for 2003. Net income for the year was $86.1 million, or $2.00 per diluted share, compared to net income of $71.6 million, or $1.69 per diluted share, in 2003.
On a same store basis, total revenue in the quarter increased 2.4 percent from the same quarter last year. Same store new vehicle revenue increased 2.5 percent for the quarter, while same store retail used vehicle revenue increased 2.8 percent for the quarter. Finance and insurance revenue increased 1.2 percent on a same store basis for the quarter. Same store revenue in service, parts and collision repair increased 1.8 percent in the quarter.
"We continue to focus on improving operating execution and performance. Our progress during the fourth quarter confirms that our efforts are gaining traction," said President and Chief Operating Officer Jeffrey C. Rachor. "Consistent inventory management improved our new vehicle days supply to 52 days from 56 days. We saw improvement in our selling, general and administrative expense rate in the fourth quarter and are targeting a 100 basis point reduction to 78 percent in 2005."
Consistent with the company's previously announced slower acquisition strategy, there have been no acquisitions completed since July 2004. In 2005, targeted acquisitions will include luxury and high volume import brands in the company's existing markets. The company will continue to dispose of non- performing stores and non-core brands.
Sonic Automotive, Inc., a Fortune 300 company based in Charlotte, N.C., is one of the largest automotive retailers in the United States operating 192 franchises and 40 collision repair centers.
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