EXHIBIT 99.1
LITHIA MOTORS REPORTS RECORD Q3 REVENUES; EARNINGS PER SHARE INCREASE 19% TO 83 CENTS
Lithia Motors' Highlights for continuing operations for period ended Sept. 30, 2005:
Third quarter 2005 | First Nine Months 2005 | |||||
Total Revenues: | +16% | Total Revenues: | +12% | |||
Total Same-Store Revenues: | +7.9% | Total Same-Store Revenues: | +2.7% | |||
Operating Profits: | +27% | Operating Profits: | +29% | |||
Net Income: | +22% | Net Income: | +23% |
MEDFORD, OREGON, October 25, 2005 (5:00 a.m. Pacific) - Lithia Motors, Inc. (NYSE: LAD) today announced that net income from continuing operations rose 22% to $17.7 million in the third quarter of 2005 compared to $14.5 million in the third quarter of 2004. Earnings per share from continuing operations, including the effect of the accounting change for convertible notes and discontinued operations, increased 19% to $0.83 per fully diluted share as compared to $0.70 in the third quarter of 2004. This was on 2% more diluted shares outstanding.
Third quarter 2005 sales increased 16% to $869.3 million from $751.0 million in the third quarter of 2004. New vehicle sales increased 15%, used vehicle sales increased 16%, finance/insurance sales increased 19%, and parts/service sales increased 11%.
Sidney B. DeBoer, Lithia's Chairman and Chief Executive Officer, commented, "The third quarter can be characterized by same-store sales and same-store gross profit growth across all business lines, cost savings, and margin improvement in the used retail business. The third quarter operating margin improved 40 basis points to 4.4%, as compared to the same period last year. This is the highest operating margin level that the company has achieved for the third quarter. We have now seen operating margin improvements in every quarter of the year."
"Finally, new vehicle inventories are well positioned going into the fourth quarter. New vehicle inventories at the end of September were 24 days lower than year-end 2004 levels and 14 days lower than at the end of the second quarter of the year," concluded Mr. DeBoer.
For the nine-month period ended September 30, 2005, Lithia's net income from continuing operations rose 23% to $40.6 million as compared to $33.0 million in the same period last year. Earnings per share from continuing operations, including the effect of the accounting change for convertible notes and discontinued operations, increased 16% to $1.91 per fully diluted share as compared to $1.65 in the same period last year. This was on 7% more diluted shares outstanding.
For the first nine months, total sales increased 12% to $2.30 billion from $2.06 billion in the same period last year. New vehicle sales increased 11%, used vehicle sales increased 11%, finance/insurance sales increased 15% and parts/service sales increased 10%.
Jeffrey B. DeBoer, Senior Vice President and CFO added, "Lithia has demonstrated its operating strength in the first nine months of the year. Year to date through the end of September, we have seen improvements in our total gross margin, operating margin and pretax margin. We have made significant gains on the cost side of the business as demonstrated by our SG&A as a percentage of gross profit that improved by 300 basis points. Total same-store sales have grown 2.7% while total same-store gross profit demonstrated better results, growing 3.5% ."
"Our guidance for the fourth quarter and full-year 2005 and 2006 is included in the table below. We have raised our full-year 2005 guidance by two cents. The full-year 2006 guidance assumes a steady pace of acquisitions and includes the effect of FAS 123, expensing for stock options, that will take affect in the first quarter of the year," concluded Jeffrey B. DeBoer.
Guidance | Guidance | Guidance | ||||
EPS excluding new accounting | 4Q 2005 | FY 2005 | FY 2006 | |||
pronouncements: | $0.45 - $0.48 | $2.51 - $2.54 | N/A | |||
Effect of Convertible Notes | ($0.03) | ($0.18) | N/A | |||
EPS - Reportable 2005 | $0.42 - $0.45 | $2.33 - $2.36 | $2.45 - $2.55 | |||
Effect of FAS 123(R) | N/A | ($0.08) | ||||
EPS - Reportable 2006 | N/A | $2.37 - $2.47 |
In October of 2004, the Financial Accounting Standards Board's Emerging Issues Task Force (EITF) ratified Issue No. 04-8, requiring the company to include in its share count in determining diluted earnings per share, the shares potentially issuable to the holders of its $85,000,000 in principal amount 2.875% Senior Subordinated Notes Due 2014, even though the holder of such notes cannot convert the notes into common stock except under certain limited circumstances and then only at a conversion price of approximately $37.69 per share. Previously, the shares issuable would only have been included in the calculation of diluted EPS if the holders were then entitled to convert the notes. For purposes of calculating reported diluted EPS for the third quarter ended 2005, Lithia is required to increase its share count by the amount contingently issuable to the noteholders. This resulted in an additional 2.255 million shares for the first three quarters of 2005.Adoption of the accounting statement did not affect the cash flow of the company.
Also, in December 2004, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standards Statement 123 (revised 2004) ("FAS 123 (R)") that will require that the value of all equity-based compensation arrangements, including stock options and employee stock purchase plans, be accounted for using a "fair value" method. Previously, the Company had accounted for such arrangements under the "intrinsic method" permitted by APB 25 and the amounts noted in the footnotes to the companies financials filed on form 10K. The new rules, absent any change, will be effective for the Company commencing with the first quarter of 2006.Adoption of this accounting change does not affect the cash flow of the Company.
Conference Call Information
Lithia Motors will be providing more detailed information on the results for the third quarter 2005 in its conference call scheduled for 11 a.m. PDT today. The call can be accessed live by calling 973-582-2700. To listen to a live webcast or hear a replay, log-on to:www.lithia.com - go toInvestor Relations - and click on theLive Webcast icon.
About Lithia
Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 25 brands of new vehicles and operates 92 stores and 184 franchises in 12 states in the Western United States and over the Internet through "Lithia.com-America's Car & Truck Store." 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. Lithia retailed 98,331 new and used vehicles and had $2.7 billion in total revenue in 2004.
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. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including, without limitation, economic conditions, acquisition risk factors and others set forth from time to time in the company's filings with the SEC. Specific risks in this press release include the benefits of Lithia's operating model, inventory position, anticipated revenues of recently acquired stores, ability to complete additional acquisitions in 2005 and projected fourth quarter, full-year 2005 and full-year 2006 earnings per share guidance, and potential changes in accounting standards.
Additional Information
For additional information on Lithia Motors, contact the Investor Relations Department: (541) 776-6591 or log-on to:www.lithia.com - go toInvestor Relations
LITHIA MOTORS, INC. | ||||||||
(In Thousands except per share and unit data) | ||||||||
Unaudited | ||||||||
Three Months Ended | ||||||||
September 30, | $ Increase | % Increase | ||||||
2005 | 2004 | (Decrease) | (Decrease) | |||||
New Vehicle Sales | $517,536 | $448,805 | $68,731 | 15.3% | ||||
Used Vehicle Sales | 227,959 | 196,784 | 31,175 | 15.8 | ||||
Finance & Insurance | 32,979 | 27,660 | 5,319 | 19.2 | ||||
Service, Body & Parts Sales | 82,456 | 74,147 | 8,309 | 11.2 | ||||
Fleet & Other Revenues | 8,380 | 3,631 | 4,749 | 130.8 | ||||
Total Revenues | 869,310 | 751,027 | 118,283 | 15.7 | ||||
Cost of Sales | 726,555 | 627,242 | 99,313 | 15.8 | ||||
Gross Profit | 142,755 | 123,785 | 18,970 | 15.3 | ||||
SG&A Expense | 100,594 | 90,260 | 10,334 | 11.4 | ||||
Depreciation/Amortization | 3,678 | 3,208 | 470 | 14.7 | ||||
Income from Operations | 38,483 | 30,317 | 8,166 | 26.9 | ||||
Flooring Interest Expense | (5,628) | (4,472) | 1,156 | 25.8 | ||||
Other Interest Expense | (3,043) | (2,305) | 738 | 32.0 | ||||
Other Expense, net | 189 | 203 | (14) | (6.9) | ||||
Income from continuing operations | ||||||||
before income taxes | 30,001 | 23,743 | 6,258 | 26.4 | ||||
Income Tax Expense | 12,276 | 9,260 | 3,016 | 32.6 | ||||
Income Tax Rate | 40.9% | 39.0% | ||||||
Net Income from continuing ops. | 17,725 | 14,483 | 3,242 | 22.4 | ||||
Income (Loss) from discontinued | ||||||||
operations, net of income taxes | (93) | (13) | (80) | 615.4 | ||||
Net Income | $17,632 | $14,470 | $3,162 | 21.9% | ||||
Diluted Net Income per share | ||||||||
including effect of convertibles notes: | ||||||||
Continuing Operations | $0.90 | $0.76 | $0.14 | 18.4% | ||||
Effects of convertible senior notes | (0.07) | (0.06) | ||||||
Discontinued Operations | - | - | ||||||
Net Income per share | $0.83 | $0.70 | 0.13 | 18.6% | ||||
Diluted Shares Outstanding | 21,882 | 21,376 | 506 | 2.4% | ||||
Diluted Net Income per share | ||||||||
before effect of convertibles notes: | ||||||||
Continuing Operations | $0.90 | $0.76 | $0.14 | 18.4% | ||||
Discontinued Operations | - | - | ||||||
Net Income per share | $0.90 | $0.76 | 0.14 | 18.4% | ||||
Diluted Shares Outstanding | 19,627 | 19,121 | 506 | 2.6% |
LITHIA MOTORS, INC. | Three Months Ended | |||||||
September 30, | Increase | % Increase | ||||||
Unit Sales: | 2005 | 2004 | (Decrease) | (Decrease) | ||||
New Vehicle | 18,926 | 15,928 | 2,998 | 18.8% | ||||
Used - Retail Vehicle | 12,138 | 10,741 | 1,397 | 13.0 | ||||
Used - Wholesale | 7,147 | 6,095 | 1,052 | 17.3 | ||||
Total Units Sold | 38,211 | 32,764 | 5,447 | 16.6 | ||||
Average Selling Price: | ||||||||
New Vehicle | $27,345 | $28,177 | ($832) | (3.0)% | ||||
Used - Retail Vehicle | 15,495 | 15,336 | 159 | 1.0 | ||||
Used - Wholesale | 5,579 | 5,259 | 320 | 6.1 | ||||
Key Financial Data: | ||||||||
Gross Profit Margin | 16.4% | 16.5% | ||||||
SG&A as a % of Gross Profit | 70.5% | 72.9% | ||||||
Operating Margin | 4.4% | 4.0% | ||||||
Pre-Tax Margin | 3.5% | 3.2% | ||||||
Gross Margin/Profit Data | ||||||||
New Vehicle Retail | 7.7% | 7.9% | ||||||
Used Vehicle Retail | 15.7% | 14.2% | ||||||
Used Vehicle Wholesale | 1.6% | 3.2% | ||||||
Service, Body & Parts | 47.9% | 48.6% | ||||||
New Retail Gross Profit/Unit | $2,105 | $2,228 | ||||||
Used Retail Gross Profit/Unit | $2,439 | $2,183 | ||||||
Used Wholesale Gross Profit/Unit | $92 | $166 | ||||||
Finance & Insurance/Retail Unit | $1,061 | $1,036 | ||||||
Same Store Data | ||||||||
New Vehicle Retail Sales | 7.8% | -3.0% | ||||||
Used Vehicle Sales (includes Wholesale) | 9.3% | -7.7% | ||||||
Total Vehicle Sales (excludes fleet) | 8.3% | -4.5% | ||||||
Finance & Insurance Sales | 7.0% | 0.6% | ||||||
Service, Body & Parts Sales | 4.7% | -0.9% | ||||||
Total Sales (Excluding Fleet) | 7.9% | -4.0% | ||||||
Total Gross Profit (Excluding Fleet) | 6.1% | -0.8% |
LITHIA MOTORS, INC. | ||||||||||
(In Thousands except per share and unit data) | ||||||||||
Unaudited | Nine Months Ended | |||||||||
September 30, | $ Increase | % Increase | ||||||||
2005 | 2004 | (Decrease) | (Decrease) | |||||||
New Vehicle Sales | $1,327,960 | $1,197,810 | $130,150 | 10.9% | ||||||
Used Vehicle Sales | 631,728 | 566,869 | 64,859 | 11.4 | ||||||
Finance & Insurance | 85,868 | 74,963 | 10,905 | 14.5 | ||||||
Service, Body & Parts Sales | 235,690 | 214,146 | 21,544 | 10.1 | ||||||
Fleet & Other Revenues | 20,163 | 6,378 | 13,785 | 216.1 | ||||||
Total Revenues | 2,301,409 | 2,060,166 | 241,243 | 11.7 | ||||||
Cost of Sales | 1,910,788 | 1,715,938 | 194,850 | 11.4 | ||||||
Gross Profit | 390,621 | 344,228 | 46,393 | 13.5 | ||||||
SG&A Expense | 287,279 | 263,239 | 24,040 | 9.1 | ||||||
Depreciation/Amortization | 10,580 | 9,158 | 1,422 | 15.5 | ||||||
Income from Operations | 92,762 | 71,831 | 20,931 | 29.1 | ||||||
Flooring Interest Expense | (17,020) | (12,140) | 4,880 | 40.2 | ||||||
Other Interest Expense | (8,893) | (6,194) | 2,699 | 43.6 | ||||||
Other Expense, net | 727 | 677 | 50 | 7.4 | ||||||
Income from continuing operations | ||||||||||
before income taxes | 67,576 | 54,174 | 13,402 | 24.7 | ||||||
Income Tax Expense | 27,024 | 21,128 | 5,896 | 27.9 | ||||||
Income Tax Rate | 40.0% | 39.0% | ||||||||
Net Income from continuing ops. | 40,552 | 33,046 | 7,506 | 22.7% | ||||||
Income (Loss) from discontinued | ||||||||||
operations, net of income taxes | (255) | (257) | (2) | (0.8) | ||||||
Net Income | $40,297 | $32,789 | $7,508 | 22.9% | ||||||
Diluted Net Income per share | ||||||||||
including effect of convertibles notes: | ||||||||||
Continuing Operations | $2.08 | $1.73 | $0.35 | 20.2% | ||||||
Effects of convertible senior sub. notes | (0.16) | (0.07) | ||||||||
Discontinued Operations | (0.01) | (0.01) | ||||||||
Net Income per share | $1.91 | $1.65 | 0.26 | 15.8% | ||||||
Diluted Shares Outstanding | 21,765 | 20,353 | 1,412 | 6.9% | ||||||
Diluted Net Income per share | ||||||||||
before effect of convertibles notes: | ||||||||||
Continuing Operations | $2.08 | $1.73 | $0.35 | 20.2% | ||||||
Discontinued Operations | (0.01) | (0.02) | ||||||||
Net Income per share | $2.07 | $1.71 | 0.36 | 21.1% | ||||||
Diluted Shares Outstanding | 19,510 | 19,127 | 383 | 2.0% |
LITHIA MOTORS, INC. | Nine Months Ended | |||||||
September 30, | Increase | % Increase | ||||||
Unit Sales: | 2005 | 2004 | (Decrease) | (Decrease) | ||||
New Vehicle | 47,808 | 42,985 | 4,823 | 11.2% | ||||
Used - Retail Vehicle | 33,820 | 31,550 | 2,270 | 7.2 | ||||
Used - Wholesale | 18,631 | 17,747 | 884 | 5.0 | ||||
Total Units Sold | 100,259 | 92,282 | 7,977 | 8.6 | ||||
Average Selling Price: | ||||||||
New Vehicle | $27,777 | $27,866 | ($89) | (0.3)% | ||||
Used - Retail Vehicle | 15,460 | 14,984 | 476 | 3.2 | ||||
Used - Wholesale | 5,844 | 5,304 | 540 | 10.2 | ||||
Key Financial Data: | ||||||||
Gross Profit Margin | 17.0% | 16.7% | ||||||
SG&A as a % of Gross Profit | 73.5% | 76.5% | ||||||
Operating Margin | 4.0% | 3.5% | ||||||
Pre-Tax Margin | 2.9% | 2.6% | ||||||
Gross Margin/Profit Data | ||||||||
New Vehicle Retail | 7.9% | 7.8% | ||||||
Used Vehicle Retail | 15.6% | 14.4% | ||||||
Used Vehicle Wholesale | 3.2% | 3.4% | ||||||
Service, Body & Parts | 48.5% | 48.3% | ||||||
New Retail Gross Profit/Unit | $2,185 | $2,187 | ||||||
Used Retail Gross Profit/Unit | $2,419 | $2,164 | ||||||
Used Wholesale Gross Profit/Unit | $184 | $181 | ||||||
Finance & Insurance/Retail Unit | $1,051 | $1,003 | ||||||
Same Store Data | ||||||||
New Vehicle Retail Sales | 2.3% | -1.9% | ||||||
Used Vehicle Sales (includes Wholesale) | 3.8% | -7.8% | ||||||
Total Vehicle Sales (excludes fleet) | 2.8% | -3.9% | ||||||
Finance & Insurance Sales | 2.7% | 0.6% | ||||||
Service, Body & Parts Sales | 1.9% | 3.3% | ||||||
Total Sales (Excluding Fleet) | 2.7% | -3.1% | ||||||
Total Gross Profit (Excluding Fleet) | 3.5% | 1.9% |
LITHIA MOTORS, INC. | ||||
Balance Sheet Highlights (Dollars in Thousands) | ||||
September 30, 2005 | December 31, 2004 | |||
Unaudited | ||||
Cash & Cash Equivalents | $41,687 | $29,264 | ||
Trade Receivables* | 93,086 | 84,489 | ||
Inventory | 516,068 | 536,653 | ||
Assets Held for Sale | - | 135 | ||
Other Current Assets | 17,102 | 12,334 | ||
Total Current Assets | 667,943 | 662,875 | ||
Real Estate, net | 257,221 | 226,357 | ||
Equipment & Leases, net | 76,470 | 73,274 | ||
Goodwill, net | 252,325 | 244,532 | ||
Other Assets | 51,832 | 49,866 | ||
Total Assets | $1,305,791 | $1,256,904 | ||
Floorplan Notes Payable | $415,134 | $450,860 | ||
Other Current Liabilities | 96,718 | 85,838 | ||
Total Current Liabilities | 511,852 | 536,698 | ||
Used Vehicle Flooring | 11,000 | - | ||
Real Estate Debt | 144,568 | 139,703 | ||
Other Long-Term Debt | 136,612 | 127,608 | ||
Other Liabilities | 51,835 | 46,949 | ||
Total Liabilities | 855,867 | 850,958 | ||
Shareholders' Equity | 449,924 | 405,946 | ||
Total Liabilities & | ||||
Shareholders' Equity | $1,305,791 | $1,256,904 |
*Includes contracts-in-transit of $45,285 and $42,913 for 2005 and 2004. | ||||
Other Balance Sheet Data (Dollars in Thousands) | ||||
Current Ratio | 1.3x | 1.2x | ||
LT Debt/Total Cap. | ||||
(Excludes Used -Vehicle Flooring | ||||
and Real Estate) | 23% | 24% | ||
Working Capital | $156,091 | $126,177 | ||
Book Value per Basic Share | $23.52 | $21.62 |