Lithia Motors Reports EPS of $0.90 for Third Quarter 2012; Provides Guidance for 2013 EPS of $3.11 to $3.21; Lithia Motors Declares $0.10 per Share Dividend for Third Quarter 2012
MEDFORD, OR — Lithia Motors, Inc. (NYSE: LAD) today reported 2012 third quarter income from continuing operations of $23.3 million, or $0.90 per diluted share. This compares to a 2011 third quarter income from continuing operations of $16.3 million, or $0.61 per diluted share, an increase of 48%.
Third quarter 2012 revenue from continuing operations increased $173.2 million, or 24%, to $888.4 million from $715.2 million in the third quarter of 2011.
Third Quarter Year-over-Year Operating Highlights:
- New vehicle same store sales increased 30%
- Used vehicle retail same store sales increased 24%
- Service, body and parts same store sales increased 6%
- SG&A expense as a percentage of gross profit was 66.8%, a reduction of 340 basis points, and the lowest quarterly percentage in company history
- Earnings per share (EPS) increased 48% to $0.90
“Our stores delivered solid results in the third quarter,” said Bryan DeBoer, President and CEO. “We generated the highest quarterly EPS in our history while driving SG&A expense as a percentage of gross profit to an all-time low. We continue our focus on improving vehicle sales volumes, service revenues and customer satisfaction. Our team challenges each other every day to increase performance throughout the organization, and remains vigilant to identify areas of opportunity.”
For the first nine months of 2012, revenue from continuing operations increased 27% to $2.5 billion from $2.0 billion in 2011. Same store new vehicle sales increased 30%, used vehicle retail same store sales increased 21% and service, body and parts same store sales increased 6%. For the first nine months of 2012, adjusted net income from continuing operations was $2.24 per share compared to $1.48 per share in the first nine months of 2011. Unadjusted, for the first nine months of 2012, net income from continuing operations was $2.30 per diluted share, compared to $1.47 per diluted share for the first nine months of 2011.
Sid DeBoer, Founder and Executive Chairman, commented, “New vehicle sales volumes in the United States continue to recover. New safety and technology features, improved fuel economy and improving consumer credit markets, coupled with an aging fleet of vehicles, are all tailwinds for increasing sales levels through the remainder of 2012 and in 2013. Our new leadership team and a revitalized group of store managers is poised to continue this growth.”
Recent Developments
On August 27, 2012, we purchased Connell Chevrolet in Killeen, Texas, with estimated annual revenues of $60 million. Our earnings guidance has been updated to reflect the impact of this transaction.
“We are excited to add this new store in Texas, which fits our core strategy of seeking exclusive franchises in our markets, and welcome our new employees to the family,” said Bryan DeBoer.
Balance Sheet Update
We ended the third quarter with $20 million in cash and $29 million in available credit on our credit facilities. We also have the ability to expand the existing credit facilities by $150 million to $800 million in total, subject to lender approval. Additionally, approximately $115 million of operating real estate is currently unfinanced, which could provide an additional $86 million in available liquidity.
During the third quarter, we strategically retired approximately $5 million in mortgages, and refinanced approximately $16 million of mortgages to extend the maturity dates. As a result, we have no mortgage maturities until 2016.
Chris Holzshu, SVP and CFO said, “We’ve taken actions throughout the third quarter to strengthen our balance sheet and improve our capital position. As of the end of the quarter, we have fixed the interest rates on approximately 60% of our outstanding mortgages. This year we have retired approximately $35 million in mortgage debt, and reduced our overall average mortgage interest rate by 180 basis points while significantly extending maturity dates. We remain well-positioned to use free cash flow and available liquidity for acquisitions and internal investments that meet our strict return metrics.”
Dividend Payment
Our Board of Directors approved a dividend of $0.10 per share for the third quarter 2012. We will pay the dividend on November 23, 2012 to shareholders of record on November 9, 2012.
Updated Outlook for 2012
We project 2012 fourth quarter earnings of $0.64 to $0.66 per diluted share. Full-year 2012 earnings are projected between $2.88 to $2.90 per diluted share. Both projections are based on the following annual assumptions:
- Total revenues of $3.2 to $3.3 billion
- New vehicle same store sales increasing 27%
- New vehicle gross margin of 7.1% to 7.3%
- Used vehicle same store sales increasing 20%
- Used vehicle gross margin of 14.3% to 14.5%
- Service body and parts same store sales increasing 5.6%
- Service body and parts gross margin of 48.1% to 48.3%
- Finance and insurance gross profit of $1,050 per unit
- Tax rate of 40%
- Average diluted shares outstanding of 26.1 million
- Capital expenditures of $67 million
- Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items
Outlook for 2013
We project 2013 first quarter earnings of $0.65 to $0.67 per diluted share and full-year 2013 earnings of $3.11 to $3.21 per diluted share. Both projections are based on the following annual assumptions:
- Total revenues of $3.5 to $3.6 billion
- New vehicle same store sales increasing 10.6%
- New vehicle gross margin of 7.1% to 7.3%
- Used vehicle same store sales increasing 7.7%
- Used vehicle gross margin of 14.3% to 14.5%
- Service body and parts same store sales increasing 4.8%
- Service body and parts gross margin of 48.0% to 48.2%
- Finance and insurance gross profit of $1,050 per unit
- Tax rate of 40%
- Average diluted shares outstanding of 26.4 million
- Capital expenditures of $25 million
- Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items
Third Quarter Earnings Conference Call and Updated Presentation
The third quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the third 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 on October 24, 2012 through November 7, 2012 by calling 877-660-6853 (Conference ID: 401506).
About Lithia
Lithia Motors, Inc. is the ninth largest automotive retailer in the United States. Lithia sells 29 brands of new vehicles and all brands of used vehicles at 87 stores 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.
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, that management believes are a benefit to shareholders. 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.” The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include without limitation, future economic conditions and others set forth from time to time in our 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 non-GAAP financial measures 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. We present cash flows from operations in the attached tables, 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, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe each of the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations 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 | % | |||||||||||||||
| September 30, | Increase | Increase | ||||||||||||||
| 2012 | 2011 | (Decrease) | (Decrease) | |||||||||||||
| Revenues: | ||||||||||||||||
| New vehicle retail | $ | 496,365 | $ | 377,860 | $ | 118,505 | 31.4 | % | ||||||||
| Used vehicle retail | 230,278 | 184,632 | 45,646 | 24.7 | ||||||||||||
| Used vehicle wholesale | 35,419 | 35,597 | (178 | ) | (0.5 | ) | ||||||||||
| Finance and insurance | 31,088 | 22,423 | 8,665 | 38.6 | ||||||||||||
| Service, body and parts | 90,626 | 84,592 | 6,034 | 7.1 | ||||||||||||
| Fleet and other | 4,597 | 10,111 | (5,514 | ) | (54.5 | ) | ||||||||||
| Total revenues | 888,373 | 715,215 | 173,158 | 24.2 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| New vehicle retail | 460,754 | 348,495 | 112,259 | 32.2 | ||||||||||||
| Used vehicle retail | 196,735 | 157,902 | 38,833 | 24.6 | ||||||||||||
| Used vehicle wholesale | 35,446 | 35,663 | (217 | ) | (0.6 | ) | ||||||||||
| Service, body and parts | 46,866 | 43,478 | 3,388 | 7.8 | ||||||||||||
| Fleet and other | 4,348 | 9,442 | (5,094 | ) | (54.0 | ) | ||||||||||
| Total cost of sales | 744,149 | 594,980 | 149,169 | 25.1 | ||||||||||||
| Gross profit | 144,224 | 120,235 | 23,989 | 20.0 | ||||||||||||
| SG&A expense | 96,380 | 84,360 | 12,020 | 14.2 | ||||||||||||
| Depreciation and amortization | 4,381 | 4,129 | 252 | 6.1 | ||||||||||||
| Income from operations | 43,463 | 31,746 | 11,717 | 36.9 | ||||||||||||
| Floor plan interest expense | (3,397 | ) | (1,977 | ) | 1,420 | 71.8 | ||||||||||
| Other interest expense | (2,131 | ) | (3,067 | ) | (936 | ) | (30.5 | ) | ||||||||
| Other income, net | 452 | 213 | 239 | 112.2 | ||||||||||||
| Income from continuing operations before income taxes | 38,387 | 26,915 | 11,472 | 42.6 | ||||||||||||
| Income tax expense | (15,048 | ) | (10,594 | ) | 4,454 | 42.0 | ||||||||||
| Income tax rate | 39.2 | % | 39.4 | % | ||||||||||||
| Income from continuing operations | $ | 23,339 | $ | 16,321 | $ | 7,018 | 43.0 | % | ||||||||
| Income (loss) from discontinued operations | (96 | ) | 242 | (338 | ) | NM | ||||||||||
| Net income | $ | 23,243 | $ | 16,563 | $ | 6,680 | 40.3 | % | ||||||||
| Diluted net income per share: | ||||||||||||||||
| Continuing operations | $ | 0.90 | $ | 0.61 | $ | 0.29 | 47.5 | % | ||||||||
| Discontinued operations | – | 0.01 | (0.01 | ) | NM | |||||||||||
| Net income per share | $ | 0.90 | $ | 0.62 | $ | 0.28 | 45.2 | % | ||||||||
| Diluted shares outstanding | 25,947 | 26,654 | (707 | ) | (2.7 | )% | ||||||||||
NM – not meaningful
| Lithia Motors, Inc. | |||||||||||||||
| Key Performance Metrics (Unaudited) | |||||||||||||||
| Three months ended | % | ||||||||||||||
| September 30, | Increase | Increase | |||||||||||||
| 2012 | 2011 | (Decrease) | (Decrease) | ||||||||||||
| Gross margin | |||||||||||||||
| New vehicle retail | 7.2 | % | 7.8 | % | (60) bps | ||||||||||
| Used vehicle retail | 14.6 | 14.5 | 10 bps | ||||||||||||
| Used vehicle wholesale | (0.1 | ) | (0.2 | ) | 10 bps | ||||||||||
| Finance and insurance | 100.0 | 100.0 | – bps | ||||||||||||
| Service, body and parts | 48.3 | 48.6 | (30) bps | ||||||||||||
| Fleet and Other | 5.4 | 6.6 | (120) bps | ||||||||||||
| Gross profit margin | 16.2 | 16.8 | (60) bps | ||||||||||||
| Unit sales | |||||||||||||||
| New vehicle retail | 14,923 | 11,262 | 3,661 | 32.5 | % | ||||||||||
| Used vehicle retail | 13,320 | 10,567 | 2,753 | 26.1 | |||||||||||
| Used vehicle wholesale | 5,173 | 4,452 | 721 | 16.2 | |||||||||||
| Total units sold | 33,416 | 26,281 | 7,135 | 27.1 | |||||||||||
| Average selling price | |||||||||||||||
| New vehicle retail | $ | 33,262 | $ | 33,552 | $ | (290 | ) | (0.9) | % | ||||||
| Used vehicle retail | 17,288 | 17,473 | (185 | ) | (1.1 | ) | |||||||||
| Used vehicle wholesale | 6,847 | 7,996 | (1,149 | ) | (14.4 | ) | |||||||||
| Average gross profit per unit | |||||||||||||||
| New vehicle retail | $ | 2,386 | $ | 2,607 | $ | (221 | ) | (8.5) | % | ||||||
| Used vehicle retail | 2,518 | 2,530 | (12 | ) | (0.5 | ) | |||||||||
| Used vehicle wholesale | (5 | ) | (15 | ) | 10 | 66.7 | |||||||||
| Finance and insurance | 1,101 | 1,027 | 74 | 7.2 | |||||||||||
| Revenue mix | |||||||||||||||
| New vehicle retail | 55.9 | % | 52.8 | % | |||||||||||
| Used vehicle retail | 25.9 | 25.8 | |||||||||||||
| Used vehicle wholesale | 4.0 | 5.1 | |||||||||||||
| Finance and insurance, net | 3.5 | 3.1 | |||||||||||||
| Service, body and parts | 10.2 | 11.8 | |||||||||||||
| Fleet and other | 0.5 | 1.4 | |||||||||||||
| Three months ended September 30, |
|||||||||||||||
| Other metrics | 2012 | 2011 | |||||||||||||
| SG&A as a % of revenue | 10.8 | % | 11.8 | % | |||||||||||
| SG&A as a % of gross profit | 66.8 | 70.2 | |||||||||||||
| Operating profit as a % of revenue | 4.9 | 4.4 | |||||||||||||
| Operating profit as a % of gross profit | 30.1 | 26.4 | |||||||||||||
| Pretax margin | 4.3 | 3.8 | |||||||||||||
| Net profit margin | 2.6 | 2.3 | |||||||||||||
| Lithia Motors, Inc. | ||||||||||||||
| Same Store Operating Highlights (Unaudited) | ||||||||||||||
| Three months ended | % | |||||||||||||
| September 30, | Increase | Increase | ||||||||||||
| 2012 | 2011 | (Decrease) | (Decrease) | |||||||||||
| Revenues | ||||||||||||||
| New vehicle retail | $ | 484,527 | $ | 372,858 | $ | 111,669 | 29.9 | % | ||||||
| Used vehicle retail | 223,890 | 180,691 | 43,199 | 23.9 | ||||||||||
| Used vehicle wholesale | 34,566 | 34,269 | 297 | 0.9 | ||||||||||
| Finance and insurance | 29,430 | 21,585 | 7,845 | 36.3 | ||||||||||
| Service, body and parts | 88,442 | 83,330 | 5,112 | 6.1 | ||||||||||
| Fleet and Other | 4,375 | 9,971 | (5,596 | ) | (56.1 | ) | ||||||||
| Total revenues | $ | 865,230 | $ | 702,704 | $ | 162,526 | 23.1 | |||||||
| Gross profit | ||||||||||||||
| New vehicle retail | $ | 34,851 | $ | 28,846 | $ | 6,005 | 20.8 | % | ||||||
| Used vehicle retail | 32,721 | 26,377 | 6,344 | 24.1 | ||||||||||
| Used vehicle wholesale | 9 | (57 | ) | 66 | NM | |||||||||
| Finance and insurance | 29,430 | 21,585 | 7,845 | 36.3 | ||||||||||
| Service, body and parts | 41,676 | 39,798 | 1,878 | 4.7 | ||||||||||
| Fleet and Other | 97 | 141 | (44 | ) | (31.2 | ) | ||||||||
| Total gross profit | $ | 138,784 | $ | 116,690 | $ | 22,094 | 18.9 | |||||||
| Unit sales | ||||||||||||||
| New vehicle retail | 14,528 | 11,106 | 3,422 | 30.8 | % | |||||||||
| Used vehicle retail | 12,926 | 10,345 | 2,581 | 24.9 | ||||||||||
| Used vehicle wholesale | 5,054 | 4,329 | 725 | 16.7 | ||||||||||
| Total units sold | 32,508 | 25,780 | 6,728 | 26.1 | ||||||||||
| Average selling price | ||||||||||||||
| New vehicle retail | $ | 33,351 | $ | 33,573 | $ | (222 | ) | (0.7) | % | |||||
| Used vehicle retail | 17,321 | 17,467 | (146 | ) | (0.8 | ) | ||||||||
| Used vehicle wholesale | 6,839 | 7,916 | (1,077 | ) | (13.6 | ) | ||||||||
| Average gross profit per unit | ||||||||||||||
| New vehicle retail | $ | 2,399 | $ | 2,597 | $ | (198 | ) | (7.6) | % | |||||
| Used vehicle retail | 2,531 | 2,550 | (19 | ) | (0.7 | ) | ||||||||
| Used vehicle wholesale | 2 | (13 | ) | 15 | NM | |||||||||
| Finance and insurance | 1,072 | 1,006 | 66 | 6.6 | ||||||||||
NM – not meaningful
| Lithia Motors, Inc. | ||||||||||||||||
| Consolidated Statements of Operations (Unaudited) | ||||||||||||||||
| (In thousands except per share data) | ||||||||||||||||
| Nine months ended | % | |||||||||||||||
| September 30, | Increase | Increase | ||||||||||||||
| 2012 | 2011 | (Decrease) | (Decrease) | |||||||||||||
| Revenues: | ||||||||||||||||
| New vehicle retail | $ | 1,355,463 | $ | 1,015,872 | $ | 339,591 | 33.4 | % | ||||||||
| Used vehicle retail | 632,361 | 512,006 | 120,355 | 23.5 | ||||||||||||
| Used vehicle wholesale | 104,663 | 93,800 | 10,863 | 11.6 | ||||||||||||
| Finance and insurance | 83,440 | 61,915 | 21,525 | 34.8 | ||||||||||||
| Service, body and parts | 262,589 | 236,216 | 26,373 | 11.2 | ||||||||||||
| Fleet and other | 28,971 | 30,408 | (1,437 | ) | (4.7 | ) | ||||||||||
| Total revenues | 2,467,487 | 1,950,217 | 517,270 | 26.5 | ||||||||||||
| Cost of sales: | ||||||||||||||||
| New vehicle retail | 1,255,024 | 936,762 | 318,262 | 34.0 | ||||||||||||
| Used vehicle retail | 539,121 | 436,196 | 102,925 | 23.6 | ||||||||||||
| Used vehicle wholesale | 103,998 | 93,204 | 10,794 | 11.6 | ||||||||||||
| Service, body and parts | 135,545 | 121,173 | 14,372 | 11.9 | ||||||||||||
| Fleet and other | 27,933 | 27,927 | 6 | 0.0 | ||||||||||||
| Total cost of sales | 2,061,621 | 1,615,262 | 446,359 | 27.6 | ||||||||||||
| Gross profit | 405,866 | 334,955 | 70,911 | 21.2 | ||||||||||||
| Asset impairments | 115 | 872 | (757 | ) | (86.8 | ) | ||||||||||
| SG&A expense | 280,292 | 240,537 | 39,755 | 16.5 | ||||||||||||
| Depreciation and amortization | 12,777 | 12,372 | 405 | 3.3 | ||||||||||||
| Income from operations | 112,682 | 81,174 | 31,508 | 38.8 | ||||||||||||
| Floor plan interest expense | (9,402 | ) | (7,723 | ) | 1,679 | 21.7 | ||||||||||
| Other interest expense | (7,398 | ) | (9,353 | ) | (1,955 | ) | (20.9 | ) | ||||||||
| Other income, net | 1,771 | 462 | 1,309 | 283.3 | ||||||||||||
| Income from continuing operations before income taxes | 97,653 | 64,560 | 33,093 | 51.3 | ||||||||||||
| Income tax expense | (37,287 | ) | (25,244 | ) | 12,043 | 47.7 | ||||||||||
| Income tax rate | 38.2 | % | 39.1 | % | ||||||||||||
| Income from continuing operations | $ | 60,366 | $ | 39,316 | $ | 21,050 | 53.5 | % | ||||||||
| Income from discontinued operations | 164 | 778 | (614 | ) | (78.9 | ) | ||||||||||
| Net income | $ | 60,530 | $ | 40,094 | $ | 20,436 | 51.0 | % | ||||||||
| Diluted net income per share: | ||||||||||||||||
| Continuing operations | $ | 2.30 | $ | 1.47 | $ | 0.83 | 56.5 | % | ||||||||
| Discontinued operations | 0.01 | 0.03 | (0.02 | ) | (66.7 | ) | ||||||||||
| Net income per share | $ | 2.31 | $ | 1.50 | $ | 0.81 | 54.0 | % | ||||||||
| Diluted shares outstanding | 26,203 | 26,738 | (535 | ) | (2.0) | % | ||||||||||
| Lithia Motors, Inc. | |||||||||||||||
| Key Performance Metrics (Unaudited) | |||||||||||||||
| Nine months ended | % | ||||||||||||||
| September 30, | Increase | Increase | |||||||||||||
| 2012 | 2011 | (Decrease) | (Decrease) | ||||||||||||
| Gross margin | |||||||||||||||
| New vehicle retail | 7.4 | % | 7.8 | % | (40) bps | ||||||||||
| Used vehicle retail | 14.7 | 14.8 | (10) bps | ||||||||||||
| Used vehicle wholesale | 0.6 | 0.6 | – bps | ||||||||||||
| Finance and insurance | 100.0 | 100.0 | – bps | ||||||||||||
| Service, body and parts | 48.4 | 48.7 | (30) bps | ||||||||||||
| Fleet and Other | 3.6 | 8.2 | (460) bps | ||||||||||||
| Gross profit margin | 16.4 | 17.2 | (80) bps | ||||||||||||
| Unit sales | |||||||||||||||
| New vehicle retail | 41,217 | 31,097 | 10,120 | 32.5 | % | ||||||||||
| Used vehicle retail | 36,286 | 29,750 | 6,536 | 22.0 | |||||||||||
| Used vehicle wholesale | 14,206 | 11,834 | 2,372 | 20.0 | |||||||||||
| Total units sold | 91,709 | 72,681 | 19,028 | 26.2 | |||||||||||
| Average selling price | |||||||||||||||
| New vehicle retail | $ | 32,886 | $ | 32,668 | $ | 218 | 0.7 | % | |||||||
| Used vehicle retail | 17,427 | 17,210 | 217 | 1.3 | |||||||||||
| Used vehicle wholesale | 7,368 | 7,926 | (558 | ) | (7.0 | ) | |||||||||
| Average gross profit per unit | |||||||||||||||
| New vehicle retail | $ | 2,437 | $ | 2,544 | $ | (107 | ) | (4.2) | % | ||||||
| Used vehicle retail | 2,570 | 2,548 | 22 | 0.9 | |||||||||||
| Used vehicle wholesale | 47 | 50 | (3 | ) | (6.0 | ) | |||||||||
| Finance and insurance | 1,077 | 1,018 | 59 | 5.8 | |||||||||||
| Revenue mix | |||||||||||||||
| New vehicle retail | 54.9 | % | 52.1 | % | |||||||||||
| Used vehicle retail | 25.6 | 26.3 | |||||||||||||
| Used vehicle wholesale | 4.3 | 4.7 | |||||||||||||
| Finance and insurance, net | 3.4 | 3.2 | |||||||||||||
| Service, body and parts | 10.6 | 12.1 | |||||||||||||
| Fleet and other | 1.2 | 1.6 | |||||||||||||
| Adjusted | As reported | ||||||||||||||
| Nine months ended September 30, |
Nine months ended September 30, |
||||||||||||||
| Other metrics | 2012 | 2011 | 2012 | 2011 | |||||||||||
| SG&A as a % of revenue | 11.4 | % | 12.4 | % | 11.4 | % | 12.3 | % | |||||||
| SG&A as a % of gross profit | 69.2 | 72.0 | 69.1 | 71.8 | |||||||||||
| Operating profit as a % of revenue | 4.5 | 4.2 | 4.6 | 4.2 | |||||||||||
| Operating profit as a % of gross profit | 27.6 | 24.3 | 27.8 | 24.2 | |||||||||||
| Pretax margin | 3.9 | 3.3 | 4.0 | 3.3 | |||||||||||
| Net profit margin | 2.4 | 2.0 | 2.4 | 2.0 | |||||||||||
| Lithia Motors, Inc. | |||||||||||||
| Same Store Operating Highlights (Unaudited) | |||||||||||||
| Nine months ended | % | ||||||||||||
| September 30, | Increase | Increase | |||||||||||
| 2012 | 2011 | (Decrease) | (Decrease) | ||||||||||
| Revenues | |||||||||||||
| New vehicle retail | $ | 1,294,861 | $ | 998,609 | $ | 296,252 | 29.7 | % | |||||
| Used vehicle retail | 606,556 | 500,671 | 105,885 | 21.1 | |||||||||
| Used vehicle wholesale | 100,180 | 90,726 | 9,454 | 10.4 | |||||||||
| Finance and insurance | 79,316 | 59,519 | 19,797 | 33.3 | |||||||||
| Service, body and parts | 245,315 | 231,378 | 13,937 | 6.0 | |||||||||
| Fleet and Other | 23,751 | 29,887 | (6,136 | ) | (20.5 | ) | |||||||
| Total revenues | $ | 2,349,979 | $ | 1,910,790 | $ | 439,189 | 23.0 | ||||||
| Gross profit | |||||||||||||
| New vehicle retail | $ | 95,662 | $ | 77,503 | $ | 18,159 | 23.4 | % | |||||
| Used vehicle retail | 89,951 | 74,101 | 15,850 | 21.4 | |||||||||
| Used vehicle wholesale | 649 | 587 | 62 | 10.6 | |||||||||
| Finance and insurance | 79,316 | 59,519 | 19,797 | 33.3 | |||||||||
| Service, body and parts | 115,803 | 110,188 | 5,615 | 5.1 | |||||||||
| Fleet and Other | 501 | 1,087 | (586 | ) | (54.0 | ) | |||||||
| Total gross profit | $ | 381,882 | $ | 322,985 | $ | 58,897 | 18.2 | ||||||
| Unit sales | |||||||||||||
| New vehicle retail | 39,517 | 30,568 | 8,949 | 29.3 | % | ||||||||
| Used vehicle retail | 34,864 | 29,134 | 5,730 | 19.7 | |||||||||
| Used vehicle wholesale | 13,682 | 11,556 | 2,126 | 18.4 | |||||||||
| Total units sold | 88,063 | 71,258 | 16,805 | 23.6 | |||||||||
| Average selling price | |||||||||||||
| New vehicle retail | $ | 32,767 | $ | 32,668 | $ | 99 | 0.3 | % | |||||
| Used vehicle retail | 17,398 | 17,185 | 213 | 1.2 | |||||||||
| Used vehicle wholesale | 7,322 | 7,851 | (529 | ) | (6.7 | ) | |||||||
| Average gross profit per unit | |||||||||||||
| New vehicle retail | $ | 2,421 | $ | 2,535 | $ | (114 | ) | (4.5) | % | ||||
| Used vehicle retail | 2,580 | 2,543 | 37 | 1.5 | |||||||||
| Used vehicle wholesale | 47 | 51 | (4 | ) | (7.8 | ) | |||||||
| Finance and insurance | 1,066 | 997 | 69 | 6.9 | |||||||||
| Lithia Motors, Inc. | ||||||
| Other Highlights (Unaudited) | ||||||
| As of | ||||||
| September 30, | December 31, | September 30, | ||||
| 2012 | 2011 | 2011 | ||||
| Days Supply(1) | ||||||
| New vehicle inventory | 75 | 62 | 66 | |||
| Used vehicle inventory | 50 | 52 | 53 | |||
| (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 September 30, 2012 | |||
| Current ratio | Not less than 1.20 to 1 | 1.35 to 1 | ||
| Fixed charge coverage ratio | Not less than 1.20 to 1 | 1.95 to 1 | ||
| Leverage ratio | Not more than 5.00 to 1 | 2.11 to 1 | ||
| Funded debt restriction | Not more than $375 million | $173.4 million | ||
| Lithia Motors, Inc. | ||||||||||||
| Other Highlights (Unaudited) | ||||||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| New vehicle unit sales brand mix | ||||||||||||
| Chrysler | 32.5 | % | 34.3 | % | 32.1 | % | 31.3 | % | ||||
| General Motors | 15.1 | 16.7 | 15.3 | 16.9 | ||||||||
| Toyota | 14.2 | 10.9 | 13.6 | 12.3 | ||||||||
| Subaru | 6.7 | 4.8 | 7.0 | 5.2 | ||||||||
| Honda, Acura | 6.8 | 5.6 | 6.9 | 7.2 | ||||||||
| BMW, Mini | 6.3 | 6.9 | 6.6 | 6.5 | ||||||||
| Ford | 5.2 | 6.1 | 5.3 | 6.1 | ||||||||
| Hyundai | 3.7 | 4.4 | 3.8 | 4.5 | ||||||||
| Nissan | 2.9 | 3.5 | 2.9 | 3.8 | ||||||||
| Mercedes | 2.7 | 2.2 | 2.6 | 1.8 | ||||||||
| Volkswagen, Audi | 2.4 | 2.4 | 2.1 | 2.4 | ||||||||
| Kia | 0.8 | 1.4 | 0.9 | 1.3 | ||||||||
| Other | 0.7 | 0.8 | 0.9 | 0.7 | ||||||||
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| Revenue geographic mix | ||||||||||||
| Texas | 23.7 | % | 23.9 | % | 24.4 | % | 24.4 | % | ||||
| Oregon | 20.7 | 20.6 | 20.8 | 19.6 | ||||||||
| California | 9.7 | 9.8 | 10.1 | 9.9 | ||||||||
| Washington | 9.9 | 9.2 | 9.5 | 9.6 | ||||||||
| Montana | 9.0 | 8.6 | 8.7 | 8.3 | ||||||||
| Alaska | 8.2 | 9.6 | 8.4 | 9.4 | ||||||||
| Idaho | 5.2 | 5.8 | 5.2 | 5.9 | ||||||||
| Iowa | 5.1 | 5.0 | 4.8 | 5.2 | ||||||||
| Nevada | 4.5 | 4.1 | 4.6 | 4.4 | ||||||||
| North Dakota | 2.3 | 2.2 | 2.2 | 2.1 | ||||||||
| New Mexico | 1.7 | 1.2 | 1.3 | 1.2 | ||||||||
| As of October 26, 2012 | ||||||||||||
| Current store count mix | # of stores | % of total | ||||||||||
| Chrysler | 23 | 26.4 | % | |||||||||
| General Motors | 14 | 16.1 | ||||||||||
| Honda, Acura | 9 | 10.3 | ||||||||||
| Toyota | 8 | 9.2 | ||||||||||
| BMW, MINI | 7 | 8.0 | ||||||||||
| Hyundai | 6 | 6.9 | ||||||||||
| Ford | 5 | 5.7 | ||||||||||
| Nissan | 3 | 3.5 | ||||||||||
| Mercedes | 3 | 3.5 | ||||||||||
| Subaru | 3 | 3.5 | ||||||||||
| Other | 3 | 3.5 | ||||||||||
| Kia | 2 | 2.3 | ||||||||||
| Volkswagen, Audi | 1 | 1.1 | ||||||||||
| Lithia Motors, Inc. | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (In thousands except per share data) | ||||||||
| September 30, 2012 | December 31, 2011 | |||||||
| Cash and cash equivalents | $ | 19,757 | $ | 20,851 | ||||
| Trade receivables, net | 128,602 | 99,407 | ||||||
| Inventories, net | 658,694 | 506,484 | ||||||
| Deferred income taxes | 4,532 | 4,730 | ||||||
| Other current assets | 11,240 | 16,719 | ||||||
| Assets held for sale | 14,671 | – | ||||||
| Total current assets | $ | 837,496 | $ | 648,191 | ||||
| Property and equipment, net | 397,754 | 373,779 | ||||||
| Goodwill | 25,838 | 18,958 | ||||||
| Franchise value | 61,972 | 59,095 | ||||||
| Deferred income taxes | 23,005 | 29,270 | ||||||
| Other non-current assets | 20,472 | 16,840 | ||||||
| Total assets | $ | 1,366,537 | 1,146,133 | |||||
| Floor plan notes payable | $ | 14,073 | $ | 114,760 | ||||
| Floor plan notes payable: non trade | 489,935 | 229,180 | ||||||
| Current maturities of long-term debt | 7,810 | 8,221 | ||||||
| Trade payables | 38,973 | 31,712 | ||||||
| Accrued liabilities | 81,635 | 72,711 | ||||||
| Liabilities related to assets held for sale | 10,065 | – | ||||||
| Total current liabilities | $ | 642,491 | 456,584 | |||||
| Long-term debt | 261,419 | 278,653 | ||||||
| Deferred revenue | 31,857 | 25,146 | ||||||
| Other long-term liabilities | 21,286 | 18,629 | ||||||
| Total liabilities | $ | 957,053 | $ | 779,012 | ||||
| Class A common stock | 266,104 | 279,366 | ||||||
| Class B common stock | 362 | 468 | ||||||
| Additional paid-in capital | 11,789 | 10,918 | ||||||
| Accumulated other comprehensive loss | (3,234 | ) | (4,508 | ) | ||||
| Retained earnings | 134,463 | 80,877 | ||||||
| Total liabilities & stockholders’ equity | $ | 1,366,537 | $ | 1,146,133 | ||||
| Lithia Motors, Inc. | |||||||||
| Summarized Cash Flow from Operations (Unaudited) | |||||||||
| (In thousands) | |||||||||
| Nine months Ended | |||||||||
| September 30, | |||||||||
| 2012 | 2011 | ||||||||
| Net income | $ | 60,530 | $ | 40,094 | |||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||
| Asset impairments | 115 | 872 | |||||||
| Depreciation and amortization | 12,777 | 12,372 | |||||||
| Depreciation and amortization within discontinued operations | 96 | 381 | |||||||
| Stock-based compensation | 2,329 | 1,686 | |||||||
| Gain on disposal of assets | (775 | ) | (134 | ) | |||||
| (Gain) loss from disposal activities within discontinued operations | 397 | (116 | ) | ||||||
| Deferred income taxes | 6,851 | 3,325 | |||||||
| Excess tax benefit from share-based payment arrangements | (1,629 | ) | (360 | ) | |||||
| (Increase) decrease: | |||||||||
| Trade receivables, net | (29,160 | ) | (7,177 | ) | |||||
| Inventories | (158,186 | ) | (53,389 | ) | |||||
| Other current assets | 3,169 | (1,078 | ) | ||||||
| Other non-current assets | (4,346 | ) | (4,079 | ) | |||||
| Increase (decrease): | |||||||||
| Floor plan notes payable | (93,975 | ) | (10,637 | ) | |||||
| Trade payables | 5,381 | 3,759 | |||||||
| Accrued liabilities | 10,164 | 9,890 | |||||||
| Other long-term liabilities and deferred revenue | 9,927 | 8,018 | |||||||
| Net cash provided by (used in) operating activities | $ | (176,335 | ) | $ | 3,427 | ||||
| Lithia Motors, Inc. | ||||||||
| Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited) | ||||||||
| (In thousands) | ||||||||
| Nine months Ended | ||||||||
| September 30, | ||||||||
| Net cash provided by (used in) operating activities | 2012 | 2011 | ||||||
| As reported | $ | (176,335 | ) | $ | 3,427 | |||
| Floor plan notes payable, non-trade | 272,760 | 67,402 | ||||||
| Adjusted | $ | 96,425 | $ | 70,829 | ||||
| Lithia Motors, Inc. | ||||||||||||||||||||
| Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) | ||||||||||||||||||||
| (In thousands, except for per share data) | ||||||||||||||||||||
| Nine months Ended September 30, 2012 | ||||||||||||||||||||
| As reported | Asset impairment and disposal gain | Equity investment | Tax attribute | Adjusted | ||||||||||||||||
| Asset impairments | $ | 115 | $ | (115 | ) | $ | – | $ | – | $ | – | |||||||||
| Selling, general and administrative | 280,292 | 739 | – | – | 281,031 | |||||||||||||||
| Income from operations | 112,682 | (624 | ) | – | – | 112,058 | ||||||||||||||
| Other income, net | 1,771 | – | (244 | ) | – | 1,527 | ||||||||||||||
| Income from continuing operations before income taxes | $ | 97,653 | $ | (624 | ) | $ | (244 | ) | $ | – | $ | 96,785 | ||||||||
| Income tax expense | (37,287 | ) | 244 | 95 | (1,072 | ) | (38,020 | ) | ||||||||||||
| Net income from continuing operations | $ | 60,366 | $ | (380 | ) | $ | (149 | ) | $ | (1,072 | ) | $ | 58,765 | |||||||
| Diluted earnings per share from continuing operations | $ | 2.30 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | 2.24 | |||||||
| Diluted share count | 26,203 | |||||||||||||||||||
| Nine months Ended September 30, 2011 | ||||||||||||
| As reported | Asset impairment and disposal gain | Adjusted | ||||||||||
| Asset impairments | $ | 872 | $ | (872 | ) | $ | – | |||||
| Selling, general and administrative | 240,537 | 580 | 241,117 | |||||||||
| Income from operations | 81,174 | 292 | 81,466 | |||||||||
| Income from continuing operations before income taxes | $ | 64,560 | $ | 292 | $ | 64,852 | ||||||
| Income tax expense | (25,244 | ) | (116 | ) | (25,360 | ) | ||||||
| Net income from continuing operations | $ | 39,316 | $ | 176 | $ | 39,492 | ||||||
| Diluted earnings per share from continuing operations | $ | 1.47 | $ | 0.01 | $ | 1.48 | ||||||
| Diluted share count | 26,738 | |||||||||||
