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Letter to the Editor
Tuesday February 21
Sonic Automotive Q4 Earnings Up 29%
Automotive retailer Sonic Automotive, Inc. has 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, 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.
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