Sonic Automotive – A Holistic Approach to Creating Shareholder Value AUTOMOTIV © February 19, 2020 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events, are not historical facts and are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These statements can generally be identified by lead-in words su ...

Financial Data and Key Metrics Changes - Sonic Automotive reported a significant increase in diluted earnings per share from continuing operations, rising over 83% year-over-year to $0.66 per diluted share compared to $0.36 in the prior year quarter [6] - The company achieved an all-time quarterly record for F&I gross profit of $126.8 million, an increase of $28.8 million or 29.3% from the third quarter of 2018 [12] - Same store fixed operations gross increased by 7.3% during the third quarter of 2019, with SG&A to gross profit ratio improving by 350 basis points to 76.7% [13] Business Line Data and Key Metrics Changes - EchoPark's revenue for the third quarter was $312.2 million, up $126.3 million or 67.9% compared to the same quarter in 2018, driven by a 71.6% improvement in retail unit sales [8] - The core franchise stores also performed well, with a $10.3 million increase in pretax income, up 36.8% year-over-year, benefiting from higher gross profit from used vehicles and fixed operations [11] Market Data and Key Metrics Changes - EchoPark is expanding its footprint, with plans to open locations in major metro markets in California, Georgia, and Florida by the end of 2020, aiming for a nationwide presence [10] - The company is currently drawing customers from over 140 markets across the U.S. to its eight existing EchoPark locations [9] Company Strategy and Development Direction - Sonic Automotive is focusing on leveraging its proprietary technology and website to enhance customer experience and drive sales, indicating a shift towards a more technology-driven approach [9] - The company plans to ramp up its growth strategy with new EchoPark locations, emphasizing the importance of market data in site selection [10][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential of existing EchoPark stores, estimating they are at about 50% maturity with significant upside remaining [93] - The relationships with automakers are reportedly improving, with manufacturers increasingly valuing technology and customer experience [30][31] Other Important Information - The Board of Directors approved a quarterly cash dividend of $0.10 per share, payable on January 15, 2020 [14] - An impairment of approximately $1.1 million related to real estate was noted, which was not added back in the adjusted results [39] Q&A Session Summary Question: Inquiry about F&I performance and potential - Management indicated that warranty penetration is a significant driver of F&I performance, with potential to reach $2,000 per transaction [21][22] Question: Market selection for new EchoPark locations - The decision-making process for new markets is data-driven, focusing on areas with high potential for growth [25] Question: Relationship with automakers - Management noted that relationships with manufacturers are improving, with a focus on technology and efficiency rather than large facilities [30][31] Question: EchoPark's expense ratio and SG&A improvements - Management confirmed that SG&A is improving due to leverage from EchoPark stores compared to franchised stores [40][41] Question: Expected drag from new store openings - Management anticipates a $1 million drag before and after opening new stores, with expectations for profitability within six months for new locations [48][93] Question: Future funding for EchoPark growth - Management indicated that EchoPark will begin to support its own growth after the stores mature, with a timeline of about three to four years for self-funding [100]

Company Overview - The company is headquartered in Charlotte, NC, operating 91 stores with 23 brands and 15 collision repair centers across major metro markets[9, 10] - Franchised geographic revenue concentration includes California at 28%, Texas at 27%, and Tennessee at 7% in FY 2018[13, 14] - The company's revenue streams are diversified, with new vehicles accounting for 50%, pre-owned vehicles for 32%, fixed operations for 14%, and F&I for 4% in FY 2018[18, 19] Franchised Segment Q3 2019 Results - Franchised segment revenue increased by 9% to $2.376 billion in Q3 2019 compared to Q3 2018[22] - Gross profit increased by 7.8% to $350 million[22] - Operating profit increased by 15.8% to $62 million[22] - Same store new vehicle unit sales increased by 3.1% in Q3 2019, with an average selling price of $41,710[21, 27] - Same store used vehicle retail volume increased by 11.4% with 29,050 units sold[32] - Same store fixed operations total gross profit increased by 7.8% to $168.277 million[40] EchoPark Segment Q3 2019 Results - EchoPark segment revenue increased by 67.9% to $312.2 million in Q3 2019 compared to Q3 2018[46] - Gross profit increased by 107.2% to $29.6 million[46] - Pre-tax profit increased by 138.9% to $2.1 million[44, 46] - Retail unit sales increased by 71.6% to 13,206 units[46] - Total front and F&I gross per unit retailed increased by 26.2% to $2,264[46] - 2019 revenues are projected at $1.2 billion[50] Consolidated Q3 2019 Results - Consolidated revenue increased by 9.4% to $2.703 billion in Q3 2019 compared to Q3 2018[62] - Gross profit increased by 7.3% to $387 million[62] - Profit after tax from continuing operations increased by 90.6% to $29 million, with diluted EPS of $0.66[62] - Same store total revenue increased by 11.6% to $2.625 billion[68]