MEDFORD, OR -- (Marketwire) -- 04/25/12 -- Lithia Motors, Inc. (NYSE: LAD) today reported 2012 first quarter adjusted income from continuing operations was $15.8 million, or $0.60 per diluted share. This compares to a 2011 first quarter adjusted income from continuing operations of $8.8 million, or $0.33 per diluted share. Unadjusted net income from continuing operations for the first quarter of 2012 was $16.8 million or $0.63 per diluted share, compared to $8.4 million or $0.31 per diluted share for 2011.
As shown in the attached non-GAAP reconciliation table, the 2012 first quarter adjusted income from continuing operations is reduced to exclude a benefit of $0.03 per share for the gain on the disposal of assets, an adjustment to an investment and a non-core tax attribute. The 2011 first quarter adjusted results from continuing operations exclude a charge of $0.02 per share on asset impairments and a stock based compensation tax shortfall.
First quarter 2012 revenue from continuing operations increased $176.0 million, or 30% to $758.9 million, compared to $582.9 million in the first quarter of 2011.
First Quarter Year-over-Year Operating Highlights:
- New vehicle same store sales increased 25%
- Used vehicle retail same store sales increased 18%
- Service, body and parts same store sales increased 5%
- Adjusted SG&A expense as a percentage of gross profit reduced 370 basis points, to 72.2%
- Adjusted income from continuing operations increased 79%
"We remain focused on consistent execution of our operational strategies," said Bryan DeBoer, President and COO. "Our first quarter results build on our momentum from 2011. Our team continues to expand market share by understanding customers and meeting their needs. Store-specific strategies that are optimized for local market conditions focus on increasing revenue while maintaining expense discipline. This unique approach for each of our stores is the foundation of our success today and in the future."
Corporate Development
On March 27, 2012, Lithia completed the sale of an 80% interest in our Nissan, Volkswagen and BMW stores in Medford, Oregon, to Dick Heimann, Vice Chairman. The remaining 20% ownership interest will be accounted for as an equity investment.
Balance Sheet Update
Lithia ended the first quarter with $9 million in cash, $17 million in available credit on our credit facility and $76 million in unfinanced new vehicle inventory. In total, this represents approximately $102 million in available liquidity.
On April 18, 2012, Lithia entered into a new five-year $650 million credit facility with 10 financial institutions. The revolving facility will provide $500 million for new vehicle inventory floor plan financing, $100 million for used vehicle inventory financing and $50 million for general corporate purposes including working capital and acquisitions, and can be expanded to $800 million in total availability.
Chris Holzshu, SVP and Chief Financial Officer, commented, "Our partner banks and manufacturer-affiliated finance companies have made a significant vote of confidence in Lithia. In addition to increasing the liquidity we can utilize for corporate development, this facility reduces our borrowing costs and provides for a five-year commitment. Continuing to strengthen our balance sheet through more favorable debt financing has been a key focus area."
CEO Succession
As previously announced, effective May 1, 2012, Bryan DeBoer, President and COO, will be promoted to Chief Executive Officer. Sid DeBoer, Founder, Chairman and CEO, will assume the role of Executive Chairman and remain Chairman of the Board.
Updated Outlook for 2012
Commenting on Lithia's outlook for the future, Sid DeBoer, Chairman and CEO, stated, "The first quarter of 2012 supports our belief that a multi-year recovery in new vehicle sales is ahead of us. Consumers have proven resilient to increases in gas prices and improved safety and technology features are creating additional demand. We still remain conservative in our estimate of how quickly demand will return to normalized levels, and anticipate a new vehicle Seasonally Adjusted Annualized Rate (SAAR) of sales between 14.0 and 14.5 million for the full year 2012."
Lithia projects its 2012 second quarter earnings within a range of $0.60 to $0.62 per diluted share. Full-year 2012 earnings are projected within a range of $2.45 to $2.53 per diluted share. Both projections are based on the following annual assumptions:
- Total revenues in range of $2.9 to $3.1 billion
- New vehicle same store sales increasing 16.0%
- New vehicle gross margin ranging from 7.6% to 7.8%
- Used vehicle same store sales increasing 13.0%
- Used vehicle gross margin ranging from 14.4% to 14.6%
- Service body and parts same store sales increasing 2.5%
- Service body and parts gross margin ranging from 48.0% to 48.2%
- Finance and insurance gross profit of $1,000 per unit
- Tax rate of 40%
- Average diluted shares outstanding of 26.6 million
- Capital expenditures of $43 million
- Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items
First Quarter Earnings Conference Call and Updated Presentation
The first quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the first quarter results has been added to Investor Relations on www.lithia.com.
To listen live on our website or for replay, visit Investor Relations on www.lithia.com and click on webcasts. A playback of the conference call will be available after 1:00 p.m. ET on April 25, 2012 through May 9, 2012 by calling 877-660-6853 (Conference ID: 392149, Account: 305).
About Lithia
Lithia Motors, Inc. is the ninth largest automotive retailer in the United States. Lithia sells 25 brands of new and all brands of used vehicles at 83 stores, which are located in 11 states. Lithia also arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.
For additional information on Lithia Motors, contact John North, VP Finance and Controller at (541) 618-5748.
Sites
www.lithia.com
www.lithiacareers.com
www.assuredservice.com
Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors
Lithia Motors on Twitter
http://twitter.com/lithiamotors
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. Forward-looking statements in this press release include our guidance regarding second quarter and full year 2012 results, the impact of gas prices and consumer demand on vehicle sales levels and the sustainability of future incremental operating leverage. Forward-looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks" or "will." These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation, future economic conditions and others set forth from time to time in the company's filings with the SEC. We urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook, which are made as of the date of this release.
Non-GAAP Financial Measures
This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income and diluted earnings per share from continuing operations, adjusted SG&A as a percentage of revenues and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, and adjusted pre-tax margin. These measures exclude certain items disclosed in the attached financial tables. Cash flows from operations were adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding adjustments for items not related to the Company's ongoing core business operations or other non-cash adjustments, and improves the period-to-period comparability of the Company's results from its core business operations. These presentations are not intended to provide net income, cash flows from operations, operating income, or selling, general and administrative costs in accordance with GAAP and should not be considered an alternative to GAAP measures.
Lithia Motors, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Three Months Ended
March 31, %
------------------------ Increase Increase
2012 2011 (Decrease) (Decrease)
----------- ----------- ----------- ----------
Revenues:
New vehicle retail $ 404,288 $ 300,640 $ 103,648 34.5%
Used vehicle retail 195,421 156,478 38,943 24.9
Used vehicle wholesale 34,336 29,537 4,799 16.2
Finance and insurance 25,420 19,299 6,121 31.7
Service, body and parts 86,448 73,761 12,687 17.2
Fleet and other 12,981 3,142 9,839 313.1
----------- ----------- ----------- ----------
Total revenues 758,894 582,857 176,037 30.2
Cost of sales:
New vehicle retail 373,162 278,034 95,128 34.2
Used vehicle retail 166,507 133,494 33,013 24.7
Used vehicle wholesale 33,918 29,138 4,780 16.4
Service, body and parts 44,855 38,000 6,855 18.0
Fleet and other 12,581 2,595 9,986 384.8
----------- ----------- ----------- ----------
Total cost of sales 631,023 481,261 149,762 31.1
----------- ----------- ----------- ----------
Gross profit 127,871 101,596 26,275 25.9
Other asset impairments 115 382 (267) (69.9)
SG&A expense 91,590 77,134 14,456 18.7
Depreciation and
amortization 4,199 4,092 107 2.6
----------- ----------- ----------- ----------
Income from operations 31,967 19,988 11,979 59.9
Floor plan interest
expense (2,950) (2,462) 488 19.8
Other interest expense (2,747) (3,292) (545) (16.6)
Other income, net 499 77 422 548.1
----------- ----------- ----------- ----------
Income from continuing
operations before
income taxes 26,769 14,311 12,458 87.1
Income tax expense (9,973) (5,923) 4,050 68.4
Income tax rate 37.3% 41.4%
----------- ----------- ----------- ----------
Income from continuing
operations $ 16,796 $ 8,388 $ 8,408 100.2%
Income from discontinued
operations - 317 (317) NM
----------- ----------- ----------- ----------
Net income $ 16,796 $ 8,705 $ 8,091 92.9%
Diluted net income per
share:
Continuing operations $ 0.63 $ 0.31 $ 0.32 103.2%
Discontinued operations - 0.02 (0.02) NM
----------- ----------- ----------- ----------
Net income per share $ 0.63 $ 0.33 $ 0.30 90.9%
=========== =========== =========== ==========
Diluted shares
outstanding 26,478 26,694 (216) (0.8)%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three Months Ended
March 31, %
---------------------- Increase Increase
2012 2011 (Decrease) (Decrease)
---------- ---------- ------------ -----------
Gross margin
New vehicle retail 7.7% 7.5% 20 bps
Used vehicle retail 14.8 14.7 10 bps
Used vehicle wholesale 1.2 1.4 (20) bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.1 48.5 (40) bps
Fleet and Other 3.1 17.4 (1,430) bps
Gross profit margin 16.8 17.4 (60) bps
Unit sales
New vehicle retail 12,469 9,525 2,944 30.9%
Used vehicle retail 11,508 9,506 2,002 21.1
Used vehicle wholesale 4,593 3,742 851 22.7
Total units sold 28,570 22,773 5,797 25.5
Average selling price
New vehicle retail $ 32,423 $ 31,563 $ 860 2.7%
Used vehicle retail 16,981 16,461 520 3.2
Used vehicle wholesale 7,476 7,893 (417) (5.3)
Average gross profit per
unit
New vehicle retail $ 2,496 $ 2,373 $ 123 5.2%
Used vehicle retail 2,513 2,418 95 3.9
Used vehicle wholesale 91 107 (16) (15.0)
Finance and insurance 1,060 1,014 46 4.5
Revenue mix
New vehicle retail 53.3% 51.6%
Used vehicle retail 25.8 26.8
Used vehicle wholesale 4.5 5.1
Finance and insurance,
net 3.3 3.3
Service, body and parts 11.4 12.7
Fleet and other 1.7 0.5
Other metrics
SG&A as a % of revenue 12.1% 13.2% (110) bps
SG&A as a % of gross
profit 71.6 75.9 (430) bps
Operating profit as a %
of revenue 4.2 3.4 80 bps
Operating profit as a %
of gross profit 25.0 19.7 530 bps
Pretax margin 3.5 2.5 100 bps
Lithia Motors, Inc.
Same Store Operating Highlights (Unaudited)
Three Months Ended
March 31, %
--------------------- Increase Increase
2012 2011 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
New vehicle retail $ 371,503 $ 296,679 $ 74,824 25.2%
Used vehicle retail 182,135 153,907 28,228 18.3
Used vehicle wholesale 31,961 28,735 3,226 11.2
Finance and insurance 23,696 18,463 5,233 28.3
Service, body and parts 75,931 72,525 3,406 4.7
Fleet and Other 9,763 2,910 6,853 235.5
---------- ---------- ----------
Total revenues $ 694,989 $ 573,219 $ 121,770 21.2
Gross profit
New vehicle retail $ 28,364 $ 22,192 $ 6,172 27.8%
Used vehicle retail 27,288 22,310 4,978 22.3
Used vehicle wholesale 380 392 (12) (3.1)
Finance and insurance 23,696 18,463 5,233 28.3
Service, body and parts 35,563 34,137 1,426 4.2
Fleet and Other 208 154 54 35.1
---------- ---------- ----------
Total gross profit $ 115,499 $ 97,648 $ 17,851 18.3
Unit sales
New vehicle retail 11,631 9,391 2,240 23.9%
Used vehicle retail 10,806 9,350 1,456 15.6
Used vehicle wholesale 4,312 3,671 641 17.5
Total units sold 26,749 22,412 4,337 19.4
Average selling price
New vehicle retail $ 31,941 $ 31,592 $ 349 1.1%
Used vehicle retail 16,855 16,461 394 2.4
Used vehicle wholesale 7,412 7,828 (416) (5.3)
Average gross profit per unit
New vehicle retail $ 2,439 $ 2,363 $ 76 3.2%
Used vehicle retail 2,525 2,386 139 5.8
Used vehicle wholesale 88 107 (19) (17.8)
Finance and insurance 1,056 985 71 7.2
Lithia Motors, Inc.
Non-GAAP Performance Metrics (Unaudited)
Three Months Ended
March 31,
---------------------- Increase
2012 2011 (Decrease)
---------- ---------- ----------
Adjusted other metrics
SG&A as a % of revenue 12.2% 13.2% (100) bps
SG&A as a % of gross profit 72.2 75.9 (370) bps
Operating profit as a % of revenue 4.1 3.5 60 bps
Operating profit as a % of gross profit 24.5 20.1 440 bps
Pretax margin 3.4 2.5 90 bps
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of
March 31, December 31, March 31,
------------ ------------ ------------
2012 2011 2011
------------ ------------ ------------
Days Supply(1)
New vehicle inventory 61 62 60
Used vehicle inventory 48 52 47
(1) Days supply calculated based on current inventory levels, excluding in-
transit vehicles, and a 30-day historical cost of sales level.
Financial covenants
Requirement As of March 31, 2012
-------------------------- --------------------
Current ratio Not less than 1.20 to 1 1.40 to 1
Fixed charge coverage ratio Not less than 1.20 to 1 1.74 to 1
Liabilities to tangible net
worth ratio Not more than 4.00 to 1 2.71 to 1
Funded debt restriction Not more than $310 million $205.9 million
Lithia Motors, Inc.
Revenue Mix (Unaudited)
Three Months Ended
March 31,
--------------------------
2012 2011
------------ ------------
New vehicle unit sales brand mix
Chrysler 32.2% 28.8%
General Motors 14.3 16.4
Toyota 12.6 14.5
Subaru 7.4 6.0
BMW, Mini 6.8 4.8
Honda, Acura 6.4 8.1
Ford 5.6 5.8
Hyundai 4.8 6.1
Nissan 3.2 4.4
Mercedes 2.6 0.9
Volkswagen, Audi 2.0 2.2
Kia 1.2 1.2
Mazda 0.6 0.5
Other 0.3 0.3
Three Months Ended
March 31,
--------------------------
2012 2011
------------ ------------
Revenue geographic mix
Texas 24.4% 24.9%
Oregon 21.6 16.6
California 10.3 10.5
Washington 9.0 10.7
Alaska 8.6 9.0
Montana 8.4 8.3
Idaho 5.3 6.6
Nevada 4.9 4.9
Iowa 4.5 5.4
North Dakota 2.0 2.1
New Mexico 1.0 1.0
As of April 25, 2012
--------------------------
Current store count mix # of stores % of total
------------ ------------
Chrysler 22 26.5%
General Motors 12 14.5
Honda, Acura 9 10.9
Toyota 8 9.6
BMW, MINI 7 8.5
Hyundai 6 7.2
Ford 5 6.0
Nissan 3 3.6
Mercedes 3 3.6
Subaru 3 3.6
Kia 2 2.4
Other 2 2.4
Volkswagen, Audi 1 1.2
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands except per share data)
March 31, 2012 December 31, 2011
----------------- -----------------
Cash and cash equivalents $ 8,965 $ 20,851
Trade receivables, net 111,040 99,407
Inventories, net 559,216 506,484
Deferred income taxes 4,427 4,730
Other current assets 10,618 16,719
----------------- -----------------
Total current assets $ 694,266 $ 648,191
Property and equipment, net 379,351 373,779
Goodwill 18,727 18,958
Franchise value 59,095 59,095
Deferred income taxes 30,536 29,270
Other non-current assets 16,752 16,840
----------------- -----------------
Total assets $ 1,198,727 1,146,133
================= =================
Floor plan notes payable $ 372,717 $ 343,940
Current maturities of long-term debt 22,982 8,221
Trade payables 34,934 31,712
Accrued liabilities 77,874 72,711
----------------- -----------------
Total current liabilities $ 508,507 456,584
Long-term debt 262,934 278,653
Deferred revenue 26,820 25,146
Other long-term liabilities 18,787 18,629
----------------- -----------------
Total liabilities $ 817,048 $ 779,012
----------------- -----------------
Class A common stock 278,970 279,366
Class B common stock 449 468
Additional paid-in capital 10,483 10,918
Accumulated other comprehensive loss (4,082) (4,508)
Retained earnings 95,859 80,877
----------------- -----------------
Total liabilities & stockholders'
equity $ 1,198,727 $ 1,146,133
================= =================
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Three Months Ended
March 31,
--------------------
2012 2011
--------- ---------
Net income $ 16,796 $ 8,705
Adjustments to reconcile net income to net cash used
in operating activities:
Asset impairments 115 382
Depreciation and amortization 4,199 4,092
Depreciation and amortization within discontinued
operations - 101
Stock-based compensation 576 491
Gain on disposal of assets (988) 105
Deferred income taxes (870) (394)
Excess tax benefit from share-based payment
arrangements (749) (21)
(Increase) decrease:
Trade receivables, net (11,633) (4,648)
Inventories (62,113) (41,769)
Other current assets 5,292 (888)
Other non-current assets 2,778 (412)
Increase (decrease):
Floor plan notes payable (3,324) 9,905
Trade payables 1,549 3,296
Accrued liabilities 5,105 9,683
Other long-term liabilities and deferred revenue 2,280 132
--------- ---------
Net cash used in operating activities $ (40,987) $ (11,240)
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
Three Months Ended
March 31,
--------------------
Net cash provided by (used in) operating activities 2012 2011
--------- ---------
As reported $ (40,987) $ (11,240)
Floor plan notes payable, non-trade 39,401 39,262
--------- ---------
Adjusted $ (1,586) $ 28,022
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended March 31, 2012
-----------------------------------------------------
Asset
impairment
and
As disposal Equity Tax
reported gain investment attribute Adjusted
-------- ---------- ---------- --------- --------
Other asset
impairments $ 115 $ (115) $ - $ - $ -
Selling, general and
administrative 91,590 739 - - 92,329
Income from
operations 31,967 (624) - - 31,343
Other income, net 499 - (244) - 255
Income from
continuing
operations before
income taxes $ 26,769 $ (624) $ (244) $ - $ 25,901
Income tax expense (9,973) 244 95 (494) (10,128)
-------- ---------- ---------- --------- --------
Net income from
continuing
operations $ 16,796 $ (380) $ (149) $ (494) $ 15,773
======== ========== ========== ========= ========
Diluted earnings per
share from
continuing
operations $ 0.63 $ (0.01) $ (0.01) $ (0.01) $ 0.60
Diluted share count 26,478
Three Months Ended March 31, 2011
-------------------------------------------
Stock
based comp
As Asset tax
reported impairment shortfall Adjusted
-------- ---------- ---------- ---------
Other asset
impairments $ 382 $ (382) $ - $ -
Income from
operations 19,988 382 - 20,370
Income from
continuing
operations before
income taxes $ 14,311 $ 382 $ - $ 14,693
Income tax expense (5,923) (153) 186 (5,890)
-------- ---------- ---------- ---------
Net income from
continuing
operations $ 8,388 $ 229 $ 186 $ 8,803
======== ========== ========== =========
Diluted earnings per
share from
continuing
operations $ 0.31 $ 0.01 $ 0.01 $ 0.33
Diluted share count 26,694
John North
541-618-5748
jnorth@lithia.com