SOURCE: Lithia Motors

Lithia Motors

July 22, 2015 07:29 ET

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

Declares $0.20 per Share Dividend for Second Quarter

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

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

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

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

Second Quarter-over-Quarter Operating Highlights:

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

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

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

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

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

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

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

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

Continuing Operations Projections

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

Same Store Projections

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

These projections exclude the impact of future acquisitions, dispositions and non-core items. Actual results may be affected by items described under Forward-Looking Statements below.

Second Quarter Earnings Conference Call and Updated Presentation
The second quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the second quarter results has been added to www.lithiainvestorrelations.com.

To listen live on our website or for replay, visit www.lithiainvestorrelations.com and click on webcasts.

About Lithia
Lithia Motors, Inc. is one of the largest automotive retailer in the United States. Lithia sells 31 brands of new vehicles and all brands of used vehicles at 129 stores in 14 states. Lithia also arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.

Sites
www.lithia.com
www.lithiainvestorrelations.com
www.lithiacareers.com

Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors

Lithia Motors on Twitter
http://twitter.com/lithiamotors

Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "project," "outlook," "expect," "anticipate," "intend," "plan," "believe," "estimate," "may," "seek," "would," "should," "likely," "goal," "strategy," "future," "maintain," "continue," "remain," "target" or "will" and similar references to future periods. Examples of forward-looking statements in this press release include, among others, statements regarding:

  • Future market conditions;
  • Expected operating results, such as improved store performance; continued improvement of SG&A as a percentage of gross profit; generating third quarter earnings per share of $1.83 to $1.87 per diluted share and 2015 full year earnings of $6.63 to $6.72 per diluted share; and all projections set forth under the headings "2015 Outlook," "Continuing Operations Projections" and "Same Store Projections";
  • Anticipated continued success, integration and growth of DCH;
  • Anticipated ability to improve store performance; ability to find accretive acquisitions; and additions of dealership locations to the company's portfolio in the future; and
  • Anticipated availability of liquidity from our unfinanced operating real estate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events that depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation, future economic and financial conditions (both nationally and locally), changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers, risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms), government regulations, legislation and others set forth throughout Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and in Part I, Item 1A. Risk Factors of our most recent Annual Report on Form 10-K, and from time to time in our other filings with the SEC. We urge you to carefully consider this information and not place undue reliance on forward-looking statements. We undertake no duty to update our forward-looking statements, including our earnings outlook, which are made as of the date of this release.

Non-GAAP Financial Measures
This press release and the attached financial tables contain non-GAAP financial measures such as adjusted net income and diluted earnings per share from continuing operations, adjusted SG&A as a percentage of revenues and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, and adjusted pre-tax margin. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures.

   
   
Lithia Motors, Inc.  
Consolidated Statements of Operations (Unaudited)  
(In thousands except per share data)  
   
    Three months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Revenues:                              
New vehicle retail   $ 1,149,512     $ 694,484     $ 455,028     65.5 %
Used vehicle retail     488,801       310,475       178,326     57.4  
Used vehicle wholesale     66,796       44,286       22,510     50.8  
Finance and insurance     72,463       43,838       28,625     65.3  
Service, body and parts     182,695       114,337       68,358     59.8  
Fleet and other     36,680       14,382       22,298     155.0  
  Total revenues     1,996,947       1,221,802       775,145     63.4  
Cost of sales:                              
New vehicle retail     1,080,170       648,490       431,680     66.6  
Used vehicle retail     426,108       266,408       159,700     59.9  
Used vehicle wholesale     65,390       42,782       22,608     52.8  
Service, body and parts     91,946       58,155       33,791     58.1  
Fleet and other     35,684       13,667       22,017     161.1  
  Total cost of sales     1,699,298       1,029,502       669,796     65.1  
Gross profit     297,649       192,300       105,349     54.8  
Asset impairments     6,130       -       6,130     NM  
SG&A expense     195,610       125,463       70,147     55.9  
Depreciation and amortization     10,287       5,825       4,462     76.6  
Income from operations     85,622       61,012       24,610     40.3  
Floor plan interest expense     (4,655 )     (3,215 )     1,440     44.8  
Other interest expense     (4,972 )     (1,869 )     3,103     166.0  
Other (expense) income, net     (356 )     1,146       (1,502 )   NM  
Income from continuing operations before income taxes     75,639       57,074       18,565     32.5  
Income tax expense     (24,416 )     (21,904 )     2,512     11.5  
Income tax rate     32.3 %     38.4 %              
Income from continuing operations   $ 51,223     $ 35,170     $ 16,053     45.6 %
Income from discontinued operations, net of tax     -       3,139       (3,139 )   NM  
Net income   $ 51,223     $ 38,309     $ 12,914     33.7 %
                               
Diluted net income per share:                              
Continuing operations   $ 1.93     $ 1.34     $ 0.59     44.0 %
Discontinued operations     -       0.11       (0.11 )   NM  
Net income per share   $ 1.93     $ 1.45     $ 0.48     33.1 %
                               
Diluted shares outstanding     26,496       26,331       165     0.6 %
                               
NM - not meaningful
   
   
Lithia Motors, Inc.  
Key Performance Metrics (Unaudited)  
   
    Three months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Gross margin                              
New vehicle retail     6.0 %     6.6 %     (60) bps        
Used vehicle retail     12.8       14.2       (140) bps        
Used vehicle wholesale     2.1       3.4       (130) bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     49.7       49.1       60 bps        
Fleet and other     2.7       5.0       (230) bps        
Gross profit margin     14.9       15.7       (80) bps        
                               
Unit sales                              
New vehicle retail     35,112       20,446       14,666     71.7 %
Used vehicle retail     24,689       16,086       8,603     53.5  
Total retail units sold     59,801       36,532       23,269     63.7  
Used vehicle wholesale     9,439       6,047       3,392     56.1  
                               
Average selling price                              
New vehicle retail   $ 32,738     $ 33,967     $ (1,229 )   (3.6) %
Used vehicle retail     19,798       19,301       497     2.6  
Used vehicle wholesale     7,077       7,324       (247 )   (3.4 )
                               
Average gross profit per unit                              
New vehicle retail   $ 1,975     $ 2,250     $ (275 )   (12.2) %
Used vehicle retail     2,539       2,739       (200 )   (7.3 )
Used vehicle wholesale     149       249       (100 )   (40.2 )
Finance and insurance     1,212       1,200       12     1.0  
Total vehicle(1)     3,443       3,706       (263 )   (7.1 )
                               
Revenue mix                              
New vehicle retail     57.6 %     56.8 %              
Used vehicle retail     24.5       25.4                
Used vehicle wholesale     3.3       3.6                
Finance and insurance, net     3.6       3.6                
Service, body and parts     9.2       9.4                
Fleet and other     1.8       1.2                
             
    Adjusted     As reported  
    Three months ended
June 30,
    Three months ended
June 30,
 
Other metrics   2015     2014     2015     2014  
SG&A as a % of revenue     9.9 %     10.3 %     9.8 %   10.3 %
SG&A as a % of gross profit     66.6       65.2       65.7     65.2  
Operating profit as a % of revenue     4.5       5.0       4.3     5.0  
Operating profit as a % of gross profit     30.0       31.8       28.8     31.7  
Pretax margin     4.1       4.7       3.8     4.7  
Net profit margin     2.5       2.9       2.6     2.9  
                               
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail
 
   
   
Lithia Motors, Inc.  
Same Store Operating Highlights (Unaudited)  
                         
    Three months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Revenues                              
New vehicle retail   $ 742,347     $ 689,006     $ 53,341     7.7 %
Used vehicle retail     357,673       307,616       50,057     16.3  
Used vehicle wholesale     49,157       44,043       5,114     11.6  
Finance and insurance     50,160       43,508       6,652     15.3  
Service, body and parts     124,087       113,252       10,835     9.6  
Fleet and other     22,042       14,381       7,661     53.3  
Total revenues   $ 1,345,466     $ 1,211,806     $ 133,660     11.0  
                               
Gross profit                              
New vehicle retail   $ 45,475     $ 45,578     $ (103 )   (0.2 )%
Used vehicle retail     47,933       43,720       4,213     9.6  
Used vehicle wholesale     1,369       1,560       (191 )   (12.2 )
Finance and insurance     50,160       43,508       6,652     15.3  
Service, body and parts     61,333       55,593       5,740     10.3  
Fleet and other     837       714       123     17.2  
Total gross profit   $ 207,107     $ 190,673     $ 16,434     8.6  
                               
Gross margin                              
New vehicle retail     6.1 %     6.6 %     (50) bps        
Used vehicle retail     13.4       14.2       (80) bps        
Used vehicle wholesale     2.8       3.5       (70) bps        
Finance and insurance     100       100.0       - bps        
Service, body and parts     49.4       49.1       30 bps        
Fleet and other     3.8       5.0       (120) bps        
Gross profit margin     15.4       15.7       (30) bps        
                               
Unit sales                              
New vehicle retail     21,411       20,260       1,151     5.7 %
Used vehicle retail     17,769       15,924       1,845     11.6  
Total retail units sold     39,180       36,184       2,996     8.3  
Used vehicle wholesale     6,259       5,981       278     4.6  
                               
Average selling price                              
New vehicle retail   $ 34,671     $ 34,008     $ 663     1.9 %
Used vehicle retail     20,129       19,318       811     4.2  
Used vehicle wholesale     7,854       7,364       490     6.7  
                               
Average gross profit per unit                              
New vehicle retail   $ 2,124     $ 2,250     $ (126 )   (5.6 )%
Used vehicle retail     2,698       2,746       (48 )   (1.7 )
Used vehicle wholesale     219       261       (42 )   (16.1 )
Finance and insurance     1,280       1,202       78     6.5  
Total vehicle(1)     3,699       3,713       (14 )   (0.4 )
 
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail
 
   
   
Lithia Motors, Inc.  
Consolidated Statements of Operations (Unaudited)  
(In thousands except per share data)  
   
    Six months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Revenues:                              
New vehicle retail   $ 2,157,328     $ 1,274,006     $ 883,322     69.3 %
Used vehicle retail     951,732       612,368       339,364     55.4  
Used vehicle wholesale     129,004       86,979       42,025     48.3  
Finance and insurance     137,067       83,469       53,598     64.2  
Service, body and parts     356,170       218,954       137,216     62.7  
Fleet and other     54,824       24,132       30,692     127.2  
  Total revenues     3,786,125       2,299,908       1,486,217     64.6  
Cost of sales:                              
New vehicle retail     2,026,212       1,188,988       837,224     70.4  
Used vehicle retail     829,597       527,505       302,092     57.3  
Used vehicle wholesale     125,437       84,144       41,293     49.1  
Service, body and parts     180,982       111,940       69,042     61.7  
Fleet and other     52,873       22,970       29,903     130.2  
  Total cost of sales     3,215,101       1,935,547       1,279,554     66.1  
Gross profit     571,024       364,361       206,663     56.7  
Asset impairments     10,260       -       10,260     NM  
SG&A expense     387,228       247,292       139,936     56.6  
Depreciation and amortization     20,013       11,332       8,681     76.6  
Income from operations     153,523       105,737       47,786     45.2  
Floor plan interest expense     (9,304 )     (6,199 )     3,105     50.1  
Other interest expense     (9,800 )     (3,843 )     5,957     155.0  
Other income, net     (724 )     2,083       (2,807 )   NM  
Income from continuing operations before income taxes     133,695       97,778       35,917     36.7  
Income tax expense     (41,819 )     (37,914 )     3,905     10.3  
Income tax rate     31.3 %     38.8 %              
Income from continuing operations   $ 91,876     $ 59,864     $ 32,012     53.5 %
Income from discontinued operations, net of tax     -       3,179       (3,179 )   NM  
Net income   $ 91,876     $ 63,043     $ 28,833     45.7 %
                               
Diluted net income per share:                              
Continuing operations   $ 3.47     $ 2.27     $ 1.20     52.9 %
Discontinued operations     -       0.12       (0.12 )   NM  
Net income per share   $ 3.47     $ 2.39     $ 1.08     45.2 %
                               
Diluted shares outstanding     26,509       26,326       183     0.7 %
 
NM - not meaningful
 
   
   
Lithia Motors, Inc.  
Key Performance Metrics (Unaudited)  
   
    Six months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Gross margin                              
New vehicle retail     6.1 %     6.7 %     (60) bps        
Used vehicle retail     12.8       13.9       (110) bps        
Used vehicle wholesale     2.8       3.3       (50) bps        
Finance and insurance     100.0       100.0       - bps        
Service, body and parts     49.2       48.9       30 bps        
Fleet and other     3.6       4.8       (120) bps        
Gross profit margin     15.1       15.8       (70) bps        
                               
Unit sales                              
New vehicle retail     65,735       37,720       28,015     74.3 %
Used vehicle retail     48,893       32,402       16,491     50.9  
Total retail units sold     114,628       70,122       44,506     63.5  
Used vehicle wholesale     18,583       11,900       6,683     56.2  
                               
Average selling price                              
New vehicle retail   $ 32,819     $ 33,775     $ (956 )   (2.8) %
Used vehicle retail     19,466       18,899       567     3.0  
Used vehicle wholesale     6,942       7,309       (367 )   (5.0 )
                               
Average gross profit per unit                              
New vehicle retail   $ 1,995     $ 2,254     $ (259 )   (11.5) %
Used vehicle retail     2,498       2,619       (121 )   (4.6 )
Used vehicle wholesale     192       238       (46 )   (19.3 )
Finance and insurance     1,196       1,190       6     0.5  
                               
Revenue mix                              
New vehicle retail     57.0 %     55.4 %              
Used vehicle retail     25.1       26.6                
Used vehicle wholesale     3.4       3.8                
Finance and insurance, net     3.6       3.6                
Service, body and parts     9.4       9.5                
Fleet and other     1.5       1.1                
                               
    Adjusted     As reported  
    Six months ended
June 30,
    Six months ended
June 30,
 
Other metrics   2015     2014     2015     2014  
SG&A as a % of revenue     10.4 %     10.6 %     10.2 %   10.8 %
SG&A as a % of gross profit     68.8       66.7       67.8     67.9  
Operating profit as a % of revenue     4.2       4.8       4.1     4.6  
Operating profit as a % of gross profit     27.6       30.1       26.9     29.0  
Pretax margin     3.7       4.4       3.5     4.3  
Net profit margin     2.3       2.7       2.4     2.7  
                               
   
   
Lithia Motors, Inc.  
Same Store Operating Highlights (Unaudited)  
   
    Six months ended         %  
    June 30,   Increase     Increase  
    2015   2014   (Decrease)     (Decrease)  
Revenues                          
New vehicle retail   $ 1,379,617   $ 1,260,741   $ 118,876     9.4 %
Used vehicle retail     689,918     604,960     84,958     14.0  
Used vehicle wholesale     94,161     86,573     7,588     8.8  
Finance and insurance     94,133     82,548     11,585     14.0  
Service, body and parts     239,101     216,782     22,319     10.3  
Fleet and other     34,343     24,130     10,213     42.3  
Total revenues   $ 2,531,273   $ 2,275,734   $ 255,539     11.2  
                           
Gross profit                          
New vehicle retail   $ 85,494   $ 83,957   $ 1,537     1.8 %
Used vehicle retail     92,650     84,052     8,598     10.2  
Used vehicle wholesale     3,051     2,902     149     5.1  
Finance and insurance     94,133     82,548     11,585     14.0  
Service, body and parts     117,028     105,844     11,184     10.6  
Fleet and other     1,614     1,160     454     39.1  
Total gross profit   $ 393,970   $ 360,463   $ 33,507     9.3  
                           
Gross margin                          
New vehicle retail     6.2     % 6.7     % (50) bps        
Used vehicle retail     13.4     13.9     (50) bps        
Used vehicle wholesale     3.2     3.4     (20) bps        
Finance and insurance     100.0     100.0     - bps        
Service, body and parts     48.9     48.8     10 bps        
Fleet and other     4.7     4.8     (10) bps        
Total gross profit     15.6     15.8     (20) bps        
                           
Unit sales                          
New vehicle retail     39,894     37,268     2,626     7.0 %
Used vehicle retail     34,942     31,971     2,971     9.3  
Total retail units sold     74,836     69,239     5,597     8.1  
Used vehicle wholesale     12,211     11,785     426     3.6  
                           
Average selling price                          
New vehicle retail   $ 34,582   $ 33,829   $ 753     2.2 %
Used vehicle retail     19,745     18,922     823     4.3  
Used vehicle wholesale     7,711     7,346     365     5.0  
                           
Average gross profit per unit                          
New vehicle retail   $ 2,143   $ 2,253   $ (110 )   (4.9) %
Used vehicle retail     2,652     2,629     23     0.9  
Used vehicle wholesale     250     246     4     1.6  
Finance and insurance     1,258     1,192     66     5.5  
Total vehicle(1)     3,679     3,661     18     0.5  
 
(1) - includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail
 
   
   
Lithia Motors, Inc.  
Segment Operating Highlights (Unaudited)  
   
    Three months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Revenues                              
Domestic   $ 768,989     $ 641,378     $ 127,611     19.9 %
Import     853,444       394,924       458,520     116.1  
Luxury     372,369       185,826       186,543     100.4  
Total segment revenues     1,994,802       1,222,128       772,674     63.2  
Corporate and other     2,145       (326 )     2,471     NM  
Total revenues   $ 1,996,947     $ 1,221,802     $ 775,145     63.4  
                               
Segment Income(1)                              
Domestic   $ 31,045     $ 25,288     $ 5,757     22.8 %
Import     25,904       14,768       11,136     75.4  
Luxury     9,515       5,832       3,683     63.2  
Total segment income     66,464       45,888       20,576     44.8  
Corporate and other     9,175       11,186       (2,011 )   (18.0 )
Income from continuing operations before income taxes   $ 75,639     $ 57,074     $ 18,565     32.5  
                               
(1) Segment income is defined as operating income less floor plan interest expense  
                               
Retail New Vehicle Unit Sales                              
Domestic     11,517       10,050       1,467     14.6 %
Import     19,313       8,479       10,834     127.8  
Luxury     4,330       1,982       2,348     118.5  
Total     35,160       20,511       14,649     71.4  
Allocated to management     (48 )     (65 )     (17 )   (26.2 )
Total retail new vehicle unit sales     35,112       20,446       14,666     71.7  
 
NM - not meaningful
 
   
   
Lithia Motors, Inc.  
Segment Operating Highlights (Unaudited)  
   
    Six months ended           %  
    June 30,     Increase     Increase  
    2015     2014     (Decrease)     (Decrease)  
Revenues                              
Domestic   $ 1,460,393     $ 1,210,308     $ 250,085     20.7 %
Import     1,612,082       745,985       866,097     116.1  
Luxury     709,290       344,436       364,854     105.9  
Total segment revenues     3,781,765       2,300,729       1,481,036     64.4  
Corporate and other     4,360       (821 )     5,181     NM  
Total revenues   $ 3,786,125     $ 2,299,908     $ 1,486,217     64.6  
                               
Segment Income(1)                              
Domestic   $ 58,174     $ 47,710     $ 10,464     21.9 %
Import     42,005       24,033       17,972     74.8  
Luxury     15,414       8,017       7,397     92.3  
Total segment income     115,593       79,760       35,833     44.9  
Corporate and other     18,102       18,018       84     0.5  
Income from continuing operations before income taxes   $ 133,695     $ 97,778     $ 35,917     36.7  
                               
(1) Segment income is defined as operating income less floor plan interest expense  
                               
Retail New Vehicle Unit Sales                              
Domestic     21,560       18,684       2,876     15.4 %
Import     36,087       15,618       20,469     131.1  
Luxury     8,195       3,577       4,618     129.1  
Total     65,842       37,879       27,963     73.8  
Allocated to management     (107 )     (159 )     (52 )   (32.7 )
Total retail new vehicle unit sales     65,735       37,720       28,015     74.3  
 
NM - not meaningful
 
 
Lithia Motors, Inc.
Other Highlights (Unaudited)
  As of
  June 30,   December 31,   June 30,
  2015   2014   2014
Days Supply(1)          
New vehicle inventory 65   62   71
Used vehicle inventory 54   53   60
           
(1) Days supply calculated based on current inventory levels, excluding in-transit vehicles, and a 30-day historical cost of sales level.
       
Financial covenants      
  Requirement   As of June 30, 2015
Current ratio Not less than 1.10 to 1   1.24 to 1
Fixed charge coverage ratio Not less than 1.20 to 1   3.21 to 1
Leverage ratio Not more than 5.00 to 1   1.97 to 1
Funded debt restriction Not more than $600 million   $414.4 million
       
       
       
Lithia Motors, Inc.  
Other Highlights (Unaudited)  
  Three months ended
June 30,
    Six months ended
June 30,
 
  2015     2014     2015     2014  
New vehicle unit sales brand mix                      
Honda Acura 23.1 %   8.3 %   22.5 %   8.0 %
Chrysler 19.1     27.6     19.1     28.5  
Toyota 19.0     13.8     19.0     13.7  
General Motors 9.5     14.5     9.3     14.3  
Subaru 6.5     9.2     6.8     9.4  
BMW, MINI 5.5     6.5     5.7     6.3  
Ford 4.1     6.7     4.3     6.3  
Nissan 3.4     3.6     3.7     3.7  
Volkswagen, Audi 3.4     2.8     3.1     2.6  
Hyundai 2.0     3.1     2.1     3.1  
Mercedes 1.5     2.2     1.5     2.3  
Kia 1.4     1.0     1.4     0.9  
Lexus 1.0     -     1.1     -  
Other 0.5     0.7     0.4     0.9  
                       
  Three months ended
June 30,
    Six months ended
June 30,
 
  2015     2014     2015     2014  
Revenue geographic mix                      
California 20.7 %   13.1 %   21.4 %   13.2 %
Oregon 16.4     21.9     16.6     22.0  
Texas 15.7     24.0     15.7     24.0  
New Jersey 15.1     -     14.4     -  
Montana 5.8     8.0     5.8     8.2  
Alaska 5.6     7.5     5.4     7.1  
Washington 5.1     7.0     5.1     7.2  
Nevada 2.9     4.4     3.0     4.6  
New York 3.3     -     3.0     -  
Idaho 2.8     4.2     2.9     4.4  
Iowa 2.9     4.3     2.8     4.3  
North Dakota 1.5     2.3     1.5     2.2  
Hawaii 1.4     2.0     1.4     1.4  
New Mexico .8     1.3     1     1.4  
                       
  As of July 22, 2015        
Current store count mix # of stores     % of total              
Chrysler 25     19.4 %            
Honda, Acura 20     15.5              
Toyota 19     14.7              
General Motors 16     12.4              
BMW, MINI 11     8.5              
Volkswagen, Audi 8     6.2              
Ford 6     4.7              
Nissan 6     4.7              
Subaru 6     4.7              
Hyundai 5     3.8              
Mercedes 3     2.3              
Other 4     3.1              
                       
                       
                       
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
  June 30, 2015   December 31, 2014
Cash and cash equivalents $ 23,394   $ 29,898
Trade receivables, net   287,808     295,379
Inventories, net   1,367,317     1,249,659
Other current assets   32,028     32,010
Assets held for sale   -     8,563
Total current assets $ 1,710,547   $ 1,615,509
           
Property and equipment, net   836,889     816,745
Goodwill   199,129     199,375
Franchise value   150,856     150,892
Other non-current assets   107,434     98,411
Total assets $ 3,004,855   $ 2,880,932
           
Floor plan notes payable $ 45,464   $ 41,047
Floor plan notes payable: non trade   1,169,717     1,137,632
Current maturities of long-term debt   37,963     31,912
Trade payables   78,885     70,853
Accrued liabilities   157,579     153,661
Deferred income taxes   3,494     2,603
Liabilities related to assets held for sale   -     4,892
Total current liabilities $ 1,493,102   $ 1,442,600
           
Long-term debt   599,402     609,066
Deferred revenue   59,893     54,403
Deferred income taxes   36,077     42,795
Other long-term liabilities   64,079     58,963
Total liabilities $ 2,252,553   $ 2,207,827
           
Class A common stock   268,748     276,058
Class B common stock   319     319
Additional paid-in capital   33,584     29,775
Accumulated other comprehensive loss   (622)     (926)
Retained earnings   450,273     367,879
Total liabilities & stockholders' equity $ 3,004,855   $ 2,880,932
           
           
           
Lithia Motors, Inc.  
Summarized Cash Flow from Operations (Unaudited)  
(In thousands)  
  Six months ended  
  June 30,  
  2015     2014  
Net income $ 91,876     $ 63,043  
               
Adjustments to reconcile net income to net cash provided by (used in) operating activities:              
Asset Impairment   10,260       -  
Depreciation and amortization   20,013       11,332  
Stock-based compensation   5,822       3,259  
Loss on disposal of assets   44       62  
Gain on sale of franchise   (5,919 )     (5,744 )
Deferred income taxes   (1,145 )     2,840  
Excess tax benefit from share-based payment arrangements   (4,865 )     (6,058 )
(Increase) decrease:              
  Trade receivables, net   7,570       (20,709 )
  Inventories   (122,660 )     (77,300 )
  Other assets   (3,815 )     (5,951 )
Increase (decrease):              
  Floor plan notes payable, net   4,417       368  
  Trade payables   8,854       1,411  
  Accrued liabilities   7,717       17,595  
  Other long-term liabilities and deferred revenue   11,161       11,658  
Net cash provided by (used in) operating activities $ 29,330     $ (4,194 )
               
               
               
Lithia Motors, Inc.  
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)  
(In thousands)  
  Six months ended  
  June 30,  
Net cash provided by (used in) operating activities 2015   2014  
As reported $ 29,330   $ (4,194 )
  Floor plan notes payable, non-trade, net   35,685     112,910  
Adjusted $ 65,015   $ 108,716  
             
             
             
Lithia Motors, Inc.  
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)  
(In thousands, except for per share data)  
   
  Three Months ended June 30, 2015  
  As reported     Disposal (gain)/loss on sale of stores     Asset impairments     Equity investment fair value adjustment     Adjusted  
Other asset impairments $ 6,130     $       $ (2,000 )   $ (4,130 )   $ -  
                                       
Selling, general and administrative   195,610       2,570       -       -       198,180  
                                       
Income from operations   85,622       (2,570 )     2,000       4,130       89,182  
                                       
Other (expense) income, net   (357 )     -       -       1,733       1,376  
                                       
Income from continuing operations before income taxes $ 75,639     $ (2,570 )   $ 2,000     $ 5,863     $ 80,932  
Income tax expense   (24,416 )     1,305       (780 )     (7,652 )     (31,543 )
Net income from continuing operations $ 51,223     $ (1,265 )   $ 1,220     $ (1,789 )   $ 49,389  
                                       
Diluted earnings per share from continuing operations $ 1.93     $ (0.05 )   $ 0.05     $ (0.07 )   $ 1.86  
Diluted share count   26,496                                  
                                       
                                       
    Three Months Ended June 30, 2014  
    As reported     Acquisition expenses     Tax attributes     Adjusted  
Selling, general and administrative   $ 125,463     $ (163 )   $ -     $ 125,300  
                                 
Income from operations     61,012       163       -       61,175  
                                 
Income from continuing operations before income taxes   $ 57,074     $ 163     $ -     $ 57,237  
Income tax expense     (21,904 )     (63 )     (73 )     (22,040 )
Net income from continuing operations   $ 35,170     $ 100     $ (73 )   $ 35,197  
                                 
Diluted earnings per share from continuing operations   $ 1.34     $ -     $ -     $ 1.34  
Diluted share count     26,331                          
                                 
                                 
                                 
Lithia Motors, Inc.  
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)  
(In thousands, except for per share data)  
   
  Six Months Ended June 30, 2015  
  As reported     Disposal (gain)/loss on sale of stores     Asset impairments     Equity investment fair value adjustment     Adjusted  
Other asset impairments $ 10,260     $ -     $ (2,000 )   $ (8,260 )   $ -  
                                       
Selling, general and administrative   387,228       5,919       -       -       393,147  
                                       
Income from operations   153,523       (5,919 )     2,000       8,260       157,864  
                                       
Other (expense) income, net   (724 )     -       -       3,465       2,741  
                                       
Income from continuing operations before income taxes $ 133,695     $ (5,919 )   $ 2,000     $ 11,725     $ 141,501  
Income tax expense   (41,819 )     2,309       (780 )     (14,902 )     (55,192 )
Net income from continuing operations $ 91,876     $ (3,610 )   $ 1,220     $ (3,177 )   $ 86,309  
                                       
Diluted earnings per share from continuing operations $ 3.47     $ (0.14 )   $ 0.05     $ (0.12 )   $ 3.26  
Diluted share count   26,509                                  
                                       
                                       
                                       
  Six Months Ended June 30, 2014  
  As reported     Reserve adjustments     Acquisition expenses     Tax attribute     Adjusted  
Selling, general and administrative $ 247,292     $ (3,931 )   $ (163 )   $ -     $ 243,198  
                                       
Income from operations   105,737       3,931       163       -       109,831  
                                       
Income from continuing operations before income taxes $ 97,778     $ 3,931     $ 163     $ -     $ 101,872  
Income tax expense   (37,914 )     (1,545 )     (63 )     (73 )     (39,595 )
Net income from continuing operations $ 59,864     $ 2,386     $ 100     $ (73 )   $ 62,277  
                                       
Diluted earnings per share from continuing operations $ 2.27     $ 0.09     $ -     $ -     $ 2.36  
Diluted share count   26,326                                  
                                       

Contact Information

  • Contact:
    John North
    VP Finance and Chief Accounting Officer
    (541) 618-5748