MEDFORD, OR--(Marketwired - Feb 15, 2017) - Lithia Motors, Inc. ( NYSE : LAD ) today reported the highest fourth quarter and full year revenue and earnings per share in company history.
Fourth quarter 2016 net income per diluted share increased 13% to $2.03 from $1.80 for 2015. Adjusted net income per diluted share increased 7% to $1.86 from $1.74 for 2015. Fourth quarter 2016 net income increased 8% to $51.3 million from $47.7 million for 2015. Adjusted net income increased 2% to $46.9 million from $46.1 million for 2015.
As shown in the attached non-GAAP reconciliation tables, the fourth quarter 2016 adjusted results exclude a $0.17 non-core benefit related to an equity investment, an indemnified legal reserve and a tax attribute. The fourth quarter 2015 adjusted results exclude a $0.06 net non-core benefit related to an equity investment offset by an asset impairment.
Fourth quarter 2016 revenue increased 15% to $2.3 billion from $2.0 billion in 2015.
Fourth Quarter-over-Quarter Operating Highlights:
- Total same store sales increased 5%
- New vehicle same store sales increased 4%
- Used vehicle retail same store sales increased 11%
- Service, body and parts same store sales increased 7%
- Same store F&I per unit increased $108 to $1,295
- Adjusted SG&A expense as a percentage of gross profit was 70.1%
2016 net income per diluted share increased 12% to $7.72 from $6.91 for 2015. Adjusted net income per diluted share increased 6% to $7.42 from $7.02 for 2015. 2016 net income increased 8% to $197.1 million from $183.0 million for 2015. 2016 adjusted net income increased 2% to $189.5 million from $186.0 million for 2015.
As shown in the attached non-GAAP reconciliation tables, the 2016 adjusted results exclude a $0.30 net non-core benefit related to an equity investment, a disposal gain and a tax attribute offset by an indemnified legal reserve. The 2015 adjusted results exclude a $0.11 net non-core charge from an asset impairment and a transition agreement offset by an equity investment and a disposal gain.
Full year 2016 revenue increased 10% to $8.7 billion from $7.9 billion in 2015.
Full Year-over-Year Operating Highlights:
- Total same store sales increased 5%
- New vehicle same store sales increased 3%
- Used vehicle retail same store sales increased 11%
- Service, body and parts same store sales increased 9%
- Same store F&I per unit increased $94 to $1,291
- Adjusted SG&A expense as a percentage of gross profit was 68.9%
Bryan DeBoer, President and CEO, said, "We increased same store sales in all core business lines, including double digit growth in used vehicle sales and record performance in F&I. Our store leaders remain focused on capturing incremental used vehicle sales and driving additional service work. 60 locations attained record profitability in 2016, while significant opportunities remain in the roughly 90 stores that did not achieve record performance this year. We will continue to target gaining market share and controlling costs to improve store performance in 2017 and beyond."
Corporate Development
In 2016, we completed the acquisition of 15 stores: a Ford store in Honolulu, Hawaii; the Carbone Auto Group, a nine store platform based in New York and Vermont; a Subaru store in Riverside, California; a Toyota store in Milford, Massachusetts; a Ford store in Thousand Oaks, California; a Ford store in Casper, Wyoming and an Audi store in Calabasas, California. We also opened a Volkswagen store in Freehold, New Jersey. These stores are expected to add over $1.1 billion in annual revenues.
Commenting on the acquired stores, Bryan DeBoer said, "Our entrepreneurial culture allows our team to rapidly grow our store base through accretive acquisitions. Since 2010, when we completed our first acquisitions after the great recession, we have increased our store count from 85 locations to 154, and grown our revenue nearly four hundred percent, from $1.8 billion to $8.7 billion. During this time, we have diversified our brand mix, added metropolitan locations from coast to coast, and maintained our sector low leverage ratio. We remain optimistic that significant acquisition opportunities remain across the United States, and will continue to seek accretive purchases."
Balance Sheet Update
We ended the fourth quarter with approximately $50 million in cash and $138 million in availability under our credit facilities. Additionally, approximately $225 million of our operating real estate is currently unfinanced, which we estimate could provide $168 million in capital, for total potential liquidity of $356 million.
Dividend Payment and Share Repurchase
Our Board of Directors has approved a dividend of $0.25 per share related to fourth quarter 2016 financial results. We expect to pay the dividend on March 24, 2017 to shareholders of record on March 10, 2017.
In the fourth quarter 2016, we repurchased 47,250 shares at a weighted average price of $91.68 per share. In 2016, we deployed $113 million to repurchase 6% of our outstanding float or 1.4 million shares at a weighted average price of $80.24. Approximately $193 million remains available under our existing repurchase authorization.
2017 Earnings Guidance
We project 2017 full year earnings of $8.00 to $8.30 per diluted share. This projection is based on the following annual assumptions:
- Total revenue of $9.2 to $9.4 billion
- New vehicle same store sales increasing 1.5%
- New vehicle gross margin of 5.5% to 5.7%
- Used vehicle same store sales increasing 5.5%
- Used vehicle gross margin of 11.5% to 11.7%
- Service body and parts same store sales increasing 5.0%
- Service body and parts gross margin of 48.2% to 48.4%
- Finance and insurance gross profit of $1,270 to $1,295 per unit
- Tax rate of 39.5%
- Average diluted shares outstanding of 25.3 million
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.
Fourth Quarter Earnings Conference Call and Updated Presentation
The fourth quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the fourth quarter results has been added to our investor relations website.
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 and is among the fastest growing companies in the Fortune 500. Lithia sells 30 brands of new vehicles and all brands of used vehicles at 154 stores in 17 states. Lithia also arranges finance, warranty, and credit insurance contracts. In addition, Lithia provides vehicle parts, maintenance and repair services at all of its locations.
Sites
www.lithiamotors.com
www.lithiainvestorrelations.com
www.lithiacareers.com
Lithia Motors on Facebook
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:
- Expected operating results, such as improved store efficiency and performance; generating 2017 full year earnings of $8.00 to $8.30 per diluted share and all projections set forth under the headings "2017 Earnings Guidance";
- Our ability to improve store performance;
- Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future, and our ability to achieve returns on investments;
- Anticipated revenues from acquired stores; and
- Anticipated availability of liquidity from our credit facility and unfinanced operating real estate.
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 most recent Annual Report on Form 10-K, and from time to time in our other filings with the SEC. 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, adjusted SG&A as a percentage of revenue 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 |
|
|
|
|
|
% |
|
| |
|
December 31, |
|
|
Increase |
|
|
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
1,335,833 |
|
|
$ |
1,167,893 |
|
|
$ |
167,940 |
|
|
14.4 |
% |
| Used vehicle retail |
|
|
559,693 |
|
|
|
469,399 |
|
|
|
90,294 |
|
|
19.2 |
|
| Used vehicle wholesale |
|
|
69,485 |
|
|
|
63,054 |
|
|
|
6,431 |
|
|
10.2 |
|
| Finance and insurance | |
|
84,532 |
|
|
|
69,318 |
|
|
|
15,214 |
|
|
21.9 |
|
| Service, body and parts |
|
|
228,417 |
|
|
|
193,024 |
|
|
|
35,393 |
|
|
18.3 |
|
| Fleet and other |
|
|
14,030 |
|
|
|
30,594 |
|
|
|
(16,564 |
) |
|
(54.1 |
) |
| |
Total revenues |
|
|
2,291,990 |
|
|
|
1,993,282 |
|
|
|
298,708 |
|
|
15.0 |
% |
| Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
1,261,892 |
|
|
|
1,095,796 |
|
|
|
166,096 |
|
|
15.2 |
|
| Used vehicle retail |
|
|
496,320 |
|
|
|
412,572 |
|
|
|
83,748 |
|
|
20.3 |
|
| Used vehicle wholesale |
|
|
69,406 |
| |
|
62,744 |
|
|
|
6,662 |
|
|
10.6 |
|
| Service, body and parts |
|
|
117,194 |
|
|
|
98,241 |
|
|
|
18,953 |
|
|
19.3 |
|
| Fleet and other |
|
|
12,342 |
|
|
|
30,506 |
|
|
|
(18,164 |
) |
|
(59.5 |
) |
| |
Total cost of sales |
|
|
1,957,154 |
|
|
|
1,699,859 |
|
|
|
257,295 |
|
|
15.1 |
|
| Gross profit |
|
|
334,836 |
|
|
|
293,423 |
|
|
|
41,413 |
|
|
14.1 |
% |
| Asset impairments |
|
|
3,498 |
|
|
|
5,733 |
|
|
|
(2,235 |
) |
|
(39.0 |
) |
| SG&A expense |
|
|
236,824 |
|
|
|
200,219 |
|
|
|
36,605 |
|
|
18.3 |
|
| Depreciation and amortization |
|
|
12,997 | |
|
|
11,056 |
|
|
|
1,941 |
|
|
17.6 |
|
| Income from operations |
|
|
81,517 |
|
|
|
76,415 |
|
|
|
5,102 |
|
|
6.7 |
% |
| Floor plan interest expense |
|
|
(7,227 |
) |
|
|
(5,279 |
) |
|
|
1,948 |
|
|
36.9 |
|
| Other interest expense |
|
|
(6,599 |
) |
|
|
(4,791 |
) |
|
|
1,808 |
|
|
37.7 |
|
| Other (expense) income, net |
|
|
(1,569 |
) |
|
|
25 |
|
|
|
1,594 |
|
|
NM |
|
| Income before income taxes |
|
|
66,122 |
|
|
|
66,370 |
|
|
|
(248 |
) |
|
(0.4 |
) % |
| Income tax expense |
|
|
(14,803 |
) |
|
|
(18,638 |
) |
|
|
(3,835 |
) |
|
(20.6 |
) |
| Income tax rate |
|
|
22.4 | % |
|
|
28.1 |
% |
|
|
|
|
|
|
|
| Net income |
|
$ |
51,319 |
|
|
$ |
47,732 |
|
|
$ |
3,587 |
|
|
7.5 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per share |
|
$ |
2.03 |
|
|
$ |
1.80 |
|
|
$ |
0.23 |
|
|
12.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted shares outstanding |
|
|
25,294 |
|
|
|
26,462 |
|
|
|
(1,168 |
) |
|
(4.4 |
)% |
| |
| Lithia Motors, Inc. |
| Key Performance Metrics (Unaudited) |
| |
| |
| Three months ended |
|
|
|
|
|
% |
|
| |
|
December 31, |
|
|
Increase |
|
|
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
5.5 |
% |
|
|
6.2 |
% |
|
|
(70 |
)bps |
|
|
|
| Used vehicle retail |
|
|
11.3 |
|
|
|
12.1 |
|
|
|
(80 |
) |
|
|
|
| Used vehicle wholesale |
|
|
0.1 |
|
|
|
0.5 |
|
|
|
(40 |
) |
|
|
|
| Finance and insurance |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
- |
|
|
|
|
| Service, body and parts |
|
|
48.7 |
|
|
|
49.1 |
|
|
|
(40 |
) |
|
|
|
| Fleet and other |
|
|
12.0 |
|
|
|
0.3 |
|
|
|
1,170 |
|
|
|
|
| Gross profit margin |
|
|
14.6 |
|
|
|
14.7 |
|
|
|
(10 |
) |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unit sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
38,547 |
|
|
|
34,350 |
|
|
|
4,197 |
|
|
12.2 |
% |
| Used vehicle retail |
|
|
28,715 |
|
|
|
24,010 |
|
|
|
4,705 |
|
|
19.6 |
|
| Total retail units sold |
|
|
67,262 |
|
|
|
58,360 |
|
|
|
8,902 |
|
|
15.3 |
|
| Used vehicle wholesale |
|
|
10,475 |
|
|
|
9,345 |
|
|
|
1,130 |
| |
12.1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average selling price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
34,655 |
|
|
$ |
34,000 |
|
|
$ |
655 |
|
|
1.9 |
% |
| Used vehicle retail |
|
|
19,491 |
|
|
|
19,550 |
|
|
|
(59 |
) |
|
(0.3 |
) |
| Used vehicle wholesale |
|
|
6,633 |
|
|
|
6,747 |
|
|
|
(114 |
) |
|
(1.7 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average gross profit per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
1,918 |
|
|
$ |
2,099 |
|
|
$ | (181 |
) |
|
(8.6 |
)% |
| Used vehicle retail |
|
|
2,207 |
|
|
|
2,367 |
|
|
|
(160 |
) |
|
(6.8 |
) |
| Used vehicle wholesale |
|
|
8 |
|
|
|
33 |
|
|
|
(25 |
) |
|
(75.8 |
) |
| Finance and insurance |
|
|
1,257 |
|
|
|
1,188 |
|
|
|
69 |
|
|
5.8 |
|
| Total vehicle (1) |
|
|
3,299 |
|
|
|
3,402 |
|
|
|
(103 |
) |
|
(3.0 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
58.3 |
% |
|
|
58.6 |
% |
|
|
|
|
|
|
|
| Used vehicle retail |
|
|
24.4 |
|
|
| 23.5 |
|
|
|
|
|
|
|
|
| Used vehicle wholesale |
|
|
3.0 |
|
|
|
3.2 |
|
|
|
|
|
|
|
|
| Finance and insurance, net |
|
|
3.7 |
|
|
|
3.5 |
|
|
|
|
|
|
|
|
| Service, body and parts |
|
|
10.0 |
|
|
|
9.7 |
|
|
|
|
|
|
|
|
| Fleet and other |
|
|
0.6 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
Adjusted |
|
|
As reported |
|
| |
|
Three months ended
December 31, |
|
|
Three months ended
December 31, |
|
| Other metrics |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
| SG&A as a % of revenue |
|
10.2 |
% |
|
10.0 |
% |
|
10.3 |
% | |
10.0 |
% |
| SG&A as a % of gross profit |
|
70.1 |
|
|
68.2 |
|
|
70.7 |
|
|
68.2 |
|
| Operating profit as a % of revenue |
|
3.8 |
|
|
4.1 |
|
|
3.6 |
|
|
3.8 |
|
| Operating profit as a % of gross profit |
|
26.0 |
|
|
28.0 |
|
|
24.3 |
|
|
26.0 |
|
| Pretax margin |
|
3.2 |
|
|
3.7 |
|
|
2.9 |
|
|
3.3 |
|
| Net profit margin |
|
2.0 |
|
|
2.3 |
|
|
2.2 |
|
|
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. |
| Same Store Operating Highlights (Unaudited) |
| |
| |
|
Three Months Ended
December 31, |
|
|
Increase |
|
|
%
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail | |
$ |
1,212,572 |
|
|
$ |
1,164,172 |
|
|
$ |
48,400 |
|
|
4.2 |
% |
| Used vehicle retail |
|
|
519,369 |
|
|
|
466,604 |
|
|
|
52,765 |
|
|
11.3 |
|
| Used vehicle wholesale |
|
|
60,835 |
|
|
|
62,828 |
|
|
|
(1,993 |
) |
|
(3.2 |
) |
| Finance and insurance |
|
|
79,169 |
|
|
|
69,033 |
|
|
|
10,136 |
|
|
14.7 |
|
| Service, body and parts |
|
|
205,110 |
|
|
|
191,858 |
|
|
|
13,252 |
|
|
6.9 |
|
| Fleet and other |
|
|
9,422 |
|
|
|
30,591 |
|
|
|
(21,169 |
) |
|
(69.2 |
) |
| Total revenues |
|
$ |
2,086,477 |
|
|
$ |
1,985,086 |
|
|
$ |
101,391 |
|
|
5.1 |
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
67,093 |
|
|
$ |
71,826 |
|
|
$ |
(4,733 |
) |
|
(6.6 |
)% |
| Used vehicle retail |
|
|
58,701 |
|
|
|
56,589 |
|
|
|
2,112 |
|
|
3.7 |
|
| Used vehicle wholesale |
|
|
115 |
|
|
|
339 |
|
|
|
(224 |
) |
|
(66.1 |
) |
| Finance and insurance |
|
|
79,169 |
|
|
|
69,033 |
|
|
|
10,136 |
|
|
14.7 |
|
| Service, body and parts |
|
|
101,294 |
|
|
|
94,243 |
|
|
|
7,051 |
|
|
7.5 |
|
| Fleet and other |
|
|
1,626 |
|
|
|
86 |
|
|
|
1,540 |
|
|
1,790.7 |
|
| Total gross profit |
|
$ |
307,998 |
|
|
$ |
292,116 |
|
|
$ |
15,882 |
|
|
5.4 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
5.5 |
% |
|
|
6.2 |
% |
|
|
(70 |
)bps |
|
|
|
| Used vehicle retail |
|
|
11.3 |
|
|
|
12.1 |
|
|
|
(80 |
) |
|
|
|
| Used vehicle wholesale |
|
|
0.2 |
|
|
|
0.5 |
|
|
|
(30 |
) |
|
|
|
| Finance and insurance |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
- |
|
|
|
|
| Service, body and parts |
|
|
49.4 |
|
|
|
49.1 |
|
|
|
30 |
| |
|
|
| Fleet and other |
|
|
17.3 |
|
|
|
0.3 |
|
|
|
1,700 |
|
|
|
|
| Gross profit margin |
|
|
14.8 |
|
|
|
14.7 |
|
|
|
10 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unit sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
34,855 |
|
|
|
34,259 |
|
|
|
596 |
|
|
1.7 |
% |
| Used vehicle retail |
|
|
26,288 |
|
|
|
23,883 |
|
|
|
2,405 |
|
|
10.1 |
|
| Total retail units sold |
|
|
61,143 |
|
|
|
58,142 |
|
|
|
3,001 |
|
|
5.2 |
|
| Used vehicle wholesale |
|
|
9,134 |
|
|
|
9,316 |
| |
|
(182 |
) |
|
(2.0 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average selling price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
34,789 |
|
|
$ |
33,981 |
|
|
$ |
808 |
|
|
2.4 |
% |
| Used vehicle retail |
|
|
19,757 |
|
|
|
19,537 |
|
|
|
220 |
|
|
1.1 |
|
| Used vehicle wholesale |
|
|
6,660 |
|
|
|
6,744 |
|
|
|
(84 |
) |
|
(1.2 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average gross profit per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
1,925 |
|
|
$ |
2,097 | |
|
$ |
(172 |
) |
|
(8.2 |
)% |
| Used vehicle retail |
|
|
2,233 |
|
|
|
2,369 |
|
|
|
(136 |
) |
|
(5.7 |
) |
| Used vehicle wholesale |
|
|
13 |
|
|
|
36 |
|
|
|
(23 |
) |
|
(63.9 |
) |
| Finance and insurance |
|
|
1,295 |
|
|
|
1,187 |
|
|
|
108 |
|
|
9.1 |
|
| Total vehicle (1) |
|
|
3,354 |
|
|
|
3,402 |
|
|
|
(48 |
) |
|
(1.4 |
) |
| (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. |
| Consolidated Statements of Operations (Unaudited) |
| (In thousands except per share data) |
| |
|
|
|
Twelve months ended
December 31, |
|
|
Increase |
|
|
%
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Revenues: |
|
|
|
|
| |
|
|
|
|
|
|
| New vehicle retail |
|
$ |
4,938,436 |
|
|
$ |
4,552,301 |
|
|
$ |
386,135 |
|
|
8.5 |
% |
| Used vehicle retail |
|
|
2,226,951 |
|
|
|
1,927,016 |
|
|
|
299,935 |
|
|
15.6 |
|
| Used vehicle wholesale |
|
|
276,616 |
|
|
|
261,530 |
|
|
|
15,086 |
|
|
5.8 |
|
| Finance and insurance |
|
|
330,922 |
|
|
|
283,018 |
|
|
|
47,904 |
|
|
16.9 |
|
| Service, body and parts |
|
|
844,505 |
|
|
|
738,990 |
|
|
|
105,515 |
|
|
14.3 |
|
| Fleet and other |
|
|
60,727 |
|
|
|
101,397 |
|
|
|
(40,670 |
) |
|
(40.1 |
) |
| |
Total revenues |
|
|
8,678,157 |
|
|
|
7,864,252 |
|
|
|
813,905 |
| |
10.3 |
% |
| Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
4,649,024 |
|
|
|
4,271,931 |
|
|
|
377,093 |
|
|
8.8 |
|
| Used vehicle retail |
|
|
1,963,267 |
|
|
|
1,685,767 |
|
|
|
277,500 |
|
|
16.5 |
|
| Used vehicle wholesale |
|
|
272,303 |
|
|
|
257,073 |
|
|
|
15,230 |
|
|
5.9 |
|
| Service, body and parts |
|
|
434,222 |
|
|
|
375,069 |
|
|
|
59,153 |
|
|
15.8 |
|
| Fleet and other |
|
|
58,026 |
|
|
|
98,778 |
|
|
|
(40,752 |
) |
|
(41.3 |
) |
| |
Total cost of sales |
|
|
7,376,842 |
|
|
|
6,688,618 |
|
|
|
688,224 |
|
|
10.3 | |
| Gross profit |
|
|
1,301,315 |
|
|
|
1,175,634 |
|
|
|
125,681 |
|
|
10.7 |
|
| Asset impairments |
|
|
13,992 |
|
|
|
20,124 |
|
|
|
(6,132 |
) |
|
(30.5 |
) |
| SG&A expense |
|
|
899,590 |
|
|
|
811,175 |
|
|
|
88,415 |
|
|
10.9 |
|
| Depreciation and amortization |
|
|
49,369 |
|
|
|
41,600 |
|
|
|
7,769 |
|
|
18.7 |
|
| Income from operations |
|
|
338,364 |
|
|
|
302,735 |
|
|
|
35,629 |
|
|
11.8 |
|
| Floor plan interest expense |
|
|
(25,531 |
) |
|
|
(19,534 |
) |
|
|
5,997 |
|
|
30.7 |
|
| Other interest expense |
|
|
(23,207 |
) |
|
|
(19,491 |
) |
|
|
3,716 |
|
|
19.1 |
|
| Other expense, net |
|
|
(6,103 |
) |
|
|
(1,006 |
) |
|
|
5,097 |
|
|
NM |
|
| Income before income taxes |
|
|
283,523 |
|
|
|
262,704 |
|
|
|
20,819 |
|
|
7.9 |
|
| Income tax expense |
|
|
(86,465 |
) |
|
|
(79,705 |
) |
|
|
6,760 |
|
|
8.5 |
|
| Income tax rate |
|
|
30.5 |
% |
|
|
30.3 |
% |
|
|
|
|
|
|
|
| Net income |
|
$ |
197,058 |
|
|
$ |
182,999 |
|
|
$ |
14,059 |
|
|
7.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income per share |
| $ |
7.72 |
|
|
$ |
6.91 |
|
|
$ |
0.81 |
|
|
11.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted shares outstanding |
|
|
25,521 |
|
|
|
26,490 |
|
|
|
(969 |
) |
|
(3.7 |
)% |
| |
| Lithia Motors, Inc. |
| Key Performance Metrics (Unaudited) |
| |
|
|
|
Twelve months ended
December 31, |
|
|
Increase |
|
|
%
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
(30 |
)bps |
|
|
|
| Used vehicle retail |
|
|
11.8 |
|
|
|
12.5 | |
|
|
(70 |
) |
|
|
|
| Used vehicle wholesale |
|
|
1.6 |
|
|
|
1.7 |
|
|
|
(10 |
) |
|
|
|
| Finance and insurance |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
- |
|
|
|
|
| Service, body and parts |
|
|
48.6 |
|
|
|
49.2 |
|
|
|
(60 |
) |
|
|
|
| Fleet and other |
|
|
4.4 |
|
|
|
2.6 |
|
|
|
180 |
|
|
|
|
| Gross profit margin |
|
|
15.0 |
|
|
|
14.9 |
|
|
|
10 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unit sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
145,772 |
|
| |
137,486 |
|
|
|
8,286 |
|
|
6.0 |
% |
| Used vehicle retail |
|
|
113,498 |
|
|
|
99,109 |
|
|
|
14,389 |
|
|
14.5 |
|
| Total retail units sold |
|
|
259,270 |
|
|
|
236,595 |
|
|
|
22,675 |
|
|
9.6 |
|
| Used vehicle wholesale |
|
|
40,615 |
|
|
|
38,167 |
|
|
|
2,448 |
|
|
6.4 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average selling price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
33,878 |
|
|
$ |
33,111 |
|
|
$ |
767 |
|
|
2.3 |
% |
| Used vehicle retail |
|
|
19,621 |
|
|
|
19,443 |
|
|
|
178 |
|
|
0.9 |
|
| Used vehicle wholesale |
|
|
6,811 |
|
|
|
6,852 |
|
|
|
(41 |
) |
|
(0.6 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average gross profit per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
1,985 |
|
|
$ |
2,039 |
|
|
$ |
(54 |
) |
|
(2.6 |
)% |
| Used vehicle retail |
|
|
2,323 |
|
|
|
2,434 |
|
|
|
(111 |
) |
|
(4.6 |
) |
| Used vehicle wholesale |
|
|
106 |
|
|
|
117 |
|
|
|
(11 |
) |
|
(9.4 |
) |
| Finance and insurance |
|
|
1,276 |
|
|
|
1,196 |
|
|
|
80 |
|
|
6.7 |
|
| Total vehicle (1) |
|
|
3,426 |
|
|
|
3,420 |
|
|
|
6 | |
|
0.2 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue mix |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
56.9 |
% |
|
|
57.9 |
% |
|
|
|
|
|
|
|
| Used vehicle retail |
|
|
25.7 |
|
|
|
24.5 |
|
|
|
|
|
|
|
|
| Used vehicle wholesale |
|
|
3.2 |
|
|
|
3.3 |
|
|
|
|
|
|
|
|
| Finance and insurance, net |
|
|
3.8 |
|
|
|
3.6 |
|
|
|
|
|
|
|
|
| Service, body and parts |
|
|
9.7 |
|
|
|
9.4 |
|
|
|
|
|
|
|
|
| Fleet and other |
|
|
0.7 |
|
|
|
1.3 |
|
|
|
| |
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
Adjusted |
|
|
As reported |
|
| |
|
Twelve Months Ended
December 31, |
|
|
Twelve months ended
December 31, |
|
| Other metrics |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
| SG&A as a % of revenue |
|
10.3 |
% |
|
10.2 |
% |
|
10.4 |
% |
|
10.3 |
% |
| SG&A as a % of gross profit |
|
68.9 |
|
|
67.9 |
|
|
69.1 |
|
|
69.0 |
|
| Operating profit as a % of revenue |
|
4.1 |
|
|
4.3 |
|
|
3.9 |
|
|
3.8 |
|
| Operating profit as a % of gross profit |
|
27.3 |
|
|
28.5 |
|
|
26.0 |
|
|
25.8 |
|
| Pretax margin |
|
3.6 |
|
|
3.8 |
|
|
3.3 |
|
|
3.3 |
|
| Net profit margin |
|
2.2 |
|
|
2.4 |
|
|
2.3 |
|
| 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. |
| Same Store Operating Highlights (Unaudited) |
| |
|
|
|
Twelve months ended
December 31, |
|
|
Increase |
|
|
%
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
4,686,693 |
|
|
$ |
4,534,865 |
|
|
$ |
151,828 |
|
|
3.3 |
% |
| Used vehicle retail |
|
|
2,129,402 |
|
|
|
1,916,309 |
|
|
|
213,093 |
|
|
11.1 |
|
| Used vehicle wholesale |
|
|
261,957 |
|
|
|
260,341 |
|
|
|
1,616 |
|
|
0.6 |
|
| Finance and insurance |
|
|
317,780 |
|
|
|
281,898 |
|
|
|
35,882 |
|
|
12.7 |
|
| Service, body and parts |
|
|
797,397 |
|
|
|
734,508 |
|
|
|
62,889 |
|
|
8.6 |
|
| Fleet and other |
|
|
52,992 |
|
|
|
101,396 |
|
|
|
(48,404 |
) |
|
(47.7 |
) |
| Total revenues |
|
$ |
8,246,221 |
|
|
$ |
7,829,317 |
|
|
$ |
416,904 |
|
|
5.3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
274,772 |
|
|
$ |
279,201 |
|
|
$ |
(4,429 |
) |
|
(1.6 |
)% |
| Used vehicle retail |
|
|
252,554 |
|
|
|
240,299 |
|
|
|
12,255 |
|
|
5.1 |
|
| Used vehicle wholesale |
|
|
4,184 |
|
|
|
4,608 |
| |
|
(424 |
) |
|
(9.2 |
) |
| Finance and insurance |
|
|
317,780 |
|
|
|
281,898 |
|
|
|
35,882 |
|
|
12.7 |
|
| Service, body and parts |
|
|
389,557 |
|
|
|
361,692 |
|
|
|
27,865 |
|
|
7.7 |
|
| Fleet and other |
|
|
2,593 |
|
|
|
2,583 |
|
|
|
10 |
|
|
0.4 |
|
| Total gross profit |
|
$ |
1,241,440 |
|
|
$ |
1,170,281 |
|
|
$ |
71,159 |
|
|
6.1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
5.9 |
% |
|
|
6.2 |
% |
|
|
(30 |
)bps |
|
|
|
| Used vehicle retail |
| |
11.9 |
|
|
|
12.5 |
|
|
|
(60 |
) |
|
|
|
| Used vehicle wholesale |
|
|
1.6 |
|
|
|
1.8 |
|
|
|
(20 |
) |
|
|
|
| Finance and insurance |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
- |
|
|
|
|
| Service, body and parts |
|
|
48.9 |
|
|
|
49.2 |
|
|
|
(30 |
) |
|
|
|
| Fleet and other |
|
|
4.9 |
|
|
|
2.5 |
|
|
|
240 |
|
|
|
|
| Total gross profit |
|
|
15.1 |
|
|
|
14.9 |
|
|
|
20 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unit sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
|
138,310 |
|
|
|
136,993 |
|
|
|
1,317 |
|
|
1.0 |
% |
| Used vehicle retail |
|
|
107,919 |
|
|
|
98,531 |
|
|
|
9,388 |
|
|
9.5 |
|
| Total retail units sold |
|
|
246,229 |
|
|
|
235,524 |
|
|
|
10,705 |
|
|
4.5 |
|
| Used vehicle wholesale |
|
|
38,234 |
|
|
|
37,966 |
|
|
|
268 |
|
|
0.7 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average selling price |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
33,885 |
|
|
$ |
33,103 |
|
|
$ |
782 |
|
|
2.4 |
% |
| Used vehicle retail |
|
|
19,731 |
|
|
|
19,449 |
|
|
| 282 |
|
|
1.4 |
|
| Used vehicle wholesale |
|
|
6,851 |
|
|
|
6,857 |
|
|
|
(6 |
) |
|
(0.1 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average gross profit per unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| New vehicle retail |
|
$ |
1,987 |
|
|
$ |
2,038 |
|
|
$ |
(51 |
) |
|
(2.5 |
)% |
| Used vehicle retail |
|
|
2,340 |
|
|
|
2,439 |
|
|
|
(99 |
) |
|
(4.1 |
) |
| Used vehicle wholesale |
|
|
109 |
|
|
|
121 |
|
|
|
(12 |
) |
|
(9.9 |
) |
| Finance and insurance |
|
|
1,291 |
|
|
|
1,197 |
|
|
|
94 |
|
|
7.9 |
|
| Total vehicle (1) |
|
|
3,449 |
|
| |
3,422 |
|
|
|
27 |
|
|
0.8 |
|
| (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. |
| Segment Operating Highlights (Unaudited) |
| |
|
|
|
Three months ended
December 31, |
|
|
Increase |
|
|
%
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
$ |
886,247 |
|
|
$ |
763,289 |
|
|
$ |
122,958 |
|
|
16.1 |
% |
| Import |
|
|
987,248 |
|
|
|
823,718 |
|
|
|
163,530 |
|
|
19.9 |
|
| Luxury |
|
|
417,544 |
|
|
|
406,581 |
|
|
|
10,963 |
|
|
2.7 |
|
| Total segment revenues |
|
|
2,291,039 |
|
| |
1,993,588 |
|
|
|
297,451 |
|
|
14.9 |
|
| Corporate and other |
|
|
951 |
|
|
|
(306 |
) |
|
|
1,257 |
|
|
(410.8 |
) |
| Total revenues |
|
$ |
2,291,990 |
|
|
$ |
1,993,282 |
|
|
$ |
298,708 |
|
|
15.0 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment Income (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
$ |
21,790 |
|
|
$ |
23,532 |
|
|
$ |
(1,742 |
) |
|
(7.4 |
)% |
| Import |
|
|
23,326 |
|
|
|
21,846 |
|
|
|
1,480 |
|
|
6.8 |
|
| Luxury |
|
|
9,731 |
|
|
|
10,627 |
|
|
|
(896 | ) |
|
(8.4 |
) |
| Total segment income |
|
|
54,847 |
|
|
|
56,005 |
|
|
|
(1,158 |
) |
|
(2.1 |
) |
| Corporate and other |
|
|
32,440 |
|
|
|
26,187 |
|
|
|
6,253 |
|
|
23.9 |
|
| Depreciation and amortization |
|
|
(12,997 |
) |
|
|
(11,056 |
) |
|
|
1,941 |
|
|
17.6 |
|
| Other interest expense |
|
|
(6,599 |
) |
|
|
(4,791 |
) |
|
|
1,808 |
|
|
37.7 |
|
| Other (expense) income, net |
|
|
(1,569 |
) |
|
|
25 |
|
|
|
1,594 |
|
|
NM |
|
| Income before income taxes |
|
$ |
66,122 |
|
|
$ |
66,370 |
|
|
$ |
(248 |
) |
|
(0.4 |
) |
| (1) Segment income for each of the segments is defined as Income before income taxes, less Depreciation and amortization, Other interest expense and Other income, net. |
| Retail New Vehicle Unit Sales |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic | |
12,531 |
|
|
11,124 |
|
|
1,407 |
|
|
12.6 |
% |
| Import |
|
21,188 |
|
|
18,381 |
|
|
2,807 |
|
|
15.3 |
|
| Luxury |
|
4,924 |
|
|
4,906 |
|
|
18 |
|
|
0.4 |
|
| Total |
|
38,643 |
|
|
34,411 |
|
|
4,232 |
|
|
12.3 |
|
| Allocated to management |
|
(96 |
) |
|
(61 |
) |
|
(35 |
) |
|
NM |
|
| Total retail new vehicle unit sales |
|
38,547 |
|
|
34,350 |
|
|
4,197 |
|
|
12.2 |
|
| |
| |
| Lithia Motors, Inc. |
| Segment Operating Highlights (Unaudited) |
| |
| |
|
Twelve months ended
December 31, |
|
|
Increase |
|
|
%
Increase |
|
| |
|
2016 |
|
|
2015 |
|
|
(Decrease) |
|
|
(Decrease) |
|
| Revenues |
|
|
| |
|
|
|
|
|
|
|
|
| Domestic |
|
$ |
3,381,715 |
|
|
$ |
3,038,882 |
|
|
$ |
342,833 |
|
|
11.3 |
% |
| Import |
|
|
3,764,255 |
|
|
|
3,330,949 |
|
|
|
433,306 |
|
|
13.0 |
|
| Luxury |
|
|
1,528,760 |
|
|
|
1,490,632 |
|
|
|
38,128 |
|
|
2.6 |
|
| Total segment revenues |
|
|
8,674,730 |
|
|
|
7,860,463 |
|
|
|
814,267 |
|
|
10.4 |
|
| Corporate and other |
|
|
3,427 |
|
|
|
3,789 |
|
|
|
(362 |
) |
|
(9.6 |
) |
| Total revenues |
|
$ |
8,678,157 |
|
|
$ |
7,864,252 |
|
|
$ |
813,905 |
|
|
10.3 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| Segment Income (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
$ |
106,210 |
|
|
$ |
115,145 |
|
|
$ |
(8,935 |
) |
|
(7.8 |
)% |
| Import |
|
|
110,204 |
|
|
|
98,751 |
|
|
|
11,453 |
|
|
11.6 |
|
| Luxury |
|
|
31,467 |
|
|
|
36,391 |
|
|
|
(4,924 |
) |
|
(13.5 |
) |
| Total segment income |
|
|
247,881 |
|
|
|
250,287 |
|
|
|
(2,406 |
) |
|
(1.0 |
) |
| Corporate and other |
|
|
114,321 |
|
|
|
74,514 |
|
|
|
39,807 |
|
|
53.4 |
|
| Depreciation and amortization |
|
|
(49,369 |
) |
|
|
(41,600 |
) |
|
|
7,769 |
|
|
18.7 |
|
| Other interest expense |
|
|
(23,207 | ) |
|
|
(19,491 |
) |
|
|
3,716 |
|
|
19.1 |
|
| Other expense, net |
|
|
(6,103 |
) |
|
|
(1,006 |
) |
|
|
5,097 |
|
|
NM |
|
| Income before income taxes |
|
$ |
283,523 |
|
|
|
262,704 |
|
|
$ |
20,819 |
|
|
7.9 |
|
| (1) Segment income for each of the segments is defined as Income before income taxes, less Depreciation and amortization, Other interest expense and Other expense, net. |
| Retail New Vehicle Unit Sales |
|
|
|
|
|
|
|
|
|
|
|
|
| Domestic |
|
47,707 |
|
|
45,080 |
|
|
2,627 |
|
|
5.8 |
% |
| Import |
|
80,769 |
|
|
75,091 |
|
|
5,678 |
|
|
7.6 |
|
| Luxury |
|
17,591 |
|
|
17,556 |
|
|
35 |
|
|
0.2 |
|
| Total |
|
146,067 |
|
|
137,727 |
|
|
8,340 |
|
|
6.1 |
|
| Allocated to management |
|
(295 | ) |
|
(241 |
) |
|
(54 |
) |
|
NM |
|
| Total retail new vehicle unit sales |
|
145,772 |
|
|
137,486 |
|
|
8,286 |
|
|
6.0 |
|
| |
| |
| Lithia Motors, Inc. |
| Other Highlights (Unaudited) |
| |
| |
|
As of |
| |
|
December 31, |
|
December 31, |
|
December 31, |
| |
|
2016 |
|
2015 |
|
2014 |
| Days Supply (1) |
|
|
|
|
|
|
| New vehicle inventory |
|
68 |
|
67 |
|
62 |
| Used vehicle inventory |
|
56 |
|
55 |
|
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 December 31, 2016 |
| Current ratio |
|
Not less than 1.10 to 1 |
|
|
1.26 to 1 |
| Fixed charge coverage ratio |
|
Not less than 1.20 to 1 |
|
|
2.63 to 1 |
| Leverage ratio |
|
Not more than 5.00 to 1 |
|
|
2.18 to 1 |
| Funded debt restriction |
|
Not more than $900 million |
|
$ |
485.2 million |
| |
|
|
| |
|
| |
| Lithia Motors, Inc. |
| Other Highlights (Unaudited) |
| |
| |
|
Three months ended
December 31, |
|
|
Twelve months ended
December 31, |
|
| |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
| New vehicle unit sales brand mix |
|
|
|
|
|
|
|
|
|
|
|
|
| Honda, Acura |
|
21.5 |
% |
|
22.1 |
% |
|
22.7 |
% |
|
22.4 |
% |
| Toyota, Lexus |
|
19.0 |
|
|
19.6 |
|
|
19.5 |
|
|
19.9 |
|
| Chrysler, Fiat |
|
16.9 |
|
|
18.6 |
|
|
18.4 |
|
|
18.9 |
|
| General Motors |
|
9.3 |
|
|
9.0 |
|
|
9.0 |
|
|
9.2 |
|
| Subaru |
|
8.5 |
|
|
7.4 |
|
|
7.6 |
|
|
6.9 |
|
| Ford |
|
6.3 |
|
|
4.9 |
|
|
5.4 |
|
|
4.7 | |
| BMW, Mini |
|
5.5 |
|
|
6.9 |
|
|
5.3 |
|
|
5.9 |
|
| Nissan |
|
4.3 |
|
|
3.5 |
|
|
3.9 |
|
|
3.7 |
|
| Volkswagen, Audi |
|
4.0 |
|
|
2.9 |
|
|
3.2 |
|
|
3.1 |
|
| Hyundai |
|
2.1 |
|
|
1.9 |
|
|
2.0 |
|
|
2.1 |
|
| Mercedes Benz |
|
1.3 |
|
|
1.6 |
|
|
1.3 |
|
|
1.5 |
|
| Kia |
|
1.1 |
|
|
1.2 |
|
|
1.3 |
|
|
1.3 |
|
| Other |
|
0.2 |
|
|
0.4 |
|
|
0.4 |
|
|
0.4 |
|
| |
|
|
|
|
|
|
| |
|
Three months ended
December 31, |
|
|
Twelve months ended
December 31, |
|
| |
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
| Revenue geographic mix | |
|
|
|
|
|
|
|
|
|
|
|
| California |
|
22.2 |
% |
|
22.1 |
% |
|
22.5 |
% |
|
21.6 |
% |
| Oregon |
|
16.6 |
|
|
16.8 |
|
|
16.7 |
|
|
16.7 |
|
| New Jersey |
|
13.8 |
|
|
15.1 |
|
|
14.0 |
|
|
14.6 |
|
| Texas |
|
11.9 |
|
|
13.6 |
|
|
13.1 |
|
|
15.0 |
|
| Montana |
|
5.4 |
|
|
6.2 |
|
|
6.1 |
|
|
6.0 |
|
| Washington |
|
5.2 |
|
|
5.5 |
|
|
5.3 |
|
|
5.2 |
|
| Alaska |
|
4.4 |
|
|
5.4 |
|
|
4.8 |
|
|
5.4 |
|
| New York |
|
6.7 |
|
|
2.8 |
|
|
4.2 |
|
|
2.9 |
|
| Nevada |
|
2.8 |
|
|
3.0 |
| |
3.0 |
|
|
3.0 |
|
| Idaho |
|
2.5 |
|
|
2.8 |
|
|
2.7 |
|
|
2.9 |
|
| Iowa |
|
2.4 |
|
|
2.7 |
|
|
2.6 |
|
|
2.8 |
|
| Hawaii |
|
2.1 |
|
|
1.8 |
|
|
2.0 |
|
|
1.5 |
|
| North Dakota |
|
1.2 |
|
|
1.4 |
|
|
1.3 |
|
|
1.5 |
|
| New Mexico |
|
0.7 |
|
|
0.8 |
|
|
0.8 |
|
|
0.9 |
|
| Massachusetts |
|
0.7 |
|
|
- |
|
|
0.5 |
|
|
- |
|
| Vermont |
|
0.9 |
|
|
- |
|
|
0.3 |
|
|
- |
|
| Wyoming |
|
0.5 |
|
|
- |
|
|
0.1 |
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
As of February 15, 2017 |
|
| Current store count mix |
|
# of stores |
|
% of total |
|
| Chrysler, Fiat |
|
30 |
|
19.5 |
% |
| Honda, Acura |
|
22 |
|
14.3 |
|
| Toyota, Lexus |
|
21 |
|
13.6 |
|
| General Motors |
|
18 |
|
11.7 |
|
| Ford |
|
12 |
|
7.8 |
|
| BMW, Mini |
|
11 |
|
7.1 |
|
| Volkswagen, Audi |
|
10 |
|
6.5 |
|
| Subaru |
|
9 |
|
5.8 |
|
| Nissan |
|
7 |
|
4.5 |
|
| Hyundai |
|
5 |
|
3.2 |
|
| Mercedes Benz |
|
4 |
|
2.6 |
|
| Kia |
|
3 |
|
1.9 |
|
| Other |
|
2 |
|
1.5 |
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| Lithia Motors, Inc. |
| Consolidated Balance Sheets (Unaudited) |
| (In thousands) |
| |
| |
|
December 31, 2016 |
|
December 31, 2015 |
|
| Cash and cash equivalents |
|
$ |
50,282 |
|
$ |
45,008 |
|
| Trade receivables, net |
|
|
417,714 |
|
|
308,462 |
|
| Inventories, net |
|
|
1,772,587 |
|
|
1,470,987 |
|
| Other current assets |
|
|
46,611 |
|
|
54,022 |
|
| Total current assets |
|
$ |
2,287,194 |
|
$ |
1,878,479 |
|
| |
|
|
|
|
|
|
|
| Property and equipment, net |
|
|
1,006,130 |
|
|
876,660 |
|
| Goodwill |
|
|
259,399 |
|
|
213,220 |
|
| Franchise value |
|
|
184,268 |
|
|
157,699 |
|
| Other non-current assets |
|
|
107,159 |
|
|
99,072 |
|
| Total assets |
|
$ |
3,844,150 |
|
$ |
3,225,130 |
|
| |
|
|
|
|
|
|
|
| Floor plan notes payable |
|
$ |
94,602 |
|
$ |
48,083 |
|
| Floor plan notes payable: non trade |
|
|
1,506,895 |
|
|
1,265,872 |
|
| Current maturities of long-term debt |
|
|
20,965 |
|
|
38,506 |
|
| Trade payables |
|
|
88,423 |
|
|
70,871 |
|
| Accrued liabilities |
|
|
211,109 |
| |
167,107 |
|
| Total current liabilities |
|
$ |
1,921,994 |
|
$ |
1,590,439 |
|
| |
|
|
|
|
|
|
|
| Long-term debt |
|
|
769,916 |
|
|
604,680 |
|
| Deferred revenue |
|
|
81,929 |
|
|
66,734 |
|
| Deferred income taxes |
|
|
59,075 |
|
|
53,129 |
|
| Other long-term liabilities |
|
|
100,460 |
|
|
81,984 |
|
| Total liabilities |
|
$ |
2,933,374 |
|
$ |
2,396,966 |
|
| |
|
|
|
|
|
|
|
| Class A common stock |
|
|
165,512 |
|
|
258,410 |
|
| Class B common stock |
|
|
219 |
|
|
316 |
|
| Additional paid-in capital |
|
|
41,225 |
|
|
38,822 |
|
| Accumulated other comprehensive loss |
|
|
- |
|
|
(277 |
) |
| Retained earnings |
|
|
703,820 |
|
|
530,893 |
|
| Total liabilities & stockholders' equity |
|
$ |
3,844,150 |
|
$ |
3,225,130 | |
| |
| |
| Lithia Motors, Inc. |
| Summarized Cash Flow from Operations (Unaudited) |
| (In thousands) |
| |
| |
Twelve Months Ended December 31, |
|
| |
2016 |
|
2015 |
|
| Net income |
$ |
197,058 |
|
$ |
182,999 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
| Asset impairments |
|
13,992 |
|
|
20,124 |
|
| Depreciation and amortization |
|
49,369 |
|
|
41,600 |
|
| Stock-based compensation |
|
11,047 |
|
|
11,871 |
|
| (Gain) loss on disposal of assets |
|
(4,343 |
) |
|
203 |
|
| Gain on sale of franchise |
|
(1,102 |
) |
|
(5,919 |
) |
| Deferred income taxes |
|
10,138 |
|
|
12,341 |
|
| Excess tax benefit from share-based payment arrangements |
|
(4,389 |
) |
|
(5,012 |
) |
| (Increase) decrease: |
|
|
|
|
|
|
| |
Trade receivables, net |
|
(105,961 |
) |
|
(13,047 |
) |
| |
Inventories |
|
(168,847 |
) |
|
(197,079 | ) |
| |
Other assets |
|
(13,305 |
) |
|
(31,290 |
) |
| Increase (decrease): |
|
|
|
|
|
|
| |
Floor plan notes payable, net |
|
16,385 |
|
|
7,035 |
|
| |
Trade payables |
|
16,449 |
|
|
674 |
|
| |
Accrued liabilities |
|
42,853 |
|
|
16,273 |
|
| |
Other long-term liabilities and deferred revenue |
|
27,173 |
|
|
33,766 |
|
| Net cash provided by operating activities |
$ |
86,517 |
|
$ |
74,539 |
|
| |
| |
| Lithia Motors, Inc. |
| Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited) |
| (In thousands) |
| |
| |
|
Twelve Months Ended December 31, |
|
| Net cash provided by operating activities |
|
2016 |
|
|
2015 |
|
| As reported |
|
$ |
86,517 |
|
|
$ |
74,539 |
|
| |
Floor plan notes payable, non-trade, net |
|
|
252,893 |
|
|
|
136,201 |
|
| |
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory |
|
|
(94,550 |
) |
|
|
(25,642 |
) |
| Adjusted |
| $ |
244,860 |
|
|
$ |
185,098 |
|
| |
| |
| Lithia Motors, Inc. |
| Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) |
| (In thousands, except for per share data) |
| |
| |
|
Three Months Ended December 31, 2016 |
|
| |
|
As reported |
|
|
Equity
investment
fair value
adjustment |
|
|
Legal
Reserve |
|
|
Tax
Attribute |
|
|
Adjusted |
|
| Asset impairments |
|
$ |
3,498 |
|
|
$ |
(3,498 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Selling, general and administrative |
|
|
236,824 |
|
|
|
- |
|
|
|
(2,030 |
) |
|
|
- |
|
|
|
234,794 |
|
| Income from operations |
|
|
81,517 |
|
|
|
3,498 |
|
|
|
2,030 |
|
|
|
- |
|
|
|
87,045 |
|
| Other (expense) income, net |
|
|
(1,569 |
) |
|
|
2,065 |
|
|
|
- |
|
|
|
- |
| |
|
497 |
|
| Income before income taxes |
|
$ |
66,122 |
|
|
$ |
5,563 |
|
|
$ |
2,030 |
|
|
$ |
- |
|
|
$ |
73,715 |
|
| Income tax expense |
|
|
(14,803 |
) |
|
|
(8,156 |
) |
|
|
(2,503 |
) |
|
|
(1,320 |
) |
|
|
(26,782 |
) |
| Net income |
|
$ |
51,319 |
|
|
$ |
(2,593 |
) |
|
$ |
(473 |
) |
|
$ |
(1,320 |
) |
|
$ |
46,933 |
|
| Diluted earnings per share |
|
$ |
2.03 |
|
|
$ |
(0.10 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.05 |
) |
|
$ |
1.86 |
|
| Diluted share count |
|
|
25,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
Three Months Ended December 31, 2015 | |
| |
|
As reported |
|
|
Asset impairment |
|
|
Equity
investment
fair value
adjustment |
|
|
Adjusted |
|
| Asset impairments |
|
$ |
5,733 |
|
|
$ |
(1,603 |
) |
|
$ |
(4,130 |
) |
|
$ |
- |
|
| Income from operations |
|
|
76,415 |
|
|
|
1,603 |
|
|
|
4,130 |
|
|
|
82,148 |
|
| Other (expense) income, net |
|
|
25 |
|
|
|
- |
|
|
|
1,733 |
|
|
|
1,758 |
|
| Income before income taxes |
|
$ |
66,370 |
|
|
$ |
1,603 |
|
|
$ |
5,864 |
|
|
$ |
73,837 |
|
| Income tax expense |
|
|
(18,638 |
) |
|
|
(605 |
) |
|
|
(8,516 |
) |
|
|
(27,759 |
) |
| Net income |
|
$ |
47,732 |
|
|
$ |
998 |
|
|
$ |
(2,652 |
) |
|
$ | 46,078 |
|
| Diluted earnings per share |
|
$ |
1.80 |
|
|
$ |
0.04 |
|
|
$ |
(0.10 |
) |
|
$ |
1.74 |
|
| Diluted share count |
|
|
26,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
| Lithia Motors, Inc. |
| Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) |
| (In thousands, except for per share data) |
| |
| |
|
Twelve Months Ended December 31, 2016 |
|
| |
|
As reported |
|
|
Disposal gain on sale of store |
|
Equity investment fair value adjustment |
|
Legal Reserve |
|
Tax
Attribute |
|
Adjusted |
|
| Asset impairments |
|
$ |
13,992 |
|
|
$ |
- |
|
|
$ |
(13,992 |
) |
|
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Selling, general and administrative |
|
|
899,590 |
|
|
|
1,087 |
|
|
|
- |
|
|
(3,936 |
) |
|
|
- |
|
|
|
896,741 |
|
| Income from operations |
|
|
338,364 |
| |
|
(1,087 |
) |
|
|
13,992 |
|
|
3,936 |
|
|
|
- |
|
|
|
355,205 |
|
| Other (expense) income, net |
|
|
(6,103 |
) |
|
|
- |
|
|
|
8,262 |
|
|
- |
|
|
|
- |
|
|
|
2,159 |
|
| Income before income taxes |
|
$ |
283,523 |
|
|
$ |
(1,087 |
) |
|
$ |
22,254 |
|
|
3,936 |
|
|
$ |
- |
|
|
$ |
308,626 |
|
| Income tax expense |
|
|
(86,465 |
) |
|
|
426 |
|
|
|
(28,530 |
) |
|
(3,250 |
) |
|
|
(1,320 |
) |
|
|
(119,139 |
) |
| Net income |
|
$ |
197,058 |
|
|
$ |
(661 |
) |
|
$ |
(6,276 |
) |
|
686 |
|
|
$ |
(1,320 |
) |
|
$ |
189,487 |
|
| Diluted earnings per share |
|
$ | 7.72 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.25 |
) |
|
0.03 |
|
|
$ |
(0.05 |
) |
|
$ |
7.42 |
|
| Diluted share count |
|
|
25,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Twelve Months Ended December 31, 2015 |
|
| |
|
As reported |
|
|
Disposal gain on sale of store |
|
Asset impairment |
|
Equity investment
fair value
adjustment |
|
Transition Agreement |
|
Adjusted |
|
| Asset impairments |
|
$ |
20,124 |
|
|
$ |
- |
|
|
$ |
(3,603 |
) |
|
$ |
(16,521 |
) |
|
|
|
|
|
$ |
- |
|
| Selling, general and administrative |
|
|
811,175 |
|
|
|
5,919 |
|
|
|
- | |
|
|
- |
|
|
|
(18,296 |
) |
|
|
798,798 |
|
| Income from operations |
|
|
302,735 |
|
|
|
(5,919 |
) |
|
|
3,603 |
|
|
|
16,521 |
|
|
|
18,296 |
|
|
|
335,236 |
|
| Other (expense) income, net |
|
|
(1,006 |
) |
|
|
- |
|
|
|
- |
|
|
|
6,930 |
|
|
|
|
|
|
|
5,924 |
|
| Income before income taxes |
|
$ |
262,704 |
|
|
$ |
(5,919 |
) |
|
$ |
3,603 |
|
|
$ |
23,451 |
|
|
$ |
18,296 |
|
|
$ |
302,135 |
|
| Income tax expense |
|
|
(79,705 |
) |
|
|
2,309 |
|
|
|
(1,385 |
) |
|
|
(30,832 |
) |
|
|
(6,507 |
) |
|
|
(116,120 |
) |
| Net income |
|
$ |
182,999 | |
|
$ |
(3,610 |
) |
|
$ |
2,218 |
|
|
$ |
(7,381 |
) |
|
$ |
11,789 |
|
|
$ |
186,015 |
|
| Diluted earnings per share |
|
$ |
6.91 |
|
|
$ |
(0.14 |
) |
|
$ |
0.08 |
|
|
$ |
(0.28 |
) |
|
$ |
0.45 |
|
|
$ |
7.02 |
|
| Diluted share count |
|
|
26,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0)
(0)