Good morning and welcome to the Sonic Automotive fourth 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 session (Operator Instructions). As a reminder, ladies and gentlemen, this call is being recorded today, February 22, 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 selecting the Investor Relations under the Our Company tab and choosing Webcast and Presentation. At this time, I would like to remind everyone that 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.

Good morning ladies and gentlemen, I’m Scott Smith Co-Founder, President and Chief Strategic Officer. Welcome to Sonic Automotive’s fourth quarter 2010 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, Jeff Dyke; David Smith the company’s Vice President and Greg Young, our Vice President of Finance. Today I will provide a little overview of the quarter. I will 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. We will then wrap up the call with a summary of our outlook for 2011 and open the call for your questions. We spent a fair amount of time last quarter discussion our operational and financial strategies. You will recall that we discussed driving organic growth through the refinement and execution of our operational playbooks. Focusing on our balance sheet and continuing to reduce our non-mortgage debt while continuing to convert lease properties to Sonic ownership and focusing on our customers by continuing to refine our e-commerce processes and overall customer experience by implementing predictable, repeatable and sustainable processes. We continue to see that benefit of all of these strategies during the fourth quarter. Our new vehicle volume easily exceeded the industry growth. The overall SAAR was up approximately 14.5% with the retail SAAR up 6%. Our new vehicle volume was up 18.3% revenue was up 20%. Used vehicles continue their strong year-over-year double-digit growth trend and as a result further refinement in implementation where used vehicle playbooks and buying strategy. All this incremental volume continued to drive our F&I performance which was up 24% over last year. Our parts and service revenue was up 8% for the quarter and 5% for the year, during a time when a number of people were expected to fixed operations growth to be flat at best. While growing our top line we also reduced our SG&A to 78.8% of growth in the quarter and hit our full year SG&A target. All of this resulted in adjusted income from continuing operations growing by 74% with EPS from continuing ops coming in at $0.30 per diluted share. Our balance sheet is in the best shape ever we continue to look for ways and opportunities to reduce our non-mortgage debt. Dave will also go into more detail on recent successes we’ve had in continuing to convert lease properties to Sonic ownership. With that I will turn the call over to Dave.

Thank you Scott and good morning everyone. Revenue for the quarter reached over $1.8 billion up 17% from 2009. Gross profit was up 11% and SG&A as a percent of growth improved to 78.8%. Adjusted operating profit for the quarter was $51 million up nearly $8 million or 17%. We saw further improvement in our interest cost primarily from our continued focus on de-levering. Adjusted after tax profit from continuing ops was $17 million, up 17% from fourth quarter ’09 adjusted EPS for the quarter was $0.30 up $0.11 or 58% from ’09. I’ve highlighted on the slide improvement for total operations in bottom right and at the moment we have no stores for sale and therefore no unsold stores and discontinued operation. We work really hard to improve the results to the total company and adjusted EPS for total operations was $0.28 for the quarter double the result from 2009. And these results really highlight our focus on investing in the base business, owning more of our properties and reducing debt and it’s paying off. Next slide please, this slide shows full year results for 2010. Adjusted net income for continuing operations was $57 million up 34% from 2009 adjusted EPS for continuing operations was $0.99. As with the fourth quarter substantial improvement was made in discontinued operations for the year and adjusted EPS for our total operations was $0.91 for the year up 44% from ’09. Next slide, this slide shows EBITDA together with industry volume. In 2010, we generated $200 million of EBITDA getting pretty close to the cash generation of 2007 on a substantially lower industry volume. Our focus on used vehicles, fixed operations and F&I have improved our profitability and lessened to some extent our dependents on new vehicle sales. Next slide, this slide shows…

Great thanks Dave and good morning everyone. I appreciate the opportunity to share the Sonic Automotive fourth quarter 2010 operating results. So let’s dig in and begin with our new vehicle results as you can see from the slide our new vehicle revenue continues to gain momentum significantly outpacing the SAAR increase as we generated a 20% growth in new vehicle revenue and 18% in volume for the quarter. We also enjoyed market share gains in all of our operating markets in the fourth quarter. Year-to-date we posted new vehicle revenue growth of 14% and volume growth of 9% gaining momentum in each of the quarter sequentially. Also included on the slide is a review of our gross dollar trends for the year as you can see we endured a 10% increase in gross dollars in Q4. Year-to-date our new vehicle gross was up 9% as we gain momentum in each of the quarters sequentially. And I will have more on gross dollars in a moment when we switch to the next slide. One of our goals in Q4 was to increase new car inventory levels prior to the month of December. We began purchasing vehicles from our manufacturing partners as well as our competitors all over the country quite honestly raising our inventory levels to a year high 73 day supply prior to December 1st. December is always a terrific month for Sonic and as a result we had the highest volume (Inaudible) month and years and ended the quarter with a 48 day supply of inventory. We give credit to our centralized new vehicle inventory management process and helping our team get this done. During the last call, we also introduced our new vehicle playbook concept to you and said we go out one store in Q4 to…

(Operator instructions) Our first question comes from the line of Scott Stember with Sidoti & Company.

Good morning. Scott Stember – Sidoti & Company: Did you guys give the customer pays sales increase for the quarter?

It did it was up one – sales increases were 4.3% for the quarter and 4% for the year and then gross is up 1% for the quarter and 1% for the year. Scott Stember – Sidoti & Company: You said 4.3%, right.

Correct. Scott Stember – Sidoti & Company: Okay, got you. And could you just talk about how things shaped up in January, obviously we have auto reports of down days due to weather? Outside of that can you just talk about the trends that you are seeing going forward?

You bet, Scott, I mean, obviously everybody had some weather issues, but we had a very nice January and we are having a very nice February. So, they are in line with all of our targets and our budgets. Scott Stember – Sidoti & Company: Got you. Can you talk about the pricing environment on some of the mid-level import volume brands, some of your competitors talk about some pricing pressure there? Is that what you are seeing?

There is plenty of and especially in Honda and Toyota. We are feeling it and with our new car playbook we are being hyper aggressive in our pricing. Obviously, trying to drive more top line revenue which is bolstering both the F&I gross and fixed operations. So for a longer period of time we think that’s really going to pay all of ours because we are going to – we are taking market share and that’s making a big difference for Sonic. So, the pressure is there. We are right that hunt, if not leading the charge and we are going to continue to do that as we move through the year. Scott Stember – Sidoti & Company: Okay, and just lastly, could you talk about how the new playbook is rolling out the Honda stores on the new side of the business? Just talk about some of the different processes that you are seeing and that you are implementing and how they compare old versus new?

Without giving you all the secret sauce, it’s significantly different. We have got some different pricing strategies. We have got a different training program for our sales associates, a different advertising strategy and that advertising really depends on the markets that we are in. For example, our Honda store is a single-point market but our VW stores in Houston we have three of the six and prior to really taking this on, we only had 45% of the share. We are now pushing 60% of the share. So, there is a difference depending on the market that we go in the advertising strategy that we use because of that market. But it’s driven by a much easier shopping experience for the consumer, a much more aggressive retail price on new and a selected advertising and marketing strategy depending on the markets. Scott Stember – Sidoti & Company: Got it. That’s all I have for now. Thank you.

Thank you Scott.

Your next question is from the line of Rick Nelson with Stephens. Rick Nelson – Stephens Inc.: Thank you and good morning.

Good morning Rick. Rick Nelson – Stephens Inc.: Just to follow up on that question about the new vehicle playbook in the Honda store. What is the rollout plan for that strategy?

It will rollout all of our Honda stores. I am hoping Rick to have it done by mid-summer, by the end of June. I gave myself in my notes towards the end of the summer, but Scott has got his foot up my but to have that done prior to the summer getting over with. So, we will probably get that done by mid-June. Rick Nelson – Stephens Inc.: Right, thanks. Also like to ask you about any luxury OEMs kind of – was there anything of note in the quarter, where you heard about a lot of auto house benefits from some of your peers?

Not for us. We didn’t had any auto house benefits, you have to invest a lot of money in those facilities and our investment principles which we are following strictly given what we have been through over the last couple of years, had not allowed us to invest like some of the others and in the auto house concept. So we didn’t have any of those long term accrual pick up that everybody else said our performance was just based on the quarter as it stood. Rick Nelson – Stephens Inc.: Also, Jeff, like to ask about regional areas of strength and weakness?

Southern California, very strong. We are very pleased with our performance there. Texas is just on fire. Florida is coming back and doing very well. Alabama, Tennessee, Georgia, the Florida Panhandle is always a real strong hold for us. A little weak in sort of the northeast if you will, the Ohio, Oklahoma market was a little weaker than we like, and I would say Northern California is about average. Rick Nelson – Stephens Inc.: All right thanks for that. And on pay capital allocation, side of things, how do you break the alternatives at this point between debt pay down and property ownership and acquisitions and buybacks?

Rick this is Dave. We have got our priorities very clearly outlined and in priority order they are investing the base business because that’s the best returns for us. Own a property is second best, and if you think about owning a property it’s a little bit of retiring the debt financing difference, right, because you are moving to a mortgage versus a lease. And then third take down debt. All three of them are important. We are focused on all of them and we are executing on all of them. Rick Nelson – Stephens Inc.: Do we see Sonic get back in the acquisition game? Is there a target debt ratio you have in mind?

I don’t think so. I think, as we look at the base business, the results we are getting today without any acquisitions, I think we are very satisfied with that. I think there is a lot of upside, continued upside in the base business. I don’t know exactly when it’s going to happen, but it’s a good – in my view three years. Rick Nelson – Stephens Inc.: Okay, thanks a lot and good luck.

Thank you.

Your next question is from the line of Patrick Archambault with Goldman Sachs. Patrick Archambault – Goldman Sachs: Yes, hi, good morning. A couple quick ones. In terms of the new vehicle sale performance was obviously very strong and you clearly on a national level have gained quite a bit of share this last quarter. Can you tell us a little bit about what you feel has driven that? Is it kind of an fairly even combination of your footprint, as well as merchandising or was your marketing push, one of the bigger drivers and how sustainable is that out performance, presumably if there is quite a bit of incentive spending from some of the bigger players, in some of the midline import you would think that over time some of the smaller outfits may be forced to match that. So, just your thoughts on that.

Great question Patrick. We are pretty lucky in that. We have some of the highest new car margins in the industry running over $2300 a copy. So it gives us some flexibility to drive volume. So we see our margins fluctuating a little bit, but the focus that we have had on driving new car volume especially with Honda, especially with BMW, Toyota, those brands where we tend to dominate and when mean dominate where we have great market presence. It has allowed us via marketing strategy to really take market share and we have done a very good job there. Our team is executing really well and here is the great news. The great news is we rolled out one playbook store for new car in Q4. We are going to see significant increase in our Honda business between now and June and the upside is limitless. If you remember back three or four years ago, when we started doing this on the used car side, we got a little of pressure on our used car margin from the street. But our used car growth in terms of dollars and volume just continue to take off and as a result I think we have got the best used vehicle business in the country. The same thing is going to happen on new. It just takes time to get the volume fill if you will installed and playbook if you will installed in all of our stores, and over the next year or two, you are going to see really nice increases in new car volume. As a result margin percentages may move around a little bit, but the total gross dollars, which is what we take to the bank, are going to grow significantly and we look forward to that. Really good upside there for us. So, great question and we think there is plenty of upside for us. Patrick Archambault – Goldman Sachs: Okay and I guess just dovetailing that into the parts and service. I don’t have the exact percentage in front of me, but it seems like, compared to what had modeled, the margin there was a little lower, but clearly the growth was probably twice what we were expecting. And, it’s been an area of strength I think at some of your peers as well. Is the strategy there to sort of take a little bit on price and just kind of extend out to some of the independent repair shops and take share from them by, I guess matching them or getting closer to their pricing schemes. Because obviously, from a volume point of view it seems like it has been effective at least as of the last quarter?

They have been taking, the mom and pops have been taking shares from the new car retailers the pep boys and things like that of the world for a long time. And we have got the facility, the backing of the manufacturer, the brand, and it’s time for that to stop and absolutely it’s a strategy. Our margins are down a little bit, I mean still rounded there at 50%. We have got all kinds of different marketing and pricing strategies that we are working through our service drive. So, we are very comfortable with where we are margin wise. We see nothing but upside, in particular just because of the used and the new vehicle volume growth that we see, our fixed operations business is going to be strong for the years to come. We had a all time record in ’10. We are going to set that again in ’11 and ’12 as we move on, just based on volume we are going to do that. Patrick Archambault – Goldman Sachs: Okay, and then, last question, can you just give us a sense of how – your view on OEs, mandated incentives, clearly in January there was some pretty big stepped up incentives that some of the OEs, that was concerning to some folks. What is your opinion? I mean, do you see the OEs in general becoming a bit more aggressive relative to last year? Or what you are seeing in the market is it just kind of short term tactical business as usual?

I think it is business as usual. It fluctuates from one quarter to the next depending on who is gaining share and who is not gaining share. Who has inventory levels that are high and who doesn’t. Honestly, I think the OEMs are doing a better job as of the reason managing their inventory levels. So it’s going to bring incentives down, which is kudos to them. That’s exactly what it should be. It allows us to make a few more dollars in the front end and will help us as we move forward. So, I don’t see anything out of the usual occurring. Patrick Archambault – Goldman Sachs: Okay, great. Thank you very much.

Appreciate the questions Patrick.

(Operator instructions) Your next question is from the line of Colin Langan with UBS. Colin Langan – UBS: Good morning. In the quarter, it looks the new-to-used ratio was a bit lower than year-to-date. Is that a seasonal impact? Because it seems like from your guidance that it would have to – on a year-over-year basis throughout next year?

I think finished at 0.9 to 1 for the year and it’s a December impact. As you know, we do a ton of highline business in December especially centered around BMW. And with all the incentives that are going on, it’s just – that’s what it is. It’s not in October or November. Since we were actually one-to-one I think in those months. We are going to be better than one-to-one in January and February with really robust new car volumes. So, it’s just a December impact and it happens every year. Colin Langan – UBS: Okay. And then in terms of – I think you gave some numbers for parts and services mix, I mean, what is the breakout there? 16% warranty, what percent is customer paying internal?

Hang on one second and if you have another question ask it, hang on one second and we will give you that breakout. Colin Langan – UBS: Yes, sure. The other question I had is, you had actually earlier made a comment about gaining share from Honda and Toyota, even though there is pricing pressure. I didn’t quite get that. You are willing to take a lower margin in order to gain share, is that front of the strategy or I just want to make sure I understood what those comments were about?

Yes, you bet. We don’t look at our business, it’s more holistic. We don’t look at our business as just new cars. So, our margin percentages have come down on Honda a little bit. But in a sense our new car volume has gone way up and because your new car volumes has gone way up, our trade ratio with those stores – we are trading for a lot more cars. So it’s supporting our used vehicle business and our F&I business is improving. So you get that F&I growth and you get the fixed operation growth. So you really have to understand the balance between that new car margin and gross margin percentage if you want to measure at that way and what you can pick up in the other parts of your business and that’s really paying off for us. And we are making more money and most importantly we are driving a lot more gross dollars using that strategy. We started using that strategy in used cars several years ago and it has wildly paid off for this company and it’s going to do the same for new cars. It takes a couple of years to get it all up and running, but the early results that we have gotten based on the stuff that we have done with Honda and VW are fantastic and we look forward to presenting you guys with better numbers from our new car side in terms of volume and gross dollars as we move forward. The volume percentage may move around a little bit, but that’s not something that we are that concerned about to be honest with you. It’s the dollars that we take to the bank as I said earlier and that’s what we are focused on is driving more gross dollars.

Is that just a pricing game? There is also how you market it, how you sell, when the customer is in there, trading with our associates, we put all that together and those things are all as part of the playbook and that’s really what it is and margin may move a little bit. But in total, it’s the playbook that’s driving it. Colin Langan – UBS: Just help me going forward, most people model by the percent margins, the margin is going to be at the Q4 level going forward or is there more downward pressure on the margin as the strategy rolls out? Jeff Dyke To be quite honest with you I think we are going to be in and around $2300 a copy and we think per unit. And we just don’t look at that, at that margin percentage number at all. And we look at the per unit – per copy number and our copy number is higher than everybody else’s for the most part I think Penske may be a little bit higher than us. But other than that, we have always been a market leader there. We are selling more cars and as mix changes, for example on our used car side, as mix changes our PUR was up in domestic import and luxury, but mix changed, so it drives the margin percentage down. It just is not something that we measure. We look at PUR and our PURs are good, they are up and we are satisfied with the gross dollars that we are generating. As you go back, Colin just real quick, in terms of revenue, customer pay is 46% of our revenue, warranty, this is for the quarter, this is year-to-date, warranty was 16.6%, wholesale parts was 12.3%, sublet, 5.3% and internal 13.3% and then other is 6.9% for 100%. And if you want to know for the quarter, it was 45% customer pay, 17% warranty, and that reflects the Lexus and Toyota recall that I talked you about, 12.5% for wholesale parts, 5.2% for sublet, 13% internal and 6.9% other. Colin Langan – UBS: Okay, and do you think for the warranty, will that be strong again next year because of the recall issue?

Your guess is as good as mine. Every time we turnaround there is another recall, so. If they have another recall, we will keep taking care of the customer and do them what’s right for the brand. Hopefully, that’s not happening, because long term recalls are not what we want for the consumer. Colin Langan – UBS: So your outlook there is based on the internal growing or the customer pay or both?

Both and we are going to see that just as a reflection of new car volume going up. Your service business will improve on a customer pay basis and our used car volume is driving internal and sublet and with the growth that we are seeing in the first quarter on pre-owned, that number is going to continue to grow. Colin Langan – UBS: Okay, thanks very much.

You bet. Thanks for the questions.

Your next question comes from the line of Himanshu Patel with J.P. Morgan. Vivek Alok – JPMorgan: Hi. This is Vivek Alok for Himanshu Patel. How are you guys?

Good.

Hi, how are you? Vivek Alok – JPMorgan: I’m good. So, I have one question on the dealership acquisition that you talked about. I guess you mentioned that you own 20% of the dealership right now. I just wanted to put this number in perspective, how many dealerships did you owned last year and what’s your target on this percentage going forward? And then secondly how do you plan to final these acquisitions, because you also planned to pay down one of your high cost debt. So can you please explain which takes more priority right now?

I talked about our priorities, probably I would put the owning our property ahead of reducing our debt, but the way I think about it, we look at the properties as you have today that are financed or leased and all we are really doing is financing it with a mortgage. And our average lease rate probably starts at 8% or 9% kind of yielded than they work their way up over the years and they can get 10%, 11%. And we are financing them with mortgages, our average is just below 5% today. So, there is a obvious spread there that’s advantageous for the company plus the all the other benefits of owning your property, when you have to reinvest, you are paying it or whatever. You would rather do it on something you own versus lease. So that’s the strategy. I think last year, we were probably about 14% of owned. I think back in the beginning of 2007, we were 0%. So we work our way up close to 20%. We don’t have a target in mind and more as better especially have good properties that makes sense for us in markets in like and brands we like. And I think we will just keep at it. We have a plan. We know when our leases mature and we look at it every month to see where we are moving forward and frankly, we do not had any issues with getting financing. It’s really nice we had about $130 million of mortgages at year end, it’s going to jump up to close to $200 million in 2011 and we have got debt with leases, we have got debt with mortgages. We like mortgage debt better, we like owning our property. Vivek Alok – JPMorgan: Okay and then on following up on your parts and service business, I imagine part of this growth was supported by high tire sales, driven by an aggressive tire company that you talked about. Can you tell us the growth in tire business and also the associated mile in that business?

Let’s see here. It certainly put added pressure, because we are selling a heck of a lot of more tires. I do not have the tire revenue number with me. But, we can reach back out to you after the call and let you know what that is. I don’t have that. Vivek Alok – JPMorgan: And can you talk about the gross margin in the business?

Well it’s 20%.

Yes, if we are lucky it’s 20%. Vivek Alok – JPMorgan: Okay, that’s very helpful. Thank you.

Yes and that’s what’s driving some of the margin in the fixed ops business as Jeff said it’s been hovering right around that 50%, but as we have talked on previous calls, all of that is incremental gross profit because we weren’t capturing any of those gross profit dollars in the past with the pricing strategy that we have. Vivek Alok – JPMorgan: Okay, thank you.

Thank you very much.

There are no further questions at this time.

Great, fantastic. We appreciate everybody participating on the call today. Thank you.

Thank you.

This concludes today’s conference call. You may now disconnect.