8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 25, 2006

SONIC AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-13395	56-201079
(Commission File Number)	(IRS Employer Identification No.)

6415 Idlewild Road, Suite 109 Charlotte, North Carolina	28212
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (704) 566-2400

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On April 25, 2006, we issued a press release announcing results for our fiscal quarter ended March 31, 2006.

A copy of the press release is attached hereto as Exhibit 99.1. A copy of the presentation materials for the earnings call is attached hereto as Exhibit 99.2.

Item 7.01.  Regulation FD Disclosure.

On April 25, 2006, we issued a press release announcing the approval of a quarterly cash dividend.

A copy of the press release is attached hereto as Exhibit 99.3.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release of Sonic Automotive, Inc. dated April 25, 2006
99.2	Earnings call presentation materials
99.3	Press release of Sonic Automotive, Inc. dated April 25, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SONIC AUTOMOTIVE, INC.
By:	/s/ Stephen K. Coss
	Stephen K. Coss Senior Vice President and General Counsel

Dated: April 25, 2006

2

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press release of Sonic Automotive, Inc. dated April 25, 2006
99.2	Earnings call presentation materials
99.3	Press release of Sonic Automotive, Inc. dated April 25, 2006

3

EX-99.1

Exhibit 99.1

Sonic Automotive, Inc. Reports Strong First Quarter Earnings

Driven by 15% Revenue Growth

CHARLOTTE, N.C. – April 25, 2006 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today reported that its 2006 first quarter earnings from continuing operations were $21.8 million, or $0.50 per diluted share, compared to $20.1 million, or $0.47 per diluted share, in the prior year period. The results for the quarter ended March 31, 2006 include $0.02 per diluted share of stock option expense related to the Company’s adoption of SFAS 123R.

“We are pleased to report strong earnings growth during a period of rising interest rates and a competitive industry environment,” said Chairman and Chief Executive Officer O. Bruton Smith. “Our results reflect the combined effect of our improved brand mix and the successful execution of our key operating initiatives. Revenue from our luxury and import stores was 80% of total revenue for the quarter.”

Revenue for the first quarter increased 15.0% from the same period last year to $1.8 billion. On a same store basis, total revenue in the quarter increased 6.5% from the prior year period with solid growth across the business.

President and Chief Operating Officer Jeffrey C. Rachor said, “We were able to maintain our margins and reduce SG&A expenses as a percentage of gross profit while driving top line growth. Our operating team continued their focus on growing the higher margin pieces of our business with 9.0% same store growth in used vehicles and 7.4% same store growth in parts and service. We remain comfortable with our 2006 continuing operations EPS target of $2.40 to $2.50 per diluted share excluding stock option expense and $2.32 to $2.42 per diluted share including stock option expense.”

Presentation materials for the Company’s April 25, 2006 earnings conference call 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 monitor.

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 176 franchises and 38 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.

Included herein are forward-looking statements, including statements pertaining to anticipated diluted earnings per share from continuing operations and anticipated stock option expense. 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, 2005. 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)

	For the Three Months Ended
	3/31/2006			3/31/2005
Revenues
New vehicles	$	1,092,695		$	958,124
Used vehicles		301,756			260,505
Wholesale vehicles		129,129			110,375
Total vehicles		1,523,580			1,329,004
Parts, service and collision repair		266,526			225,628
Finance, insurance and other		45,432			40,932
Total revenues		1,835,538			1,595,564
Total gross profit		290,839			250,591
SG&A expenses		226,307			197,143
Depreciation		4,826			3,401
Operating income		59,706			50,047
Interest expense, floor plan		12,125			7,448
Interest expense, other		11,718			10,573
Other (expense) / income		(666	)		12
Income from continuing operations before taxes		35,197			32,038
Income taxes		13,374			11,972
Income from continuing operations		21,823			20,066
Discontinued operations:
Loss from operations and the sale of discontinued franchises		(7,480	)		(4,660	)
Income tax benefit		2,739			1,706
Loss from discontinued operations		(4,741	)		(2,954	)
Net income	$	17,082		$	17,112
Diluted:
Weighted average common shares outstanding		46,205			45,460
Earnings per share from continuing operations	$	0.50		$	0.47
Loss per share from discontinued operations		($0.11	)		($0.07	)
Earnings per share	$	0.39		$	0.40
Gross Margin Data (Continuing Operations):
Retail new vehicles		7.6	%		7.6	%
Fleet vehicles		3.3	%		3.0	%
Total new vehicles		7.3	%		7.2	%
Used vehicles retail		10.8	%		10.7	%
Total vehicles retail		8.0	%		8.0	%
Parts, service and collision repair		49.7	%		49.4	%
Finance, insurance and other		100.0	%		100.0	%
Overall gross margin		15.8	%		15.7	%
SG&A Expenses (Continuing Operations):
Personnel	$	133,470		$	115,934
Advertising		13,902			12,936
Facility rent		22,833			18,726
Other		56,102			49,547
Total	$	226,307		$	197,143
Unit Data (Continuing Operations):
New units		34,518			31,871
Used units		15,726			14,480
Total units retailed		50,244			46,351
Wholesale units		12,943			12,108
Average price per unit:
Total new vehicles		31,656			30,063
Used vehicles		19,188			17,991
Wholesale vehicles		9,977			9,116
Other Data:
Same store revenue percentage changes:
New (retail & fleet)		5.4	%
Used		9.0	%
Parts, service and collision repair		7.4	%
Finance, insurance and other		6.4	%
Total		6.5	%

Balance Sheet Data:

	3/31/2006			12/31/2005
ASSETS
Current Assets:
Cash and cash equivalents	$	6,911		$	7,566
Receivables, net		347,245			396,225
Inventories		1,023,119			1,016,457
Assets held for sale		230,966			73,837
Construction in progress expected to be sold in sale-leaseback transactions		101,033			95,131
Other current assets		31,231			27,484
Total current assets		1,740,505			1,616,700
Property and Equipment, Net		137,900			148,267
Goodwill, Net		1,143,844			1,122,538
Other Intangibles, Net		78,379			88,696
Other Assets		57,090			49,300
TOTAL ASSETS	$	3,157,718		$	3,025,501
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Notes payable - floor plan - trade	$	429,190		$	579,022
Notes payable - floor plan - non-trade		615,244			410,296
Trade accounts payable		82,045			91,101
Accrued interest		15,507			17,378
Other accrued liabilities		159,375			167,060
Liabilities associated with assets held for sale - trade		73,969			45,953
Liabilities associated with assets held for sale - non-trade		75,671			6,937
Current maturities of long-term debt		2,911			2,747
Total current liabilities		1,453,912			1,320,494
LONG-TERM DEBT		685,310			712,311
OTHER LONG-TERM LIABILITIES		32,977			29,479
DEFERRED INCOME TAXES		131,964			132,419
STOCKHOLDERS’ EQUITY		853,555			830,798
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,157,718		$	3,025,501
Balance Sheet Ratios:
Current Ratio		1.20			1.22
Debt to Total Capital, Net of Cash		44.4	%		46.0	%

EX-99.2

Exhibit 99.2

Cautionary Notice Regarding

Forward-Looking Statements

•

This presentation contains statements that constitute “forward-looking

statements”

within the meaning of Section 27A of the Securities Act of 1933

and

Section 21E of the Securities Exchange Act of 1934.

•

These forward-looking statements are not historical facts, but only predictions

by our company and/or our company’s management.

•

These statements generally can be identified by lead-in words such as “believe,”

“except”

“anticipate,”

“intend,”

“plan,”

“foresee”

and other similar words. 

Similarly, statements that describe our company’s objectives, plans or goals are

also forward-looking statements.

•

You are cautioned that these forward-looking statements are not guarantees of

future performance and involve risks and uncertainties, and that

actual results

may differ materially from those projected in the forward-looking statements as

a results of various factors. Among others, factors that could materially

adversely affect actual results and performance include those risk factors that are

listed in Sonic Automotive’s Form 10-K for the year ended December 31, 2005.

Sonic Automotive

First Quarter 2006

Earnings Review

April 25, 2006

The Quarter in Review

•

Net income of $21.8 million from continuing operations, up

9% from year ago.  Improvement driven by revenue growth

and cost reductions.  Continuing operations diluted EPS of

$0.50 includes $0.02 charge for stock options.

•

Operating profit was up 19% to $59.7 million, and was 3.3%

of revenue (up 20 basis points from 2005)

•

SG&A as a percent of gross was 77.8% --

90 basis points

better than Q1 2005

•

Continued portfolio

enrichment strategy –

Luxury volume

now 51% of total; Combined Luxury & Import total of 80%

•

Used car initiatives beginning to take hold

•

Strong performance –

more to come

1

Financial Performance

2

O/(U)

(amounts in millions, except per share data)

Q1 2006

Q1 2005

Revenue

$1,836

$240

Gross Profit

$291

$40

Operating Profit

$60

$10

Net Income

   – Continuing Operations

$21.8

$1.8

   – Total Operations

17.1

-

EPS

   – Continuing Operations

$0.50

*

$0.03

   – Total Operations

0.39

(0.01)

* Includes stock option expense of $0.02

Same Store Results

•

Strong revenue and profit growth across all business lines despite a

challenging industry environment

•

Gross profit margin improved to 15.9%, up from 15.7% last year

•

Sonic’s new vehicle same store results outperformed the industry

3

First Quarter 2006

Over Prior Year

Revenue

Gross Profit

New

5.4%

7.6%

Used

9.0%

9.1%

Parts & Service

7.4%

7.6%

F&I

6.4%

6.4%

Total

6.5%

7.5%

Used Vehicles

•

Implementing used vehicle best practices and inventory

management technology

•

Focus on market at both ends

Certified Pre-Owned

Value Vehicles

4

March MTD

Used Retail

Volume chg. 

2006 vs. 2005

Used/New

Ratio 2006

Used/New

Ratio 2005

Champion Stores

22.3%

0.61

0.47

Other Same Store

9.9%

0.48

0.45

Memo: Full year Sector leaders

0.62

Portfolio Enrichment

•

Portfolio enrichment continues, driven by our acquisition strategy and strong

growth in luxury and import demand.

•

Acquire to enrich portfolio mix and replace lost revenue

•

Focus on stable dealerships with upside

5

Q1 2006

Q1 2005

% of Total Revenues

Luxury and Import

70%

67%

Cadillac

10%

11%

        Subtotal

80%

78%

Other Domestic

19%

21%

Non-Franchised

1%

1%

        Total

100%

100%

Memo:  Luxury Including Cadillac

51%

48%

Discontinued Operations

•

We are in the second year of our portfolio enrichment strategy

•

Proceeds from the sale of discontinued operations will be reinvested in

new, higher-margin import and luxury stores

•

Acquisition revenue for 2006 projected at $400-$700 million

6

Q1 2006

Q1 2005

(amounts in millions except per share data)

After-tax

Loss

EPS

After-tax

Loss

EPS

Loss from Operations

(2.0)

$    

(0.04)

$  

(2.4)

$     

(0.05)

$  

Other Impacts:

Loss on Sale

(0.1)

-

(0.6)

(0.02)

Impairment / lease terminations

(2.6)

(0.07)

-

-

Loss from Discontinued Operations,

as Reported

(4.7)

$    

(0.11)

$  

(3.0)

$     

(0.07)

$  

SG&A Expenses as % of Gross Profit

•

Reduced SG&A as a percentage of gross profit by 90 basis points –

worth

$3 million

•

Improvements made in advertising, compensation and other operating

expenses

77.8%

78.7%

7

69.9%

71.2%

7.9%

7.5%

Q1 2006

Q1 2005

All Other SG&A

Rent

Interest

•

Higher rates have increased interest costs.

•

A further 25bps increase is assumed in our earnings

guidance.

8

Q1

Q1

2006

2005

Change

$ Millions

Floorplan Interest Expense

12.1

$  

7.4

$    

(4.7)

$  

Other Interest Expense

11.7

$  

10.6

$  

(1.1)

$  

Inventory Management

Days Supply

Mar-06

Mar-05

Dec-05

Mar-06

Industry

New Vehicles

Domestic (excluding Cadillac)

69

58

63

80

Luxury (including Cadillac)

48

41

48

53

Import

44

38

47

51

Overall

56

48

53

67

Used Vehicles

39

40

40

Parts

35

36

35

9

Summary

•

Strong results posted for the quarter

•

Improvements achieved in volume, mix of business and cost

structure

•

Further opportunity in portfolio enrichment, SG&A expenses

and used vehicle sales; interest cost remains a drag on

earnings

•

We have a clear strategy and we are executing

2006 Continuing Operations Diluted EPS Guidance

$2.40 -

$2.50 (excluding stock option expense)

$2.32 –

$2.42 (including stock option expense)

10

EX-99.3

Exhibit 99.3

SONIC AUTOMOTIVE, INC. DECLARES QUARTERLY CASH DIVIDEND

CHARLOTTE, N.C. – April 25, 2006 – Sonic Automotive, Inc. (NYSE: SAH), a leader in automotive retailing, today announced that its Board of Directors approved a quarterly dividend of $0.12 per share payable in cash for shareholders of record on June 15, 2006. The dividend will be payable July 15, 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 176 franchises and 38 collision repair centers. Sonic can be reached on the Web at www.sonicautomotive.com.

Included herein is a forward-looking statement pertaining to an anticipated cash dividend to shareholders. 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, 2005. The Company does not undertake any obligation to update forward-looking information.