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Sonic Automotive Inc SAH
Q1 2011 Earnings Call Transcript

Transcript Call Date 04/26/2011

Operator: Good morning, and welcome to the Sonic Automotive First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. As a reminder, ladies and gentlemen, this call is being recorded, today, April 26, 2011.

Presentation materials, which management will be reviewing on the 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.

During this conference call, management may discuss financial projections, expectations about the Company's products or markets, or otherwise make statements about the future. Such statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission. Thank you.

I would now like to introduce Mr. Scott Smith, Co-Founder and President of Sonic Automotive. Mr. Smith, you may begin your conference.

B. Scott Smith - President and Chief Strategic Officer: Thank you, Holly. Good morning, ladies and gentlemen. I am Scott Smith, Co-Founder, President and Chief Strategic Officer. Welcome to Sonic Automotive's first quarter 2011 earnings conference call.

Joining me on the call today are the Company's Vice Chairman and Chief Financial Officer, Mr. Dave Cosper; our Executive Vice President of Operations, Mr. Jeff Dyke; Greg Young, our Vice President of Finance; and David Smith, the Company's Vice President.

Today I'll provide an overview of the quarter. I'll then turn the call over to Dave Cosper for a financial review; Jeff Dyke will follow Dave and give an update on our operational trends, and then we'll open the call for your questions.

So if you'll please turn to the slide labeled 'Overall Results.' We're pleased with this quarter's operating results. Our EPS from continuing operations was $0.27 per share an increase of 125% over the first quarter of last year. Our results were driven by our new and used vehicle business, which also drove incremental business in our fixed operations and F&I business.

Our 27% new vehicle volume growth easily outpaced the industry growth in Q1. Our used volume continued its double-digit growth trend for the eighth consecutive quarter. Our used to new ratio was 0.94 to 1 for the quarter, as our used volume continues to increase even as the new vehicle market continues to rebound.

We continue to get closer to our goal of 100 used cars per store per month. Our parts and service business continues to grow steadily with revenues up 6% over the first quarter of last year. The implementation of our operating playbooks, which is driving new and repeat customer business combined with the benefit we get from our reconditioning used vehicles are both giving a positive impact on our fixed operations business. Dave will have more color on this in just a minute.

While we made progress this quarter on our continuing effort to own more of our dealership property, we purchased the real estate for five of our luxury and import stores in Northern California, and we now own the real estate on 18% of our dealerships.

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