MEDFORD, Ore.--(BUSINESS WIRE)--Feb. 15, 2007--Lithia Motors, Inc. (NYSE: LAD) today announced that full-year 2006 sales increased 11% to $3.17 billion as compared to $2.85 billion in the same period last year. New vehicle sales increased 13%, used vehicle sales increased 7%, finance/insurance sales increased 12% and parts/service sales increased 14%.
Full-year 2006 net income from continuing operations was $40.3 million as compared to $56.0 million in 2005. Diluted earnings per share from continuing operations were $1.91 including the $0.12 effect of accounting for equity compensation under FAS123(R), and the $0.05 effect of accounting for derivative instruments and hedging activities under SFAS 133.
Full-year 2006 earnings per share from continuing operations, excluding the effect of accounting for equity compensation under FAS123(R) and excluding the accounting for derivative instruments and hedging activities SFAS 133, were $2.08 as compared to $2.53 in the same period last year.
Sid DeBoer, Lithia's Chairman and CEO, commented, "We were able to drive positive same-store sales growth in all business lines for the full-year 2006 and the result was total same-store revenue growth of 3.7%. New vehicle same store sales for Lithia grew 4.8% as compared to an industry that saw total sales down nearly 3%. Total same-store gross profit for the year increased 2.1%. One highlight was in parts and service, where we saw our same store customer pay business increase 7% for the year."
"In the fourth quarter we were successful in our efforts to reduce inventories. Our new vehicle day's supply at the end of December was more than 30 days below December 2005 levels, and 8 days below our average levels for the end of the year. At the end of January our day's supply of new vehicle inventory had dropped another 11 days. This positions our inventories well going into the first quarter of 2007."
"Our focus on pushing new vehicle sales in the fourth quarter combined with the fact that fuel costs continued to stabilize, lead to a sequential increase in truck and SUV sales, as a percent of total sales, from the third to the fourth quarter of the year. Additionally, interest rates have continued to remain steady, and combined with the lower inventory position this should help ensure no further increases in flooring costs."
"Full year earnings were lower than last year due to a combination of factors. First, there was a 29 cent difference in year over year earnings due to an accounting change for equity compensation under FAS123(R), and a change year over year in derivative instruments and hedging activities under FAS 133. Effective January 1, 2007, we expect that the derivative transactions will qualify for fair value accounting as hedge transactions."
"Other factors that impacted full-year and fourth quarter earnings were higher inventory flooring costs resulting from higher inventory levels and higher interest rates; lower retail vehicle gross profit margins due to poor inventory mix; L2 start-up costs; and the increased costs resulting from company-wide operational initiatives that we have been implementing throughout the year," concluded Mr. DeBoer.
For the fourth quarter, total sales increased 12% to $735.8 million from $655.3 million in the same period last year. New vehicle sales increased 18%, used vehicle sales were even with last year, finance/insurance sales increased 8%, and parts/service sales increased 16%.
For the fourth quarter, Lithia's net income from continuing operations was $6.6 million as compared to $11.8 million in the fourth quarter of 2005. Diluted earnings per share from continuing operations were $0.32, including the $0.03 effect of accounting for equity compensation under FAS123(R) and the $0.01 effect of accounting for derivative instruments and hedging activities under SFAS 133.
Fourth quarter earnings per share from continuing operations, excluding the affect of accounting for equity compensation under FAS123(R) and excluding the accounting for derivative instruments and hedging activities under SFAS 133, were $0.36 as compared to $0.54 in the same period last year..
Jeffrey B. DeBoer, Senior Vice President and CFO added, "For the full-year 2006 we completed acquisitions with approximately $470 million in annualized revenues. This represents over 16% growth on our 2005 total revenues of $2.85 billion."
"Our guidance for the full-year 2007 is included in the table below. As was outlined in more detail in our earnings press release for the period ended September 30, 2006; operational projects and initiatives; start up costs for our first independent used vehicle retail outlets; increased company health and benefit plan costs and our domestic product mix will continue to negatively impact earnings in 2007."
earnings in 2007."
Guidance
Earnings per Share FY 2007
-------------
From Continuing Operations: $1.90 - $2.10
From Continuing Operations: $1.90 - $2.10
In December of 2006, Lithia filed its restated financial statements for the quarters ended March 31, 2006 and June 30, 2006, and for the years ended December 31, 2005, 2004 and 2003. These financial statements were restated as a result of an accounting error relating to the Company's derivative accounting under Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). Neither cash flows nor shareholder equity was affected by these restatements.
Conference Call Information
Lithia Motors will be providing more detailed information on the results for the fourth quarter and full-year 2006 in its conference call scheduled for 2 p.m. PT today. The call can be accessed live by calling 973-582-2750. To listen to a live webcast or hear a replay, log-on to: www.lithia.com -- go to Investor Relations -- and click on the Live Webcast icon.
About Lithia
Lithia Motors, Inc. is a Fortune 700 and Russell 2000 Company. Lithia sells 28 brands of new vehicles at 104 stores, which are located in 45 markets within 15 states. Internet sales are centralized at www.Lithia.com. Lithia also sells used vehicles; arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.
Forward Looking Statements
This press release includes forward looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation economic conditions, acquisition risk factors and others set forth from time to time in the company's filings with the SEC. Specific risks in this press release include items which impact earnings, industry data, projections on how interest rates, fuel costs and the companies inventories may impact future results, anticipated revenues of recent acquisitions, and projected full-year 2007 earnings per share guidance.
Additional Information
For additional information on Lithia Motors, contact the Investor Relations Department: (541) 776-6591 or log-on to: www.lithia.com -- go to Investor Relations.
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Unaudited
--------------------- Twelve Months
Ended December 31,
----------------------- $Increase % Increase
2006 2005 (Decrease) (Decrease)
---------- ---------- ----------- -----------
New Vehicle Sales $1,841,463 $1,631,316 $ 210,147 12.9%
Used Vehicle Sales 862,397 805,448 56,949 7.1
Finance & Insurance 119,936 107,564 12,372 11.5
Service, Body & Parts
Sales 343,747 302,960 40,787 13.5
Fleet & Other
Revenues 5,351 4,410 941 21.3
---------- ---------- --------- -----------
Total Revenues 3,172,894 2,851,698 321,196 11.3
Cost of Sales 2,634,417 2,359,999 274,418 11.6
---------- ---------- --------- -----------
Gross Profit 538,477 491,699 46,778 9.5
SG&A Expense 406,569 357,617 48,952 13.7
Depreciation/
Amortization 17,071 13,975 3,096 22.2
---------- ---------- --------- -----------
Income from
Operations 114,837 120,107 (5,270) (4.4)
Flooring Interest
Expense (34,636) (17,580) 17,056 97.0
Other Interest
Expense (15,453) (11,891) 3,562 30.0
Other Income, net 958 953 5 0.5
---------- ---------- ----------- -----------
Income from
continuing
operations before
income taxes 65,706 91,589 (25,883) (28.3)
Income Tax Expense (25,369) (35,610) (10,241) (28.8)
Income Tax Rate 38.6% 38.9%
---------- ----------
Net Income from
continuing ops. 40,337 55,979 (15,642) (27.9)%
Income (Loss) from
discontinued
operations, net of
income taxes (3,033) (2,352) 681 29.0
Net Income $ 37,304 $ 53,627 ($16,323) (30.4)%
========== ========== ========= ===========
Diluted Net Income
per share:
Continuing Operations
before following
accounting
adjustments: $ 2.08 $ 2.53 $ (0.45) (17.8)%
Effect of SFAS 133 (0.05) 0.12
Effects of FAS123(R) (0.12) -
Continuing Operations
Net Income per
share: $ 1.91 $ 2.65 (0.74) (27.9)%
Discontinued
Operations (0.14) (0.11)
---------- ----------
Net Income per share $ 1.77 $ 2.54 (0.77) (30.3)%
========== ========== ========= ===========
Diluted Shares
Outstanding 22,102 21,807 295 1.4%
LITHIA MOTORS, INC.
Twelve Months
Ended December 31,
------------------- $Increase % Increase
Unit Sales: 2006 2005 (Decrease) (Decrease)
--------------------------- -------- -------- ---------- ----------
New Vehicle 66,224 58,372 7,852 13.5%
Used - Retail Vehicle 43,424 42,831 593 1.4
Used - Wholesale 25,282 23,608 1,674 7.1
Total Units Sold 134,930 124,811 10,119 8.1
Average Selling Price: 2006 2005
--------------------------- -------- --------
New Vehicle $ 27,807 $ 27,947 ($140) (0.5)%
Used - Retail Vehicle 16,290 15,564 726 4.7
Used - Wholesale 6,132 5,880 252 4.3
Key Financial Data: 2006 2005
--------------------------- -------- --------
Gross Profit Margin 17.0% 17.2% -20 bps
SG&A as a % of Gross Profit 75.5% 72.7% +280 bps
Operating Margin 3.6% 4.2% -60 bps
Pre-Tax Margin 2.1% 3.2% -110 bps
Gross Margin/Profit Data 2006 2005
--------------------------- -------- --------
New Vehicle Retail 7.7% 8.0% -30 bps
Used Vehicle Retail 14.9% 15.6% -70 bps
Used Vehicle Wholesale 2.4% 2.7% -30 bps
Service, Body & Parts 48.5% 47.8% +70 bps
New Retail Gross
Profit/Unit $ 2,129 $ 2,231 -$102
Used Retail Gross
Profit/Unit $ 2,426 $ 2,423 +$3
Used Wholesale Gross
Profit/Unit $ 149 $ 160 -$11
Finance & Insurance/Retail
Unit $ 1,094 $ 1,063 +$31
Same Store Data 2006 2005
--------------------------- -------- --------
New Vehicle Retail Sales 4.8% 0.9%
Used Vehicle Sales
(includes Wholesale) 0.6% 3.7%
Total Vehicle Sales
(excludes fleet) 3.4% 1.8%
Finance & Insurance Sales 5.1% 1.7%
Service, Body & Parts Sales 5.3% 2.9%
Total Sales (Excluding
Fleet) 3.7% 1.9%
Total Gross Profit
(Excluding Fleet) 2.1% 3.2%
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Unaudited
---------------------------
Three Months Ended
December 31,
------------------- $Increase % Increase
2006 2005 (Decrease) (Decrease)
-------- -------- ---------- ----------
New Vehicle Sales $427,217 $361,222 $ 65,995 18.3%
Used Vehicle Sales 190,282 190,538 (256) (0.1)
Finance & Insurance 26,757 24,881 1,876 7.5
Service, Body & Parts Sales 89,999 77,819 12,180 15.7
Fleet & Other Revenues 1,566 847 719 84.9
-------- -------- -------- ----------
Total Revenues 735,821 655,307 80,514 12.3
Cost of Sales 609,717 539,243 70,474 13.1
-------- -------- -------- ----------
Gross Profit 126,104 116,064 10,040 8.7
SG&A Expense 98,585 86,481 12,104 14.0
Depreciation/
Amortization 4,592 3,752 840 22.4
-------- -------- -------- ----------
Income from Operations 22,927 25,831 (2,904) (11.2)
Flooring Interest Expense (8,142) (5,217) 2,925 56.1
Other Interest Expense (4,765) (3,120) 1,645 52.7
Other Income, net 189 402 (213) (53.0)
-------- -------- -------- ----------
Income from continuing
operations before income
taxes 10,209 17,896 (7,687) (43.0)
Income Tax Expense (3,620) (6,124) (2,504) (40.9)
Income Tax Rate 35.5% 34.2%
-------- --------
Income from continuing ops. 6,589 11,772 (5,183) (44.0)
Income (Loss) from
discontinued operations,
net of income taxes (1,060) (1,282) (222) (17.3)
Net Income $ 5,529 $ 10,490 ($4,961) (47.3)%
======== ======== ======== ==========
Diluted Net Income per
share:
Continuing Operations
before following
accounting adjustments: $ 0.36 $ 0.54 $ (0.18) (33.3)%
Effect of SFAS 133 (0.01) 0.02
Effects of FAS123(R) (0.03) -
Continuing Operations
Net Income per share: $ 0.32 $ 0.56 (0.24) (42.9)%
Discontinued Operations (0.05) (0.06)
-------- --------
Net Income per share $ 0.27 $ 0.50 (0.23) (46.0)%
======== ======== ======== ==========
Diluted Shares Outstanding 22,041 21,929 112 0.5%
LITHIA MOTORS, INC.
Three Months
Ended
December 31,
----------------- $Increase % Increase
Unit Sales: 2006 2005 (Decrease) (Decrease)
------------------------------ ------- ------- ---------- ----------
New Vehicle 14,770 12,568 2,202 17.5%
Used - Retail Vehicle 9,227 9,815 (588) (6.0)
Used - Wholesale 6,021 5,658 363 6.4
Total Units Sold 30,018 28,041 1,977 7.1
Average Selling Price: 2006 2005
------------------------------ ------- -------
New Vehicle $28,925 $28,741 $ 184 0.6%
Used - Retail Vehicle 16,540 15,898 642 4.0
Used - Wholesale 6,255 6,097 158 2.6
Key Financial Data:
------------------------------
Gross Profit Margin 17.1% 17.7% -60 bps
SG&A as a % of Gross Profit 78.2% 74.5% +370 bps
Operating Margin 3.1% 3.9% -80 bps
Pre-Tax Margin 1.4% 2.7% -130 bps
Gross Margin/Profit Data 2006 2005
------------------------------ ------- -------
New Vehicle Retail 7.8% 8.0% -20 bps
Used Vehicle Retail 14.3% 15.5% -120 bps
Used Vehicle Wholesale 1.4% 1.1% +30 bps
Service, Body & Parts 48.1% 47.9% +20 bps
New Retail Gross Profit/Unit $ 2,257 $ 2,299 -$42
Used Retail Gross Profit/Unit $ 2,365 $ 2,471 -$106
Used Wholesale Gross
Profit/Unit $ 87 $ 69 -$18
Finance & Insurance/Retail
Unit $ 1,115 $ 1,112 +$3
Same Store Data 2006 2005
------------------------------ ------- -------
New Vehicle Retail Sales 6.6% (5.7)%
Used Vehicle Sales (includes
Wholesale) (7.4)% 3.4%
Total Vehicle Sales (excludes
fleet) 1.8% (2.7)%
Finance & Insurance Sales 3.4% (4.1)%
Service, Body & Parts Sales 3.6% 3.7%
Total Sales (Excluding Fleet) 2.1% (2.1)%
Total Gross Profit (Excluding
Fleet) (0.9)% 1.1%
LITHIA MOTORS, INC.
Balance Sheet Highlights (Dollars in Thousands)
December 31, 2006 December 31, 2005
----------------- -----------------
Unaudited
-----------------
Cash & Cash Equivalents $ 26,600 $ 48,566
Trade Receivables(a) 118,528 106,443
Inventory 603,306 606,047
Assets Held for Sale 15,485 27,411
Other Current Assets 15,721 15,781
---------------- ----------------
Total Current Assets 779,640 804,248
Real Estate, net 327,890 255,372
Equipment & Leases, net 89,213 77,805
Goodwill, net 307,424 260,899
Other Assets 75,190 54,390
---------------- ----------------
Total Assets $ 1,579,357 $ 1,452,714
================ ================
Floorplan Notes Payable $ 499,679 $ 530,452
Liabilities held for sale 11,610 22,388
Other Current Liabilities 118,650 94,962
---------------- ----------------
Total Current Liabilities 629,939 647,802
Used Vehicle Flooring 95,614 -
Real Estate Debt 155,890 154,046
Other Long-Term Debt 140,879 136,505
Other Liabilities 63,642 54,130
---------------- ----------------
Total Liabilities 1,085,964 992,483
---------------- ----------------
Shareholders' Equity 493,393 460,231
---------------- ----------------
Total Liabilities &
Shareholders' Equity $ 1,579,357 $ 1,452,714
================ ================
(a) Includes contracts-in-transit of $56,211 and $52,453 at December
31, 2006 and December 31, 2005 respectively.
Other Balance Sheet Data (Dollars in Thousands except per share data)
Current Ratio 1.2x 1.2x
LT Debt/Total Cap.
(Excludes Used -Vehicle Flooring
and Real Estate) 22% 23%
Working Capital $ 149,701 $ 156,446
Book Value per Basic Share $ 25.32 $ 24.00
CONTACT: Lithia Motors, Inc.
Investor Relations Department, 541-776-6591
SOURCE: Lithia Motors, Inc.
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