SOURCE: Lithia Motors

Lithia Motors

February 24, 2010 16:08 ET

Lithia Motors Reports Fourth Quarter and Full Year 2009 Results

MEDFORD, OR--(Marketwire - February 24, 2010) -  Lithia Motors, Inc. (NYSE: LAD) today reported, as previously announced, 2009 adjusted fourth quarter earnings of $0.01 per diluted share. This compares to a 2008 adjusted fourth quarter net loss of $(0.16) per diluted share. As shown in the attached reconciliation table, the 2009 results exclude non-cash charges on asset impairments and expenses related to reserves of $0.09 per share. The 2008 results exclude a one-time gain of $0.11 related to debt extinguishment, net of certain asset impairment charges. Unadjusted, net loss from continuing operations was $(2.1) million, or $(0.08) per diluted share, for the quarter ended December 31, 2009.

Fourth quarter 2009 revenue totaled $419 million, compared to $399 million in the year-ago period, an increase of 4.9%, driven primarily by higher used vehicle sales. Same store new vehicle sales increased 1.2% while used vehicle retail sales increased 17.9% when compared to the prior year. Service, body and parts same store sales declined 2.7% compared to the prior year.

Sid DeBoer, Lithia's Chairman and CEO, commented, "Our fourth quarter results were impacted by weak new vehicle sales at our Chrysler stores. This was caused by the delay in the release of new products, like the 2010 Ram heavy duty pickup, and lower advertising and incentive spending by Chrysler which slowed floor traffic. In response, we focused on increasing used vehicle sales at the affected locations. We also improved new vehicle sales of our other brands. Excluding Chrysler, we had approximately 18.5% new vehicle same store sales growth over the fourth quarter of 2008. On an adjusted basis, we were profitable in the fourth quarter, despite significant headwinds."

For the full year 2009, total sales declined 15.2% to $1.7 billion as compared to $2.1 billion in 2008. Same store new vehicle sales decreased 23.6%, retail used vehicle sales increased 3.1% and service, body and parts sales decreased 3.3%.

Adjusted net income from continuing operations for the full year 2009 was $0.50 per share, compared to $0.01 per share for 2008, as shown in the attached reconciliation table. Full year 2009 GAAP net income from continuing operations was $6.1 million, or $0.27 per diluted share, compared to a net loss from continuing operations of $(226.5) million, or $(11.22) per share in 2008. 

Liquidity Update
Lithia ended the year with $74.2 million in immediately available funds, including $12.8 million in cash, $25.7 million in availability on its revolving credit facility, and $35.7 million in unfloored new vehicle inventory. At December 31, 2009, Lithia was in compliance with all debt covenants, and has no mortgage maturities until 2011.

Outlook for 2010
Lithia reaffirms its 2010 earnings guidance as provided on February 3, 2010. First quarter earnings guidance is projected within a range of $0.04 to $0.06 per diluted share. Full year 2010 earnings guidance is projected within a range of $0.55 to $0.63 per diluted share. This guidance includes approximately 18% additional dilution related to the equity offering completed in October 2009. Specific reference is made to the February 3, 2010 release for assumptions upon which this guidance was given.

Fourth Quarter Earnings Conference Call
The fourth quarter conference call may be accessed at 2:00 p.m. Pacific Time today by telephone at (800) 254-5933 Conference ID: 47221792 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 February 24, 2010 through March 10, 2010 by calling (800) 642-1687 access code: 47221792 and via the internet at www.lithia.com.

An updated investor presentation containing fourth quarter and full year results can be accessed at www.lithia.com by clicking on "Investor Relations."

About Lithia
Lithia Motors, Inc. is a Fortune 800 Company, selling 26 brands of new and all brands of used vehicles at 85 stores, which are located in 12 states. Lithia also sells used vehicles; arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.

For additional information on Lithia Motors, contact the Investor Relations Department at (541) 776-6591 or visit www.lithia.com and click on "Investor Relations."

Sites
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Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. Forward-looking statements in this press release include our guidance regarding first quarter and full year 2010 results. 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 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          
  December 31,          
  2009   2008   Variance   % Variance  
New vehicle sales $ 209,707   $ 206,207   $ 3,500   1.7 %
Used vehicle sales   127,994     107,404     20,590   19.2  
Finance and insurance   12,220     13,716     (1,496 ) (10.9 )
Service, body and parts   68,221     70,133     (1,912 ) (2.7 )
Fleet and other revenues   528     1,664     (1,136 ) (68.3 )
Total revenues   418,670     399,124     19,546   4.9  
                       
Cost of sales   343,265     323,127     20,138   6.2  
Gross profit   75,405     75,997     (592 ) (0.8 )
Asset impairment charges   177     1,147     (970 ) (84.6 )
SG&A expense   66,083     67,437     (1,354 ) (2.0 )
Depreciation and amortization   6,331     3,980     2,351   59.1  
Income from operations   2,814     3,433     (619 ) (18.0 )
                       
Floorplan interest expense   (2,380 )   (5,511 )   3,131   56.8  
Other interest expense   (3,474 )   (4,215 )   741   17.6  
Other income, net   47     3,619     (3,572 ) (98.7 )
Loss from continuing operations before income taxes   (2,993 )   (2,674 )   (319 ) (11.9 )
                       
Income tax benefit   923     1,667     (744 ) (44.6 )
Income tax rate   30.8 %   62.3 %          
Loss from continuing operations   (2,070 )   (1,007 )   (1,063 ) (105.6 )%
                       
Income (loss) from discontinued operations,                      
net of income tax   516     (3,271 )   3,787   NM  
Net loss $ (1,554 ) $ (4,278 )   2,724   63.7 %
                       
Diluted net income (loss) per share:                      
Continuing operations $ (0.08 ) $ (0.05 ) $ (0.03 ) (60.0 )%
Discontinued operations   0.02     (0.16 )   0.18   NM  
Net loss per share $ (0.06 ) $ (0.21 ) $ 0.15   71.4  
                       
Diluted shares outstanding   25,113     20,519     4,594   22.4 %
                       
NM - not meaningful                      
                 
                 
LITHIA MOTORS, INC.                
(Continuing operations) Three Months Ended          
Unaudited December 31,          
  2009   2008   Variance   % Variance  
Unit sales:                      
New vehicle   6,516     6,808     (292 ) (4.3 )%
Used - retail vehicle   6,420     5,880     540   9.2  
Used - wholesale   3,139     2,860     279   9.8  
Total units sold   16,075     15,548     527   3.4  
                       
Average selling price:                      
New vehicle $ 32,183   $ 30,289   $ 1,894   6.3 %
Used - retail vehicle   17,109     15,808     1,301   8.2  
Used - wholesale   5,784     5,053     731   14.5  
                       
Gross margin/profit data                      
New vehicle retail   7.8 %   8.7 %   (90) bps      
Used vehicle retail   13.8 %   11.8 %   200 bps      
Used vehicle wholesale   (0.2 )%   (4.9 )%   470 bps      
Service, body & parts   46.0 %   48.1 %   (210) bps      
Finance & insurance   100.0 %   100.0 %   -      
Gross profit margin   18.0 %   19.0 %   (100) bps      
New retail gross profit/unit $ 2,524   $ 2,629   $ (105 )    
Used retail gross profit/unit   2,353     1,865     488      
Used wholesale gross profit/unit   (13 )   (247 )   234      
Finance & insurance/retail unit   945     1,081     (136 )    
                       
Revenue mix:                      
New vehicles   50.1 %   51.7 %          
Used retail vehicles   26.2 %   23.3 %          
Used wholesale vehicles   4.4 %   3.6 %          
Finance and insurance, net   2.9 %   3.4 %          
Service and parts   16.3 %   17.6 %          
Fleet and other   0.1 %   0.4 %          
         
         
LITHIA MOTORS, INC.        
(Continuing operations)        
Unaudited Three Months Ended  
  December 31,  
  2009   2008  
New vehicle unit sales brand mix:        
Chrysler Brands 23.7 % 35.9 %
General Motors 17.4 % 14.5 %
Toyota 16.5 % 15.3 %
Honda 9.5 % 7.5 %
Ford 5.8 % 4.6 %
BMW 6.2 % 5.3 %
Hyundai 3.8 % 4.1 %
Nissan 3.7 % 2.8 %
Volkswagen, Audi 3.3 % 3.2 %
Subaru 7.4 % 4.6 %
Mercedes 1.3 % 1.3 %
Other 1.4 % 0.9 %
         
(Selected Same Store Data)        
Unaudited Three Months Ended  
  December 31,  
  2009 vs. 2008   2008 vs. 2007  
Same store revenue:        
New vehicle retail sales 1.2 % (38.8 )%
Chrysler Brands (29.9 )% (41.4 )%
General Motors 24.1 % (42.3 )%
Toyota 5.8 % (33.0 )%
All other brands 20.9 % (36.5 )%
Used vehicle retail sales 17.9 % (17.7 )%
Used wholesale sales 30.4 % (50.5 )%
Total vehicle sales (excluding fleet) 7.4 % (34.6 )%
Finance & insurance sales (10.2 )% (33.1 )%
Service, body and parts sales (2.7 )% (0.7 )%
Total sales (excluding fleet) 5.1 % (30.3 )%
Total gross profit (excluding fleet) 2.5 % (19.4 )%
                 
                 
LITHIA MOTORS, INC.                
(In thousands except per share data)                
Unaudited Twelve Months Ended          
  December 31,          
  2009   2008   Variance   % Variance  
New vehicle sales $ 874,701   $ 1,147,418   $ (272,717 ) (23.8 )%
Used vehicle sales   539,352     547,706     (8,354 ) (1.5 )
Finance and insurance   56,010     76,679     (20,669 ) (27.0 )
Service, body and parts   276,690     286,326     (9,636 ) (3.4 )
Fleet and other revenues   2,562     4,871     (2,309 ) (47.4 )
Total revenues   1,749,315     2,063,000     (313,685 ) (15.2 )
                       
Cost of sales   1,419,696     1,706,525     (286,829 ) (16.8 )
Gross profit   329,619     356,475     (26,856 ) (7.5 )
Asset impairment charges   6,976     335,672     (328,696 ) (97.9 )
SG&A expense   270,245     307,316     (37,071 ) (12.1 )
Depreciation and amortization   18,248     16,943     1,305   7.7  
Income (loss) from operations   34,150     (303,456 )   337,606   NM  
                       
Floorplan interest expense   (10,878 )   (20,517 )   9,639   47.0  
Other interest expense   (14,063 )   (17,878 )   3,815   21.3  
Other income, net   1,494     6,624     (5,130 ) (77.4 )
Income (loss) from continuing operations before income taxes   10,703     (335,227 )   345,930   NM  
                       
Income tax expense (benefit)   4,639     (108,720 )   113,359   NM  
Income tax rate   43.3 %   32.4 %          
Income (loss) from continuing operations   6,064     (226,507 )   232,571   NM %
                       
Income (loss) from discontinued operations,                      
net of income tax   3,087     (26,079 )   29,166   NM  
Net income (loss) $ 9,151   $ (252,586 ) $ 261,737   NM %
                       
Diluted net income (loss) per share:                      
Continuing operations $ 0.27   $ (11.22 ) $ 11.49   NM %
Discontinued operations   0.14     (1.29 )   1.43   NM  
Net income (loss) per share $ 0.41   $ (12.51 ) $ 12.92   NM  
                       
Diluted shares outstanding   22,176     20,195     1,981   9.8 %
                       
NM - not meaningful                      
                 
                 
LITHIA MOTORS, INC.                
(Continuing Operations) Twelve Months Ended          
Unaudited December 31,          
  2009   2008   Variance   % Variance  
Unit sales:                      
New vehicle   29,109     39,091     (9,982 ) (25.5 )%
Used - retail vehicle   28,750     27,305     1,445   5.3  
Used - wholesale   13,413     15,840     (2,427 ) (15.3 )
Total units sold   71,272     82,236     (10,964 ) (13.3 )
                       
Average selling price:                      
New vehicle $ 30,049   $ 29,352   $ 697   2.4 %
Used - retail vehicle   16,266     16,638     (372 ) (2.2 )
Used - wholesale   5,345     5,897     (552 ) (9.4 )
                       
Gross margin/profit data                      
New vehicle retail   8.4 %   7.9 %   50 bps      
Used vehicle retail   14.1 %   11.5 %   260 bps      
Used vehicle wholesale   0.3 %   (3.2 )%   350 bps      
Service, body & parts   47.9 %   48.2 %   (30) bps      
Finance & insurance   100.0 %   100.0 %   -      
Gross profit margin   18.8 %   17.3 %   150 bps      
New retail gross profit/unit $ 2,533   $ 2,325   $ 208      
Used retail gross profit/unit   2,290     1,919     371      
Used wholesale gross profit/unit   18     (191 )   209      
Finance & insurance/retail unit   968     1,155     (187 )    
                       
Revenue mix:                      
New vehicles   50.0 %   55.6 %          
Used retail vehicles   26.7 %   22.0 %          
Used wholesale vehicles   4.2 %   4.6 %          
Finance and insurance, net   3.2 %   3.7 %          
Service and parts   15.8 %   13.9 %          
Fleet and other   0.1 %   0.2 %          
         
         
LITHIA MOTORS, INC.        
(Continuing operations)        
Unaudited Twelve Months Ended  
  December 31,  
  2009   2008  
New vehicle unit sales brand mix:        
Chrysler Brands 30.2 % 33.9 %
General Motors 15.6 % 17.0 %
Toyota 15.2 % 15.5 %
Honda 8.8 % 8.3 %
Ford 5.0 % 4.2 %
BMW 5.1 % 4.9 %
Hyundai 5.0 % 4.1 %
Nissan 3.9 % 4.1 %
Volkswagen, Audi 3.2 % 2.6 %
Subaru 5.7 % 3.4 %
Mercedes 1.1 % 0.9 %
Other 1.2 % 1.1 %
         
(Selected same store data)        
Unaudited Twelve Months Ended  
  December 31,  
  2009 vs. 2008   2008 vs. 2007  
Same store revenue:        
New vehicle retail sales (23.6 )% (25.4 )%
Chrysler Brands (32.1 )% (33.5 )%
General Motors (26.9 )% (15.0 )%
Toyota (27.0 )% (14.3 )%
All other brands (11.8 )% (24.9 )%
Used vehicle retail sales 3.1 % (17.0 )%
Used wholesale sales (23.1 )% (30.2 )%
Total vehicle sales (excluding fleet) (16.4 )% (23.6 )%
Finance & insurance sales (26.2 )% (22.5 )%
Service, body and parts sales (3.3 )% 0.1 %
Total sales (excluding fleet) (14.9 )% (20.9 )%
Total gross profit (excluding fleet) (6.3 )% (19.2 )%
LITHIA MOTORS, INC.        
Condensed balance sheet (dollars in thousands)        
Unaudited        
  December 31, 2009   December 31, 2008  
Cash & cash equivalents $ 12,776   $ 10,874  
Trade receivables*   52,097     69,615  
Inventory   328,726     422,812  
Assets held for sale   11,693     161,423  
Other current assets   12,771     31,828  
Total current assets   418,063     696,552  
             
Real estate, net   326,625     284,088  
Equipment & other, net   59,429     62,188  
Other assets   90,983     90,631  
Total assets $ 895,100   $ 1,133,459  
             
Flooring notes payable $ 210,488   $ 337,700  
Liabilities related to assets held for sale   5,050     108,172  
Current maturities of senior subordinated convertible notes   -     42,500  
Current maturities of LOC   24,000     -  
Other current liabilities   81,639     108,656  
Total current liabilities   321,177     597,028  
             
Real estate debt   230,265     163,708  
Other long-term debt   2,800     101,476  
Other liabilities   33,820     22,904  
Total liabilities $ 588,062   $ 885,116  
             
Shareholders' equity   307,038     248,343  
             
Total liabilities & shareholders' equity $ 895,100   $ 1,133,459  
             
*Note: Includes contracts-in-transit of $21,940 and $27,799 for 2009 and 2008, respectively
             
Other information            
Lt debt/total cap (excludes real estate)   1 %   29 %
Book value per basic share $ 13.93   $ 12.30  
     
     
Debt covenant ratios    
  Requirement As of December 31, 2009
Minimum tangible net worth Not less than $200 million $263.4 million
Vehicle equity Not less than $45 million $138.7 million
Fixed charge coverage ratio Not less than 1.05 to 1 1.35 to 1
Liabilities to tangible net worth ratio Not more than 4.00 to 1 2.23 to 1
                       
                       
The following table reconciles reported GAAP income (loss) per the income statement to non-GAAP income (loss):                      
Unaudited Three Months Ended December 31,  
  Net Income / (Loss)     Diluted earnings per share  
Continuing Operations 2009     2008     2009     2008  
As reported $ (2,070 )   $ (1,007 )   $ (0.08 )   $ (0.05 )
  Asset impairments   1,057       178       0.04       0.01  
  Reserve adjustments   1,145       -       0.05       -  
  Gain on extinguishment of debt   -       (2,366 )     -       (0.12 )
Adjusted $ 132     $ (3,195 )   $ 0.01     $ (0.16 )
                               
Discontinued Operations                              
As reported $ 516     $ (3,271 )   $ 0.02     $ (0.16 )
  Impairments and disposal (gain) loss   (1,491 )     1,444       (0.06 )     0.07  
Adjusted $ (975 )   $ (1,827 )   $ (0.04 )   $ (0.09 )
                               
Consolidated Operations                              
As reported $ (1,554 )   $ (4,278 )   $ (0.06 )   $ (0.21 )
Adjusted $ (843 )   $ (5,022 )   $ (0.03 )   $ (0.25 )
                       
                       
  Twelve Months Ended December 31,  
  Net Income / (Loss)     Diluted earnings per share  
Continuing Operations 2009     2008     2009     2008  
As reported $ 6,064     $ (226,507 )   $ 0.27     $ (11.22 )
Asset impairments   4,618       230,241       0.22       11.40  
Reserve adjustments   1,145       -       0.05       -  
Gain on extinguishment of debt   (791 )     (3,479 )     (0.04 )     (0.17 )
Adjusted $ 11,036     $ 255     $ 0.50     $ 0.01  
                               
Discontinued Operations                              
As reported $ 3,087     $ (26,079 )   $ 0.14     $ (1.29 )
Impairments and disposal (gain) loss   (6,378 )     18,962       (0.29 )     0.94  
Adjusted $ (3,291 )   $ (7,117 )   $ (0.15 )   $ (0.35 )
                               
Consolidated Operations                              
As reported $ 9,151     $ (252,586 )   $ 0.41     $ (12.51 )
Adjusted $ 7,745     $ (6,862 )   $ 0.35     $ (0.34 )

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        
  Twelve Months Ended December 31,  
  2009   2008  
As reported            
Cash flows from operations $ 9,934   $ 85,165  
Flooring notes payable: non-trade   31,417     (16,803 )
Adjusted $ 41,351   $ 68,362  
             
    2009     2008  
As reported            
Cash flows from financing $ (29,122 ) $ (100,242 )
Flooring notes payable: non-trade   (31,417 )   16,803  
Adjusted $ (60,539 ) $ (80,439 )

Contact Information

  • Contact:
    Investor Relations Department
    (541) 776-6591
    www.lithia.com