Sonic Automotive (SAH) 8-K Results of Operations and Financial Condition

1

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,”

“expect”

“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-Q for the quarter ended September 30,

2006.

Sonic Automotive

Fourth Quarter 2006

Earnings Review

February 27, 2007

1

The Quarter in Review

•

Total revenue increased $119 million, or 6.5%. 

Same store revenue increased 2.7% driven by

improvement in all retail lines

•

Combined luxury and import brands were 84% of

total revenue.  Luxury brands comprised a record

54% of total revenue

•

SG&A as a percent of gross profit improved 80

basis points to 73.9%

•

Operating margin hit 3.8%.

•

Achieved financial targets with fewer-than-expected

acquisitions

2

Financial Performance

(amounts in millions, except per share data)

2006

2005

Better/

(Worse)

Revenue

$1,958

$1,839

$119

Gross Profit

$305

$286

$19

Operating Profit

   – Amount

$74

$66

$8

   – Margin

3.8%

3.6%

Net Income

   – Continuing Operations

$28.4

$26.7

$1.7

   – Total Operations

23.2

20.9

2.3

EPS

   – Continuing Operations

$0.63

$0.61

$0.02

   – Total Operations

0.52

0.48

0.04

Q4

Up

6.6%

Up

6.5%

Up

12.5%

Up

6.3%

3

2006 Earnings Perspective

Strong financial performance, despite headwinds

–

Rising interest rates

–

Limited acquisitions

Earnings

per Share

Original Guidance

$2.40 - $2.50

Mid-Point

$2.45

Less Stock Options Expense

(0.08)

Total

$2.37

Actual Earnings

$2.22

Second Quarter Charges

0.27

Total

$2.49

4

Portfolio Enrichment

19%

17%

50%

51%

31%

32%

YTD 2005

YTD 2006

Domestic

Luxury

Import

Percent of Total Revenue

17%

16%

53%

54%

30%

30%

Q4 2005

Q4 2006

Domestic

Luxury

Import

5

Same Store Revenue Growth

•

Solid performance across all business units

•

Vehicle sales continue to outpace the industry

4.3%

3.4%

(15.9%)

3.1%

4.4%

2.7%

New Retail

Used

Wholesale

Fixed

Operations

F&I

Total

6

Same Store Used Car Comparison

4

th

Quarter 2006

Domestic

Luxury (incl.

Cadillac)

Imports

Margin

11.5%

8.3%

12.2%

Used to New Ratio

0.78

0.43

0.38

Gross Per Unit

$1,725

$2,228

$1,757

California

All Other

Stores

Margin

8.3%

10.6%

Used to New Ratio

0.28

0.56

Process

Total Same

Store

Retail Volume Change

7.7%

1.3%

YOY Used to New Ratio Change

40bps

Flat

YOY GPU Change

0.7%

-0.7%

Geographical -

Continuing

Process Stores -

Same Store

Brand -

Continuing

7

SG&A Expenses as % of Gross Profit

FY 2003

FY 2004

FY 2005

Q4 2006

All Other SG&A

Rent

6.0%

71.9%

8.0%

6.9%

7.3%

70.9%

68.8%

65.9%

77.9%

77.8%

76.1%

73.9%

Fixed Absorption -

81.6%

83.2%

85.0%

91.1%

8

Inventory Management

Days Supply

Dec-06

Dec-05

Dec-06

Industry

New Vehicles

Domestic (excluding Cadillac)

59

57

76

Luxury (including Cadillac)

41

42

39

Import

38

42

51

Overall

48

48

62

Used Vehicles

40

37

Parts

36

35

9

Capitalization

60.5%

54.0%

53.8%

53.2%

46.8%

46.2%

46.0%

39.5%

2003

2004

2005

2006

100%

Debt

Equity

****Achieved 40% Target For Debt-To-Capital****

100%

100%

100%

10

•

Same store sales growth

–

Low single digits across most

business lines

–

Slightly higher in fixed operations

•

Gross margins

–

New vehicle margins relatively

stable

–

Used vehicle margins stabilizing

to up slightly

–

Fixed operations margins

continuing improvement

•

Expense levels

–

Operating improvements offset

partially by rent increases

•

Interest Rates

–

Stable rates

–

Carryover increase on variable

rate debt

•

Acquisition growth

–

$0*

•

Share count increasing

–

Primarily due to accounting

effect of 2005 convertible

notes

Projection Assumptions

Projection Assumptions

2007 EPS from continuing operations target

of $2.48 -

$2.58 (excl. Acquisitions)

*targeting 10-15% of revenue, not

included in assumptions

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LIBOR Rate Comparison

4.25

4.50

4.75

5.00

5.25

5.50

2006 Actual

2007 Estimate

Average 2006

March

June

December

September

January

2007 Projection

Average 2006

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Share Count

2006

Actual

2007

Forecast *

Basic Weighted Average Shares

42,336

43,144

Stock Option Plans

851

876

2002 Convertibles

2,776

2,776

2005 Convertibles

302

1,604

Fully Diluted Weighted Average Shares

46,265

48,400

* 2007 Forecast assumes average price of $31.88 compared to an average price

   of $24.83 in 2006.

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•

BMW of Fairfax Service Center

•

Lexus of Rockville

•

BMW of Chattanooga

•

Mercedes Benz of Fort Myers

•

Rockville Porsche/Audi

•

Momentum Porsche

•

Concord Toyota

Facility Investments

Facility Investments

Spend money where you make money

Focus on High Margin Business –

Service

Capacity and Luxury/Highline Imports

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2007 Earnings Outlook -

Perspective

(Continuing Operations)

-

Continued strong operational performance

-

Investment in High-Margin Business segments

-

Actual Share count up slightly; fully diluted share count up

nearly 5%

Earnings

per Share

2006 Actual

$2.22

Second Quarter Charges

0.27

Subtotal

$2.49

2007 Considerations:

Operating Improvement

0.19 -

0.33

Rent Expense

(0.12) -

(0.16)

Share Dilution

(2005 Convertible notes)

(0.08)

Acquisitions

0.00

Total

$2.48 -

$2.58

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Summary

•

Strong operating and financial performance in 2006

•

Execution of key initiatives continues

•

Used vehicles, fixed operations, and F&I are growth

opportunities

•

Disciplined and prudent acquisitions –

targeting

10%-15% of revenue

•

Strategy is sound; team focused on delivering results

•

Top priority: Improved profits and cash flow

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