Lithia Motors Reports First Quarter 2010 Results; Exceeds Guidance, Raises Full Year Estimate
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MEDFORD, OR, Apr 27, 2010 (MARKETWIRE via COMTEX) --Lithia Motors, Inc. (NYSE: LAD) today reported 2010 adjusted first quarter earnings of $0.09 per diluted share. This compares to a 2009 adjusted first quarter net loss from continuing operations of $(0.01) per diluted share, and includes approximately 5.3 million additional shares in 2010 compared to 2009 due mainly to our recent equity offering. As shown in the attached reconciliation table, the 2010 adjusted results exclude non-core charges of $0.04 per share on asset impairments and expenses related to reserves offset by gains on disposal of assets, while the 2009 adjusted results from continuing operations exclude non-core charges of $0.03 per share on asset impairments offset by a one-time gain related to debt extinguishment. Unadjusted, net income from continuing operations was $1.3 million, or $0.05 per diluted share, for the quarter ended March 31, 2010, compared to a net loss from continuing operations of $(0.8) million, or $(0.04) per diluted share for the first quarter of 2009. First quarter 2010 revenue totaled $463 million, compared to $409 million in the year-ago period, an increase of 13.4%, driven primarily by higher used vehicle sales. Same store new vehicle sales increased 11.5% compared to the prior year. Excluding the impact of Chrysler sales, same store new vehicle sales increased 25.3%. Same store used vehicle retail sales increased 22.4% when compared to the prior year. Service, body and parts same store sales declined 6.0% compared to the prior year. Sid DeBoer, Lithia's Chairman and CEO, commented, "Strong retail vehicle sales in March, coupled with our disciplined cost controls generated solid EPS growth over the prior year. This improvement was achieved including approximately 25% more shares outstanding." Balance Sheet Update Lithia ended the period with $90.8 million in immediately available funds, including $11.4 million in cash, $47.2 million in availability on its revolving credit facility, and $32.2 million in unfinanced new vehicle inventory. At March 31, 2010, Lithia was in compliance with all debt covenants, and has no mortgage maturities until January 2011. Operational Update Due to recent events, Lithia is also announcing the reclassification of two stores from discontinued operations to continuing operations in the first quarter. The effects of the reclassification are included in the financial results above on a comparative basis for all periods presented. "With these reclassifications, we no longer have any operating stores classified within discontinued operations. The right-sizing initiative we began in 2008 is nearly completed," said DeBoer. "We continue to seek accretive acquisitions to achieve our diversification strategy and believe our patience will be rewarded," he concluded. Increased Outlook for 2010 Lithia is providing 2010 second quarter earnings guidance within a range of $0.19 to $0.21 per diluted share. Full-year 2010 earnings guidance has been increased and is projected within a range of $0.63 to $0.69 per diluted share. Both projections are based on the following revised assumptions: -- Total revenues in range of $1.90 to $1.95 billion
-- New vehicle same store sales increasing 5.9%
-- New vehicle gross margin from 8.3% to 8.5%
-- Used vehicle same store sales increasing 11.2%
-- Used vehicle gross margin from 14.2% to 14.5%
-- Service body and parts same store sales decreasing 3.0%
-- Service body and parts gross margin from 47.8% to 48.1%
-- Finance and insurance gross profit of $955 per unit
-- Tax rate of 38.5%
-- Estimated average diluted shares outstanding of 26.2 million
-- Capital expenditures of approximately $2.7 million
-- Chrysler market share consistent with full year 2009 levels
-- Guidance excludes the impact of future acquisitions, dispositions, and
any potential non-core items
First Quarter Earnings Conference Call The first quarter conference call may be accessed at 2:00 p.m. Pacific Time today by telephone at (800) 254-5933 Conference ID: 68515213 or via the internet (audio webcast) at www.lithia.com by clicking on "Investor Relations." A playback of the conference call will be available after 5 p.m. Pacific Time April 27th, 2010 through May 11, 2010 by calling (800) 642-1687 access code: 68515213 and via the internet at www.lithia.com. About Lithia Lithia Motors, Inc. is the ninth largest automotive retailer in the United States and a Fortune 800 company. Lithia sells 26 brands of new and all brands of used vehicles at 85 stores, which are located in 12 states. Lithia also sells used vehicles; arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations. For additional information on Lithia Motors, contact the Investor Relations Department at (541) 776-6591 or visit www.lithia.com and click on "Investor Relations." Sites
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Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. Forward-looking statements in this press release include our guidance regarding second quarter and full year 2010 results and our belief we can find accretive diversifying acquisition opportunities. Forward looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks" or "will." These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation, future economic conditions and others set forth from time to time in the company's filings with the SEC. We urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook. Non-GAAP Financial Measures The attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income and diluted earnings per share from continuing operations, cash flow from operations adjusted to include the change in non-trade floorplan debt, adjusted to exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding adjustments for items not related to the Company's ongoing core business operations or other non-cash adjustments, and improves the period-to-period comparability of the Company's results from its core business operations. LITHIA MOTORS, INC.
(In thousands except per share data)
Unaudited Three Months Ended
March 31,
---------------------- Increase % Increase
2010 2009 (Decrease) (Decrease)
---------- ---------- ---------- ---------
New vehicle sales $ 217,447 $ 194,318 $ 23,129 11.9 %
Used vehicle sales 160,688 126,230 34,458 27.3
Finance and insurance 14,740 13,646 1,094 8.0
Service, body and parts 69,696 73,878 (4,182) (5.7)
Fleet and other revenues 806 573 233 40.7
---------- ---------- ---------- ---------
Total revenues 463,377 408,645 54,732 13.4
---------- ---------- ---------- ---------
Cost of sales 376,763 328,683 48,080 14.6
---------- ---------- ---------- ---------
Gross profit 86,614 79,962 6,652 8.3
Asset impairment charges 1,491 1,653 (162) (9.8)
SG&A expense 71,881 69,832 2,049 2.9
Depreciation and
amortization 4,751 4,114 637 15.5
---------- ---------- ---------- ---------
Income from operations 8,491 4,363 4,128 94.6
Floorplan interest expense (2,783) (2,929) (146) (5.0)
Other interest expense (3,588) (3,987) (399) (10.0)
Other income, net 66 1,165 (1,099) (94.4)
---------- ---------- ---------- ---------
Income (loss) from
continuing operations
before income taxes 2,186 (1,388) 3,574 NM
Income tax expense
(benefit) 844 (615) 1,459 NM
Income tax rate 38.6% 44.3%
---------- ---------- ---------- ---------
Income (loss) from
continuing operations 1,342 (773) 2,115 NM %
Income (loss) from
discontinued operations,
net of income tax (75) 2,102 (2,177) NM
---------- ---------- ---------- ---------
Net income $ 1,267 $ 1,329 (62) (4.7)%
========== ========== ========== =========
Diluted net income (loss)
per share:
Continuing operations $ 0.05 $ (0.04) $ 0.09 NM %
Discontinued operations - 0.10 (0.10) (100.0)
---------- ---------- ---------- ---------
Net income per share $ 0.05 $ 0.06 $ (0.01) (16.7)
========== ========== ========== =========
Diluted shares outstanding 26,019 20,750 5,269 25.4 %
NM - not meaningful
LITHIA MOTORS, INC.
(Continuing operations)
Unaudited Three Months Ended
March 31,
---------------------- Increase % Increase
2010 2009 (Decrease) Decrease
---------- ---------- ---------- ----------
Unit sales:
New vehicle 6,946 6,460 486 7.5%
Used - retail vehicle 8,281 7,156 1,125 15.7
Used - wholesale 3,320 3,196 124 3.9
Total units sold 18,547 16,812 1,735 10.3
Average selling price:
New vehicle $ 31,305 $ 30,080 $ 1,225 4.1%
Used - retail vehicle 16,536 15,316 1,220 8.0
Used - wholesale 7,154 5,203 1,951 37.5
Gross margin/profit data
New vehicle retail 8.5% 8.7% (20) bps
Used vehicle retail 13.7% 12.5% 120 bps
Used vehicle wholesale 1.6% 2.1% (50) bps
Service, body & parts 48.7% 47.5% 120 bps
Finance & insurance 100.0% 100.0% -
Gross profit margin 18.7% 19.6% (90) bps
New retail gross
profit/unit $ 2,668 $ 2,608 $ 60
Used retail gross
profit/unit 2,258 1,913 345
Used wholesale gross
profit/unit 112 110 2
Finance & insurance/retail
unit 968 1,002 (34)
Revenue mix:
New vehicles 46.9% 47.6%
Used retail vehicles 29.6% 26.8%
Used wholesale vehicles 5.1% 4.1%
Finance and insurance, net 3.2% 3.3%
Service and parts 15.0% 18.1%
Fleet and other 0.2% 0.1%
LITHIA MOTORS, INC.
(Continuing operations) Three Months Ended
Unaudited March 31,
------------------------
2010 2009
----------- -----------
New vehicle unit sales brand mix:
Chrysler Brands 26.7% 36.2%
General Motors 16.1% 14.4%
Toyota 14.6% 14.3%
Honda 8.3% 7.9%
Hyundai 6.3% 4.4%
Subaru 5.9% 4.6%
Ford 5.5% 4.8%
BMW 5.5% 4.9%
Nissan 3.9% 3.2%
Volkswagen, Audi 3.3% 3.1%
Kia 2.1% -%
Mercedes 1.0% 1.1%
Other 0.8% 1.1%
(Selected Same Store Data)
Unaudited Three Months Ended
March 31,
------------------------
2010 2009
vs. vs.
2009 2008
----------- -----------
Same store revenue:
New vehicle retail sales 11.5 % (39.0)%
Chrysler Brands (13.0)% (38.6)%
General Motors 19.1 % (47.4)%
Toyota 16.1 % (43.2)%
All other brands 31.5 % (32.6)%
Used vehicle retail sales 22.4 % (12.7)%
Used wholesale sales 41.9 % (47.8)%
Total vehicle sales (excluding fleet) 16.8 % (32.6)%
Finance & insurance sales (0.4)% (32.6)%
Service, body and parts sales (6.0)% (5.2)%
Total sales (excluding fleet) 12.1 % (28.9)%
Total gross profit (excluding fleet) 7.2 % (16.9)%
LITHIA MOTORS, INC.
Condensed balance sheet (dollars in thousands)
Unaudited
March 31, 2010 December 31, 2009
---------------- ----------------
Cash & cash equivalents $ 11,421 $ 12,776
Trade receivables* 60,681 52,097
Inventory 360,025 328,726
Assets held for sale 2,202 11,693
Other current assets 10,305 12,771
---------------- ----------------
Total current assets 444,634 418,063
Real estate, net 323,194 326,625
Equipment & other, net 56,975 59,429
Other assets 96,697 90,983
---------------- ----------------
Total assets $ 921,500 $ 895,100
================ ================
Flooring notes payable $ 236,923 $ 210,488
Liabilities related to assets held for
sale 2,140 5,050
Current maturities of Line of Credit - 24,000
Other current liabilities 105,760 81,639
---------------- ----------------
Total current liabilities 344,823 321,177
Real estate debt 231,285 230,265
Other long-term debt 2,763 2,800
Other liabilities 34,151 33,820
---------------- ----------------
Total liabilities $ 613,022 $ 588,062
---------------- ----------------
Shareholders' equity 308,478 307,038
---------------- ----------------
Total liabilities & shareholders'
equity $ 921,500 $ 895,100
================ ================
*Note: Includes contracts-in-transit of $26,046 and $21,940 for 2010 and
2009, respectively
Other information
Lt debt/total cap (excludes real
estate) 1% 1%
Book value per share $ 11.92 $ 11.90
Debt covenant ratios
As of March 31,
Requirement 2010
---------------- ----------------
Minimum tangible net worth Not less than $ 264.5 million
$200 million
Vehicle equity Not less than $ 141.0 million
$45 million
Fixed charge coverage ratio Not less than 1.25 to 1
1.15 to 1
Liabilities to tangible net worth ratio Not more than 2.32 to 1
4.00 to 1
The following table reconciles reported GAAP income (loss) per the income
statement to non-GAAP income (loss):
Unaudited Three Months Ended March 31,
Net Income / Diluted earnings
(Loss) per share
------------------ ------------------
Continuing Operations 2010 2009 2010 2009
-------- -------- --------- --------
As reported $ 1,342 $ (773) $ 0.05 $ (0.04)
Impairments and disposal gain 731 1,147 0.03 0.06
Reserve adjustments 160 - 0.01 -
Gain on extinguishment of debt - (607) - (0.03)
-------- -------- --------- --------
Adjusted $ 2,233 $ (233) $ 0.09 $ (0.01)
Discontinued Operations
As reported $ (75) $ 2,102 $ - $ 0.10
Impairments and disposal
(gain) loss 10 (3,469) - (0.17)
-------- -------- --------- --------
Adjusted $ (65) $ (1,367) $ - $ (0.07)
Consolidated Operations
As reported $ 1,267 $ 1,329 $ 0.05 $ 0.06
Adjusted $ 2,168 $ (1,600) $ 0.09 $ (0.08)
The following table reconciles GAAP cash flows from operations per the
statement of cash flows to non-GAAP cash flows from operations:
Consolidated Statement of Cash Flows
Unaudited
Three Months Ended March 31,
2010 2009
-------------- --------------
As reported
Cash flows from operations $ (10,449) $ 15,726
Flooring notes payable: non-trade 20,615 (16,111)
-------------- --------------
Adjusted $ 10,166 $ (385)
2010 2009
-------------- --------------
As reported
Cash flows from financing $ 7,318 $ (25,644)
Flooring notes payable: non-trade (20,615) 16,111
-------------- --------------
Adjusted $ (13,297) $ (9,533)
Lithia Motors
Investor Relations
(541) 776-6591
www.lithia.com
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