Lithia Reports Adjusted EPS of $1.86 for Second Quarter of 2015; Revenues Increase 63%

MEDFORD, OR--(Marketwired - Jul 22, 2015) - Lithia Motors, Inc. (NYSE: LAD) reported adjusted net income of $49.4 million for the second quarter of 2015, the highest quarterly net income in company history and a 40% increase over the prior year period.

2015 second quarter adjusted net income was $1.86 per diluted share. This compares to 2014 second quarter adjusted net income from continuing operations of $35.2 million, or $1.34 per diluted share.

Unadjusted net income from continuing operations for the second quarter of 2015 was $51.2 million, or $1.93 per diluted share, compared to $35.2 million, or $1.34 per diluted share, for the second quarter of 2014. As shown in the attached non-GAAP reconciliation tables, the 2015 second quarter adjusted results exclude a $0.07 net benefit from non-core items related to a gain on the sale of a store, asset impairment charges related to real estate and a net benefit on an equity investment. The 2014 second quarter adjusted results from continuing operations exclude non-core charges related to acquisition expenses for the pending DCH combination offset by a non-core benefit resulting from a tax attribute, resulting in no change to earnings per share.

Second quarter 2015 revenue from continuing operations increased $775 million, or 63%, to $2.0 billion from $1.2 billion for the second quarter of 2014.

Second Quarter-over-Quarter Operating Highlights:

• Total same store sales increased 11%
• New vehicle same store sales increased 8%
• Used vehicle retail same store sales increased 16%
• Service, body and parts same store sales increased 10%
• Same store F&I per unit increased $78 to $1,280
• Adjusted SG&A expense as a percentage of gross profit was 66.6%
  
  

"Our second quarter earnings were the highest quarterly earnings in company history," said Bryan DeBoer, President and CEO. "Total same store sales grew double digits, led by a 16% increase in used vehicle sales. Total revenues increased 63% and adjusted earnings per share increased 39% over the prior year period. Our store leaders remain focused on continuing to capture more new vehicle market share, increasing used vehicle unit volume and growing service revenue while providing an exceptional customer experience. Within both DCH and Lithia, many opportunities remain to improve store performance and to find accretive acquisitions."

For the first six months of 2015, revenue from continuing operations increased 65% to $3.8 billion from $2.3 billion in 2014.

For the first six months of 2015, adjusted net income per diluted share increased 38% to $3.26 from $2.36 for the first six months of 2014. Unadjusted net income from continuing operations was $3.47 per diluted share for the first six months of 2015, compared to $2.27 per diluted share for the first six months of 2014.

Chris Holzshu, SVP and CFO, said, "Adjusted SG&A as a percentage of gross profit was 66.6% in the second quarter of 2015, bringing the first half of the year down to 68.8%. DCH has been able to reduce selling costs more quickly than we anticipated. As we continue to integrate operations, we are targeting consolidated SG&A as a percentage of gross profit in the mid-60s on a full year basis. Additionally, same store F&I per unit was $1,280 per unit, an increase of $78 over the prior year and the best result in company history. We still believe opportunity remains to improve this number given continued focus by our store personnel."

Balance Sheet Update
We ended the second quarter with $23 million in cash and $168 million in available credit on our credit facilities. Additionally, approximately $156 million of our operating real estate is currently unfinanced, which could provide an estimated additional $117 million in available liquidity, for total potential liquidity of $308 million.

Dividend Payment
Our Board of Directors has approved a dividend of $0.20 per share related to second quarter 2015 financial results. We will pay the dividend August 21, 2015 to shareholders of record on August 7, 2015.

2015 Outlook
We project 2015 third quarter earnings of $1.83 to $1.87 per diluted share and 2015 full year earnings of $6.63 to $6.72 per diluted share. Both projections are based on the following annual assumptions:

Continuing Operations Projections

• Total revenues of $7.6 to $7.8 billion
• New vehicle sales increasing 45.0%
• New vehicle gross margin of 5.9% to 6.1%
• Used vehicle sales increasing 40.0%
• Used vehicle gross margin of 12.6% to 12.8%
• Service body and parts sales increasing 42.0%
• Service body and parts gross margin of 48.8% to 49.2%
• Finance and insurance gross profit of $1,200 per unit
• Tax rate of 40.0%
• Average diluted shares outstanding of 26.5 million 
  
  

Same Store Projections

• Total revenues of $5.7 to $5.9 billion
• New vehicle same store sales increasing 7.0%
• Used vehicle same store sales increasing 12.0%
• Service body and parts same store sales increasing 8.5%
• Finance and insurance gross profit of $1,250 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.

Second Quarter Earnings Conference Call and Updated Presentation
The second quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the second 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 retailer in the United States. Lithia sells 31 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; continued improvement of SG&A as a percentage of gross profit; generating third quarter earnings per share of $1.83 to $1.87 per diluted share and 2015 full year earnings of $6.63 to $6.72 per diluted share; and all projections set forth under the headings "2015 Outlook," "Continuing Operations Projections" and "Same Store Projections";
• Anticipated continued success, integration and growth of DCH;
• Anticipated ability to improve store performance; ability to find accretive acquisitions; and additions of dealership locations to the company's portfolio in the future; and
• Anticipated availability of liquidity from our 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 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												%
			June 30,								Increase				Increase
			2015				2014				(Decrease)				(Decrease)
Revenues:
New vehicle retail			$	1,149,512			$	694,484			$	455,028			65.5	%
Used vehicle retail				488,801				310,475				178,326			57.4
Used vehicle wholesale				66,796				44,286				22,510			50.8
Finance and insurance				72,463				43,838				28,625			65.3
Service, body and parts				182,695				114,337				68,358			59.8
Fleet and other				36,680				14,382				22,298			155.0
	Total revenues			1,996,947				1,221,802				775,145			63.4
Cost of sales:
New vehicle retail				1,080,170				648,490				431,680			66.6
Used vehicle retail				426,108				266,408				159,700			59.9
Used vehicle wholesale				65,390				42,782				22,608			52.8
Service, body and parts				91,946				58,155				33,791			58.1
Fleet and other				35,684				13,667				22,017			161.1
	Total cost of sales			1,699,298				1,029,502				669,796			65.1
Gross profit				297,649				192,300				105,349			54.8
Asset impairments				6,130				-				6,130			NM
SG&A expense				195,610				125,463				70,147			55.9
Depreciation and amortization				10,287				5,825				4,462			76.6
Income from operations				85,622				61,012				24,610			40.3
Floor plan interest expense				(4,655	)			(3,215	)			1,440			44.8
Other interest expense				(4,972	)			(1,869	)			3,103			166.0
Other (expense) income, net				(356	)			1,146				(1,502	)		NM
Income from continuing operations before income taxes				75,639				57,074				18,565			32.5
Income tax expense				(24,416	)			(21,904	)			2,512			11.5
Income tax rate				32.3	%			38.4	%
Income from continuing operations			$	51,223			$	35,170			$	16,053			45.6	%
Income from discontinued operations, net of tax				-				3,139				(3,139	)		NM
Net income			$	51,223			$	38,309			$	12,914			33.7	%
Diluted net income per share:
Continuing operations			$	1.93			$	1.34			$	0.59			44.0	%
Discontinued operations				-				0.11				(0.11	)		NM
Net income per share			$	1.93			$	1.45			$	0.48			33.1	%
Diluted shares outstanding				26,496				26,331				165			0.6	%

NM - not meaningful

Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
		Three months ended												%
		June 30,								Increase				Increase
		2015				2014				(Decrease)				(Decrease)
Gross margin
New vehicle retail			6.0	%			6.6	%			(60) bps
Used vehicle retail			12.8				14.2				(140) bps
Used vehicle wholesale			2.1				3.4				(130) bps
Finance and insurance			100.0				100.0				- bps
Service, body and parts			49.7				49.1				60 bps
Fleet and other			2.7				5.0				(230) bps
Gross profit margin			14.9				15.7				(80) bps
Unit sales
New vehicle retail			35,112				20,446				14,666			71.7	%
Used vehicle retail			24,689				16,086				8,603			53.5
Total retail units sold			59,801				36,532				23,269			63.7
Used vehicle wholesale			9,439				6,047				3,392			56.1
Average selling price
New vehicle retail		$	32,738			$	33,967			$	(1,229	)		(3.6)	%
Used vehicle retail			19,798				19,301				497			2.6
Used vehicle wholesale			7,077				7,324				(247	)		(3.4	)
Average gross profit per unit
New vehicle retail		$	1,975			$	2,250			$	(275	)		(12.2)	%
Used vehicle retail			2,539				2,739				(200	)		(7.3	)
Used vehicle wholesale			149				249				(100	)		(40.2	)
Finance and insurance			1,212				1,200				12			1.0
Total vehicle(1)			3,443				3,706				(263	)		(7.1	)
Revenue mix
New vehicle retail			57.6	%			56.8	%
Used vehicle retail			24.5				25.4
Used vehicle wholesale			3.3				3.6
Finance and insurance, net			3.6				3.6
Service, body and parts			9.2				9.4
Fleet and other			1.8				1.2
		Adjusted								As reported
		Three months ended June 30,								Three months ended June 30,
Other metrics		2015				2014				2015				2014
SG&A as a % of revenue			9.9	%			10.3	%			9.8	%		10.3	%
SG&A as a % of gross profit			66.6				65.2				65.7			65.2
Operating profit as a % of revenue			4.5				5.0				4.3			5.0
Operating profit as a % of gross profit			30.0				31.8				28.8			31.7
Pretax margin			4.1				4.7				3.8			4.7
Net profit margin			2.5				2.9				2.6			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												%
		June 30,								Increase				Increase
		2015				2014				(Decrease)				(Decrease)
Revenues
New vehicle retail		$	742,347			$	689,006			$	53,341			7.7	%
Used vehicle retail			357,673				307,616				50,057			16.3
Used vehicle wholesale			49,157				44,043				5,114			11.6
Finance and insurance			50,160				43,508				6,652			15.3
Service, body and parts			124,087				113,252				10,835			9.6
Fleet and other			22,042				14,381				7,661			53.3
Total revenues		$	1,345,466			$	1,211,806			$	133,660			11.0
Gross profit
New vehicle retail		$	45,475			$	45,578			$	(103	)		(0.2	)%
Used vehicle retail			47,933				43,720				4,213			9.6
Used vehicle wholesale			1,369				1,560				(191	)		(12.2	)
Finance and insurance			50,160				43,508				6,652			15.3
Service, body and parts			61,333				55,593				5,740			10.3
Fleet and other			837				714				123			17.2
Total gross profit		$	207,107			$	190,673			$	16,434			8.6
Gross margin
New vehicle retail			6.1	%			6.6	%			(50) bps
Used vehicle retail			13.4				14.2				(80) bps
Used vehicle wholesale			2.8				3.5				(70) bps
Finance and insurance			100				100.0				- bps
Service, body and parts			49.4				49.1				30 bps
Fleet and other			3.8				5.0				(120) bps
Gross profit margin			15.4				15.7				(30) bps
Unit sales
New vehicle retail			21,411				20,260				1,151			5.7	%
Used vehicle retail			17,769				15,924				1,845			11.6
Total retail units sold			39,180				36,184				2,996			8.3
Used vehicle wholesale			6,259				5,981				278			4.6
Average selling price
New vehicle retail		$	34,671			$	34,008			$	663			1.9	%
Used vehicle retail			20,129				19,318				811			4.2
Used vehicle wholesale			7,854				7,364				490			6.7
Average gross profit per unit
New vehicle retail		$	2,124			$	2,250			$	(126	)		(5.6	)%
Used vehicle retail			2,698				2,746				(48	)		(1.7	)
Used vehicle wholesale			219				261				(42	)		(16.1	)
Finance and insurance			1,280				1,202				78			6.5
Total vehicle(1)			3,699				3,713				(14	)		(0.4	)

(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)
			Six months ended												%
			June 30,								Increase				Increase
			2015				2014				(Decrease)				(Decrease)
Revenues:
New vehicle retail			$	2,157,328			$	1,274,006			$	883,322			69.3	%
Used vehicle retail				951,732				612,368				339,364			55.4
Used vehicle wholesale				129,004				86,979				42,025			48.3
Finance and insurance				137,067				83,469				53,598			64.2
Service, body and parts				356,170				218,954				137,216			62.7
Fleet and other				54,824				24,132				30,692			127.2
	Total revenues			3,786,125				2,299,908				1,486,217			64.6
Cost of sales:
New vehicle retail				2,026,212				1,188,988				837,224			70.4
Used vehicle retail				829,597				527,505				302,092			57.3
Used vehicle wholesale				125,437				84,144				41,293			49.1
Service, body and parts				180,982				111,940				69,042			61.7
Fleet and other				52,873				22,970				29,903			130.2
	Total cost of sales			3,215,101				1,935,547				1,279,554			66.1
Gross profit				571,024				364,361				206,663			56.7
Asset impairments				10,260				-				10,260			NM
SG&A expense				387,228				247,292				139,936			56.6
Depreciation and amortization				20,013				11,332				8,681			76.6
Income from operations				153,523				105,737				47,786			45.2
Floor plan interest expense				(9,304	)			(6,199	)			3,105			50.1
Other interest expense				(9,800	)			(3,843	)			5,957			155.0
Other income, net				(724	)			2,083				(2,807	)		NM
Income from continuing operations before income taxes				133,695				97,778				35,917			36.7
Income tax expense				(41,819	)			(37,914	)			3,905			10.3
Income tax rate				31.3	%			38.8	%
Income from continuing operations			$	91,876			$	59,864			$	32,012			53.5	%
Income from discontinued operations, net of tax				-				3,179				(3,179	)		NM
Net income			$	91,876			$	63,043			$	28,833			45.7	%
Diluted net income per share:
Continuing operations			$	3.47			$	2.27			$	1.20			52.9	%
Discontinued operations				-				0.12				(0.12	)		NM
Net income per share			$	3.47			$	2.39			$	1.08			45.2	%
Diluted shares outstanding				26,509				26,326				183			0.7	%

NM - not meaningful

Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
		Six months ended												%
		June 30,								Increase				Increase
		2015				2014				(Decrease)				(Decrease)
Gross margin
New vehicle retail			6.1	%			6.7	%			(60) bps
Used vehicle retail			12.8				13.9				(110) bps
Used vehicle wholesale			2.8				3.3				(50) bps
Finance and insurance			100.0				100.0				- bps
Service, body and parts			49.2				48.9				30 bps
Fleet and other			3.6				4.8				(120) bps
Gross profit margin			15.1				15.8				(70) bps
Unit sales
New vehicle retail			65,735				37,720				28,015			74.3	%
Used vehicle retail			48,893				32,402				16,491			50.9
Total retail units sold			114,628				70,122				44,506			63.5
Used vehicle wholesale			18,583				11,900				6,683			56.2
Average selling price
New vehicle retail		$	32,819			$	33,775			$	(956	)		(2.8)	%
Used vehicle retail			19,466				18,899				567			3.0
Used vehicle wholesale			6,942				7,309				(367	)		(5.0	)
Average gross profit per unit
New vehicle retail		$	1,995			$	2,254			$	(259	)		(11.5)	%
Used vehicle retail			2,498				2,619				(121	)		(4.6	)
Used vehicle wholesale			192				238				(46	)		(19.3	)
Finance and insurance			1,196				1,190				6			0.5
Revenue mix
New vehicle retail			57.0	%			55.4	%
Used vehicle retail			25.1				26.6
Used vehicle wholesale			3.4				3.8
Finance and insurance, net			3.6				3.6
Service, body and parts			9.4				9.5
Fleet and other			1.5				1.1
		Adjusted								As reported
		Six months ended June 30,								Six months ended June 30,
Other metrics		2015				2014				2015				2014
SG&A as a % of revenue			10.4	%			10.6	%			10.2	%		10.8	%
SG&A as a % of gross profit			68.8				66.7				67.8			67.9
Operating profit as a % of revenue			4.2				4.8				4.1			4.6
Operating profit as a % of gross profit			27.6				30.1				26.9			29.0
Pretax margin			3.7				4.4				3.5			4.3
Net profit margin			2.3				2.7				2.4			2.7

Lithia Motors, Inc.
Same Store Operating Highlights (Unaudited)
		Six months ended										%
		June 30,						Increase				Increase
		2015			2014			(Decrease)				(Decrease)
Revenues
New vehicle retail		$	1,379,617		$	1,260,741		$	118,876			9.4	%
Used vehicle retail			689,918			604,960			84,958			14.0
Used vehicle wholesale			94,161			86,573			7,588			8.8
Finance and insurance			94,133			82,548			11,585			14.0
Service, body and parts			239,101			216,782			22,319			10.3
Fleet and other			34,343			24,130			10,213			42.3
Total revenues		$	2,531,273		$	2,275,734		$	255,539			11.2
Gross profit
New vehicle retail		$	85,494		$	83,957		$	1,537			1.8	%
Used vehicle retail			92,650			84,052			8,598			10.2
Used vehicle wholesale			3,051			2,902			149			5.1
Finance and insurance			94,133			82,548			11,585			14.0
Service, body and parts			117,028			105,844			11,184			10.6
Fleet and other			1,614			1,160			454			39.1
Total gross profit		$	393,970		$	360,463		$	33,507			9.3
Gross margin
New vehicle retail			6.2			% 6.7			% (50) bps
Used vehicle retail			13.4			13.9			(50) bps
Used vehicle wholesale			3.2			3.4			(20) bps
Finance and insurance			100.0			100.0			- bps
Service, body and parts			48.9			48.8			10 bps
Fleet and other			4.7			4.8			(10) bps
Total gross profit			15.6			15.8			(20) bps
Unit sales
New vehicle retail			39,894			37,268			2,626			7.0	%
Used vehicle retail			34,942			31,971			2,971			9.3
Total retail units sold			74,836			69,239			5,597			8.1
Used vehicle wholesale			12,211			11,785			426			3.6
Average selling price
New vehicle retail		$	34,582		$	33,829		$	753			2.2	%
Used vehicle retail			19,745			18,922			823			4.3
Used vehicle wholesale			7,711			7,346			365			5.0
Average gross profit per unit
New vehicle retail		$	2,143		$	2,253		$	(110	)		(4.9)	%
Used vehicle retail			2,652			2,629			23			0.9
Used vehicle wholesale			250			246			4			1.6
Finance and insurance			1,258			1,192			66			5.5
Total vehicle(1)			3,679			3,661			18			0.5

(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												%
		June 30,								Increase				Increase
		2015				2014				(Decrease)				(Decrease)
Revenues
Domestic		$	768,989			$	641,378			$	127,611			19.9	%
Import			853,444				394,924				458,520			116.1
Luxury			372,369				185,826				186,543			100.4
Total segment revenues			1,994,802				1,222,128				772,674			63.2
Corporate and other			2,145				(326	)			2,471			NM
Total revenues		$	1,996,947			$	1,221,802			$	775,145			63.4
Segment Income(1)
Domestic		$	31,045			$	25,288			$	5,757			22.8	%
Import			25,904				14,768				11,136			75.4
Luxury			9,515				5,832				3,683			63.2
Total segment income			66,464				45,888				20,576			44.8
Corporate and other			9,175				11,186				(2,011	)		(18.0	)
Income from continuing operations before income taxes		$	75,639			$	57,074			$	18,565			32.5
(1) Segment income is defined as operating income less floor plan interest expense
Retail New Vehicle Unit Sales
Domestic			11,517				10,050				1,467			14.6	%
Import			19,313				8,479				10,834			127.8
Luxury			4,330				1,982				2,348			118.5
Total			35,160				20,511				14,649			71.4
Allocated to management			(48	)			(65	)			(17	)		(26.2	)
Total retail new vehicle unit sales			35,112				20,446				14,666			71.7

NM - not meaningful

Lithia Motors, Inc.
Segment Operating Highlights (Unaudited)
		Six months ended												%
		June 30,								Increase				Increase
		2015				2014				(Decrease)				(Decrease)
Revenues
Domestic		$	1,460,393			$	1,210,308			$	250,085			20.7	%
Import			1,612,082				745,985				866,097			116.1
Luxury			709,290				344,436				364,854			105.9
Total segment revenues			3,781,765				2,300,729				1,481,036			64.4
Corporate and other			4,360				(821	)			5,181			NM
Total revenues		$	3,786,125			$	2,299,908			$	1,486,217			64.6
Segment Income(1)
Domestic		$	58,174			$	47,710			$	10,464			21.9	%
Import			42,005				24,033				17,972			74.8
Luxury			15,414				8,017				7,397			92.3
Total segment income			115,593				79,760				35,833			44.9
Corporate and other			18,102				18,018				84			0.5
Income from continuing operations before income taxes		$	133,695			$	97,778			$	35,917			36.7
(1) Segment income is defined as operating income less floor plan interest expense
Retail New Vehicle Unit Sales
Domestic			21,560				18,684				2,876			15.4	%
Import			36,087				15,618				20,469			131.1
Luxury			8,195				3,577				4,618			129.1
Total			65,842				37,879				27,963			73.8
Allocated to management			(107	)			(159	)			(52	)		(32.7	)
Total retail new vehicle unit sales			65,735				37,720				28,015			74.3

NM - not meaningful

Lithia Motors, Inc.
Other Highlights (Unaudited)
	As of
	June 30,		December 31,		June 30,
	2015		2014		2014
Days Supply(1)
New vehicle inventory	65		62		71
Used vehicle inventory	54		53		60

(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 June 30, 2015
Current ratio	Not less than 1.10 to 1		1.24 to 1
Fixed charge coverage ratio	Not less than 1.20 to 1		3.21 to 1
Leverage ratio	Not more than 5.00 to 1		1.97 to 1
Funded debt restriction	Not more than $600 million		$414.4 million

Lithia Motors, Inc.
Other Highlights (Unaudited)
	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
New vehicle unit sales brand mix
Honda Acura	23.1	%		8.3	%		22.5	%		8.0	%
Chrysler	19.1			27.6			19.1			28.5
Toyota	19.0			13.8			19.0			13.7
General Motors	9.5			14.5			9.3			14.3
Subaru	6.5			9.2			6.8			9.4
BMW, MINI	5.5			6.5			5.7			6.3
Ford	4.1			6.7			4.3			6.3
Nissan	3.4			3.6			3.7			3.7
Volkswagen, Audi	3.4			2.8			3.1			2.6
Hyundai	2.0			3.1			2.1			3.1
Mercedes	1.5			2.2			1.5			2.3
Kia	1.4			1.0			1.4			0.9
Lexus	1.0			-			1.1			-
Other	0.5			0.7			0.4			0.9
	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Revenue geographic mix
California	20.7	%		13.1	%		21.4	%		13.2	%
Oregon	16.4			21.9			16.6			22.0
Texas	15.7			24.0			15.7			24.0
New Jersey	15.1			-			14.4			-
Montana	5.8			8.0			5.8			8.2
Alaska	5.6			7.5			5.4			7.1
Washington	5.1			7.0			5.1			7.2
Nevada	2.9			4.4			3.0			4.6
New York	3.3			-			3.0			-
Idaho	2.8			4.2			2.9			4.4
Iowa	2.9			4.3			2.8			4.3
North Dakota	1.5			2.3			1.5			2.2
Hawaii	1.4			2.0			1.4			1.4
New Mexico	.8			1.3			1			1.4
	As of July 22, 2015
Current store count mix	# of stores			% of total
Chrysler	25			19.4	%
Honda, Acura	20			15.5
Toyota	19			14.7
General Motors	16			12.4
BMW, MINI	11			8.5
Volkswagen, Audi	8			6.2
Ford	6			4.7
Nissan	6			4.7
Subaru	6			4.7
Hyundai	5			3.8
Mercedes	3			2.3
Other	4			3.1

Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
	June 30, 2015			December 31, 2014
Cash and cash equivalents	$	23,394		$	29,898
Trade receivables, net		287,808			295,379
Inventories, net		1,367,317			1,249,659
Other current assets		32,028			32,010
Assets held for sale		-			8,563
Total current assets	$	1,710,547		$	1,615,509
Property and equipment, net		836,889			816,745
Goodwill		199,129			199,375
Franchise value		150,856			150,892
Other non-current assets		107,434			98,411
Total assets	$	3,004,855		$	2,880,932
Floor plan notes payable	$	45,464		$	41,047
Floor plan notes payable: non trade		1,169,717			1,137,632
Current maturities of long-term debt		37,963			31,912
Trade payables		78,885			70,853
Accrued liabilities		157,579			153,661
Deferred income taxes		3,494			2,603
Liabilities related to assets held for sale		-			4,892
Total current liabilities	$	1,493,102		$	1,442,600
Long-term debt		599,402			609,066
Deferred revenue		59,893			54,403
Deferred income taxes		36,077			42,795
Other long-term liabilities		64,079			58,963
Total liabilities	$	2,252,553		$	2,207,827
Class A common stock		268,748			276,058
Class B common stock		319			319
Additional paid-in capital		33,584			29,775
Accumulated other comprehensive loss		(622)			(926)
Retained earnings		450,273			367,879
Total liabilities & stockholders' equity	$	3,004,855		$	2,880,932

Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
		Six months ended
		June 30,
		2015				2014
Net income		$	91,876			$	63,043
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Asset Impairment			10,260				-
Depreciation and amortization			20,013				11,332
Stock-based compensation			5,822				3,259
Loss on disposal of assets			44				62
Gain on sale of franchise			(5,919	)			(5,744	)
Deferred income taxes			(1,145	)			2,840
Excess tax benefit from share-based payment arrangements			(4,865	)			(6,058	)
(Increase) decrease:
	Trade receivables, net		7,570				(20,709	)
	Inventories		(122,660	)			(77,300	)
	Other assets		(3,815	)			(5,951	)
Increase (decrease):
	Floor plan notes payable, net		4,417				368
	Trade payables		8,854				1,411
	Accrued liabilities		7,717				17,595
	Other long-term liabilities and deferred revenue		11,161				11,658
Net cash provided by (used in) operating activities		$	29,330			$	(4,194	)

Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
		Six months ended
		June 30,
Net cash provided by (used in) operating activities		2015			2014
As reported		$	29,330		$	(4,194	)
	Floor plan notes payable, non-trade, net		35,685			112,910
Adjusted		$	65,015		$	108,716

Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
	Three Months ended June 30, 2015
	As reported				Disposal (gain)/loss on sale of stores				Asset impairments				Equity investment fair value adjustment				Adjusted
Other asset impairments	$	6,130			$				$	(2,000	)		$	(4,130	)		$	-
Selling, general and administrative		195,610				2,570				-				-				198,180
Income from operations		85,622				(2,570	)			2,000				4,130				89,182
Other (expense) income, net		(357	)			-				-				1,733				1,376
Income from continuing operations before income taxes	$	75,639			$	(2,570	)		$	2,000			$	5,863			$	80,932
Income tax expense		(24,416	)			1,305				(780	)			(7,652	)			(31,543	)
Net income from continuing operations	$	51,223			$	(1,265	)		$	1,220			$	(1,789	)		$	49,389
Diluted earnings per share from continuing operations	$	1.93			$	(0.05	)		$	0.05			$	(0.07	)		$	1.86
Diluted share count		26,496

		Three Months Ended June 30, 2014
		As reported				Acquisition expenses				Tax attributes				Adjusted
Selling, general and administrative		$	125,463			$	(163	)		$	-			$	125,300
Income from operations			61,012				163				-				61,175
Income from continuing operations before income taxes		$	57,074			$	163			$	-			$	57,237
Income tax expense			(21,904	)			(63	)			(73	)			(22,040	)
Net income from continuing operations		$	35,170			$	100			$	(73	)		$	35,197
Diluted earnings per share from continuing operations		$	1.34			$	-			$	-			$	1.34
Diluted share count			26,331

Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
	Six Months Ended June 30, 2015
	As reported				Disposal (gain)/loss on sale of stores				Asset impairments				Equity investment fair value adjustment				Adjusted
Other asset impairments	$	10,260			$	-			$	(2,000	)		$	(8,260	)		$	-
Selling, general and administrative		387,228				5,919				-				-				393,147
Income from operations		153,523				(5,919	)			2,000				8,260				157,864
Other (expense) income, net		(724	)			-				-				3,465				2,741
Income from continuing operations before income taxes	$	133,695			$	(5,919	)		$	2,000			$	11,725			$	141,501
Income tax expense		(41,819	)			2,309				(780	)			(14,902	)			(55,192	)
Net income from continuing operations	$	91,876			$	(3,610	)		$	1,220			$	(3,177	)		$	86,309
Diluted earnings per share from continuing operations	$	3.47			$	(0.14	)		$	0.05			$	(0.12	)		$	3.26
Diluted share count		26,509
	Six Months Ended June 30, 2014
	As reported				Reserve adjustments				Acquisition expenses				Tax attribute				Adjusted
Selling, general and administrative	$	247,292			$	(3,931	)		$	(163	)		$	-			$	243,198
Income from operations		105,737				3,931				163				-				109,831
Income from continuing operations before income taxes	$	97,778			$	3,931			$	163			$	-			$	101,872
Income tax expense		(37,914	)			(1,545	)			(63	)			(73	)			(39,595	)
Net income from continuing operations	$	59,864			$	2,386			$	100			$	(73	)		$	62,277
Diluted earnings per share from continuing operations	$	2.27			$	0.09			$	-			$	-			$	2.36
Diluted share count		26,326