EXHIBIT 99.1
LITHIA MOTORS Q2 REVENUES GROW 13% TO A RECORD $846 MILLION; TOTAL SAME STORE SALES INCREASE 7.6%; EARNINGS OF $0.55 PER SHARE
MEDFORD, OREGON, AUGUST 1, 2006 (5:00 a.m. PDT) -Lithia Motors, Inc. (NYSE: LAD) today announced that second quarter 2006 sales increased 13% to $846.5 million as compared to $750.8 million in the same period last year. New vehicle sales increased 13%, used vehicle sales increased 15%, finance/insurance sales increased 21% and parts/service sales increased 14%.
Second quarter 2006 net income from continuing operations was $11.7 million as compared to $13.1 million in the second quarter of 2005. Diluted earnings per share from continuing operations, including the $0.03 effect of accounting for equity compensation under FAS123(R), were $0.55.
Second quarter 2006 earnings per share from continuing operations, excluding the effect of accounting for equity compensation under FAS123(R), were $0.58 as compared to $0.62 in the same period last year.
Sid DeBoer, Lithia's Chairman and CEO, commented, "In the second quarter we had strong increases in same store sales in all business lines. Total same store sales increased 7.6% and total same store gross profits increased 6.8% . Earnings, however, did not quite keep pace due to certain unusual expenses and because we sacrificed new car margins in order to gain sales volume and market share. It was a difficult sales environment affected by both higher fuel prices and interest rates."
"Our strategy to aggressively pursue market share that began in the first quarter of the year, continued throughout the second quarter. This resulted in an increase in new vehicle same store sales of 6.6% as compared to an industry that was down much more than 5%. This was on top of strong increases in new same store sales in the second quarter of last year that resulted from the introduction of employee pricing programs at our GM stores. Our used vehicle business and parts and service businesses also performed well, with same store sales up 9.2% and 7.5% respectively," concluded Mr. DeBoer.
For the six-month period ending June 30, 2006, total sales increased 13% to $1.59 billion from $1.41 billion in the same period last year. New vehicle sales increased 16%, used vehicle sales increased 11%, finance/insurance sales increased 16%, and parts/service sales increased 12%.
For the first six-months, Lithia's net income from continuing operations was $22.3 million as compared to $23.6 million in the first six months of 2005. Diluted earnings per share from continuing operations, including the $0.06 effect of accounting for equity compensation under FAS123(R), were $1.05.
For the first half of 2006 earnings per share from continuing operations, excluding the affect of accounting for equity compensation under FAS123(R), were $1.11 as compared to $1.13 in the same period last year.
Jeffrey B. DeBoer, Senior Vice President and CFO added, "In the second quarter, we completed four acquisitions; a Dodge store in Fresno, California, and three Chrysler Dodge and Jeep stores located in Twin Falls, Idaho; Bryan, Texas and La Crosse Wisconsin. Year to date we have completed acquisitions with approximately $160 million in annualized revenues, and we are still on track to hit our annual acquisition targets."
"While Lithia posted strong sales and gross profit performance in what was an anemic sales environment, not all the benefits accrued to the bottom line. A number of items impacted our second quarter earnings: hailstorm damage at stores in three of our markets; a higher tax rate affecting our second quarter due to a change in accounting estimates; stock option expense as a result of FAS123(R); a deferral ofcertain manufacturer incentives to future monthsdue to changes in the incentive; higher interest expense corresponding to increased inventories and higher interest rates. We also now have duplication of some costs related to various long-term operational initiatives that should benefit the company's long-term performance. While many of these items will not carry through to the third quarter, we expect the higher SG&A, option and interest expense to be factors that impact earnings throughout the rest of the year."
"As a result of these items, we are lowering our guidance for the full-year 2006, which is included in the table below. In particular we have noticed that analyst projections for the third quarter are overly optimistic. Last year's third quarter was very strong with high operating margins and strong same store sales growth concurrent with a very strong incentive environment. Therefore, it will be very difficult to exceed last year's third quarter earnings. The full-year 2006 guidance is on a continuing operations basis. It assumes a steady pace of acquisitions and dispositions and includes the effect of FAS123(R), expensing for stock options and our employee stock purchase plan, that took affect starting in the first quarter of this year," concluded Jeffrey B. DeBoer.
Earnings Per Share | Guidance | |||
FY 2005 | FY 2006 | |||
EPS w/o FAS 123(R) adoption: | $2.37 | $2.32 - $2.40(non-GAAP) | ||
Effect of FAS 123(R): | N/A | ($0.12) | ||
EPS - Reportable 2006: | N/A | $2.20 - $2.28 |
The inclusion of the non-GAAP "EPS without FAS 123(R) amounts" is included in the above guidance because management believes that the absence of a comparable expense in 2005 would obscure the earnings estimate on a comparable basis. As noted above, the EPS guidance is also given for reportable EPS and reconciles to the non-GAAP number.
In December 2004, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standards Statement 123 (revised 2004) ("FAS123(R)") that required 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. Prior to 2006, the Company had accounted for such arrangements under the "intrinsic method" permitted by APB 25 and the amounts under the fair value method were presented in the
footnotes to the company's financials filed on Form 10-K. The new rules became effective for the Company commencing with the first quarter of 2006.Adoption of thisaccounting 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 second quarter 2006 in its conference call scheduled for 11 a.m. PT today. The call can be accessed live by calling 973-633-1010. 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 700 and Russell 2000 Company with 96 stores located in 38 markets in 13 states, selling 25 brands of new vehicles and over the Internet at "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 103,333 new and used vehicles and had $2.9 billion in total revenue in 2005.
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, items which impacted earnings, anticipated revenues of recently acquired and projected new store acquisitions and projected full-year 2006 earnings per share guidance.
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 | |||||||
June 30, | $Increase | % Increase | ||||||
2006 | 2005 | (Decrease) | (Decrease) | |||||
New Vehicle Sales | $496,121 | $438,375 | $57,746 | 13.2% | ||||
Used Vehicle Sales | 230,909 | 200,769 | 30,140 | 15.0 | ||||
Finance & Insurance | 32,776 | 27,204 | 5,572 | �� | 20.5 | |||
Service, Body & Parts Sales | 85,736 | 75,417 | 10,319 | 13.7 | ||||
Fleet & Other Revenues | 939 | 9,064 | (8,125) | (89.6) | ||||
Total Revenues | 846,481 | 750,829 | 95,652 | 12.7 | ||||
Cost of Sales | 702,256 | 623,584 | 78,672 | 12.6 | ||||
Gross Profit | 144,225 | 127,245 | 16,980 | 13.3 | ||||
SG&A Expense | 107,536 | 93,323 | 14,213 | 15.2 | ||||
Depreciation/Amortization | 4,212 | 3,406 | 806 | 23.7 | ||||
Income from Operations | 32,477 | 30,516 | 1,961 | 6.4 | ||||
Flooring Interest Expense | (8,931) | (6,000) | 2,931 | 48.9 | ||||
Other Interest Expense | (3,641) | (3,036) | 605 | 19.9 | ||||
Other Income, net | 315 | 247 | 68 | 27.5 | ||||
Income from continuing operations | ||||||||
before income taxes | 20,220 | 21,727 | (1,507) | (6.9) | ||||
Income Tax Expense | 8,503 | 8,622 | (119) | (1.4) | ||||
Income Tax Rate | 42.1% | 39.7% | ||||||
Income from continuing ops. | 11,717 | 13,105 | (1,388) | (10.6) | ||||
Loss from discontinued operations, | ||||||||
net of income taxes | (50) | (430) | (380) | (88.4) | ||||
Net Income | $11,667 | $12,675 | ($1,008) | (8.0)% | ||||
Diluted Net Income per share: | ||||||||
Continuing Operations | $0.58 | $0.62 | $(0.04) | (6.5)% | ||||
Effects of FAS123(R) | (0.03) | - | ||||||
Diluted Net Income per share | ||||||||
after effect of FAS123(R): | $0.55 | $0.62 | (0.07) | (11.3)% | ||||
Discontinued Operations | - | (0.02) | ||||||
Net Income per share | $0.55 | $0.60 | (0.05) | (8.3)% | ||||
Diluted Shares Outstanding | 22,150 | 21,749 | 401 | 1.8% | ||||
Increase | Increase | |||||||
Unit Sales: | 2006 | 2005 | (Decrease) | (Decrease) | ||||
New Vehicle | 18,276 | 15,601 | 2,675 | 17.1% | ||||
Used - Retail Vehicle | 11,861 | 10,601 | 1,260 | 11.9 | ||||
Used - Wholesale | 6,317 | 5,703 | 614 | 10.8 | ||||
Total Units Sold | 36,454 | 31,905 | 4,549 | 14.3 |
LITHIA MOTORS, INC. | ||||||||
Three Months Ended | ||||||||
June 30, | $Increase | % Increase | ||||||
Average Selling Price: | 2006 | 2005 | (Decrease) | (Decrease) | ||||
New Vehicle | $27,146 | $28,099 | ($953) | (3.4)% | ||||
Used - Retail Vehicle | 16,270 | 15,686 | 584 | 3.7 | ||||
Used - Wholesale | 6,004 | 6,047 | (43) | (0.7) | ||||
Key Financial Data: | ||||||||
Gross Profit Margin | 17.0% | 16.9% | ||||||
SG&A as a % of Gross Profit | 74.6% | 73.3% | ||||||
Operating Margin | 3.8% | 4.1% | ||||||
Pre-Tax Margin | 2.4% | 2.9% | ||||||
Gross Margin/Profit Data | 2006 | 2005 | ||||||
New Vehicle Retail | 7.3% | 7.9% | ||||||
Used Vehicle Retail | 15.8% | 15.9% | ||||||
Used Vehicle Wholesale | 2.8% | 3.9% | ||||||
Service, Body & Parts | 50.3% | 49.3% | ||||||
New Retail Gross Profit/Unit | $1,984 | $2,220 | ||||||
Used Retail Gross Profit/Unit | $2,575 | $2,494 | ||||||
Used Wholesale Gross Profit/Unit | $168 | $234 | ||||||
Finance & Insurance/Retail Unit | $1,088 | $1,038 | ||||||
Same Store Data | 2006 | 2005 | ||||||
New Vehicle Retail Sales | 6.6% | 4.8% | ||||||
Used Vehicle Sales (includes Wholesale) 9.2% | 4.2% | |||||||
Total Vehicle Sales (excludes fleet) | 7.4% | 4.6% | ||||||
Finance & Insurance Sales | 14.3% | 2.9% | ||||||
Service, Body & Parts Sales | 7.5% | 1.4% | ||||||
Total Sales (Excluding Fleet) | 7.6% | 4.2% | ||||||
Total Gross Profit (Excluding Fleet) | 6.8% | 3.1% |
LITHIA MOTORS, INC. | ||||||||
(In Thousands except per share and unit data) | ||||||||
Unaudited | Six Months Ended | |||||||
June 30, | $Increase | % Increase | ||||||
2006 | 2005 | (Decrease) | (Decrease) | |||||
New Vehicle Sales | $923,871 | $797,994 | $125,877 | 15.8% | ||||
Used Vehicle Sales | 439,987 | 398,091 | 41,896 | 10.5 | ||||
Finance & Insurance | 60,330 | 51,820 | 8,510 | 16.4 | ||||
Service, Body & Parts Sales | 168,209 | 149,682 | 18,527 | 12.4 | ||||
Fleet & Other Revenues | 2,269 | 12,168 | (9,899) | (81.4) | ||||
Total Revenues | 1,594,666 | 1,409,755 | 184,911 | 13.1 | ||||
Cost of Sales | 1,319,660 | 1,165,278 | 154,382 | 13.2 | ||||
Gross Profit | 275,006 | 244,477 | 30,529 | 12.5 | ||||
SG&A Expense | 208,253 | 182,455 | 25,798 | 14.1 | ||||
Depreciation/Amortization | 8,258 | 6,794 | 1,464 | 21.5 | ||||
Income from Operations | 58,495 | 55,228 | 3,267 | 5.9 | ||||
Flooring Interest Expense | (15,546) | (11,102) | 4,444 | 40.0 | ||||
Other Interest Expense | (6,972) | (5,841) | 1,131 | 19.4 | ||||
Other Expense, net | 742 | 532 | 210 | 39.5 | ||||
Income from continuing operations | ||||||||
before income taxes | 36,719 | 38,817 | (2,098) | (5.4) | ||||
Income Tax Expense | 14,373 | 15,236 | (863) | (5.7) | ||||
Income Tax Rate | 39.1% | 39.3% | ||||||
Net Income from continuing ops. | 22,346 | 23,581 | (1,235) | (5.2)% | ||||
Income (Loss) from discontinued | ||||||||
operations, net of income taxes | (1,371) | (916) | 455 | 49.7 | ||||
Net Income | $20,975 | $22,665 | ($1,690) | (7.5)% | ||||
Diluted Net Income per share: | ||||||||
Continuing Operations | $1.11 | $1.13 | $(0.02) | (1.8)% | ||||
Effects of FAS123(R) | (0.06) | - | ||||||
Diluted Net Income per share | ||||||||
after effect of FAS123(R): | $1.05 | $1.13 | (0.08) | (7.1)% | ||||
Discontinued Operations | (0.06) | (0.04) | ||||||
Net Income per share | $0.99 | $1.09 | (0.10) | (9.2)% | ||||
Diluted Shares Outstanding | 22,109 | 21,710 | 399 | 1.8% | ||||
Increase | Increase | |||||||
Unit Sales: | 2006 | 2005 | (Decrease) | (Decrease) | ||||
New Vehicle | 33,517 | 28,465 | 5,052 | 17.7% | ||||
Used - Retail Vehicle | 22,618 | 21,421 | 1,197 | 5.6 | ||||
Used - Wholesale | 11,851 | 11,247 | 604 | 5.4 | ||||
Total Units Sold | 67,986 | 61,133 | 6,853 | 11.2 |
LITHIA MOTORS, INC. | ||||||||
Six Months Ended | ||||||||
June 30, | $Increase | % Increase | ||||||
Average Selling Price: | 2006 | 2005 | (Decrease) | (Decrease) | ||||
New Vehicle | $27,564 | $28,034 | ($470) | (1.7)% | ||||
Used - Retail Vehicle | 16,219 | 15,450 | 769 | 5.0 | ||||
Used - Wholesale | 6,172 | 5,970 | 202 | 3.4 | ||||
Key Financial Data: | ||||||||
Gross Profit Margin | 17.2% | 17.3% | ||||||
SG&A as a % of Gross Profit | 75.7% | 74.6% | ||||||
Operating Margin | 3.7% | 3.9% | ||||||
Pre-Tax Margin | 2.3% | 2.8% | ||||||
Gross Margin/Profit Data | 2006 | 2005 | ||||||
New Vehicle Retail | 7.6% | 8.0% | ||||||
Used Vehicle Retail | 15.6% | 15.7% | ||||||
Used Vehicle Wholesale | 3.9% | 4.1% | ||||||
Service, Body & Parts | 49.6% | 49.0% | ||||||
New Retail Gross Profit/Unit | $2,096 | $2,246 | ||||||
Used Retail Gross Profit/Unit | $2,532 | $2,420 | ||||||
Used Wholesale Gross Profit/Unit | $241 | $247 | ||||||
Finance & Insurance/Retail Unit | $1,075 | $1,039 | ||||||
Same Store Data | 2006 | 2005 | ||||||
New Vehicle Retail Sales | 8.8% | (0.2)% | ||||||
Used Vehicle Sales (includes Wholesale) | 4.7% | 1.0% | ||||||
Total Vehicle Sales (excludes fleet) | 7.4% | 0.2% | ||||||
Finance & Insurance Sales | 9.5% | 0.8% | ||||||
Service, Body & Parts Sales | 6.3% | 0.8% | ||||||
Total Sales (Excluding Fleet) | 7.4% | 0.3% | ||||||
Total Gross Profit (Excluding Fleet) | 5.9% | 2.4% |
LITHIA MOTORS, INC. | ||||
Balance Sheet Highlights (Dollars in Thousands) | ||||
June 30, 2006 | December 31, 2005 | |||
Unaudited | ||||
Cash & Cash Equivalents | $23,435 | $48,566 | ||
Trade Receivables* | 113,912 | 106,443 | ||
Inventory | 881,990 | 606,047 | ||
Assets Held for Sale | - | 27,411 | ||
Other Current Assets | 13,057 | 15,781 | ||
Total Current Assets | 1,032,394 | 804,248 | ||
Real Estate, net | 282,032 | 255,372 | ||
Equipment & Leases, net | 84,008 | 77,805 | ||
Goodwill, net | 276,731 | 260,899 | ||
Other Assets | 64,824 | 54,390 | ||
Total Assets | $1,739,989 | $1,452,714 | ||
Floorplan Notes Payable | $763,081 | $530,452 | ||
Liabilities held for sale | - | 22,388 | ||
Other Current Liabilities | 107,397 | 95,560 | ||
Total Current Liabilities | 870,478 | 648,400 | ||
Used Vehicle Flooring | 18,000 | - | ||
Real Estate Debt | 168,508 | 154,046 | ||
Other Long-Term Debt | 142,609 | 136,505 | ||
Other Liabilities | 57,743 | 54,130 | ||
Total Liabilities | 1,257,338 | 993,081 | ||
Shareholders' Equity | 482,651 | 459,633 | ||
Total Liabilities & | ||||
Shareholders' Equity | $1,739,989 | $1,452,714 |
* Includes contracts-in-transit of $52,599 and $52,453 at June 30, 2006 and December 31, 2005 respectively.
Other Balance Sheet Data (Dollars in Thousands except per share data)
Current Ratio | 1.2x | 1.2x | ||
LT Debt/Total Cap. | ||||
(Excludes Used -Vehicle Flooring | ||||
and Real Estate) | 23% | 23% | ||
Working Capital | $161,916 | $155,848 | ||
Book Value per Basic Share | $24.80 | $23.97 |