Lithia Motors Reports Adjusted EPS of $1.42 for Fourth Quarter 2014 and $5.11 for Full Year 2014; Fourth Quarter Revenue Increases 75%Lithia Motors Declares $0.16 per Share Dividend for Fourth Quarter
MEDFORD, OR -- (Marketwired - February 25, 2015) - Lithia Motors, Inc. (NYSE: LAD) reported the highest fourth quarter and full year adjusted net income in Company history and increased adjusted net income from continuing operations 46% for the fourth quarter 2014 over the prior year period.
2014 fourth quarter adjusted net income from continuing operations was $37.5 million, or $1.42 per diluted share. This compares to 2013 fourth quarter adjusted net income from continuing operations of $25.7 million, or $0.98 per diluted share.
Unadjusted net income from continuing operations for the fourth quarter of 2014 was $41.1 million, or $1.55 per diluted share, compared to $27.2 million, or $1.03 per diluted share, for the fourth quarter of 2013. As shown in the attached non-GAAP reconciliation tables, the 2014 fourth quarter per share adjusted results from continuing operations exclude the following non-core items: a $0.02 charge for acquisition expenses; a $0.13 benefit related to the equity investment associated with the new market tax credit transaction; and a $0.02 benefit from a tax attribute. The 2013 fourth quarter per share adjusted results from continuing operations exclude the following non-core items: a $0.06 benefit for a gain on a sale of land; a $0.05 net benefit from non-core tax attributes; and a $0.06 expense related to an adjustment to a legal reserve associated with a lawsuit filed in 2006 and settled in 2013.
Fourth quarter 2014 revenue from continuing operations increased $768 million, or 75%, to $1.8 billion from $1.0 billion for the fourth quarter of 2013.
Fourth Quarter-over-Quarter Operating Highlights:
- Total same store sales increased 14%
- New vehicle same store sales increased 12%
- Used vehicle retail same store sales increased 16%
- Service, body and parts same store sales increased 12%
- Same store F&I per unit increased $46 to $1,214
- Adjusted SG&A expense as a percentage of gross profit was 70.3% (includes DCH)
For the full year of 2014, revenue from continuing operations increased 35% to $5.4 billion from $4.0 billion in 2014.
Full Year-over-Year Operating Highlights:
- Total same store sales increased 12%
- New vehicle same store sales increased 11%
- Used vehicle retail same store sales increased 15%
- Service, body and parts same store sales increased 11%
- Same store F&I per unit increased $83 to $1,205
- Adjusted SG&A expense as a percentage of gross profit was 67.7% (includes DCH)
"We had a strong finish to 2014," said Bryan DeBoer, President and CEO. "Our store leaders responded to shifting market dynamics to deliver solid results. We grew overall revenue 35% for the year and the DCH integration is progressing well. We achieved our second earnings per share milestone by exceeding $5.00 per share in 2014 and see a clear path to achieving $6.00 per share. We also have established a fourth milestone objective of $7.00 per share."
For the full year of 2014, adjusted net income per diluted share from continuing operations increased 28% to $5.11 from $3.99 for the full year of 2013. Unadjusted, net income from continuing operations was $5.14 per diluted share for the full year of 2014, compared to $4.02 per diluted share for the full year of 2013.
Chris Holzshu, SVP and CFO, said, "We finished 2014 with adjusted SG&A as a percentage of gross profit at 67.7%. The fourth quarter of 2014 was at 70.3% due to the impact of the DCH stores on our overall result. We target SG&A as a percentage of gross profit to continue to improve as we integrate the 36 stores added in 2014. For the full year, incremental throughput, or the percentage of additional same store gross profit dollars that we retain after deducting incremental selling costs, was 42.9%. 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
In January 2015, Lithia opened Subaru of Clearlake, Texas. The store is a new franchise we were awarded from Subaru. We estimate the store will contribute $45 million in annual revenues.
Bryan DeBoer, President and CEO, stated, "We significantly increased the size of Lithia in 2014, adding annualized revenues in excess of $2.7 billion. We acquired 35 stores and opened one franchise in 2014, and are pleased to have already opened a new store in the Houston, Texas market with Clearlake Subaru. The acquisition market remains active and we continue to seek domestic, import and luxury franchises in cities ranging from mid-sized regional markets to metropolitan markets across the United States."
Balance Sheet Update
We ended the fourth quarter with $30 million in cash and $70 million in available credit on our credit facilities. Additionally, approximately $146 million of our operating real estate is currently unfinanced, which could provide an estimated additional $109 million in available liquidity, for total potential liquidity of $209 million.
Dividend Payment
Our Board of Directors has approved a dividend of $0.16 per share related to fourth quarter 2014 financial results. We will pay the dividend March 27, 2015 to shareholders of record on March 13, 2015.
2015 Outlook
We project 2015 first quarter earnings of $1.18 to $1.21 per diluted share and 2015 full year earnings of $5.95 to $6.05 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 41.5%
- New vehicle gross margin of 5.9% to 6.1%
- Used vehicle sales increasing 36.5%
- Used vehicle gross margin of 12.3% to 12.5%
- Service body and parts sales increasing 41.0%
- Service body and parts gross margin of 48.4% to 48.6%
- Finance and insurance gross profit of $1,150 per unit
- Tax rate of 40%
- Average diluted shares outstanding of 26.5 million
- Full year capital expenditures are $120 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.
Fourth Quarter Earnings Conference Call and Updated Presentation
The fourth quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the fourth 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%, generating earnings per share of $6.00 and all projections set forth under the heading "2015 Outlook";
- The increase in our annual revenues that we estimate will result from the dealership that we acquired as set forth under the heading "Corporate Development";
- 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 %
December 31, Increase Increase
----------------------
2014 2013 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues:
New vehicle retail $1,071,543 $ 589,535 $ 482,008 81.8%
Used vehicle retail 409,591 253,797 155,794 61.4
Used vehicle wholesale 59,867 37,642 22,225 59.0
Finance and insurance 60,057 35,994 24,063 66.9
Service, body and parts 172,398 100,797 71,601 71.0
Fleet and other 19,851 7,109 12,742 179.2
---------- ---------- ---------- ----------
Total revenues 1,793,307 1,024,874 768,433 75.0
Cost of sales:
New vehicle retail 1,006,025 550,438 455,587 82.8
Used vehicle retail 359,099 218,446 140,653 64.4
Used vehicle wholesale 59,560 37,310 22,250 59.6
Service, body and parts 88,097 52,690 35,407 67.2
Fleet and other 19,405 6,697 12,708 189.8
---------- ---------- ---------- ----------
Total cost of sales 1,532,186 865,581 666,605 77.0
---------- ---------- ---------- ----------
Gross profit 261,121 159,293 101,828 63.9
Asset impairment 1,853 - 1,853 NM
SG&A expense 184,288 108,416 75,872 70.0
Depreciation and
amortization 8,964 5,316 3,648 68.6
---------- ---------- ---------- ----------
Income from operations 66,016 45,561 20,455 44.9
Floor plan interest expense (4,535) (2,979) 1,556 52.2
Other interest expense (4,848) (2,115) 2,733 129.2
Other income, net 89 773 (684) (88.5)
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes 56,722 41,240 15,482 37.5
Income tax expense (15,582) (14,080) 1,502 10.7
Income tax rate 27.5% 34.1%
---------- ---------- ---------- ----------
Income from continuing
operations $ 41,140 $ 27,160 $ 13,980 51.5%
Income from discontinued
operations, net of tax - 212 (212) NM
---------- ---------- ---------- ----------
Net income $ 41,140 $ 27,372 $ 13,768 50.3%
Diluted net income per
share:
Continuing operations $ 1.55 $ 1.03 $ 0.52 50.5%
Discontinued operations - 0.01 (0.01) NM
---------- ---------- ---------- ----------
Net income per share $ 1.55 $ 1.04 $ 0.51 49.0%
========== ========== ========== ==========
Diluted shares outstanding 26,517 26,283 234 0.9%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics
(Unaudited)
Three months ended %
December 31, Increase Increase
------------------------
2014 2013 (Decrease) (Decrease)
----------- ----------- ----------- ----------
Gross margin
New vehicle retail 6.1% 6.6% (50) bps
Used vehicle retail 12.3 13.9 (160) bps
Used vehicle wholesale 0.5 0.9 (40) bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.9 47.7 120 bps
Fleet and other 2.2 5.8 (360) bps
Gross profit margin 14.6 15.5 (90) bps
Unit sales
New vehicle retail 32,064 17,004 15,060 88.6%
Used vehicle retail 21,562 13,830 7,732 55.9
Total retail units sold 53,626 30,834 22,792 73.9
Used vehicle wholesale 9,029 5,462 3,567 65.3
Average selling price
New vehicle retail 33,419 34,670 (1,251) (3.6)%
Used vehicle retail 18,996 18,351 645 3.5
Used vehicle wholesale 6,631 6,892 (261) (3.8)
Average gross profit per
unit
New vehicle retail $ 2,043 $ 2,299 $ (256) (11.1)%
Used vehicle retail 2,342 2,556 (214) (8.4)
Used vehicle wholesale 34 61 (27) (44.3)
Finance and insurance 1,120 1,167 (47) (4.0)
Total vehicle(1) 3,289 3,593 (304) (8.5)
Revenue mix
New vehicle retail 59.8% 57.5%
Used vehicle retail 22.8 24.8
Used vehicle wholesale 3.3 3.7
Finance and insurance,
net 3.3 3.5
Service, body and parts 9.6 9.8
Fleet and other 1.2 0.7
Adjusted As reported
------------------------ -----------------------
Three months ended Three months ended
December 31, December 31,
Other metrics 2014 2013 2014 2013
----------- ----------- ----------- ----------
SG&A as a % of revenue 10.2% 10.6% 10.3% 10.6%
SG&A as a % of gross
profit 70.3 68.2 70.6 68.1
Operating profit as a %
of revenue 3.8 4.4 3.7 4.4
Operating profit as a %
of gross profit 26.3 28.5 25.3 28.6
Pretax margin 3.4 4.0 3.2 4.0
Net profit margin 2.1 2.5 2.3 2.7
(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 %
December 31, Increase Increase
------------------------
2014 2013 (Decrease) (Decrease)
----------- ----------- ----------- ----------
Revenues
New vehicle retail $ 657,520 $ 587,804 $ 69,716 11.9%
Used vehicle retail 293,067 253,385 39,682 15.7
Used vehicle wholesale 43,192 37,641 5,551 14.7
Finance and insurance 40,842 35,900 4,942 13.8
Service, body and parts 112,786 100,467 12,319 12.3
Fleet and other 13,243 7,108 6,135 86.3
----------- ----------- -----------
Total revenues $ 1,160,650 $ 1,022,305 $ 138,345 13.5
Gross profit
New vehicle retail $ 41,841 $ 39,057 $ 2,784 7.1%
Used vehicle retail 36,796 35,310 1,486 4.2
Used vehicle wholesale 505 332 173 52.1
Finance and insurance 40,842 35,900 4,942 13.8
Service, body and parts 54,461 47,998 6,463 13.5
Fleet and other 668 410 258 62.9
----------- ----------- -----------
Total gross profit $ 175,113 $ 159,007 $ 16,106 10.1
Gross margin
New vehicle retail 6.4% 6.6% (20) bps
Used vehicle retail 12.6 13.9 (130) bps
Used vehicle wholesale 1.2 0.9 30 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.3 47.8 50 bps
Fleet and other 5.0 5.8 (80) bps
Gross profit margin 15.1 15.6 (50) bps
Unit sales
New vehicle retail 18,510 16,937 1,573 9.3%
Used vehicle retail 15,146 13,807 1,339 9.7
Total retail units sold 33,656 30,744 2,912 9.5
Used vehicle wholesale 5,814 5,462 352 6.4
Average selling price
New vehicle retail $ 35,522 $ 34,705 $ 817 2.4%
Used vehicle retail 19,349 18,352 997 5.4
Used vehicle wholesale 7,429 6,891 537 7.8
Average gross profit per
unit
New vehicle retail $ 2,260 $ 2,306 $ (46) 2.0%
Used vehicle retail 2,429 2,557 (128) (5.0)
Used vehicle wholesale 87 61 26 42.6
Finance and insurance 1,214 1,168 46 3.9
Total vehicle(1) 3,565 3,597 (32) (0.9)
(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.
Consolidated Statements of Operations
(Unaudited)
(In thousands except per share data)
Twelve months ended %
December 31, Increase Increase
2014 2013 (Decrease) (Decrease)
----------- ----------- ----------- ----------
Revenues:
New vehicle retail $ 3,077,670 $ 2,256,598 $ 821,072 36.4%
Used vehicle retail 1,362,481 1,032,224 330,257 32.0
Used vehicle wholesale 195,699 158,235 37,464 23.7
Finance and insurance 190,381 139,007 51,374 37.0
Service, body and parts 512,124 383,483 128,041 33.5
Fleet and other 51,971 36,202 15,769 43.6
----------- ----------- ----------- ----------
Total revenues 5,390,326 4,005,749 1,384,577 34.6
Cost of sales:
New vehicle retail 2,879,486 2,105,480 774,006 36.8
Used vehicle retail 1,183,228 881,366 301,862 34.2
Used vehicle wholesale 192,053 155,524 36,529 23.5
Service, body and parts 262,388 197,913 64,475 32.6
Fleet and other 49,849 34,513 15,336 44.4
----------- ----------- ----------- ----------
Total cost of sales 4,567,004 3,374,796 1,192,208 35.3
----------- ----------- ----------- ----------
Gross profit 823,322 630,953 192,369 30.5
Asset impairments 1,853 - 1,853 NM
SG&A expense 563,207 427,400 135,807 31.8
Depreciation and
amortization 26,363 20,035 6,328 31.6
----------- ----------- ----------- ----------
Income from operations 231,899 183,518 48,381 26.4
Floor plan interest
expense (13,861) (12,373) 1,488 12.0
Other interest expense (10,742) (8,350) 2,392 28.6
Other income, net 3,199 2,993 206 6.9
----------- ----------- ----------- ----------
Income from continuing
operations before income
taxes 210,495 165,788 44,707 27.0
Income tax expense (74,955) (60,574) 14,381 23.7
Income tax rate 35.6% 36.5%
----------- ----------- ----------- ----------
Income from continuing
operations $ 135,540 $ 105,214 $ 30,326 28.8%
Income from discontinued
operations, net of tax 3,180 786 2,394 NM
----------- ----------- ----------- ----------
Net income $ 138,720 $ 106,000 $ 32,720 30.9%
Diluted net income per
share:
Continuing operations $ 5.14 $ 4.02 $ 1.12 27.9%
Discontinued operations 0.12 0.03 0.09 NM
----------- ----------- ----------- ----------
Net income per share $ 5.26 $ 4.05 $ 1.21 29.9%
=========== =========== =========== ==========
Diluted shares outstanding 26,382 26,191 191 0.7%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics
(Unaudited)
Twelve months ended %
December 31, Increase Increase
------------------------
2014 2013 (Decrease) (Decrease)
----------- ----------- ----------- ----------
Gross margin
New vehicle retail 6.4% 6.7% (30) bps
Used vehicle retail 13.2 14.6 (140) bps
Used vehicle wholesale 1.9 1.7 20 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.8 48.4 40 bps
Fleet and other 4.1 4.7 (60) bps
Gross profit margin 15.3 15.8 (50) bps
Unit sales
New vehicle retail 91,104 66,857 24,247 36.3%
Used vehicle retail 71,674 57,061 14,613 25.6
Total retail units sold 162,778 123,918 38,860 31.4
Used vehicle wholesale 27,918 22,086 5,832 26.4
Average selling price
New vehicle retail $ 33,782 $ 33,753 $ 29 0.1%
Used vehicle retail 19,009 18,090 919 5.1
Used vehicle wholesale 7,010 7,164 (154) (2.1)
Average gross profit per
unit
New vehicle retail $ 2,175 $ 2,260 $ (85) (3.8)%
Used vehicle retail 2,501 2,644 (143) (5.4)
Used vehicle wholesale 131 123 8 6.5
Finance and insurance 1,170 1,122 48 4.3
Total vehicle(1) 3,511 3,581 (70) (2.0)
Revenue mix
New vehicle retail 57.1% 56.3%
Used vehicle retail 25.3 25.8
Used vehicle wholesale 3.6 4.0
Finance and insurance,
net 3.5 3.5
Service, body and parts 9.5 9.6
Fleet and other 1.0 0.8
Adjusted As reported
------------------------ -----------------------
Twelve months ended Twelve months ended
December 31, December 31,
------------------------ -----------------------
Other metrics 2014 2013 2014 2013
----------- ----------- ----------- ----------
SG&A as a % of revenue 10.3% 10.6% 10.4% 10.7%
SG&A as a % of gross
profit 67.7 67.2 68.4 67.7
Operating profit as a %
of revenue 4.4 4.7 4.3 4.6
Operating profit as a %
of gross profit 29.1 29.7 28.2 29.1
Pretax margin 4.1 4.2 3.9 4.1
Net profit margin 2.5 2.6 2.5 2.6
(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)
Twelve months ended %
December 31, Increase Increase
------------------------
2014 2013 (Decrease) (Decrease)
----------- ----------- ----------- ----------
Revenues
New vehicle retail $ 2,501,956 $ 2,252,242 $ 249,714 11.1%
Used vehicle retail 1,181,168 1,031,101 150,067 14.6
Used vehicle wholesale 172,585 158,210 14,375 9.1
Finance and insurance 161,205 138,850 22,355 16.1
Service, body and parts 425,976 382,728 43,248 11.3
Fleet and other 41,898 36,201 5,697 15.7
----------- ----------- -----------
Total revenues $ 4,484,788 $ 3,999,332 $ 485,456 12.1
Gross profit
New vehicle retail $ 163,611 $ 150,879 $ 12,732 8.4%
Used vehicle retail 158,350 150,715 7,635 5.1
Used vehicle wholesale 3,728 2,823 905 32.1
Finance and insurance 161,205 138,850 22,355 16.1
Service, body and parts 206,939 185,268 21,671 11.7
Fleet and other 2,168 1,687 481 28.5
----------- ----------- -----------
Total gross profit $ 696,001 $ 630,222 $ 65,779 10.4
Gross margin
New vehicle retail 6.5% 6.7% (20) bps
Used vehicle retail 13.4 14.6 (120) bps
Used vehicle wholesale 2.2 1.8 40 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.6 48.4 20 bps
Fleet and other 5.2 4.7 50 bps
Total gross profit 15.5 15.8 (30) bps
Unit sales
New vehicle retail 72,177 66,703 5,474 8.2%
Used vehicle retail 61,561 56,997 4,564 8.0
Total retail units sold 133,738 123,700 10,038 8.1
Used vehicle wholesale 23,582 22,085 1,497 6.8
Average selling price
New vehicle retail $ 34,664 $ 33,765 $ 899 2.7%
Used vehicle retail 19,187 18,090 1,097 6.1
Used vehicle wholesale 7,319 7,164 155 2.2
Average gross profit per
unit
New vehicle retail $ 2,267 $ 2,262 $ 5 0.2%
Used vehicle retail 2,572 2,644 (72) (2.7)
Used vehicle wholesale 158 128 30 23.4
Finance and insurance 1,205 1,122 83 7.4
Total vehicle(1) 3,641 3,583 58 1.6
(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.
Other Highlights
(Unaudited)
As of December 31,
---------------------
Increase
2014 2013 (Decrease)
---------- ---------- ----------
Days Supply(1)
New vehicle inventory 62 74 (12)
Used vehicle inventory 53 63 (10)
(1) Days supply calculated based on current inventory
levels, excluding in-transit vehicles, and a 30-day
historical cost of sales level.
Financial covenants
As of December
Requirement 31, 2014
------------------------------ ---------------
Current ratio(1) Not less than 1.20 to 1 1.16 to 1
Fixed charge coverage ratio Not less than 1.20 to 1 3.30 to 1
Leverage ratio Not more than 5.00 to 1 2.21 to 1
Funded debt restriction Not more than $600 million $374.0 million
(1) In February 2015, we requested and received a waiver for the current
ratio covenant as of December 31, 2014, and amended the facility to reduce
the covenant to 1.10 to 1 for the first quarter of 2015 and beyond.
Lithia Motors, Inc.
Other Highlights
(Unaudited)
Three months ended Twelve Months ended
December 31, December 31,
---------------------- ----------------------
2014 2013 2014 2013
---------- ---------- ---------- ----------
New vehicle unit sales brand
mix
Chrysler 17.8% 27.6% 24.6% 29.5%
Toyota 18.1 14.0 15.2 14.6
Honda, Acura 22.7 8.5 13.2 7.9
General Motors 9.3 14.2 12.5 15.2
Subaru 7.0 9.3 8.7 8.2
BMW, MINI 7.9 7.5 6.8 6.7
Ford 4.1 6.0 5.6 6.0
Nissan 3.8 3.4 3.7 3.0
Volkswagen, Audi 3.0 1.8 2.8 2.2
Hyundai 1.6 2.4 2.5 2.6
Mercedes 1.9 3.9 2.2 2.8
Kia 1.1 0.8 1.1 0.7
Lexus 1.2 - 0.4 -
Other 0.5 0.6 0.7 0.6
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2014 2013 2014 2013
---------- ---------- ---------- ----------
Revenue geographic mix
Texas 14.9% 23.1% 20.7% 24.4%
Oregon 16.0 23.0 20.2 21.6
California 21.4 11.7 15.8 10.8
Washington 5.9 8.2 6.8 8.1
Alaska 5.4 7.2 6.6 7.6
Iowa 3.1 5.0 3.9 4.9
Idaho 2.9 4.6 3.9 4.9
Montana 5.5 8.6 7.3 8.9
Nevada 3.3 4.7 4.2 4.8
North Dakota 1.4 2.3 1.9 2.4
New Mexico 0.9 1.6 1.3 1.6
New Jersey 15.2 - 5.0 -
New York 2.8 - 0.9 -
Hawaii 1.3 - 1.5 -
As of February 25,
2014
----------------------
# of
Current store count mix stores % of total
---------- ----------
Chrysler, Fiat 25 19.2%
Honda, Acura 22 16.9
Toyota, Lexus 19 14.6
General Motors 16 12.3
BMW, MINI 11 8.5
Volkswagen, Audi 7 5.4
Nissan 6 4.6
Ford 6 4.6
Subaru 6 4.6
Hyundai 5 3.8
Mercedes 3 2.3
Other 4 3.2
Lithia Motors, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 31, 2014 December 31, 2013
----------------- -----------------
Cash and cash equivalents $ 29,898 $ 23,686
Trade receivables, net 295,379 170,519
Inventories, net 1,249,659 859,019
Deferred income taxes - 1,548
Other current assets 32,010 15,251
Assets held for sale 8,563 11,526
----------------- -----------------
Total current assets $ 1,615,509 $ 1,081,549
Property and equipment, net 816,745 481,212
Goodwill 199,375 49,511
Franchise value 150,892 71,199
Deferred income taxes - 10,256
Other non-current assets 98,411 31,394
----------------- -----------------
Total assets $ 2,880,932 $ 1,725,121
================= =================
Floor plan notes payable $ 41,047 $ 18,789
Floor plan notes payable: non trade 1,137,632 695,066
Current maturities of long-term debt 31,912 7,083
Trade payables 70,853 51,159
Accrued liabilities 153,661 94,143
Deferred income taxes 2,603 -
Liabilities related to assets held for
sale 4,892 6,271
----------------- -----------------
Total current liabilities $ 1,442,600 $ 872,511
Long-term debt 609,066 245,471
Deferred revenue 54,403 44,005
Deferred income taxes 42,795 -
Other long-term liabilities 58,963 28,412
----------------- -----------------
Total liabilities $ 2,207,827 $ 1,190,399
----------------- -----------------
Class A common stock 276,058 268,255
Class B common stock 319 319
Additional paid-in capital 29,775 22,598
Accumulated other comprehensive loss (926) (1,538)
Retained earnings 367,879 245,088
----------------- -----------------
Total liabilities & stockholders'
equity $ 2,880,932 $ 1,725,121
================= =================
Lithia Motors, Inc.
Summarized Cash Flow from Operations
(Unaudited)
(In thousands)
Twelve months ended
December 31,
------------------------------
2014 2013
-------------- --------------
Net income $ 138,720 $ 106,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairment 1,853 -
Depreciation and amortization 26,363 20,035
Stock-based compensation 7,436 6,565
(Gain) loss on disposal of assets 464 (2,339)
Gain on sale of franchise (5,937) -
Deferred income taxes 13,355 14,477
Excess tax benefit from share-based payment
arrangements (6,186) (5,994)
(Increase) decrease:
Trade receivables, net (59,474) (37,370)
Inventories (76,002) (106,896)
Other assets (31,182) (5,655)
Increase (decrease):
Floor plan notes payable, net (647) 5,300
Trade payables (3,105) 8,480
Accrued liabilities (13,472) 12,304
Other long-term liabilities and deferred
revenue 38,133 17,152
-------------- --------------
Net cash provided by operating activities $ 30,319 $ 32,059
============== ==============
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations
(Unaudited)
(In thousands)
Twelve months ended
December 31,
------------------------
Net cash provided by operating activities 2014 2013
----------- -----------
As reported $ 30,319 $ 32,059
Floor plan notes payable, non-trade, net 440,341 128,636
Borrowings on floor plan notes payble associated
with acquired inventory (257,363) (25,148)
----------- -----------
Adjusted $ 213,297 $ 135,547
=========== ===========
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(In thousands, except for per share data)
Three months ended December 31, 2014
--------------------------------------------------------
As Acquisition Equity Tax
reported expenses Investment attributes Adjusted
-------- ----------- ----------- ---------- --------
Asset impairments $ 1,853 $ - $ (1,853) $ - $ -
Selling, general
and
administrative 184,288 (819) - - 183,468
Income from
operations 66,016 819 1,853 - 68,689
Other income 89 - 1,160 - 1,249
Income from
continuing
operations before
income taxes $ 56,722 $ 819 $ 3,013 $ - $ 60,555
Income tax expense (15,583) (338) (6,506) (600) (23,027)
-------- ----------- ----------- ---------- --------
Net income from
continuing
operations $ 41,139 $ 481 $ (3,493) $ (600) $ 37,527
======== =========== =========== ========== ========
Diluted earnings
per share from
continuing
operations $ 1.55 $ 0.02 $ (0.13) $ (0.02) $ 1.42
Diluted share
count 26,517
Three months ended December 31, 2013
--------------------------------------------------------
Asset
As disposal Reserve Tax Adjusted
reported gain adjustments attributes
-------- ----------- ----------- ---------- --------
Selling, general
and
administrative $108,416 $ 2,531 $ (2,341) $ - $108,606
Income from
operations 45,561 (2,531) 2,341 - 45,371
Income from
continuing
operations before
income taxes $ 41,240 $ (2,531) $ 2,341 $ - $ 41,050
Income tax expense (14,080) 968 (869) (1,320) (15,301)
-------- ----------- ----------- ---------- --------
Net income from
continuing
operations $ 27,160 $ (1,563) $ 1,472 $ (1,320) $ 25,749
======== =========== =========== ========== ========
Diluted earnings
per share from
continuing
operations $ 1.03 $ (0.06) $ 0.06 $ (0.05) $ 0.98
Diluted share
count 26,283
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
(In thousands, except for per share data)
Twelve months ended December 31, 2014
As Reserve Acquisition Equity Tax
reported Adjustments expenses Investment attributes Adjusted
-------- ----------- ----------- ---------- ---------- ---------
Asset
impair-
ments $1,853 $ - $ - $ (1,853) $ - $ -
Selling,
general
and
administ-
rative 563,207 (3,931) (1,865) - - 557,411
Income from
operations 231,899 3,931 1,865 1,853 - 239,548
Other
income 3,199 - - 1,160 - 4,359
Income from
continuing
operations
before
income
taxes $210,495 $ 3,931 $ 1,865 $ 3,013 - $219,304
Income tax
expense (74,955) (1,545) (720) (6,506) (867) (84,593)
------- ---------- ---------- --------- --------- --------
Net income
from
continuing
operations $135,540 $ 2,386 $ 1,145 $ (3,493) (867) $134,711
======= ========== ========== ========= ========= ========
Diluted
earnings
per share
from
continuing
operations $ 5.14 $ 0.09 $ 0.04 $ (0.13) (0.03) $ 5.11
Diluted
share
count 26,382
Twelve months ended December 31, 2013
----------------------------------------------------------
Asset
As disposal Reserve Tax
reported gain adjustments attributes Adjusted
-------- -------- ----------- ----------- --------
Selling,
general and
administrative $ 427,400 $ 2,531 $ (6,153) $ - $ 423,778
Income from
operations 183,518 (2,531) 6,153 - 187,140
Income from
continuing
operations
before income
taxes $ 165,788 $ (2,531) $ 6,153 $ - $ 169,410
Income tax
expense (60,574) 968 (2,353) (2,832) (64,791)
-------- -------- ----------- ----------- --------
Net income from
continuing
operations $ 105,214 $ (1,563) $ 3,800 $ (2,832) $ 104,619
======== ======== =========== =========== ========
Diluted
earnings per
share from
continuing
operations $ 4.02 $ (0.06) $ 0.14 $ (0.11) $ 3.99
Diluted share
count 26,191
Contact:
John North
VP Finance and Controller
(541) 618-5748
