SOURCE: Lithia Motors

Lithia Motors

February 19, 2014 07:29 ET

Lithia Motors Reports Adjusted EPS of $0.98 for Fourth Quarter 2013 and $3.99 for Full Year 2013

Lithia Motors Declares $0.13 per Share Dividend for Fourth Quarter 2013

MEDFORD, OR--(Marketwired - Feb 19, 2014) - Lithia Motors, Inc. (NYSE: LAD) reported the highest fourth quarter adjusted net income in Company history and increased adjusted net income from continuing operations 33% for the fourth quarter 2013 over the prior year period.

2013 fourth quarter adjusted net income from continuing operations was $25.7 million, or $0.98 per diluted share. This compares to 2012 fourth quarter adjusted net income from continuing operations of $19.3 million, or $0.74 per diluted share.

Unadjusted net income from continuing operations for the fourth quarter of 2013 was $27.2 million, or $1.03 per diluted share, compared to $19.7 million or $0.76 per diluted share for 2012. As shown in the attached non-GAAP reconciliation tables, the 2013 fourth quarter adjusted income from continuing operations is reduced to exclude a benefit of $0.06 per share for a gain on a sale of land and a $0.05 per share net benefit from non-core tax attributes, offset by a non-core charge of $0.06 per share related to an adjustment to a legal reserve associated with a lawsuit filed in 2006 and settled in 2013. The 2012 fourth quarter adjusted results from continuing operations exclude a benefit of $0.02 per share for a non-core tax attribute.

Fourth quarter 2013 revenue from continuing operations increased $147.5 million, or 17%, to $1.0 billion from $877.4 million in the fourth quarter of 2012.

Fourth Quarter-over-Quarter Operating Highlights:

  • Total same store sales increased 11%
  • New vehicle same store sales increased 11%
  • Used vehicle retail same store sales increased 16%
  • Service, body and parts same store sales increased 8%
  • Adjusted SG&A expense as a percentage of gross profit decreased 200 basis points to 68.2%

For the full year of 2013, revenue from continuing operations increased 21% to $4.0 billion from $3.3 billion in 2012.

Full Year-over-Year Operating Highlights:

  • Total same store sales increased 15%
  • New vehicle same store sales increased 16%
  • Used vehicle retail same store sales increased 18%
  • Service, body and parts same store sales increased 7%
  • Adjusted SG&A expense as a percentage of gross profit decreased 220 basis points to 67.2%

"For the third consecutive quarter, we exceeded $1.0 billion in revenue," said Bryan DeBoer, President and CEO. "We also exceeded $4.0 billion in annual revenue for the first time in Company history. We grew same store revenue 15% in 2013, on top of total same store revenue increases of 23% in 2012, 22% in 2011 and 18% in 2010. We've been able to maintain cost discipline over the last four years of growth, resulting in expanding operating margin each year. Our store leaders continue to challenge their teams to improve store performance while earning customers for life. Significant opportunities remain to increase used car sales and to capture the coming wave of service work from greater vehicle sales volumes over the last few years."

For the full year of 2013, adjusted net income per diluted share from continuing operations increased 35% to $3.99 from $2.96 for the full year of 2012. Unadjusted, net income from continuing operations was $4.02 per diluted share for the full year of 2013, compared to $3.03 per diluted share for the full year of 2012.

Chris Holzshu, SVP and CFO, said, "We finished 2013 with full year adjusted SG&A expense as a percentage of gross profit of 67.2%. This is a record result for the company and is 220 basis points lower than our full year 2012 SG&A expense. For the full year, incremental throughput, or the percentage of additional same store gross profit dollars that we retain after deducting selling costs, was 51.4%. Our stores remain focused on maintaining incremental throughput above 50%, which can continue to lever our SG&A expense going forward."

Corporate Development
In October 2013, we acquired Stockton Nissan Kia in Stockton, California and Fresno Lincoln Volvo in Fresno, California. In November 2013, we acquired Lodi Toyota Scion in Lodi, California. In December 2013, we acquired Diablo Subaru of Walnut Creek, in Walnut Creek, California. The combined estimated annual revenues for these acquisitions is $150 million.

In February 2014, we acquired Island Honda in Kahului, Hawaii, and Stockton Volkswagen in Stockton, California. The combined estimated annual revenues for these acquisitions is $50 million

Bryan DeBoer, President and CEO, stated, "The pace of acquisitions accelerated in the fourth quarter of 2013 as we completed the purchase of four additional locations. For the full year 2013, we acquired seven stores and 2014 is off to a strong start with our first acquisition in the state of Hawaii and an additional store increasing our footprint in northern California. We believe the acquisition market remains active and anticipate 2014 will be a productive year for Lithia to grow our network of stores."

Balance Sheet Update
We ended the fourth quarter with $24 million in cash and $160 million in available credit on our credit facilities. Additionally, approximately $181 million of our operating real estate is currently unfinanced, which we estimate could provide up to an additional $136 million in available liquidity, for total liquidity of $320 million.

During the fourth quarter, we amended our syndicated credit facility, increasing the capacity by $200 million to $1.0 billion in total availability. The amendment increased the number of participants from 10 to 13, including six banks and seven captive finance companies. The amendment also reduced the interest rate and non-use fees on the facility, provided the ability to upsize the overall capacity to $1.25 billion and extended the maturity date to December 2018.

Dividend Payment
Lithia announced that the Board of Directors has approved a dividend of $0.13 per share related to fourth quarter 2013 financial results. Lithia will pay the dividend March 21, 2014 to shareholders of record on March 7, 2014.

Outlook for 2014
We project 2014 first quarter earnings of $0.92 to $0.94 per diluted share and full-year 2014 earnings of $4.30 to $4.40 per diluted share. These projections are based on the following annual assumptions about 2014 performance:

  • Total revenues of $4.5 to $4.6 billion
  • New vehicle same store sales increasing 8.0%
  • New vehicle gross margin of 6.4% to 6.6%
  • Used vehicle same store sales increasing 8.0%
  • Used vehicle gross margin of 14.5% to 14.7%
  • Service body and parts same store sales increasing 7.0%
  • Service body and parts gross margin of 48.2% to 48.4%
  • Finance and insurance gross profit of $1,125 per unit
  • Tax rate of 39.5%
  • Average diluted shares outstanding of 26.2 million
  • Capital expenditures of $84 million

These projections exclude the impact of future acquisitions, dispositions and non-core items. Actual results may be affected by items described in the 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 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 the ninth largest automotive retailer in the United States. Lithia sells 28 brands of new vehicles and all brands of used vehicles at 96 stores in 12 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
www.assuredservice.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" or "will" and similar references to future periods. Examples of forward-looking statements in this press release include, among others, statements we make regarding:

  • Expected operating results, such as improved store performance, maintaining incremental throughput above 50%, strategy for customer retention, growth and financial results and all projections set forth under the heading "Outlook for 2014";
  • Anticipated acquisitions in 2014 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 industries in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation, future economic and financial conditions (both nationally and locally), changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers, risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms), government regulations, legislation and others set forth throughout Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2012 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           %  
    December 31,     Increase     Increase  
    2013     2012     (Decrease)     (Decrease)  
Revenues:                              
New vehicle retail   $ 589,535     $ 506,871     $ 82,664     16.3 %
Used vehicle retail     253,797       208,367       45,430     21.8  
Used vehicle wholesale     37,642       35,768       1,874     5.2  
Finance and insurance     35,994       29,244       6,750     23.1  
Service, body and parts     100,797       89,665       11,132     12.4  
Fleet and other     7,109       7,458       (349 )   (4.7 )
  Total revenues     1,024,874       877,373       147,501     16.8  
Cost of sales:                              
New vehicle retail     550,438       471,336       79,102     16.8  
Used vehicle retail     218,446       179,186       39,260     21.9  
Used vehicle wholesale     37,310       35,011       2,299     6.6  
Service, body and parts     52,690       46,409       6,281     13.5  
Fleet and other     6,697       7,071       (374 )   (5.3 )
  Total cost of sales     865,581       739,013       126,568     17.1  
Gross profit     159,293       138,360       20,933     15.1  
SG&A expense     108,416       97,126       11,290     11.6  
Depreciation and amortization     5,316       4,441       875     19.7  
Income from operations     45,561       36,793       8,769     23.8  
Floor plan interest expense     (2,979 )     (3,490 )     (511 )   (14.6 )
Other interest expense     (2,115 )     (2,239 )     (124 )   (5.5 )
Other income, net     773       754       19     2.4  
Income from continuing operations before income taxes     41,240       31,818       9,422     29.6  
Income tax expense     (14,080 )     (12,154 )     1,926     15.8  
Income tax rate     34.1 %     38.2 %              
Income from continuing operations   $ 27,160     $ 19,664     $ 7,496     38.1 %
Income from discontinued operations, net of tax     212       169       43     26.2  
Net income   $ 27,372     $ 19,833     $ 7,539     38.0 %
                               
Diluted net income per share:                              
Continuing operations   $ 1.03     $ 0.76     $ 0.27     35.5 %
Discontinued operations     0.01       -       0.01     NM  
Net income per share   $ 1.04     $ 0.76     $ 0.28     36.8 %
                               
Diluted shares outstanding     26,283       26,068       215     0.8 %
 
NM - not meaningful
 
 
 
Lithia Motors, Inc.  
Key Performance Metrics (Unaudited)  
   
    Three months ended           %  
    December 31,     Increase     Increase  
    2013     2012     (Decrease)     (Decrease)  
Gross margin                              
New vehicle retail     6.6 %     7.0 %     (40) bps        
Used vehicle retail     13.9       14.0       (10) bps        
Used vehicle wholesale     0.9       2.1       (120) bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     47.7       48.2       (50) bps        
Fleet and Other     5.8       5.2       60 bps        
Gross profit margin     15.5       15.8       (30) bps        
                               
Unit sales                              
New vehicle retail     17,004       14,713       2,291     15.6 %
Used vehicle retail     13,830       11,943       1,887     15.8  
Total retail units sold     30,834       26,656       4,178     15.7  
Used vehicle wholesale     5,462       5,009       453     9.0  
                               
Average selling price                              
New vehicle retail   $ 34,670     $ 34,451     $ 219     0.6 %
Used vehicle retail     18,351       17,447       904     5.2  
Used vehicle wholesale     6,892       7,141       (249 )   (3.5 )
                               
Average gross profit per unit                              
New vehicle retail   $ 2,299     $ 2,415     $ (116 )   (4.8 )%
Used vehicle retail     2,556       2,443       113     4.6  
Used vehicle wholesale     61       151       (90 )   (59.6 )
Finance and insurance     1,167       1,097       70     6.4  
Total vehicle(1)     3,593       3,553       40     1.1  
                               
Revenue mix                              
New vehicle retail     57.5 %     57.8 %              
Used vehicle retail     24.8       23.7                
Used vehicle wholesale     3.7       4.1                
Finance and insurance, net     3.5       3.3                
Service, body and parts     9.8       10.2                
Fleet and other     0.7       0.9                
                               
    Adjusted     As reported  
    Three months ended
December 31,
    Three months ended
December 31,
 
Other metrics   2013     2012     2013     2012  
SG&A as a % of revenue     10.6 %     11.1 %     10.6 %   11.1 %
SG&A as a % of gross profit     68.2       70.2       68.1     70.2  
Operating profit as a % of revenue     4.4       4.2       4.4     4.2  
Operating profit as a % of gross profit     28.5       26.6       28.6     26.6  
Pretax margin     4.0       3.6       4.0     3.6  
Net profit margin     2.5       2.2       2.7     2.2  
                               
NM - not meaningful
(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  
    2013     2012     (Decrease)     (Decrease)  
Revenues                              
New vehicle retail   $ 562,622     $ 509,086     $ 53,536     10.5 %
Used vehicle retail     242,049       208,356       33,693     16.2  
Used vehicle wholesale     36,462       35,731       731     2.0  
Finance and insurance     34,289       29,271       5,018     17.1  
Service, body and parts     96,659       89,619       7,040     7.9  
Fleet and other     7,001       7,314       (313 )   (4.3 )
Total revenues   $ 979,082     $ 879,377     $ 99,705     11.3  
                               
Gross profit                              
New vehicle retail   $ 37,376     $ 35,420     $ 1,956     5.5 %
Used vehicle retail     33,761       29,196       4,565     15.6  
Used vehicle wholesale     352       673       (321 )   (47.7 )
Finance and insurance     34,289       29,271       5,018     17.1  
Service, body and parts     45,460       42,535       2,925     6.9  
Fleet and other     304       243       61     25.1  
Total gross profit   $ 151,542     $ 137,338     $ 14,204     10.3  
                               
Gross margin                              
New vehicle retail     6.6 %     7.0 %     (40) bps        
Used vehicle retail     13.9       14.0       (10) bps        
Used vehicle wholesale     1.0       1.9       (90) bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     47.0       47.5       (50) bps        
Fleet and Other     4.3       3.3       100 bps        
Gross profit margin     15.5       15.6       (10) bps        
                               
Unit sales                              
New vehicle retail     16,078       14,774       1,304     8.8 %
Used vehicle retail     13,137       11,941       1,196     10.0  
Total retail units sold     29,215       26,715       2,500     9.4  
Used vehicle wholesale     5,271       5,006       265     5.3  
                               
Average selling price                              
New vehicle retail   $ 34,993     $ 34,458     $ 535     1.6 %
Used vehicle retail     18,425       17,449       976     5.6  
Used vehicle wholesale     6,917       7,138       (221 )   (3.1 )
                               
Average gross profit per unit                              
New vehicle retail   $ 2,325     $ 2,397     $ (72 )   (3.0 )%
Used vehicle retail     2,570       2,445       125     5.1  
Used vehicle wholesale     67       134       (67 )   (50.0 )
Finance and insurance     1,174       1,096       78     7.1  
Total vehicle(1)     3,621       3,540       81     2.3  
                               
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail
 
 
 
Lithia Motors, Inc.  
Consolidated Statements of Operations (Unaudited)  
(In thousands except per share data)  
   
    Twelve months ended           %  
    December 31,     Increase     Increase  
    2013     2012     (Decrease)     (Decrease)  
Revenues:                              
New vehicle retail   $ 2,256,598     $ 1,847,603     $ 408,995     22.1 %
Used vehicle retail     1,032,224       833,484       198,740     23.8  
Used vehicle wholesale     158,235       139,237       18,998     13.6  
Finance and insurance     139,007       112,234       26,773     23.9  
Service, body and parts     383,483       347,703       35,780     10.3  
Fleet and other     36,202       36,226       (24 )   (0.1 )
  Total revenues     4,005,749       3,316,487       689,262     20.8  
Cost of sales:                              
New vehicle retail     2,105,480       1,713,156       392,324     22.9  
Used vehicle retail     881,366       711,763       169,603     23.8  
Used vehicle wholesale     155,524       137,823       17,701     12.8  
Service, body and parts     197,913       179,633       18,280     10.2  
Fleet and other     34,513       34,812       (299 )   (0.9 )
  Total cost of sales     3,374,796       2,777,187       597,609     21.5  
Gross profit     630,953       539,300       91,653     17.0  
Asset impairments     -       115       (115 )   (100.0 )
SG&A expense     427,400       373,688       53,712     14.4  
Depreciation and amortization     20,035       17,128       2,907     17.0  
Income from operations     183,518       148,369       35,149     23.7  
Floor plan interest expense     (12,373 )     (12,816 )     (443 )   (3.5 )
Other interest expense     (8,350 )     (9,621 )     (1,271 )   (13.2 )
Other income, net     2,993       2,525       468     18.5  
Income from continuing operations before income taxes     165,788       128,457       37,331     29.1  
Income tax expense     (60,574 )     (49,062 )     11,512     23.5  
Income tax rate     36.5 %     38.2 %              
Income from continuing operations   $ 105,214     $ 79,395     $ 25,819     32.5 %
Income from discontinued operations, net of tax     786       967       (181 )   (18.7 )
Net income   $ 106,000     $ 80,362     $ 25,638     31.9 %
                               
Diluted net income per share:                              
Continuing operations   $ 4.02     $ 3.03     $ 0.99     32.7 %
Discontinued operations     0.03       0.04       (0.01 )   (25.0 )
Net income per share   $ 4.05     $ 3.07     $ 0.98     31.9 %
                               
Diluted shares outstanding     26,191       26,170       21     0.1 %
                               
                               
                               
Lithia Motors, Inc.  
Key Performance Metrics (Unaudited)  
   
    Twelve months ended           %  
    December 31,     Increase     Increase  
    2013     2012     (Decrease)     (Decrease)  
Gross margin                              
New vehicle retail     6.7 %     7.3 %     (60) bps        
Used vehicle retail     14.6       14.6       - bps        
Used vehicle wholesale     1.7       1.0       70 bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     48.4       48.3       10 bps        
Fleet and Other     4.7       3.9       80 bps        
Gross profit margin     15.8       16.3       (50) bps        
                               
Unit sales                              
New vehicle retail     66,857       55,666       11,191     20.1 %
Used vehicle retail     57,061       47,965       9,096     19.0  
Total retail units sold     123,918       103,631       20,287     19.6  
Used vehicle wholesale     22,086       19,144       2,942     15.4  
                               
Average selling price                              
New vehicle retail   $ 33,753     $ 33,191     $ 562     1.7 %
Used vehicle retail     18,090       17,377       713     4.1  
Used vehicle wholesale     7,164       7,273       (109 )   (1.5 )
                               
Average gross profit per unit                              
New vehicle retail   $ 2,260     $ 2,415     $ (155 )   (6.4 )%
Used vehicle retail     2,644       2,538       106     4.2  
Used vehicle wholesale     123       74       49     66.2  
Finance and insurance     1,122       1,083       39     3.6  
Total vehicle(1)     3,581       3,569       12     0.3  
                               
Revenue mix                              
New vehicle retail     56.3 %     55.7 %              
Used vehicle retail     25.8       25.1                
Used vehicle wholesale     3.9       4.2                
Finance and insurance, net     3.5       3.4                
Service, body and parts     9.6       10.5                
Fleet and other     0.9       1.1                
                               
    Adjusted     As reported  
    Twelve months ended
December 31,
    Twelve months ended
December 31,
 
Other metrics   2013     2012     2013     2012  
SG&A as a % of revenue     10.6 %     11.3 %     10.7 %   11.3 %
SG&A as a % of gross profit     67.2       69.4       67.7     69.3  
Operating profit as a % of revenue     4.7       4.5       4.6     4.5  
Operating profit as a % of gross profit     29.7       27.4       29.1     27.5  
Pretax margin     4.2       3.8       4.1     3.9  
Net profit margin     2.6       2.3       2.6     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)  
   
    Twelve months ended           %  
    December 31,     Increase     Increase  
    2013     2012     (Decrease)     (Decrease)  
Revenues                              
New vehicle retail   $ 2,148,126     $ 1,845,273     $ 302,853     16.4 %
Used vehicle retail     981,536       830,435       151,101     18.2  
Used vehicle wholesale     149,878       138,623       11,255     8.1  
Finance and insurance     131,960       110,254       21,706     19.7  
Service, body and parts     369,789       346,402       23,387     6.8  
Fleet and Other     35,685       35,627       58     0.2  
Total revenues   $ 3,816,974     $ 3,306,614     $ 510,360     15.4  
                               
Gross profit                              
New vehicle retail   $ 142,874     $ 133,878     $ 8,996     6.7 %
Used vehicle retail     144,376       121,446       22,930     18.9  
Used vehicle wholesale     2,754       1,386       1,368     98.7  
Finance and insurance     131,960       110,254       21,706     19.7  
Service, body and parts     175,667       164,072       11,595     7.1  
Fleet and Other     1,188       855       333     38.9  
Total gross profit   $ 598,819     $ 531,891     $ 66,928     12.6  
                               
Gross margin                              
New vehicle retail     6.7 %     7.3 %     (60) bps        
Used vehicle retail     14.7       14.6       10 bps        
Used vehicle wholesale     1.8       1.0       80 bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     47.5       47.4       10 bps        
Fleet and Other     3.3       2.4       90 bps        
Gross profit margin     15.7       16.1       (40) bps        
                               
Unit sales                              
New vehicle retail     63,489       55,590       7,899     14.2 %
Used vehicle retail     54,334       47,782       6,552     13.7  
Total retail units sold     117,823       103,372       14,451     14.0  
Used vehicle wholesale     21,023       19,052       1,971     10.3  
                               
Average selling price                              
New vehicle retail   $ 33,835     $ 33,194     $ 641     1.9 %
Used vehicle retail     18,065       17,380       685     3.9  
Used vehicle wholesale     7,129       7,276       (147 )   (2.0 )
                               
Average gross profit per unit                              
New vehicle retail   $ 2,250     $ 2,408     $ (158 )   (6.6 )%
Used vehicle retail     2,657       2,542       115     4.5  
Used vehicle wholesale     131       73       58     79.5  
Finance and insurance     1,120       1,067       53     5.0  
Total vehicle(1)     3,581       3,550       31     0.9  
                               
(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.
Other Highlights (Unaudited)
 
    As of December 31,    
   
2013
 
2012
  Increase
(Decrease)
Days Supply(1)            
New vehicle inventory   74   76   (2)
Used vehicle inventory   63   56   7
             
(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, 2013
Current ratio   Not less than 1.20 to 1   1.41 to 1
Fixed charge coverage ratio   Not less than 1.20 to 1   3.94 to 1
Leverage ratio   Not more than 5.00 to 1   1.38 to 1
Funded debt restriction   Not more than $375 million   $167.6 million
         
         
         
Lithia Motors, Inc.  
Other Highlights (Unaudited)  
   
    Three months ended
December 31,
    Twelve months ended
December 31,
 
    2013     2012     2013     2012  
New vehicle unit sales brand mix                        
Chrysler   27.6 %   32.0 %   29.5 %   32.2 %
General Motors   14.2     14.7     15.2     15.2  
Toyota   14.0     13.8     14.6     13.7  
Subaru   9.3     7.8     8.2     7.3  
Honda, Acura   8.5     6.7     7.9     6.9  
BMW, MINI   7.5     7.5     6.7     6.8  
Ford   6.0     6.2     6.0     5.5  
Mercedes   3.9     2.7     2.8     2.2  
Nissan   3.4     2.5     3.0     2.8  
Hyundai   2.4     2.7     2.6     3.6  
Volkswagen, Audi   1.8     1.7     2.2     2.0  
Kia   0.8     0.6     0.7     0.9  
Mazda   0.2     0.5     0.4     0.5  
Other   0.4     0.6     0.2     0.4  
             
    Three months ended
December 31,
    Twelve months ended
December 31,
 
    2013     2012     2013     2012  
Revenue geographic mix                        
Texas   23.0 %   24.3 %   24.5 %   24.9 %
Oregon   23.0     20.1     21.6     20.1  
California   11.7     10.5     10.7     10.4  
Montana   8.6     8.7     8.9     8.9  
Washington   8.2     8.8     8.1     8.3  
Alaska   7.2     7.8     7.6     8.4  
Iowa   5.1     5.2     4.9     5.0  
Nevada   4.7     4.8     4.8     4.7  
Idaho   4.6     5.0     4.9     5.3  
North Dakota   2.3     2.9     2.4     2.5  
New Mexico   1.6     1.9     1.6     1.5  
             
    As of February 19, 2014        
Current store count mix   # of stores     % of total              
Chrysler   23     24.0 %            
General Motors   13     13.5              
Honda, Acura   11     11.4              
Toyota   10     10.4              
BMW, MINI   9     9.4              
Hyundai   5     5.2              
Subaru   5     5.2              
Ford   5     5.2              
Mercedes   4     4.2              
Nissan   4     4.2              
Volkswagen, Audi   4     4.2              
Other   3     3.1              
                         
                         
                         
Lithia Motors, Inc.  
Consolidated Balance Sheets (Unaudited)  
(In thousands)  
   
    December 31, 2013     December 31, 2012  
Cash and cash equivalents   $ 23,686     $ 42,839  
Trade receivables, net     170,519       133,149  
Inventories, net     859,019       723,326  
Deferred income taxes     1,548       3,832  
Other current assets     15,251       17,484  
Assets held for sale     11,526       12,579  
Total current assets   $ 1,081,549     $ 933,209  
                 
Property and equipment, net     481,212       425,086  
Goodwill     49,511       32,047  
Franchise value     71,199       62,429  
Deferred income taxes     10,256       17,123  
Other non-current assets     31,394       22,808  
Total assets   $ 1,725,121     $ 1,492,702  
                 
Floor plan notes payable   $ 18,789     $ 13,454  
Floor plan notes payable: non trade     695,066       568,130  
Current maturities of long-term debt     7,083       8,182  
Trade payables     51,159       41,589  
Accrued liabilities     94,143       81,602  
Liabilities related to assets held for sale     6,271       8,347  
Total current liabilities   $ 872,511     $ 721,304  
                 
Long-term debt     245,471       286,876  
Deferred revenue     44,005       33,589  
Other long-term liabilities     28,412       22,832  
Total liabilities   $ 1,190,399     $ 1,064,601  
                 
Class A common stock     268,255       268,801  
Class B common stock     319       343  
Additional paid-in capital     22,598       12,399  
Accumulated other comprehensive loss     (1,538 )     (2,615 )
Retained earnings     245,088       149,173  
Total liabilities & stockholders' equity   $ 1,725,121     $ 1,492,702  
                 
                 
                 
Lithia Motors, Inc.  
Summarized Cash Flow from Operations (Unaudited)  
(In thousands)  
   
    Twelve months ended  
    December 31,  
    2013     2012  
Net income   $ 106,000     $ 80,362  
                 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Asset impairments     -       115  
Depreciation and amortization     20,035       17,128  
Depreciation and amortization within discontinued operations     -       186  
Stock-based compensation     6,565       3,116  
Gain on disposal of assets     (2,339 )     (747 )
Loss on disposal activities within discontinued operations     -       621  
Deferred income taxes     14,477       14,172  
Excess tax benefit from share-based payment arrangements     (5,994 )     (2,802 )
(Increase) decrease:                
  Trade receivables, net     (37,370 )     (33,704 )
  Inventories     (106,896 )     (230,442 )
  Other current assets     (901 )     (4,194 )
  Other non-current assets     (4,754 )     (6,176 )
Increase (decrease):                
  Floor plan notes payable, net     5,300       (82,109 )
  Trade payables     8,480       8,001  
  Accrued liabilities     12,304       10,538  
  Other long-term liabilities and deferred revenue     17,152       13,459  
Net cash provided by (used in) operating activities   $ 32,059     $ (212,476 )
                 
                 
                 
Lithia Motors, Inc.  
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)  
(In thousands)  
   
    Twelve months ended  
    December 31,  
Net cash provided by (used in) operating activities   2013     2012  
As reported   $ 32,059     $ (212,476 )
Floor plan notes payable, non-trade, net     128,636       348,477  
Adjusted   $ 160,695     $ 136,001  
                 
                 
                 
Lithia Motors, Inc.  
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)  
(In thousands, except for per share data)  
   
    Three months ended December 31, 2013  
    As reported     Asset disposal gain     Reserve adjustments     Tax attributes     Adjusted  
Selling, general and administrative     108,416       2,531       (2,341 )     -       108,606  
                                         
Income from operations     45,561       (2,531 )     2,341       -       45,371  
                                         
Income from continuing operations before income taxes   $ 41,240     $ (2,531 )   $ 2,341     $ -     $ 41,050  
Income tax expense     (14,080 )     968       (869 )     (1,320 )     (15,301 )
Net income from continuing operations   $ 27,160     $ (1,563 )   $ 1,472     $ (1,320 )   $ 25,749  
                                         
Diluted earnings per share from continuing operations   $ 1.03     $ (0.06 )   $ 0.06     $ (0.05 )   $ 0.98  
Diluted share count     26,283                                  
                                         
                                         
                                         
    Three months ended December 31, 2012          
    As reported     Tax attributes     Adjusted          
Income from continuing operations before income taxes   $ 31,818     $ -     $ 31,818          
Income tax expense     (12,154 )     (374 )     (12,528 )        
Net income from continuing operations   $ 19,664     $ (374 )   $ 19,290          
                                 
Diluted earnings per share from continuing operations   $ 0.76     $ (0.02 )   $ 0.74          
Diluted share count     26,068                          
                                 
                                         
                                         
Lithia Motors, Inc.  
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)  
(In thousands, except for per share data)  
   
    Twelve months ended December 31, 2013  
    As reported     Asset disposal gain     Reserve adjustments     Tax attributes     Adjusted  
Selling, general and administrative     427,400       2,531       (6,153 )     -       423,778  
                                         
Income from operations     183,518       (2,531 )     6,153       -       187,140  
                                         
Income from continuing operations before income taxes   $ 165,788     $ (2,531 )   $ 6,153     $ -     $ 169,410  
Income tax expense     (60,574 )     968       (2,353 )     (2,832 )     (64,791 )
Net income from continuing operations   $ 105,214     $ (1,563 )   $ 3,800     $ (2,832 )   $ 104,619  
                                         
Diluted earnings per share from continuing operations   $ 4.02     $ (0.06 )   $ 0.14     $ (0.11 )   $ 3.99  
Diluted share count     26,191                                  
                                         
                                         
                                         
    Twelve months ended December 31, 2012  
    As reported     Asset impairment and disposal gain     Equity investment     Tax attributes     Adjusted  
Asset impairments   $ 115     $ (115 )   $ -     $ -     $ -  
Selling, general and administrative     373,688       739       -       -       374,427  
                                         
Income from operations     148,369       (624 )     -       -       147,745  
                                         
Other income, net     2,525       -       (244 )     -       2,281  
                                         
Income from continuing operations before income taxes   $ 128,457     $ (624 )   $ (244 )   $ -     $ 127,589  
Income tax expense     (49,062 )     244       95       (1,440 )     (50,163 )
Net income from continuing operations   $ 79,395     $ (380 )   $ (149 )   $ (1,440 )   $ 77,426  
                                         
Diluted earnings per share from continuing operations   $ 3.03     $ (0.01 )   $ (0.01 )   $ (0.05 )   $ 2.96  
Diluted share count     26,170                                  
                                         
                                         

Contact Information

  • Contact:
    John North
    VP Finance and Controller
    (541) 618-5748