SOURCE: Lithia Motors

Lithia Motors

April 27, 2010 16:05 ET

Lithia Motors Reports First Quarter 2010 Results; Exceeds Guidance, Raises Full Year Estimate

MEDFORD, OR--(Marketwire - April 27, 2010) -  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
www.lithia.com
www.lithiacares.com
www.lithiajobs.com

Lithia Motors on Facebook
http://www.facebook.com/profile.php?id=1270221622&ref=ts

Lithia Life on Facebook
http://www.facebook.com/pages/Lithia-Lifecom/34360183908?ref=ts

Lithia Life on YouTube
http://www.youtube.com/user/LithiaLife

Lithia Life on Twitter
http://twitter.com/LithiaLife

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) Unaudited
  Three Months Ended
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 vs. 2009        2009 vs. 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              
    Requirement       As of March 31, 2010  
Minimum tangible net worth   Not less than $200 million       $264.5 million  
Vehicle equity   Not less than $45 million       $141.0 million  
Fixed charge coverage ratio   Not less than 1.15 to 1       1.25 to 1  
Liabilities to tangible net worth ratio   Not more than 4.00 to 1       2.32 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 / (Loss)     Diluted earnings 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 )
               

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