Lithia Motors Reports Adjusted EPS of $1.32 for th
Post# of 617763
MEDFORD, OR--(Marketwired - Oct 30, 2014) - Lithia Motors, Inc. (
2014 third quarter adjusted net income from continuing operations was $34.9 million, or $1.32 per diluted share. This compares to 2013 third quarter adjusted net income from continuing operations of $29.6 million, or $1.13 per diluted share.
Unadjusted net income from continuing operations for the third quarter of 2014 was $34.5 million, or $1.31 per diluted share, compared to $30.9 million or $1.18 per diluted share, for the third quarter of 2013. As shown in the attached non-GAAP reconciliation tables, the 2014 third quarter adjusted results from continuing operations exclude a $0.01 per share expense related to non-core acquisition expenses for the purchase of DCH Auto Group offset by a non-core benefit resulting from a tax attribute. The 2013 third quarter adjusted results from continuing operations exclude a $0.05 per share benefit related to non-core tax attribute.
Third quarter 2014 revenue from continuing operations increased $228 million, or 21%, to $1.3 billion from $1.1 billion for the third quarter of 2013.
Third Quarter-over-Quarter Operating Highlights:
- Total same store sales increased 12%
- New vehicle same store sales increased 11%
- Used vehicle retail same store sales increased 13%
- Service, body and parts same store sales increased 13%
- Same store F&I per unit increased $97 to $1,202
- Adjusted SG&A expense as a percentage of gross profit was 66.1%
"As we previously announced, we had solid results in new vehicle sales, service and parts and F&I per unit in the quarter," said Bryan DeBoer, President and CEO. "Used vehicle revenue showed strong growth but margin compression was a headwind in the quarter. The outlook remains bright for automotive retailing, with exciting product from our manufacturer partners, ample credit availability and opportunities for us to increase earnings through improving store operations and finding synergies with the DCH Auto group. "
For the first nine months of 2014, adjusted net income per diluted share from continuing operations increased 22% to $3.69 from $3.02 for the first nine months of 2013. Unadjusted net income from continuing operations was $3.58 per diluted share for the first nine months of 2014, compared to $2.98 per diluted share for the first nine months of 2013.
Chris Holzshu, SVP and CFO, said, "For the second quarter in a row, our same store F&I per unit was above $1,200, and was $97 per unit above the third quarter of last year. Our adjusted SG&A as a percentage of gross profit was 66.1% for the third quarter of 2014, slightly higher than last year's result and among the best in the industry. Our incremental throughput, or the percentage of incremental gross profit remaining after deducting incremental SG&A expense, was 38% on a same store basis in the third quarter of 2014, and was impacted by the lower gross profit dollars generated in our used vehicle business. We seek to improve operational leverage through targeting incremental throughput of 50%."
Corporate Development On October 1, 2014, we completed the purchase of DCH Auto Group (USA) Inc., one of the 10 largest dealer groups in the country. The DCH stores are estimated to generate approximately $2.3 billion in annualized revenue. The transaction was funded by approximately $364 million in cash, the issuance of 268,770 shares of Lithia Class A common stock, incurring $230 million of vehicle floorplan debt financing, and the assumption of non-floor plan debt of $53 million.
Additionally, in October 2014, we acquired Harris Nissan in Clovis, California with $25 million in estimated total annual revenues.
Bryan DeBoer, President and CEO, stated, "We continue to see robust acquisition activity in the marketplace, and are pleased to add Lithia Nissan of Clovis in our exclusive market strategy. Additionally, the integration of DCH will provide geographic and franchise diversification, shifting 20% of our revenues to the east coast and over 50% of our vehicle sales volume to import brands, while more than doubling our potential acquisition targets as we pursue a metro market strategy."
Balance Sheet Update We ended the third quarter with $22 million in cash and $167 million in available credit on our credit facilities. Additionally, approximately $133 million of our operating real estate is currently unfinanced, which could provide an estimated additional $100 million in available liquidity, for total potential liquidity of $289 million.
On October 1, 2014, we amended our credit facility to increase the total financing commitment to $1.7 billion.
Dividend Payment and Share Repurchase We announced that our Board of Directors has approved a dividend of $0.16 per share related to third quarter 2014 financial results. We will pay the dividend December 5, 2014 to shareholders of record on November 21, 2014.
Since the second quarter, we have repurchased approximately 161,000 shares at a weighted average price of $69 per share. Under our existing share repurchase authorization, approximately 1.5 million shares remain available for repurchase.
Outlook for 2014 We project 2014 fourth quarter earnings guidance within a range of $1.17 to $1.19 per diluted share, including earnings related to the DCH Auto Group. Full-year 2014 earnings are projected to be $4.86 to $4.88 per diluted share. Both projections are based on the following full year assumptions. Additionally, the fourth quarter projection excludes $0.04 to $0.06 per share and the full year projection excludes $0.06 to $0.08 per share in acquisition expenses and is based on the following assumptions:
Continuing Operations Projections
- Total revenues of $5.2 to $5.4 billion
- New vehicle sales increasing 35.0%
- New vehicle gross margin of 6.2% to 6.4%
- Used vehicle sales increasing 31.5%
- Used vehicle gross margin of 13.0% to 13.3%
- Service body and parts sales increasing 33.5%
- Service body and parts gross margin of 48.3% to 48.5%
- Finance and insurance gross profit of $1,170 per unit
- Tax rate of 40%
- Average diluted shares outstanding of 26.4 million
- Full year capital expenditures of $90 million
Same Store Projections
- Total revenues of $4.2 to $4.4 billion
- New vehicle same store sales increasing 9.5%
- Used vehicle same store sales increasing 12.0%
- Service body and parts same store sales increasing 10.5%
- Finance and insurance gross profit of $1,200 per unit
2015 Earnings Guidance We project 2015 first quarter earnings $1.18 to $1.21 per diluted share and 2015 full year earnings of $5.60 to $5.80 per diluted share, with Lithia operations contributing $4.95 to $5.05 per diluted share and DCH operations contributing $0.65 to $0.75 per diluted share. Both projections are based on the following annual assumptions:
Continuing Operations Projections
- Total revenues of $7.4 to $7.6 billion
- New vehicle sales increasing 45.0%
- New vehicle gross margin of 5.9% to 6.1%
- Used vehicle sales increasing 38.0%
- Used vehicle gross margin of 12.3% to 12.5%
- Service body and parts sales increasing 41.0%
- Service body and parts gross margin of 48.0% to 48.1%
- Finance and insurance gross profit of $1,125 per unit
- Tax rate of 40%
- Average diluted shares outstanding of 26.7 million
- Full year capital expenditures are $80 million
Same Store Projections
- Total revenues of $5.4 to $5.6 billion
- New vehicle same store sales increasing 6.5%
- Used vehicle same store sales increasing 10.5%
- Service body and parts same store sales increasing 8.0%
- Finance and insurance gross profit of $1,200 per unit
These projections exclude the impact of future acquisitions, dispositions and non-core items. Actual results may be affected by items described under Forward-Looking Statements below.
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 www.lithiainvestorrelations.com .
To listen live on our website or for replay, visit www.lithiainvestorrelations.com and click on webcasts.
About Lithia Lithia Motors, Inc. is one of the largest automotive retailers in the United States. Lithia sells 30 brands of new vehicles and all brands of used vehicles at 129 stores in 14 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.lithiainvestorrelations.com www.lithiacareers.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. 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 "project," "outlook," "expect," "anticipate," "intend," "plan," "believe," "estimate," "may," "seek," "would," "should," "likely," "goal," "strategy," "future," "maintain," "continue," "remain," "target" or "will" and similar references to future periods. Examples of forward-looking statements in this press release include, among others, statements regarding:
- Future market conditions;
- Expected operating results, such as improved store performance, maintaining incremental throughput above 50%, increasing same store F&I per unit and all projections set forth under the heading "Outlook for 2014" and "2015 Earnings Guidance";
- The increase in our annual revenues that we estimate will result from the dealerships that we acquired and from the DCH Auto Group transaction as set forth under the heading "Corporate Development";
- Anticipated availability of liquidity from our unfinanced operating real estate; and
- Anticipated levels of capital expenditures in the future.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events that depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation, future economic and financial conditions (both nationally and locally), changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers, risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms), government regulations, legislation and others set forth throughout Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2013 and from time to time in our other filings with the SEC, including in Part II, Item 1A. Risk Factors of our Quarterly Reports on Form 10-Q. We urge you to carefully consider this information and not place undue reliance on forward-looking statements. 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. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. 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 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 | ||||||||||||||
2014 | 2013 | (Decrease) | (Decrease) | |||||||||||||
Revenues: | ||||||||||||||||
New vehicle retail | $ | 732,121 | $ | 604,135 | $ | 127,986 | 21.2 | % | ||||||||
Used vehicle retail | 340,522 | 280,734 | 59,788 | 21.3 | ||||||||||||
Used vehicle wholesale | 48,853 | 43,396 | 5,457 | 12.6 | ||||||||||||
Finance and insurance | 46,855 | 37,132 | 9,723 | 26.2 | ||||||||||||
Service, body and parts | 120,772 | 97,784 | 22,988 | 23.5 | ||||||||||||
Fleet and other | 7,988 | 6,109 | 1,879 | 30.8 | ||||||||||||
Total revenues | 1,297,111 | 1,069,290 | 227,821 | 21.3 | ||||||||||||
Cost of sales: | ||||||||||||||||
New vehicle retail | 684,473 | 565,549 | 118,924 | 21.0 | ||||||||||||
Used vehicle retail | 296,624 | 239,093 | 57,531 | 24.1 | ||||||||||||
Used vehicle wholesale | 48,349 | 42,686 | 5,663 | 13.3 | ||||||||||||
Service, body and parts | 62,351 | 50,793 | 11,558 | 22.8 | ||||||||||||
Fleet and other | 7,474 | 5,780 | 1,694 | 29.3 | ||||||||||||
Total cost of sales | 1,099,271 | 903,901 | 195,370 | 21.6 | ||||||||||||
Gross profit | 197,840 | 165,389 | 32,451 | 19.6 | ||||||||||||
SG&A expense | 131,627 | 108,570 | 23,057 | 21.2 | ||||||||||||
Depreciation and amortization | 6,067 | 5,099 | 968 | 19.0 | ||||||||||||
Income from operations | 60,146 | 51,720 | 8,426 | 16.3 | ||||||||||||
Floor plan interest expense | (3,127 | ) | (2,909 | ) | 218 | 7.5 | ||||||||||
Other interest expense | (2,051 | ) | (1,933 | ) | 118 | 6.1 | ||||||||||
Other income, net | 1,027 | 835 | 192 | 23.0 | ||||||||||||
Income from continuing operations before income taxes | 55,995 | 47,713 | 8,282 | 17.4 | ||||||||||||
Income tax expense | (21,458 | ) | (16,822 | ) | 4,636 | 27.6 | ||||||||||
Income tax rate | 38.3 | % | 35.3 | % | ||||||||||||
Income from continuing operations | $ | 34,537 | $ | 30,891 | $ | 3,646 | 11.8 | % | ||||||||
Income from discontinued operations, net of tax | - | 127 | (127 | ) | NM | |||||||||||
Net income | $ | 34,537 | $ | 31,018 | $ | 3,519 | 11.3 | % | ||||||||
Diluted net income per share: | ||||||||||||||||
Continuing operations | $ | 1.31 | $ | 1.18 | $ | 0.13 | 11.0 | % | ||||||||
Discontinued operations | - | - | - | - | ||||||||||||
Net income per share | $ | 1.31 | $ | 1.18 | $ | 0.13 | 11.0 | % | ||||||||
Diluted shares outstanding | 26,359 | 26,237 | 122 | 0.5 | % | |||||||||||
NM - not meaningful |
Lithia Motors, Inc. | |||||||||||||||
Key Performance Metrics | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended | % | ||||||||||||||
September 30, | Increase | Increase | |||||||||||||
2014 | 2013 | (Decrease) | (Decrease) | ||||||||||||
Gross margin | |||||||||||||||
New vehicle retail | 6.5 | % | 6.4 | % | 10 bps | ||||||||||
Used vehicle retail | 12.9 | 14.8 | (190) bps | ||||||||||||
Used vehicle wholesale | 1.0 | 1.6 | (60) bps | ||||||||||||
Finance and insurance | 100.0 | 100.0 | - bps | ||||||||||||
Service, body and parts | 48.4 | 48.1 | 30 bps | ||||||||||||
Fleet and other | 6.4 | 5.4 | 100 bps | ||||||||||||
Gross profit margin | 15.3 | 15.5 | (20) bps | ||||||||||||
Unit sales | |||||||||||||||
New vehicle retail | 21,320 | 18,109 | 3,211 | 17.7 | % | ||||||||||
Used vehicle retail | 17,710 | 15,496 | 2,214 | 14.3 | |||||||||||
Total retail units sold | 39,030 | 33,605 | 5,425 | 16.1 | |||||||||||
Used vehicle wholesale | 6,989 | 6,059 | 930 | 15.3 | |||||||||||
Average selling price | |||||||||||||||
New vehicle retail | 34,340 | 33,361 | 979 | 2.9 | % | ||||||||||
Used vehicle retail | 19,228 | 18,117 | 1,111 | 6.1 | |||||||||||
Used vehicle wholesale | 6,990 | 7,162 | (172 | ) | (2.4 | ) | |||||||||
Average gross profit per unit | |||||||||||||||
New vehicle retail | $ | 2,235 | $ | 2,131 | $ | 104 | 4.9 | % | |||||||
Used vehicle retail | 2,479 | 2,687 | (208 | ) | (7.7 | ) | |||||||||
Used vehicle wholesale | 72 | 117 | (45 | ) | (38.5 | ) | |||||||||
Finance and insurance | 1,200 | 1,105 | 95 | 8.6 | |||||||||||
Total vehicle (1) | 3,559 | 3,513 | 46 | 1.3 | |||||||||||
Revenue mix | |||||||||||||||
New vehicle retail | 56.4 | % | 56.5 | % | |||||||||||
Used vehicle retail | 26.3 | 26.3 | |||||||||||||
Used vehicle wholesale | 3.8 | 4.1 | |||||||||||||
Finance and insurance, net | 3.6 | 3.5 | |||||||||||||
Service, body and parts | 9.3 | 9.1 | |||||||||||||
Fleet and other | 0.6 | 0.5 | |||||||||||||
Adjusted | As reported | ||||||||||||||
Three months ended September 30, | Three months ended September 30, | ||||||||||||||
Other metrics | 2014 | 2013 | 2014 | 2013 | |||||||||||
SG&A as a % of revenue | 10.1 | % | 10.2 | % | 10.1 | % | 10.2 | % | |||||||
SG&A as a % of gross profit | 66.1 | 65.6 | 66.5 | 65.6 | |||||||||||
Operating profit as a % of revenue | 4.7 | 4.8 | 4.6 | 4.8 | |||||||||||
Operating profit as a % of gross profit | 30.8 | 31.3 | 30.4 | 31.3 | |||||||||||
Pretax margin | 4.4 | 4.5 | 4.3 | 4.5 | |||||||||||
Net profit margin | 2.7 | 2.8 | 2.7 | 2.9 | |||||||||||
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail |
Lithia Motors, Inc. | |||||||||||||||
Same Store Operating Highlights | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended | % | ||||||||||||||
September 30, | Increase | Increase | |||||||||||||
2014 | 2013 | (Decrease) | (Decrease) | ||||||||||||
Revenues | |||||||||||||||
New vehicle retail | $ | 668,677 | $ | 604,135 | $ | 64,542 | 10.7 | % | |||||||
Used vehicle retail | 317,342 | 280,734 | 36,608 | 13.0 | |||||||||||
Used vehicle wholesale | 46,333 | 43,396 | 2,937 | 6.8 | |||||||||||
Finance and insurance | 43,041 | 37,141 | 5,900 | 15.9 | |||||||||||
Service, body and parts | 110,491 | 97,784 | 12,707 | 13.0 | |||||||||||
Fleet and other | 6,241 | 6,109 | 132 | 2.2 | |||||||||||
Total revenues | $ | 1,192,125 | $ | 1,069,299 | $ | 122,826 | 11.5 | ||||||||
Gross profit | |||||||||||||||
New vehicle retail | $ | 43,366 | $ | 38,586 | $ | 4,780 | 12.4 | % | |||||||
Used vehicle retail | 41,733 | 41,641 | 92 | 0.2 | |||||||||||
Used vehicle wholesale | 465 | 710 | (245 | ) | (34.5 | ) | |||||||||
Finance and insurance | 43,041 | 37,141 | 5,900 | 15.9 | |||||||||||
Service, body and parts | 53,572 | 46,993 | 6,579 | 14.0 | |||||||||||
Fleet and other | 415 | 328 | 87 | 26.5 | |||||||||||
Total gross profit | $ | 182,592 | $ | 165,399 | $ | 17,193 | 10.4 | ||||||||
Gross margin | |||||||||||||||
New vehicle retail | 6.5 | % | 6.4 | % | 10 bps | ||||||||||
Used vehicle retail | 13.2 | 14.8 | (160) bps | ||||||||||||
Used vehicle wholesale | 1.0 | 1.6 | (60) bps | ||||||||||||
Finance and insurance | 100.0 | 100.0 | - bps | ||||||||||||
Service, body and parts | 48.5 | 48.1 | 40 bps | ||||||||||||
Fleet and other | 6.6 | 5.4 | 120 bps | ||||||||||||
Gross profit margin | 15.3 | 15.5 | (20) bps | ||||||||||||
Unit sales | |||||||||||||||
New vehicle retail | 19,344 | 18,109 | 1,235 | 6.8 | % | ||||||||||
Used vehicle retail | 16,451 | 15,496 | 955 | 6.2 | |||||||||||
Total retail units sold | 35,795 | 33,605 | 2,190 | 6.5 | |||||||||||
Used vehicle wholesale | 6,568 | 6,059 | 509 | 8.4 | |||||||||||
Average selling price | |||||||||||||||
New vehicle retail | $ | 34,568 | $ | 33,361 | $ | 1,207 | 3.6 | % | |||||||
Used vehicle retail | 19,290 | 18,117 | 1,173 | 6.5 | |||||||||||
Used vehicle wholesale | 7,054 | 7,162 | (108 | ) | (1.5 | ) | |||||||||
Average gross profit per unit | |||||||||||||||
New vehicle retail | $ | 2,242 | $ | 2,131 | $ | 111 | 5.2 | % | |||||||
Used vehicle retail | 2,537 | 2,687 | (150 | ) | (5.6 | ) | |||||||||
Used vehicle wholesale | 71 | 117 | (46 | ) | (39.3 | ) | |||||||||
Finance and insurance | 1,202 | 1,105 | 97 | 8.8 | |||||||||||
Total vehicle (1) | 3,593 | 3,514 | 79 | 2.3 | |||||||||||
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail |
Lithia Motors, Inc. | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands except per share data) | ||||||||||||||||
Nine months ended | % | |||||||||||||||
September 30, | Increase | Increase | ||||||||||||||
2014 | 2013 | (Decrease) | (Decrease) | |||||||||||||
Revenues: | ||||||||||||||||
New vehicle retail | $ | 2,006,127 | $ | 1,667,063 | $ | 339,064 | 20.3 | % | ||||||||
Used vehicle retail | 952,890 | 778,427 | 174,463 | 22.4 | ||||||||||||
Used vehicle wholesale | 135,832 | 120,593 | 15,239 | 12.6 | ||||||||||||
Finance and insurance | 130,324 | 103,013 | 27,311 | 26.5 | ||||||||||||
Service, body and parts | 339,726 | 282,686 | 57,040 | 20.2 | ||||||||||||
Fleet and other | 32,120 | 29,093 | 3,027 | 10.4 | ||||||||||||
Total revenues | 3,597,019 | 2,980,875 | 616,144 | 20.7 | ||||||||||||
Cost of sales: | ||||||||||||||||
New vehicle retail | 1,873,461 | 1,555,042 | 318,419 | 20.5 | ||||||||||||
Used vehicle retail | 824,129 | 662,920 | 161,209 | 24.3 | ||||||||||||
Used vehicle wholesale | 132,493 | 118,214 | 14,279 | 12.1 | ||||||||||||
Service, body and parts | 174,291 | 145,223 | 29,068 | 20.0 | ||||||||||||
Fleet and other | 30,444 | 27,816 | 2,628 | 9.4 | ||||||||||||
Total cost of sales | 3,034,818 | 2,509,215 | 525,603 | 20.9 | ||||||||||||
Gross profit | 562,201 | 471,660 | 90,541 | 19.2 | ||||||||||||
SG&A expense | 378,919 | 318,984 | 59,935 | 18.8 | ||||||||||||
Depreciation and amortization | 17,399 | 14,719 | 2,680 | 18.2 | ||||||||||||
Income from operations | 165,883 | 137,957 | 27,926 | 20.2 | ||||||||||||
Floor plan interest expense | (9,326 | ) | (9,394 | ) | (68 | ) | (0.7 | ) | ||||||||
Other interest expense | (5,894 | ) | (6,235 | ) | (341 | ) | (5.5 | ) | ||||||||
Other income, net | 3,110 | 2,220 | 890 | 40.1 | ||||||||||||
Income from continuing operations before income taxes | 153,773 | 124,548 | 29,225 | 23.5 | ||||||||||||
Income tax expense | (59,372 | ) | (46,494 | ) | 12,878 | 27.7 | ||||||||||
Income tax rate | 38.6 | % | 37.3 | % | ||||||||||||
Income from continuing operations | $ | 94,401 | $ | 78,054 | $ | 16,347 | 20.9 | % | ||||||||
Income from discontinued operations, net of tax | 3,179 | 574 | 2,605 | NM | ||||||||||||
Net income | $ | 97,580 | $ | 78,628 | $ | 18,952 | 24.1 | % | ||||||||
Diluted net income per share: | ||||||||||||||||
Continuing operations | $ | 3.58 | $ | 2.98 | $ | 0.60 | 20.1 | % | ||||||||
Discontinued operations | 0.13 | 0.03 | 0.10 | NM | ||||||||||||
Net income per share | $ | 3.71 | $ | 3.01 | $ | 0.70 | 23.3 | % | ||||||||
Diluted shares outstanding | 26,337 | 26,159 | 178 | 0.7 | % | |||||||||||
NM - not meaningful |
Lithia Motors, Inc. | |||||||||||||||
Key Performance Metrics | |||||||||||||||
(Unaudited) | |||||||||||||||
Nine months ended | % | ||||||||||||||
September 30, | Increase | Increase | |||||||||||||
2014 | 2013 | (Decrease) | (Decrease) | ||||||||||||
Gross margin | |||||||||||||||
New vehicle retail | 6.6 | % | 6.7 | % | (10) bps | ||||||||||
Used vehicle retail | 13.5 | 14.8 | (130) bps | ||||||||||||
Used vehicle wholesale | 2.5 | 2.0 | 50 bps | ||||||||||||
Finance and insurance | 100.0 | 100.0 | - bps | ||||||||||||
Service, body and parts | 48.7 | 48.6 | 10 bps | ||||||||||||
Fleet and other | 5.2 | 4.4 | 80 bps | ||||||||||||
Gross profit margin | 15.6 | 15.8 | (20) bps | ||||||||||||
Unit sales | |||||||||||||||
New vehicle retail | 59,040 | 49,853 | 9,187 | 18.4 | % | ||||||||||
Used vehicle retail | 50,112 | 43,231 | 6,881 | 15.9 | |||||||||||
Total retail units sold | 109,152 | 93,084 | 16,068 | 17.3 | |||||||||||
Used vehicle wholesale | 18,889 | 16,624 | 2,265 | 13.6 | |||||||||||
Average selling price | |||||||||||||||
New vehicle retail | $ | 33,979 | $ | 33,440 | $ | 539 | 1.6 | % | |||||||
Used vehicle retail | 19,015 | 18,006 | 1,009 | 5.6 | |||||||||||
Used vehicle wholesale | 7,191 | 7,254 | (63 | ) | (0.9 | ) | |||||||||
Average gross profit per unit | |||||||||||||||
New vehicle retail | $ | 2,247 | $ | 2,247 | $ | - | - | % | |||||||
Used vehicle retail | 2,569 | 2,672 | (103 | ) | (3.9 | ) | |||||||||
Used vehicle wholesale | 177 | 143 | 34 | 23.8 | |||||||||||
Finance and insurance | 1,194 | 1,107 | 87 | 7.9 | |||||||||||
Revenue mix | |||||||||||||||
New vehicle retail | 55.8 | % | 55.9 | % | |||||||||||
Used vehicle retail | 26.5 | 26.1 | |||||||||||||
Used vehicle wholesale | 3.8 | 4.0 | |||||||||||||
Finance and insurance, net | 3.6 | 3.5 | |||||||||||||
Service, body and parts | 9.4 | 9.5 | |||||||||||||
Fleet and other | 0.9 | 1.0 | |||||||||||||
Adjusted | As reported | ||||||||||||||
Nine months ended September 30, | Nine months ended September 30, | ||||||||||||||
Other metrics | 2014 | 2013 | 2014 | 2013 | |||||||||||
SG&A as a % of revenue | 10.4 | % | 10.6 | % | 10.5 | % | 10.7 | % | |||||||
SG&A as a % of gross profit | 66.5 | 66.8 | 67.4 | 67.6 | |||||||||||
Operating profit as a % of revenue | 4.8 | 4.8 | 4.6 | 4.6 | |||||||||||
Operating profit as a % of gross profit | 30.4 | 30.1 | 29.5 | 29.2 | |||||||||||
Pretax margin | 4.4 | 4.3 | 4.3 | 4.2 | |||||||||||
Net profit margin | 2.7 | 2.6 | 2.6 | 2.6 | |||||||||||
Lithia Motors, Inc. | |||||||||||||||
Same Store Operating Highlights | |||||||||||||||
(Unaudited) | |||||||||||||||
Nine months ended | % | ||||||||||||||
September 30, | Increase | Increase | |||||||||||||
2014 | 2013 | (Decrease) | (Decrease) | ||||||||||||
Revenues | |||||||||||||||
New vehicle retail | $ | 1,844,436 | $ | 1,664,438 | $ | 179,998 | 10.8 | % | |||||||
Used vehicle retail | 888,101 | 777,716 | 110,385 | 14.2 | |||||||||||
Used vehicle wholesale | 129,393 | 120,569 | 8,824 | 7.3 | |||||||||||
Finance and insurance | 120,363 | 102,950 | 17,413 | 16.9 | |||||||||||
Service, body and parts | 313,190 | 282,261 | 30,929 | 11.0 | |||||||||||
Fleet and other | 28,655 | 29,093 | (438 | ) | (1.5 | ) | |||||||||
Total revenues | $ | 3,324,138 | $ | 2,977,027 | $ | 347,111 | 11.7 | ||||||||
Gross profit | |||||||||||||||
New vehicle retail | $ | 121,770 | $ | 111,822 | $ | 9,948 | 8.9 | % | |||||||
Used vehicle retail | 121,554 | 115,405 | 6,149 | 5.3 | |||||||||||
Used vehicle wholesale | 3,223 | 2,491 | 732 | 29.4 | |||||||||||
Finance and insurance | 120,363 | 102,950 | 17,413 | 16.9 | |||||||||||
Service, body and parts | 152,478 | 137,270 | 15,208 | 11.1 | |||||||||||
Fleet and other | 1,500 | 1,277 | 223 | 17.5 | |||||||||||
Total gross profit | $ | 520,888 | $ | 471,215 | $ | 49,673 | 10.5 | ||||||||
Gross margin | |||||||||||||||
New vehicle retail | 6.6 | % | 6.7 | % | (10) bps | ||||||||||
Used vehicle retail | 13.7 | 14.8 | (110) bps | ||||||||||||
Used vehicle wholesale | 2.5 | 2.1 | 40 bps | ||||||||||||
Finance and insurance | 100.0 | 100.0 | - bps | ||||||||||||
Service, body and parts | 48.7 | 48.6 | 10 bps | ||||||||||||
Fleet and other | 5.2 | 4.4 | 80 bps | ||||||||||||
Total gross profit | 15.7 | 15.8 | (10) bps | ||||||||||||
Unit sales | |||||||||||||||
New vehicle retail | 53,667 | 49,766 | 3,901 | 7.8 | % | ||||||||||
Used vehicle retail | 46,415 | 43,190 | 3,225 | 7.5 | |||||||||||
Total retail units sold | 100,082 | 92,956 | 7,126 | 7.7 | |||||||||||
Used vehicle wholesale | 17,768 | 16,623 | 1,145 | 6.9 | |||||||||||
Average selling price | |||||||||||||||
New vehicle retail | $ | 34,368 | $ | 33,445 | $ | 923 | 2.8 | % | |||||||
Used vehicle retail | 19,134 | 18,007 | 1,127 | 6.3 | |||||||||||
Used vehicle wholesale | 7,282 | 7,253 | 29 | 0.4 | |||||||||||
Average gross profit per unit | |||||||||||||||
New vehicle retail | $ | 2,269 | $ | 2,247 | $ | 22 | 1.0 | % | |||||||
Used vehicle retail | 2,619 | 2,672 | (53 | ) | (2.0 | ) | |||||||||
Used vehicle wholesale | 181 | 150 | 31 | 20.7 | |||||||||||
Finance and insurance | 1,203 | 1,108 | 95 | 8.6 | |||||||||||
Total vehicle (1) | 3,666 | 3,579 | 87 | 2.4 | |||||||||||
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail |
Lithia Motors, Inc. | ||||||
Other Highlights | ||||||
(Unaudited) | ||||||
As of | ||||||
September 30, | December 31, | September 30, | ||||
2014 | 2013 | 2013 | ||||
Days Supply (1) | ||||||
New vehicle inventory | 72 | 74 | 76 | |||
Used vehicle inventory | 54 | 63 | 54 | |||
(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, 2014 | |||
Current ratio | Not less than 1.20 to 1 | 1.41 to 1 | ||
Fixed charge coverage ratio | Not less than 1.20 to 1 | 4.00 to 1 | ||
Leverage ratio | Not more than 5.00 to 1 | 1.53 to 1 | ||
Funded debt restriction | Not more than $375 million | $242.4 million | ||
Lithia Motors, Inc. | ||||||||||||
Other Highlights | ||||||||||||
(Unaudited) | ||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
New vehicle unit sales brand mix | ||||||||||||
Chrysler | 28.1 | % | 29.4 | % | 28.4 | % | 30.1 | % | ||||
General Motors | 14.2 | 14.5 | 14.2 | 15.5 | ||||||||
Toyota | 13.6 | 14.9 | 13.7 | 14.8 | ||||||||
Subaru | 9.9 | 8.0 | 9.6 | 7.8 | ||||||||
Honda, Acura | 8.0 | 8.8 | 8.0 | 7.7 | ||||||||
Ford | 6.5 | 5.9 | 6.4 | 5.9 | ||||||||
BMW, MINI | 6.1 | 6.4 | 6.2 | 6.4 | ||||||||
Nissan | 3.5 | 2.8 | 3.6 | 2.8 | ||||||||
Hyundai | 3.0 | 2.6 | 3.0 | 2.7 | ||||||||
Volkswagen, Audi | 2.8 | 2.8 | 2.6 | 2.3 | ||||||||
Mercedes | 2.4 | 2.5 | 2.3 | 2.5 | ||||||||
Kia | 1.2 | 0.7 | 1.1 | 0.6 | ||||||||
Mazda | 0.4 | 0.4 | 0.4 | 0.5 | ||||||||
Other | 0.3 | 0.3 | 0.5 | 0.4 | ||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Revenue geographic mix | ||||||||||||
Texas | 22.8 | % | 24.1 | % | 23.5 | % | 24.9 | % | ||||
Oregon | 22.7 | 22.0 | 22.3 | 21.1 | ||||||||
California | 12.8 | 10.1 | 13.0 | 10.4 | ||||||||
Montana | 8.2 | 9.0 | 8.2 | 8.9 | ||||||||
Alaska | 7.5 | 7.9 | 7.3 | 7.8 | ||||||||
Washington | 7.2 | 8.0 | 7.2 | 8.1 | ||||||||
Nevada | 4.6 | 5.0 | 4.6 | 4.8 | ||||||||
Idaho | 4.4 | 5.0 | 4.4 | 5.1 | ||||||||
Iowa | 4.3 | 4.9 | 4.3 | 4.8 | ||||||||
North Dakota | 2.1 | 2.3 | 2.2 | 2.4 | ||||||||
Hawaii | 2.0 | 0.0 | 1.6 | 0.0 | ||||||||
New Mexico | 1.4 | 1.7 | 1.4 | 1.7 | ||||||||
As of October 30, 2014 | ||||||||||||
Current store count mix | # of stores | % of total | ||||||||||
Chrysler, Fiat | 25 | 19.4 | % | |||||||||
Honda, Acura | 22 | 17.0 | ||||||||||
Toyota, Lexus | 19 | 14.7 | ||||||||||
General Motors | 16 | 12.4 | ||||||||||
BMW, MINI | 11 | 8.5 | ||||||||||
Volkswagen, Audi | 7 | 5.4 | ||||||||||
Nissan | 6 | 4.7 | ||||||||||
Ford | 6 | 4.7 | ||||||||||
Subaru | 5 | 3.9 | ||||||||||
Hyundai | 5 | 3.9 | ||||||||||
Mercedes | 3 | 2.3 | ||||||||||
Other | 4 | 3.1 | ||||||||||
Lithia Motors, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Cash and cash equivalents | $ | 21,666 | $ | 23,686 | ||||
Trade receivables, net | 181,855 | 170,519 | ||||||
Inventories, net | 941,756 | 859,019 | ||||||
Deferred income taxes | 500 | 1,548 | ||||||
Other current assets | 11,088 | 15,251 | ||||||
Assets held for sale | 8,920 | 11,526 | ||||||
Total current assets | $ | 1,165,785 | $ | 1,081,549 | ||||
Property and equipment, net | 536,519 | 481,212 | ||||||
Goodwill | 65,745 | 49,511 | ||||||
Franchise value | 77,482 | 71,199 | ||||||
Deferred income taxes | 12,450 | 10,256 | ||||||
Other non-current assets | 46,922 | 31,394 | ||||||
Total assets | $ | 1,904,903 | $ | 1,725,121 | ||||
Floor plan notes payable | $ | 21,362 | $ | 18,789 | ||||
Floor plan notes payable: non trade | 718,227 | 695,066 | ||||||
Current maturities of long-term debt | 9,305 | 7,083 | ||||||
Trade payables | 59,481 | 51,159 | ||||||
Accrued liabilities | 116,619 | 94,143 | ||||||
Liabilities related to assets held for sale | 4,776 | 6,271 | ||||||
Total current liabilities | $ | 929,770 | $ | 872,511 | ||||
Long-term debt | 263,117 | 245,471 | ||||||
Deferred revenue | 51,913 | 44,005 | ||||||
Other long-term liabilities | 36,190 | 28,412 | ||||||
Total liabilities | $ | 1,280,990 | $ | 1,190,399 | ||||
Class A common stock | 266,075 | 268,255 | ||||||
Class B common stock | 319 | 319 | ||||||
Additional paid-in capital | 27,657 | 22,598 | ||||||
Accumulated other comprehensive loss | (1,075 | ) | (1,538 | ) | ||||
Retained earnings | 330,937 | 245,088 | ||||||
Total liabilities & stockholders' equity | $ | 1,904,903 | $ | 1,725,121 | ||||
Lithia Motors, Inc. | |||||||||
Summarized Cash Flow from Operations | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Nine months ended | |||||||||
September 30, | |||||||||
2014 | 2013 | ||||||||
Net income | $ | 97,580 | $ | 78,628 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 17,399 | 14,719 | |||||||
Stock-based compensation | 5,054 | 4,161 | |||||||
Loss on disposal of assets | 307 | 107 | |||||||
Gain on sale of franchise | (5,744 | ) | - | ||||||
Deferred income taxes | 4,725 | 8,504 | |||||||
Excess tax benefit from share-based payment arrangements | (6,160 | ) | (5,956 | ) | |||||
(Increase) decrease: | |||||||||
Trade receivables, net | (11,336 | ) | (6,937 | ) | |||||
Inventories | (44,349 | ) | (18,187 | ) | |||||
Other assets | (13,700 | ) | 1,660 | ||||||
Increase (decrease): | |||||||||
Floor plan notes payable, net | 1,132 | 5,721 | |||||||
Trade payables | 4,246 | 4,848 | |||||||
Accrued liabilities | 21,913 | 13,099 | |||||||
Other long-term liabilities and deferred revenue | 16,635 | 12,307 | |||||||
Net cash provided by operating activities | $ | 87,702 | $ | 112,674 | |||||
Lithia Motors, Inc. | |||||||
Reconciliation of Non-GAAP Cash Flow from Operations | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
Nine months ended | |||||||
September 30, | |||||||
Net cash provided by operating activities | 2014 | 2013 | |||||
As reported | $ | 87,702 | $ | 112,674 | |||
Floor plan notes payable, non-trade, net | 30,375 | 2,685 | |||||
Adjusted | $ | 118,077 | $ | 115,359 | |||
Lithia Motors, Inc. | ||||||||||||||||
Reconciliation of Certain Non-GAAP Financial Measures | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except for per share data) | ||||||||||||||||
Three Months Ended September 30, 2014 | ||||||||||||||||
As reported | Acquisition expenses | One-time tax items | Adjusted | |||||||||||||
Selling, general and administrative | $ | 131,627 | $ | (883 | ) | $ | - | $ | 130,744 | |||||||
Income from operations | 60,146 | 883 | - | 61,029 | ||||||||||||
Income from continuing operations before income taxes | $ | 55,995 | $ | 883 | $ | - | $ | 56,878 | ||||||||
Income tax expense | (21,458 | ) | (319 | ) | (194 | ) | (21,971 | ) | ||||||||
Net income from continuing operations | $ | 34,537 | $ | 564 | $ | (194 | ) | $ | 34,907 | |||||||
Diluted earnings per share from continuing operations | $ | 1.31 | $ | $0.02 | $ | (0.01 | ) | $ | 1.32 | |||||||
Diluted share count | 26,359 | |||||||||||||||
Three Months Ended September 30, 2013 | ||||||||||||
As reported | Tax attribute | Adjusted | ||||||||||
Income from continuing operations before income taxes | $ | 47,713 | $ | - | $ | 47,713 | ||||||
Income tax expense | (16,822 | ) | (1,284 | ) | (18,106 | ) | ||||||
Net income from continuing operations | $ | 30,891 | $ | (1,284 | ) | $ | 29,607 | |||||
Diluted earnings per share from continuing operations | $ | 1.18 | $ | (0.05 | ) | $ | 1.13 | |||||
Diluted share count | 26,237 | |||||||||||
Lithia Motors, Inc. | ||||||||||||||||||||
Reconciliation of Certain Non-GAAP Financial Measures | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands, except for per share data) | ||||||||||||||||||||
Nine Months Ended September 30, 2014 | ||||||||||||||||||||
As reported | Reserve adjustments | Acquisition expenses | Tax attribute | Adjusted | ||||||||||||||||
Selling, general and administrative | $ | 378,919 | $ | (3,931 | ) | $ | (1,046 | ) | $ | - | $ | 373,942 | ||||||||
Income from operations | 165,883 | 3,931 | 1,046 | - | 170,860 | |||||||||||||||
Income from continuing operations before income taxes | $ | 153,773 | $ | 3,931 | $ | 1,046 | $ | - | $ | 158,750 | ||||||||||
Income tax expense | (59,372 | ) | (1,545 | ) | (406 | ) | (267 | ) | (61,590 | ) | ||||||||||
Net income from continuing operations | $ | 94,401 | $ | 2,386 | $ | 640 | $ | (267 | ) | $ | 97,160 | |||||||||
Diluted earnings per share from continuing operations | $ | 3.58 | $ | 0.09 | $ | 0.03 | $ | (0.01 | ) | $ | 3.69 | |||||||||
Diluted share count | 26,337 | |||||||||||||||||||
Nine months ended September 30, 2013 | ||||||||||||||||
As reported | Reserve adjustment | Tax attribute | Adjusted | |||||||||||||
Selling, general and administrative | $ | 318,984 | $ | (3,813 | ) | $ | - | $ | 315,171 | |||||||
Income from operations | $ | 137,957 | $ | 3,813 | $ | - | $ | 141,770 | ||||||||
Income from continuing operations before income taxes | $ | 124,548 | $ | 3,813 | $ | - | $ | 128,361 | ||||||||
Income tax expense | (46,494 | ) | (1,484 | ) | (1,512 | ) | (49,490 | ) | ||||||||
Net income from continuing operations | $ | 78,054 | $ | 2,329 | $ | (1,512 | ) | $ | 78,871 | |||||||
Diluted earnings per share from continuing operations | $ | 2.98 | $ | 0.09 | $ | (0.05 | ) | $ | 3.02 | |||||||
Diluted share count | 26,159 |
Contact: John North VP Finance and Controller (541) 618-5748