MEDFORD, Ore. -- Lithia Motors, Inc. (NYSE:LAD) today announced that second quarter 2007 sales increased 11% to $885.1 million as compared to $801.2 million in the same period last year. New vehicle sales increased 10%, used vehicle sales increased 9%, finance/insurance sales increased 5%, and parts/service sales increased 19%.
Second quarter 2007 net income from continuing operations was $10.7 million as compared to $12.1 million in the second quarter of 2006. Diluted earnings per share from continuing operations were $0.50 as compared to $0.57 in the second quarter of 2006. For a more accurate comparison of earnings, last year's fair market value adjustment to our swaps needs to be considered. Our interest rate swaps did not qualify for hedge accounting in 2006, which had the effect of increasing second quarter 2006 earnings per share by 3 cents. Our swaps do qualify for hedge accounting in 2007 and there was no comparable effect on earnings per share in the second quarter.
Sid DeBoer, Lithia's Chairman and CEO, commented, "The highlight of the quarter was Lithia's parts and service business which continued its strong performance with same-store sales growth of 4.6% on top of 8.0% growth in the second quarter of last year."
"Total sales grew 11% in the second quarter driven by strong parts and service sales and revenues from acquisitions made in the past 12 months. Second quarter total same-store sales declined 2.0%; however, we had a difficult comparison against 9.3% growth in the second quarter of 2006. Regardless of the difficult year over year comparisons, retail sales have been lackluster in the first half of the year. We believe that we are seeing a challenging retail environment for automotive sales in our markets that will continue for the rest of the year. This is related to the ripple affects from the slowdown in residential construction, high gas prices and customer concerns over personal debt."
"Vehicle inventories are at low levels going into the third quarter of the year. New vehicle inventories at the end of June were 9 days below our historical average levels. Finally, earnings per share from continuing operations in the second quarter were down 12% from last year as a result of the retail sales environment, continuing costs related to L2 Auto and our future operating initiatives and higher year over year interest expense," concluded Mr. DeBoer.
For the six-month period ending June 30, 2007, total sales increased 10% to $1.66 billion as compared to $1.51 billion in the same period last year. New vehicle sales increased 9%, used vehicle sales increased 9%, finance/insurance sales increased 8%, and parts/service sales increased 20%.
For the first six-months, Lithia's net income from continuing operations was $17.9 million as compared to $22.9 million in 2006. Diluted earnings per share from continuing operations were $0.85 as compared to $1.08 in the first six-months of 2006. Last year's fair market value adjustment to our swaps had the effect of increasing first half 2006 earnings per share by 7 cents. There was no comparable effect on earnings per share in the first half of this year.
Jeffrey B. DeBoer, Senior Vice President and CFO added, "We are lowering our guidance for the full-year 2007. Our initial 2007 guidance was in-line with what we had earned for the full-year 2006. We are adjusting guidance lower to take into account the slower than expected retail environment in the first half of the year and the costs associated with the investments, for the future, we are making in our company this year. We do not foresee an impact to the company's dividend or current operating initiatives as a result of our updated projections for the year."
"In the second quarter, we had five stores and one body shop classified as discontinued operations as we continue to dispose of our lowest performing operations. Of the 12 cents in discontinued operations, 1 cent is related to operating losses and 11 cents are due to a one-time non-cash write-off of intangibles related to the discontinued stores."
The full-year 2007 guidance is on a continuing operations basis and assumes a steady pace of acquisitions and dispositions," concluded Jeffrey B. DeBoer.
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Conference Call Information
Lithia Motors will be providing more detailed information on the results for the second quarter 2007 in its conference call scheduled for today at 2 p.m. PDT and 5 p.m. EDT. The call can be accessed live by calling 973-582-2750; Conference ID #: 9010604. To listen LIVE on our website or for REPLAY: Log-on to www.Lithia.com - Go to Investor Relations - and click on the Conference Call Icon.
About Lithia
Lithia Motors, Inc. is a Fortune 700 and Russell 2000 Company. Lithia sells 30 brands of new vehicles at 108 stores which are located in 46 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. Lithia retailed 109,648 new and used vehicles and had $3.17 billion in total revenue in 2006.
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 the accuracy of the company's internal forecasts, comments and predictions related to the retail sales environment, anticipated costs related to new initiatives 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.
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