MEDFORD, OR—(Marketwired – Apr 22, 2015) – Lithia Motors, Inc. (
NYSE
:
LAD
) reported the highest first quarter adjusted net income in Company history and increased adjusted net income from continuing operations 36% for the first quarter of 2015 over the prior year period.
2015 first quarter adjusted net income from continuing operations was $36.9 million, or $1.39 per diluted share. This compares to 2014 first quarter adjusted net income from continuing operations of $27.1 million, or $1.03 per diluted share.
Unadjusted net income from continuing operations for the first quarter of 2015 was $40.7 million, or $1.53 per diluted share, compared to $24.7 million, or $0.94 per diluted share, for the first quarter of 2014. As shown in the attached non–GAAP reconciliation tables, the 2015 first quarter per share adjusted results from continuing operations exclude a $0.09 benefit related to the gain on the sale of a store and a $0.05 benefit related to an equity investment. The 2014 first quarter per share adjusted results from continuing operations exclude a $0.09 expense related to an adjustment to a reserve associated with a lawsuit filed in 2006 and settled in 2013, a loss for a hailstorm in Texas and a reserve for a contract assumed in an acquisition.
First quarter 2015 revenue from continuing operations increased $711 million, or 66%, to $1.8 billion from $1.1 billion for the first quarter of 2014.
First Quarter–over–Quarter Operating Highlights:
Total same store sales increased 11%
New vehicle same store sales increased 11%
Used vehicle retail same store sales increased 11%
Service, body and parts same store sales increased 11%
Same store F&I per unit increased $52 to $1,233
Adjusted SG&A expense as a percentage of gross profit was 71.3%
“We delivered the best first quarter earnings in our Company's history, and the second best quarterly earnings ever,” said Bryan DeBoer, President and CEO. “For the fourth consecutive quarter, we achieved double digit growth in same store sales in all business lines. On a continuing operations basis, we grew revenue 66% and adjusted net income 36% over the first quarter of 2014. We remain focused on capturing additional market share, improving existing store results, the continued success, integration and growth of DCH and actively seeking accretive acquisitions.”
Chris Holzshu, SVP and CFO, said, “SG&A as a percentage of gross profit was 71.3% in the first quarter of 2015, slightly higher than the prior year due to the effect of the DCH acquisition, but better than our projection. We target improving SG&A as a percentage of gross profit as we integrate the 36 stores added in 2014. In the first quarter, incremental throughput, or the percentage of additional same store gross profit dollars that we retain after deducting incremental selling costs, was 45.1%. 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
As previously announced, in January 2015, we opened Subaru of Clearlake, Texas. The store is a new franchise we were awarded from Subaru, which we estimate will contribute approximately $45 million in annual revenues.
Bryan DeBoer, President and CEO, stated, “The acquisition market is robust and we anticipate continued activity as independent dealers seek attractive exit strategies. We remain focused on pursuing accretive acquisitions and will continue to add locations to our portfolio in the future.”
Balance Sheet Update
We ended the first quarter with $21 million in cash and $50 million in available credit from our credit facilities. Additionally, approximately $155 million of our operating real estate is currently unfinanced, which could provide an estimated additional $116 million in available liquidity, for total potential liquidity of $187 million.
Dividend Payment
Our Board of Directors has approved a 25% increase in our quarterly dividend to $0.20 per share related to first quarter 2015 financial results. We will pay the dividend May 29, 2015 to shareholders of record on May 15, 2015.
2015 Outlook
We project 2015 second quarter earnings of $1.55 to $1.59 per diluted share and 2015 full year earnings of $6.20 to $6.30 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 43.5%
New vehicle gross margin of 5.9% to 6.1%
Used vehicle sales increasing 36.5%
Used vehicle gross margin of 12.6% to 12.8%
Service body and parts sales increasing 40.5%
Service body and parts gross margin of 48.8% to 49.0%
Finance and insurance gross profit of $1,180 per unit
Tax rate of 40.0%
Average diluted shares outstanding of 26.5 million
Full year capital expenditures are $100 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.
First Quarter Earnings Conference Call and Updated Presentation
The first quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877–407–8029. An updated presentation highlighting the first 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%; continued improvement of SG&A as a percentage of gross profit; generating second quarter earnings per share of $1.58 to 1.62 per diluted share and 2015 full year earnings of $6.20 to $6.30 per diluted share; and all projections set forth under the headings “2015 Outlook,” “Continuing Operations Projections” and “Same Store Projections”;
The increase in our annual revenues that we estimate will result from the dealership that we opened as set forth under the heading “Corporate Development”;
Anticipated continued success, integration and growth of DCH;
Anticipated ability to capture additional market share; ability to find accretive acquisitions; and additions of dealership locations to the company's portfolio in the future;
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
%
March 31,
Increase
Increase
2015
2014
(Decrease)
(Decrease)
Revenues:
New vehicle retail
$
1,007,816
$
579,522
$
428,294
74.0
%
Used vehicle retail
462,931
301,893
161,038
53.3
Used vehicle wholesale
62,208
42,693
19,515
45.7
Finance and insurance
64,604
39,631
24,973
63.0
Service, body and parts
173,475
104,617
68,858
65.8
Fleet and other
18,144
9,750
8,394
86.1
Total revenues
1,789,178
1,078,106
711,072
66.0
Cost of sales:
New vehicle retail
946,042
540,498
405,544
75.0
Used vehicle retail
403,489
261,097
142,392
54.5
Used vehicle wholesale
60,047
41,362
18,685
45.2
Service, body and parts
89,036
53,785
35,251
65.5
Fleet and other
17,189
9,303
7,886
84.8
Total cost of sales
1,515,803
906,045
609,758
67.3
Gross profit
273,375
172,061
101,314
58.9
Asset impairments
4,130
–
–
NM
SG&A expense
191,618
121,829
69,789
57.3
Depreciation and amortization
9,726
5,507
4,219
76.6
Income from operations
67,901
44,725
23,176
51.8
Floor plan interest expense
(4,649
)
(2,984
)
1665
55.8
Other interest expense
(4,828
)
(1,974
)
(2,854
)
144.6
Other income (expense), net
(368
)
937
(1,305
)
NM
Income from continuing operations before income taxes
58,056
40,704
17,352
42.6
Income tax expense
(17,403
)
(16,010
)
1,393
8.7
Income tax rate
30.0
%
39.3
%
Income from continuing operations
$
40,653
$
24,694
$
15,959
64.6
%
Income from discontinued operations, net of tax
–
40
(40
)
NM
Net income
$
40,653
$
24,734
$
15,919
64.4
%
Diluted net income per share:
Continuing operations
$
1.53
$
0.94
$
0.59
62.8
%
Discontinued operations
–
–
–
–
Net income per share
$
1.53
$
0.94
$
0.59
62.8
%
Diluted shares outstanding
26,519
26,320
199
0.8
%
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