SOURCE: Lithia Motors

Lithia Motors

February 25, 2015 07:29 ET

Lithia Motors Reports Adjusted EPS of $1.42 for Fourth Quarter 2014 and $5.11 for Full Year 2014; Fourth Quarter Revenue Increases 75%

Lithia Motors Declares $0.16 per Share Dividend for Fourth Quarter

MEDFORD, OR--(Marketwired - Feb 25, 2015) - Lithia Motors, Inc. (NYSE: LAD) reported the highest fourth quarter and full year adjusted net income in Company history and increased adjusted net income from continuing operations 46% for the fourth quarter 2014 over the prior year period.

2014 fourth quarter adjusted net income from continuing operations was $37.5 million, or $1.42 per diluted share. This compares to 2013 fourth quarter adjusted net income from continuing operations of $25.7 million, or $0.98 per diluted share.

Unadjusted net income from continuing operations for the fourth quarter of 2014 was $41.1 million, or $1.55 per diluted share, compared to $27.2 million, or $1.03 per diluted share, for the fourth quarter of 2013. As shown in the attached non-GAAP reconciliation tables, the 2014 fourth quarter per share adjusted results from continuing operations exclude the following non-core items: a $0.02 charge for acquisition expenses; a $0.13 benefit related to the equity investment associated with the new market tax credit transaction; and a $0.02 benefit from a tax attribute. The 2013 fourth quarter per share adjusted results from continuing operations exclude the following non-core items: a $0.06 benefit for a gain on a sale of land; a $0.05 net benefit from non-core tax attributes; and a $0.06 expense related to an adjustment to a legal reserve associated with a lawsuit filed in 2006 and settled in 2013.

Fourth quarter 2014 revenue from continuing operations increased $768 million, or 75%, to $1.8 billion from $1.0 billion for the fourth quarter of 2013.

Fourth Quarter-over-Quarter Operating Highlights:

  • Total same store sales increased 14%
  • New vehicle same store sales increased 12%
  • Used vehicle retail same store sales increased 16%
  • Service, body and parts same store sales increased 12%
  • Same store F&I per unit increased $46 to $1,214
  • Adjusted SG&A expense as a percentage of gross profit was 70.3% (includes DCH)

For the full year of 2014, revenue from continuing operations increased 35% to $5.4 billion from $4.0 billion in 2014.

Full Year-over-Year Operating Highlights:

  • Total same store sales increased 12%
  • New vehicle same store sales increased 11%
  • Used vehicle retail same store sales increased 15%
  • Service, body and parts same store sales increased 11%
  • Same store F&I per unit increased $83 to $1,205
  • Adjusted SG&A expense as a percentage of gross profit was 67.7% (includes DCH)

"We had a strong finish to 2014," said Bryan DeBoer, President and CEO. "Our store leaders responded to shifting market dynamics to deliver solid results. We grew overall revenue 35% for the year and the DCH integration is progressing well. We achieved our second earnings per share milestone by exceeding $5.00 per share in 2014 and see a clear path to achieving $6.00 per share. We also have established a fourth milestone objective of $7.00 per share."

For the full year of 2014, adjusted net income per diluted share from continuing operations increased 28% to $5.11 from $3.99 for the full year of 2013. Unadjusted, net income from continuing operations was $5.14 per diluted share for the full year of 2014, compared to $4.02 per diluted share for the full year of 2013.

Chris Holzshu, SVP and CFO, said, "We finished 2014 with adjusted SG&A as a percentage of gross profit at 67.7%. The fourth quarter of 2014 was at 70.3% due to the impact of the DCH stores on our overall result. We target SG&A as a percentage of gross profit to continue to improve as we integrate the 36 stores added in 2014. For the full year, incremental throughput, or the percentage of additional same store gross profit dollars that we retain after deducting incremental selling costs, was 42.9%. Our stores remain focused on maintaining incremental throughput of 45% to 50%, which will continue to lever our SG&A expense going forward."

Corporate Development
In January 2015, Lithia opened Subaru of Clearlake, Texas. The store is a new franchise we were awarded from Subaru. We estimate the store will contribute $45 million in annual revenues.

Bryan DeBoer, President and CEO, stated, "We significantly increased the size of Lithia in 2014, adding annualized revenues in excess of $2.7 billion. We acquired 35 stores and opened one franchise in 2014, and are pleased to have already opened a new store in the Houston, Texas market with Clearlake Subaru. The acquisition market remains active and we continue to seek domestic, import and luxury franchises in cities ranging from mid-sized regional markets to metropolitan markets across the United States."

Balance Sheet Update
We ended the fourth quarter with $30 million in cash and $70 million in available credit on our credit facilities. Additionally, approximately $146 million of our operating real estate is currently unfinanced, which could provide an estimated additional $109 million in available liquidity, for total potential liquidity of $209 million.

Dividend Payment
Our Board of Directors has approved a dividend of $0.16 per share related to fourth quarter 2014 financial results. We will pay the dividend March 27, 2015 to shareholders of record on March 13, 2015.

2015 Outlook
We project 2015 first quarter earnings of $1.18 to $1.21 per diluted share and 2015 full year earnings of $5.95 to $6.05 per diluted share. Both projections are based on the following annual assumptions:

Continuing Operations Projections

  • Total revenues of $7.5 to $7.7 billion
  • New vehicle sales increasing 41.5%
  • New vehicle gross margin of 5.9% to 6.1%
  • Used vehicle sales increasing 36.5%
  • Used vehicle gross margin of 12.3% to 12.5%
  • Service body and parts sales increasing 41.0%
  • Service body and parts gross margin of 48.4% to 48.6%
  • Finance and insurance gross profit of $1,150 per unit
  • Tax rate of 40%
  • Average diluted shares outstanding of 26.5 million
  • Full year capital expenditures are $120 million

Same Store Projections

  • Total revenues of $5.2 to $5.4 billion
  • New vehicle same store sales increasing 7.0%
  • Used vehicle same store sales increasing 10.5%
  • Service body and parts same store sales increasing 8.5%
  • Finance and insurance gross profit of $1,200 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.

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 one of the largest automotive retailers in the United States. Lithia sells 30 brands of new vehicles and all brands of used vehicles at 130 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, maintaining incremental throughput between 45% and 50%, generating earnings per share of $6.00 and all projections set forth under the heading "2015 Outlook";
  • The increase in our annual revenues that we estimate will result from the dealership that we acquired as set forth under the heading "Corporate Development";
  • Anticipated availability of liquidity from our unfinanced operating real estate; and
  • Anticipated levels of capital expenditures in the future.

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           %  
    December 31,     Increase     Increase  
    2014     2013     (Decrease)     (Decrease)  
Revenues:                              
New vehicle retail   $ 1,071,543     $ 589,535     $ 482,008     81.8 %
Used vehicle retail     409,591       253,797       155,794     61.4  
Used vehicle wholesale     59,867       37,642       22,225     59.0  
Finance and insurance     60,057       35,994       24,063     66.9  
Service, body and parts     172,398       100,797       71,601     71.0  
Fleet and other     19,851       7,109       12,742     179.2  
  Total revenues     1,793,307       1,024,874       768,433     75.0  
Cost of sales:                              
New vehicle retail     1,006,025       550,438       455,587     82.8  
Used vehicle retail     359,099       218,446       140,653     64.4  
Used vehicle wholesale     59,560       37,310       22,250     59.6  
Service, body and parts     88,097       52,690       35,407     67.2  
Fleet and other     19,405       6,697       12,708     189.8  
  Total cost of sales     1,532,186       865,581       666,605     77.0  
Gross profit     261,121       159,293       101,828     63.9  
Asset impairment     1,853       -       1,853     NM  
SG&A expense     184,288       108,416       75,872     70.0  
Depreciation and amortization     8,964       5,316       3,648     68.6  
Income from operations     66,016       45,561       20,455     44.9  
Floor plan interest expense     (4,535 )     (2,979 )     1,556     52.2  
Other interest expense     (4,848 )     (2,115 )     2,733     129.2  
Other income, net     89       773       (684 )   (88.5 )
Income from continuing operations before income taxes     56,722       41,240       15,482     37.5  
Income tax expense     (15,582 )     (14,080 )     1,502     10.7  
Income tax rate     27.5 %     34.1 %              
Income from continuing operations   $ 41,140     $ 27,160     $ 13,980     51.5 %
Income from discontinued operations, net of tax     -       212       (212 )   NM  
Net income   $ 41,140     $ 27,372     $ 13,768     50.3 %
                               
Diluted net income per share:                              
Continuing operations   $ 1.55     $ 1.03     $ 0.52     50.5 %
Discontinued operations     -       0.01       (0.01 )   NM  
Net income per share   $ 1.55     $ 1.04     $ 0.51     49.0 %
                               
Diluted shares outstanding     26,517       26,283       234     0.9 %
                               
NM - not meaningful
 
 
   
   
Lithia Motors, Inc.  
Key Performance Metrics  
(Unaudited)  
    Three months ended           %  
    December 31,     Increase     Increase  
    2014     2013     (Decrease)     (Decrease)  
Gross margin                              
New vehicle retail     6.1 %     6.6 %     (50) bps        
Used vehicle retail     12.3       13.9       (160) bps        
Used vehicle wholesale     0.5       0.9       (40) bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     48.9       47.7       120 bps        
Fleet and other     2.2       5.8       (360) bps        
Gross profit margin     14.6       15.5       (90) bps        
                               
Unit sales                              
New vehicle retail     32,064       17,004       15,060     88.6 %
Used vehicle retail     21,562       13,830       7,732     55.9  
Total retail units sold     53,626       30,834       22,792     73.9  
Used vehicle wholesale     9,029       5,462       3,567     65.3  
                               
Average selling price                              
New vehicle retail     33,419       34,670       (1,251 )   (3.6) %
Used vehicle retail     18,996       18,351       645     3.5  
Used vehicle wholesale     6,631       6,892       (261 )   (3.8 )
                               
Average gross profit per unit                              
New vehicle retail   $ 2,043     $ 2,299     $ (256 )   (11.1) %
Used vehicle retail     2,342       2,556       (214 )   (8.4 )
Used vehicle wholesale     34       61       (27 )   (44.3 )
Finance and insurance     1,120       1,167       (47 )   (4.0 )
Total vehicle(1)     3,289       3,593       (304 )   (8.5 )
                               
Revenue mix                              
New vehicle retail     59.8 %     57.5 %              
Used vehicle retail     22.8       24.8                
Used vehicle wholesale     3.3       3.7                
Finance and insurance, net     3.3       3.5                
Service, body and parts     9.6       9.8                
Fleet and other     1.2       0.7                
   
Adjusted
   
As reported
 
    Three months ended
December 31,
    Three months ended
December 31,
 
   
Other metrics   2014     2013     2014     2013  
SG&A as a % of revenue     10.2 %     10.6 %     10.3 %   10.6 %
SG&A as a % of gross profit     70.3       68.2       70.6     68.1  
Operating profit as a % of revenue     3.8       4.4       3.7     4.4  
Operating profit as a % of gross profit     26.3       28.5       25.3     28.6  
Pretax margin     3.4       4.0       3.2     4.0  
Net profit margin     2.1       2.5       2.3     2.7  
                               
                               
 
 (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  
    2014     2013     (Decrease)     (Decrease)  
Revenues                              
New vehicle retail   $ 657,520     $ 587,804     $ 69,716     11.9 %
Used vehicle retail     293,067       253,385       39,682     15.7  
Used vehicle wholesale     43,192       37,641       5,551     14.7  
Finance and insurance     40,842       35,900       4,942     13.8  
Service, body and parts     112,786       100,467       12,319     12.3  
Fleet and other     13,243       7,108       6,135     86.3  
Total revenues   $ 1,160,650     $ 1,022,305     $ 138,345     13.5  
                               
Gross profit                              
New vehicle retail   $ 41,841     $ 39,057     $ 2,784     7.1 %
Used vehicle retail     36,796       35,310       1,486     4.2  
Used vehicle wholesale     505       332       173     52.1  
Finance and insurance     40,842       35,900       4,942     13.8  
Service, body and parts     54,461       47,998       6,463     13.5  
Fleet and other     668       410       258     62.9  
Total gross profit   $ 175,113     $ 159,007     $ 16,106     10.1  
                               
Gross margin                              
New vehicle retail     6.4 %     6.6 %     (20) bps        
Used vehicle retail     12.6       13.9       (130) bps        
Used vehicle wholesale     1.2       0.9       30 bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     48.3       47.8       50 bps        
Fleet and other     5.0       5.8       (80) bps        
Gross profit margin     15.1       15.6       (50) bps        
                               
Unit sales                              
New vehicle retail     18,510       16,937       1,573     9.3 %
Used vehicle retail     15,146       13,807       1,339     9.7  
Total retail units sold     33,656       30,744       2,912     9.5  
Used vehicle wholesale     5,814       5,462       352     6.4  
                               
Average selling price                              
New vehicle retail   $ 35,522     $ 34,705     $ 817     2.4 %
Used vehicle retail     19,349       18,352       997     5.4  
Used vehicle wholesale     7,429       6,891       537     7.8  
                               
Average gross profit per unit                              
New vehicle retail   $ 2,260     $ 2,306     $ (46 )   2.0 %
Used vehicle retail     2,429       2,557       (128 )   (5.0 )
Used vehicle wholesale     87       61       26     42.6  
Finance and insurance     1,214       1,168       46     3.9  
Total vehicle(1)     3,565       3,597       (32 )   (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.
Consolidated Statements of Operations
(Unaudited)
(In thousands except per share data)
 
    Twelve months ended         %  
    December 31,     Increase   Increase  
    2014     2013     (Decrease)   (Decrease)  
Revenues:                            
New vehicle retail   $ 3,077,670     $ 2,256,598     $ 821,072   36.4 %
Used vehicle retail     1,362,481       1,032,224       330,257   32.0  
Used vehicle wholesale     195,699       158,235       37,464   23.7  
Finance and insurance     190,381       139,007       51,374   37.0  
Service, body and parts     512,124       383,483       128,041   33.5  
Fleet and other     51,971       36,202       15,769   43.6  
  Total revenues     5,390,326       4,005,749       1,384,577   34.6  
Cost of sales:                            
New vehicle retail     2,879,486       2,105,480       774,006   36.8  
Used vehicle retail     1,183,228       881,366       301,862   34.2  
Used vehicle wholesale     192,053       155,524       36,529   23.5  
Service, body and parts     262,388       197,913       64,475   32.6  
Fleet and other     49,849       34,513       15,336   44.4  
  Total cost of sales     4,567,004       3,374,796       1,192,208   35.3  
Gross profit     823,322       630,953       192,369   30.5  
Asset impairments     1,853       -       1,853   NM  
SG&A expense     563,207       427,400       135,807   31.8  
Depreciation and amortization     26,363       20,035       6,328   31.6  
Income from operations     231,899       183,518       48,381   26.4  
Floor plan interest expense     (13,861 )     (12,373 )     1,488   12.0  
Other interest expense     (10,742 )     (8,350 )     2,392   28.6  
Other income, net     3,199       2,993       206   6.9  
Income from continuing operations before income taxes     210,495       165,788       44,707   27.0  
Income tax expense     (74,955 )     (60,574 )     14,381   23.7  
Income tax rate     35.6 %     36.5 %            
Income from continuing operations   $ 135,540     $ 105,214     $ 30,326   28.8 %
Income from discontinued operations, net of tax     3,180       786       2,394   NM  
Net income   $ 138,720     $ 106,000     $ 32,720   30.9 %
                             
Diluted net income per share:                            
Continuing operations   $ 5.14     $ 4.02     $ 1.12   27.9 %
Discontinued operations     0.12       0.03       0.09   NM  
Net income per share   $ 5.26     $ 4.05     $ 1.21   29.9 %
                             
Diluted shares outstanding     26,382       26,191       191   0.7 %
 
NM - not meaningful
 
 
 
 
Lithia Motors, Inc.
Key Performance Metrics
(Unaudited)
    Twelve months ended           %  
    December 31,     Increase     Increase  
    2014     2013     (Decrease)     (Decrease)  
Gross margin                              
New vehicle retail     6.4 %     6.7 %     (30) bps        
Used vehicle retail     13.2       14.6       (140) bps        
Used vehicle wholesale     1.9       1.7       20 bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     48.8       48.4       40 bps        
Fleet and other     4.1       4.7       (60) bps        
Gross profit margin     15.3       15.8       (50) bps        
                               
Unit sales                              
New vehicle retail     91,104       66,857       24,247     36.3 %
Used vehicle retail     71,674       57,061       14,613     25.6  
Total retail units sold     162,778       123,918       38,860     31.4  
Used vehicle wholesale     27,918       22,086       5,832     26.4  
                               
Average selling price                              
New vehicle retail   $ 33,782     $ 33,753     $ 29     0.1 %
Used vehicle retail     19,009       18,090       919     5.1  
Used vehicle wholesale     7,010       7,164       (154 )   (2.1 )
                               
Average gross profit per unit                              
New vehicle retail   $ 2,175     $ 2,260     $ (85 )   (3.8) %
Used vehicle retail     2,501       2,644       (143 )   (5.4 )
Used vehicle wholesale     131       123       8     6.5  
Finance and insurance     1,170       1,122       48     4.3  
Total vehicle(1)     3,511       3,581       (70 )   (2.0 )
                               
Revenue mix                              
New vehicle retail     57.1 %     56.3 %              
Used vehicle retail     25.3       25.8                
Used vehicle wholesale     3.6       4.0                
Finance and insurance, net     3.5       3.5                
Service, body and parts     9.5       9.6                
Fleet and other     1.0       0.8                
                               
    Adjusted     As reported  
    Twelve months ended
December 31,
    Twelve months ended
December 31,
 
Other metrics   2014     2013     2014     2013  
SG&A as a % of revenue     10.3 %     10.6 %     10.4 %   10.7 %
SG&A as a % of gross profit     67.7       67.2       68.4     67.7  
Operating profit as a % of revenue     4.4       4.7       4.3     4.6  
Operating profit as a % of gross profit     29.1       29.7       28.2     29.1  
Pretax margin     4.1       4.2       3.9     4.1  
Net profit margin     2.5       2.6       2.5     2.6  
                               
(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  
    2014     2013     (Decrease)     (Decrease)  
Revenues                              
New vehicle retail   $ 2,501,956     $ 2,252,242     $ 249,714     11.1 %
Used vehicle retail     1,181,168       1,031,101       150,067     14.6  
Used vehicle wholesale     172,585       158,210       14,375     9.1  
Finance and insurance     161,205       138,850       22,355     16.1  
Service, body and parts     425,976       382,728       43,248     11.3  
Fleet and other     41,898       36,201       5,697     15.7  
Total revenues   $ 4,484,788     $ 3,999,332     $ 485,456     12.1  
                               
Gross profit                              
New vehicle retail   $ 163,611     $ 150,879     $ 12,732     8.4 %
Used vehicle retail     158,350       150,715       7,635     5.1  
Used vehicle wholesale     3,728       2,823       905     32.1  
Finance and insurance     161,205       138,850       22,355     16.1  
Service, body and parts     206,939       185,268       21,671     11.7  
Fleet and other     2,168       1,687       481     28.5  
Total gross profit   $ 696,001     $ 630,222     $ 65,779     10.4  
                               
Gross margin                              
New vehicle retail     6.5 %     6.7 %     (20) bps        
Used vehicle retail     13.4       14.6       (120) bps        
Used vehicle wholesale     2.2       1.8       40 bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     48.6       48.4       20 bps        
Fleet and other     5.2       4.7       50 bps        
Total gross profit     15.5       15.8       (30) bps        
                               
Unit sales                              
New vehicle retail     72,177       66,703       5,474     8.2 %
Used vehicle retail     61,561       56,997       4,564     8.0  
Total retail units sold     133,738       123,700       10,038     8.1  
Used vehicle wholesale     23,582       22,085       1,497     6.8  
                               
Average selling price                              
New vehicle retail   $ 34,664     $ 33,765     $ 899     2.7 %
Used vehicle retail     19,187       18,090       1,097     6.1  
Used vehicle wholesale     7,319       7,164       155     2.2  
                               
Average gross profit per unit                              
New vehicle retail   $ 2,267     $ 2,262     $ 5     0.2 %
Used vehicle retail     2,572       2,644       (72 )   (2.7 )
Used vehicle wholesale     158       128       30     23.4  
Finance and insurance     1,205       1,122       83     7.4  
Total vehicle(1)     3,641       3,583       58     1.6  
                               
(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,    
   
2014
 
2013
  Increase
(Decrease)
Days Supply(1)            
New vehicle inventory   62   74   (12)
Used vehicle inventory   53   63   (10)
             
  (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, 2014
 Current ratio(1)   Not less than 1.20 to 1   1.16 to 1
 Fixed charge coverage ratio   Not less than 1.20 to 1   3.30 to 1
 Leverage ratio   Not more than 5.00 to 1   2.21 to 1
 Funded debt restriction   Not more than $600 million   $374.0 million
         
(1) In February 2015, we requested and received a waiver for the current ratio covenant as of December 31, 2014, and amended the facility to reduce the covenant to 1.10 to 1 for the first quarter of 2015 and beyond.
 
 
 
 
Lithia Motors, Inc.
Other Highlights
(Unaudited)
    Three months ended
December 31,
    Twelve Months ended
December 31,
 
    2014     2013     2014     2013  
New vehicle unit sales brand mix                        
Chrysler   17.8 %   27.6 %   24.6 %   29.5 %
Toyota   18.1     14.0     15.2     14.6  
Honda, Acura   22.7     8.5     13.2     7.9  
General Motors   9.3     14.2     12.5     15.2  
Subaru   7.0     9.3     8.7     8.2  
BMW, MINI   7.9     7.5     6.8     6.7  
Ford   4.1     6.0     5.6     6.0  
Nissan   3.8     3.4     3.7     3.0  
Volkswagen, Audi   3.0     1.8     2.8     2.2  
Hyundai   1.6     2.4     2.5     2.6  
Mercedes   1.9     3.9     2.2     2.8  
Kia   1.1     0.8     1.1     0.7  
Lexus   1.2     -     0.4     -  
Other   0.5     0.6     0.7     0.6  
                         
    Three months ended
December 31,
    Twelve months ended
December 31,
 
    2014     2013     2014     2013  
Revenue geographic mix                        
Texas   14.9 %   23.1 %   20.7 %   24.4 %
Oregon   16.0     23.0     20.2     21.6  
California   21.4     11.7     15.8     10.8  
Washington   5.9     8.2     6.8     8.1  
Alaska   5.4     7.2     6.6     7.6  
Iowa   3.1     5.0     3.9     4.9  
Idaho   2.9     4.6     3.9     4.9  
Montana   5.5     8.6     7.3     8.9  
Nevada   3.3     4.7     4.2     4.8  
North Dakota   1.4     2.3     1.9     2.4  
New Mexico   0.9     1.6     1.3     1.6  
New Jersey   15.2     -     5.0     -  
New York   2.8     -     0.9     -  
Hawaii   1.3     -     1.5     -  
                         
    As of February 25, 2014        
Current store count mix   # of stores     % of total              
Chrysler, Fiat   25     19.2 %            
Honda, Acura   22     16.9              
Toyota, Lexus   19     14.6              
General Motors   16     12.3              
BMW, MINI   11     8.5              
Volkswagen, Audi   7     5.4              
Nissan   6     4.6              
Ford   6     4.6              
Subaru   6     4.6              
Hyundai   5     3.8              
Mercedes   3     2.3              
Other   4     3.2              
                         
                         
 
 
Lithia Motors, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
    December 31, 2014     December 31, 2013  
Cash and cash equivalents   $ 29,898     $
23,686
 
Trade receivables, net     295,379       170,519  
Inventories, net     1,249,659       859,019  
Deferred income taxes     -       1,548  
Other current assets     32,010       15,251  
Assets held for sale     8,563       11,526  
Total current assets   $ 1,615,509     $ 1,081,549  
                 
Property and equipment, net     816,745       481,212  
Goodwill     199,375       49,511  
Franchise value     150,892       71,199  
Deferred income taxes     -       10,256  
Other non-current assets     98,411       31,394  
Total assets   $ 2,880,932     $ 1,725,121  
                 
Floor plan notes payable   $ 41,047     $ 18,789  
Floor plan notes payable: non trade     1,137,632       695,066  
Current maturities of long-term debt     31,912       7,083  
Trade payables     70,853       51,159  
Accrued liabilities     153,661       94,143  
Deferred income taxes     2,603       -  
Liabilities related to assets held for sale     4,892       6,271  
Total current liabilities   $ 1,442,600     $ 872,511  
                 
Long-term debt     609,066       245,471  
Deferred revenue     54,403       44,005  
Deferred income taxes     42,795       -  
Other long-term liabilities     58,963       28,412  
Total liabilities   $ 2,207,827     $ 1,190,399  
                 
Class A common stock     276,058       268,255  
Class B common stock     319       319  
Additional paid-in capital     29,775       22,598  
Accumulated other comprehensive loss     (926 )     (1,538 )
Retained earnings     367,879       245,088  
Total liabilities & stockholders' equity   $ 2,880,932     $ 1,725,121  
                 
                 
 
 
Lithia Motors, Inc.
Summarized Cash Flow from Operations
(Unaudited)
(In thousands)
    Twelve months ended  
    December 31,  
    2014     2013  
Net income   $ 138,720     $ 106,000  
                 
Adjustments to reconcile net income to net cash provided by operating activities:                
Asset impairment     1,853       -  
Depreciation and amortization     26,363       20,035  
Stock-based compensation     7,436       6,565  
(Gain) loss on disposal of assets     464       (2,339 )
Gain on sale of franchise     (5,937 )     -  
Deferred income taxes     13,355       14,477  
Excess tax benefit from share-based payment arrangements     (6,186 )     (5,994 )
(Increase) decrease:                
  Trade receivables, net     (59,474 )     (37,370 )
  Inventories     (76,002 )     (106,896 )
  Other assets     (31,182 )     (5,655 )
Increase (decrease):                
  Floor plan notes payable, net     (647 )     5,300  
  Trade payables     (3,105 )     8,480  
  Accrued liabilities     (13,472 )     12,304  
  Other long-term liabilities and deferred revenue     38,133       17,152  
Net cash provided by operating activities   $ 30,319     $ 32,059  
                 
                 
 
 
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations
(Unaudited)
(In thousands)
    Twelve months ended  
    December 31,  
Net cash provided by operating activities   2014     2013  
As reported   $ 30,319     $ 32,059  
  Floor plan notes payable, non-trade, net     440,341       128,636  
  Borrowings on floor plan notes payble associated with acquired inventory     (257,363 )     (25,148 )
Adjusted   $ 213,297     $ 135,547  
                 
                 
   
   
Lithia Motors, Inc.  
Reconciliation of Certain Non-GAAP Financial Measures  
(Unaudited)  
(In thousands, except for per share data)  
   
    Three months ended December 31, 2014  
    As reported     Acquisition expenses     Equity Investment     Tax attributes     Adjusted  
Asset impairments   $ 1,853     $ -     $ (1,853 )   $ -     $ -  
Selling, general and administrative     184,288       (819 )     -       -       183,468  
                                         
Income from operations     66,016       819       1,853       -       68,689  
                                         
Other income     89       -       1,160       -       1,249  
                                         
Income from continuing operations before income taxes   $ 56,722     $ 819     $ 3,013     $ -     $ 60,555  
Income tax expense     (15,583 )     (338 )     (6,506 )     (600 )     (23,027 )
Net income from continuing operations   $ 41,139     $ 481     $ (3,493 )   $ (600 )   $ 37,527  
                                         
Diluted earnings per share from continuing operations   $ 1.55     $ 0.02     $ (0.13 )   $ (0.02 )   $ 1.42  
Diluted share count     26,517                                  
                                         
    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                                  
                                         
                                         
   
   
Lithia Motors, Inc.  
Reconciliation of Certain Non-GAAP Financial Measures  
(Unaudited)  
(In thousands, except for per share data)  
   
          Twelve months ended December 31, 2014  
    As reported    Reserve Adjustments    Acquisition expenses    Equity Investment    Tax attributes    Adjusted 
Asset impairments   $ 1,853     $ -     $ -     $ (1,853 )   $ -     $ -  
Selling, general and administrative     563,207       (3,931 )     (1,865 )     -       -       557,411  
                                                 
Income from operations     231,899       3,931       1,865       1,853       -       239,548  
                                                 
Other income     3,199       -       -       1,160       -       4,359  
                                                 
Income from continuing operations before income taxes   $ 210,495     $ 3,931     $ 1,865     $ 3,013       -     $ 219,304  
Income tax expense     (74,955 )     (1,545 )     (720 )     (6,506 )     (867 )     (84,593 )
Net income from continuing operations   $ 135,540     $ 2,386     $ 1,145     $ (3,493 )     (867 )   $ 134,711  
                                                 
Diluted earnings per share from continuing operations   $ 5.14     $ 0.09     $ 0.04     $ (0.13 )     (0.03 )   $ 5.11  
Diluted share count     26,382                                          
                                                 
      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                                  

Contact Information

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