Lithia Reports Adjusted EPS of $1.74 for Fourth Quarter 2015 and $7.02 for Full Year 2015; Fourth Quarter Adjusted Net Income Increases 23%Declares $0.20 per Share Dividend for the Fourth Quarter
MEDFORD, OR -- (Marketwired - February 24, 2016) - Lithia Motors, Inc. (NYSE: LAD) reported the highest fourth quarter and full year adjusted net income in company history and increased adjusted net income 23% for the fourth quarter 2015 over the prior year period.
2015 fourth quarter adjusted net income was $46.1 million or $1.74 per diluted share, compared to 2014 fourth quarter adjusted net income of $37.5 million, or $1.42 per diluted share.
Unadjusted net income for the fourth quarter 2015 was $47.7 million, or $1.80 per diluted share, compared to $41.1 million, or $1.55 per diluted share, for the fourth quarter of 2014. As shown in the attached non-GAAP reconciliation tables, the 2015 fourth quarter adjusted results exclude a $0.06 net non-core benefit related to an equity investment offset by an asset impairment charge. The 2014 fourth quarter adjusted results exclude a $0.13 non-core net benefit from an equity investment and a non-core tax attribute offset by a charge related to acquisition expenses.
Fourth quarter 2015 revenue increased $200.0 million, or 11%, to $2.0 billion from $1.8 billion for the fourth quarter 2014.
Fourth Quarter-over-Quarter Operating Highlights:
- Total same store sales increased 9%
- New vehicle same store sales increased 7%
- Used vehicle retail same store sales increased 12%
- Service, body and parts same store sales increased 10%
- Same store F&I per unit increased $69 to $1,189
- SG&A expense as a percentage of gross profit was 68.2%
For the full year 2015, revenues increased 46% to $7.9 billion from $5.4 billion in 2014.
Full Year-over-Year Operating Highlights:
- Total same store sales increased 11%
- New vehicle same store sales increased 9%
- Used vehicle retail same store sales increased 13%
- Service, body and parts same store sales increased 10%
- Same store F&I per unit increased $73 to $1,244
- Adjusted SG&A expense as a percentage of gross profit was 67.9%
"2015 finished ahead of our expectations," said Bryan DeBoer, President and CEO. "Despite significant headwinds reported by some in the industry, our store leaders successfully responded to their local market conditions. As a result of their efforts, we achieved our third and fourth EPS milestones by exceeding $7.00 per share in 2015. Our entrepreneurial culture, where each store has the autonomy to make individual decisions, will drive continued operational improvement. This improvement, along with growth through acquisitions, will be critical to achieving our next milestone of $8.00 per share."
For 2015, adjusted net income per diluted share increased 37% to $7.02 from $5.11 for 2014. Unadjusted net income from continuing operations was $6.91 per diluted share for 2015 compared to $5.14 per diluted share for 2014.
Chris Holzshu, SVP and CFO, said, "We are focused on two primary objectives: efficiently operating our stores and prudently allocating capital. We finished 2015 with adjusted SG&A as a percentage of gross profit at 67.9% and incremental same store throughput of 50%. We also allocated over $46 million in capital to repurchase shares since January 1, 2016. Our preferred use of capital will be growth through acquisitions, but we will look for opportunities to repurchase stock when we deem it to be an attractive use of funds."
Corporate Development
As previously announced, since October 2015 we acquired a Chrysler Jeep Dodge Ram Fiat store in Concord, California; a Chrysler Jeep Dodge Ram Alpha Fiat in Spokane, Washington; a Subaru store in Riverside, California and a Toyota store in Milford, Massachusetts. We estimate these stores will contribute approximately $200 million in annual revenues.
Bryan DeBoer, President and CEO, stated, "We acquired over $2.7 billion in annual revenues in 2014, and followed that by adding nine stores over the last 14 months with an estimated $380 million in annual revenues. We are excited to have acquired our first stores within the DCH metropolitan strategy on both the east and west coasts of the United States. We are continuing to actively seek acquisitions and anticipate further transactions in both rural and metropolitan markets."
Balance Sheet Update
We ended 2015 with $45 million in cash and $134 million in availability under our credit facilities. Additionally, approximately $211 million of our operating real estate is currently unfinanced, which we estimate could provide an additional $159 million in available liquidity, for total potential liquidity of $338 million.
Dividend Payment and Share Repurchase
Our Board of Directors has approved a dividend of $0.20 per share related to fourth quarter 2015 financial results. We expect to pay the dividend March 25, 2016 to shareholders of record on March 11, 2016.
Since the fourth quarter 2015, we have repurchased approximately 595,000 shares at a weighted average price of $79.11 per share. Under our existing share repurchase authorization, approximately 676,000 shares remain available for purchase.
2016 Outlook
We project 2016 first quarter earnings of $1.47 to $1.51 per diluted share and 2016 full year earnings of $7.30 to $7.50 per diluted share. Both projections are based on the following annual assumptions:
- Total revenues of $8.4 to $8.5 billion
- New vehicle sales increasing 5.5%
- New vehicle gross margin of 5.8% to 6.0%
- Used vehicle sales increasing 6.0%
- Used vehicle gross margin of 12.4% to 12.6%
- Service body and parts sales increasing 5.0%
- Service body and parts gross margin of 49.0% to 49.4%
- Finance and insurance gross profit of $1,210 per unit
- Tax rate of 40.0%
- Average diluted shares outstanding of 26.0 million
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 31 brands of new vehicles and all brands of used vehicles at 139 stores in 15 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
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:
- Expected operating results, such as improved store efficiency and performance; generating 2016 first quarter earnings per share of $1.47 to $1.51 per diluted share and 2016 full year earnings of $7.30 to $7.50 per diluted share and all projections set forth under the headings "2016 Outlook";
- The increase in our annual revenues that we estimate will result from dealerships that we acquired;
- Anticipated ability to improve store performance;
- Anticipated additions of dealership locations to our portfolio in the future; and
- Anticipated availability of liquidity from our credit facility and 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 %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues:
New vehicle retail $1,167,893 $1,071,543 $ 96,350 9.0%
Used vehicle retail 469,399 409,591 59,808 14.6
Used vehicle wholesale 63,054 59,867 3,187 5.3
Finance and insurance 69,318 60,057 9,261 15.4
Service, body and parts 193,024 172,398 20,626 12.0
Fleet and other 30,594 19,851 10,743 54.1
---------- ---------- ---------- ----------
Total revenues 1,993,282 1,793,307 199,975 11.2
Cost of sales:
New vehicle retail 1,095,796 1,006,025 89,771 8.9
Used vehicle retail 412,572 359,099 53,473 14.9
Used vehicle wholesale 62,744 59,560 3,184 5.3
Service, body and parts 98,241 88,097 10,144 11.5
Fleet and other 30,506 19,405 11,101 57.2
---------- ---------- ---------- ----------
Total cost of sales 1,699,859 1,532,186 167,673 10.9
---------- ---------- ---------- ----------
Gross profit 293,423 261,121 32,302 12.4
Asset impairments 5,733 1,853 3,880 NM
SG&A expense 200,219 184,288 15,931 8.6
Depreciation and
amortization 11,056 8,964 2,092 23.3
---------- ---------- ---------- ----------
Income from operations 76,415 66,016 10,399 15.8
Floor plan interest expense (5,279) (4,535) 744 16.4
Other interest expense (4,791) (4,848) (57) (1.2)
Other income, net 25 89 (64) (71.9)
---------- ---------- ---------- ----------
Income before income taxes 66,370 56,722 9,648 17.0
Income tax expense (18,638) (15,582) 3,056 19.6
Income tax rate 28.1% 27.5%
---------- ---------- ---------- ----------
Net income $ 47,732 $ 41,140 $ 6,592 16.0%
========== ========== ========== ==========
Diluted net income per
share:
Net income per share $ 1.80 $ 1.55 $ 0.25 16.1%
Diluted shares outstanding 26,462 26,517 (55) (0.2)%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Gross margin
New vehicle retail 6.2% 6.1% 10 bps
Used vehicle retail 12.1 12.3 (20) bps
Used vehicle wholesale 0.5 0.5 - bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.1 48.9 20 bps
Fleet and other 0.3 2.2 (190) bps
Gross profit margin 14.7 14.6 10 bps
Unit sales
New vehicle retail 34,350 32,064 2,286 7.1%
Used vehicle retail 24,010 21,562 2,448 11.4
Total retail units sold 58,360 53,626 4,734 8.8
Used vehicle wholesale 9,345 9,029 316 3.5
Average selling price
New vehicle retail $ 34,000 $ 33,419 $ 581 1.7%
Used vehicle retail 19,550 18,996 554 2.9
Used vehicle wholesale 6,747 6,631 116 1.7
Average gross profit per
unit
New vehicle retail $ 2,099 $ 2,043 $ 56 2.7%
Used vehicle retail 2,367 2,342 25 1.1
Used vehicle wholesale 33 34 (1) (2.9)
Finance and insurance 1,188 1,120 68 6.1
Total vehicle(1) 3,402 3,289 113 3.4
Revenue mix
New vehicle retail 58.6% 59.8%
Used vehicle retail 23.5 22.8
Used vehicle wholesale 3.2 3.3
Finance and insurance, net 3.5 3.3
Service, body and parts 9.7 9.6
Fleet and other 1.5 1.2
Adjusted As reported
-------------------- --------------------
Three months ended Three months ended
December 31, December 31,
-------------------- --------------------
Other metrics 2015 2014 2015 2014
--------- --------- --------- ---------
SG&A as a % of revenue 10.0% 10.2% 10.0% 10.3%
SG&A as a % of gross profit 68.2 70.3 68.2 70.6
Operating profit as a % of
revenue 4.1 3.8 3.8 3.7
Operating profit as a % of gross
profit 28.0 26.3 26.0 25.3
Pretax margin 3.7 3.4 3.3 3.2
Net profit margin 2.3 2.1 2.4 2.3
(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
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
New vehicle retail $1,137,113 $1,067,701 $ 69,412 6.5%
Used vehicle retail 457,112 407,453 49,659 12.2
Used vehicle wholesale 62,219 59,753 2,466 4.1
Finance and insurance 67,521 59,758 7,763 13.0
Service, body and parts 189,285 171,704 17,581 10.2
Fleet and other 30,504 19,851 10,653 53.7
---------- ---------- ----------
Total revenues $1,943,754 $1,786,220 $ 157,534 8.8
Gross profit
New vehicle retail $ 70,076 $ 65,186 $ 4,890 7.5%
Used vehicle retail 55,683 50,231 5,452 10.9
Used vehicle wholesale 281 336 (55) (16.4)
Finance and insurance 67,521 59,758 7,763 13.0
Service, body and parts 92,999 83,956 9,043 10.8
Fleet and other 83 445 (362) (81.3)
---------- ---------- ----------
Total gross profit $ 286,643 $ 259,912 $ 26,731 10.3
Gross margin
New vehicle retail 6.2% 6.1% 10 bps
Used vehicle retail 12.2 12.3 (10) bps
Used vehicle wholesale 0.5 0.6 (10) bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.1 48.9 20 bps
Fleet and other 0.3 2.2 (190) bps
Gross profit margin 14.7 14.6 10 bps
Unit sales
New vehicle retail 33,443 31,921 1,522 4.8%
Used vehicle retail 23,355 21,430 1,925 9.0
Total retail units sold 56,798 53,351 3,447 6.5
Used vehicle wholesale 9,176 8,995 181 2.0
Average selling price
New vehicle retail $ 34,002 $ 33,448 $ 554 1.7%
Used vehicle retail 19,572 19,013 559 2.9
Used vehicle wholesale 6,781 6,643 138 2.1
Average gross profit per
unit
New vehicle retail $ 2,095 $ 2,042 $ 53 2.6%
Used vehicle retail 2,384 2,344 40 1.7
Used vehicle wholesale 31 37 (6) (16.2)
Finance and insurance 1,189 1,120 69 6.2
Total vehicle(1) 3,408 3,290 118 3.6
(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.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Twelve months ended %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues:
New vehicle retail $4,552,301 $3,077,670 $1,474,631 47.9%
Used vehicle retail 1,927,016 1,362,481 564,535 41.4
Used vehicle wholesale 261,530 195,699 65,831 33.6
Finance and insurance 283,018 190,381 92,637 48.7
Service, body and parts 738,990 512,124 226,866 44.3
Fleet and other 101,397 51,971 49,426 95.1
---------- ---------- ---------- ----------
Total revenues 7,864,252 5,390,326 2,473,926 45.9
Cost of sales:
New vehicle retail 4,271,931 2,879,486 1,392,445 48.4
Used vehicle retail 1,685,767 1,183,228 502,539 42.5
Used vehicle wholesale 257,073 192,053 65,020 33.9
Service, body and parts 375,069 262,388 112,681 42.9
Fleet and other 98,778 49,849 48,929 98.2
---------- ---------- ---------- ----------
Total cost of sales 6,688,618 4,567,004 2,121,614 46.5
---------- ---------- ---------- ----------
Gross profit 1,175,634 823,322 352,312 42.8
Asset impairments 20,124 1,853 18,271 NM
SG&A expense 811,175 563,207 247,968 44.0
Depreciation and
amortization 41,600 26,363 15,237 57.8
---------- ---------- ---------- ----------
Income from operations 302,735 231,899 70,836 30.5
Floor plan interest expense (19,534) (13,861) 5,673 40.9
Other interest expense (19,491) (10,742) 8,749 81.4
Other (expense) income, net (1,006) 3,199 (4,205) NM
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes 262,704 210,495 52,209 24.8
Income tax expense (79,705) (74,955) 4,750 6.3
Income tax rate 30.3% 35.6%
---------- ---------- ---------- ----------
Income from continuing
operations $ 182,999 $ 135,540 $ 47,459 35.0%
Income from discontinued
operations, net of tax -- 3,180 (3,180) NM
---------- ---------- ---------- ----------
Net income $ 182,999 $ 138,720 $ 44,279 31.9%
========== ========== ========== ==========
Diluted net income per
share:
Continuing operations $ 6.91 $ 5.14 $ 1.77 34.4%
Discontinued operations -- 0.12 (0.12) NM
---------- ---------- ---------- ----------
Net income per share $ 6.91 $ 5.26 $ 1.65 31.4%
========== ========== ========== ==========
Diluted shares outstanding 26,490 26,382 108 0.4%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Twelve months ended %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Gross margin
New vehicle retail 6.2% 6.4% (20) bps
Used vehicle retail 12.5 13.2 (70) bps
Used vehicle wholesale 1.7 1.9 (20) bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.2 48.8 40 bps
Fleet and other 2.6 4.1 (150) bps
Gross profit margin 14.9 15.3 (40) bps
Unit sales
New vehicle retail 137,486 91,104 46,382 50.9%
Used vehicle retail 99,109 71,674 27,435 38.3
Total retail units sold 236,595 162,778 73,817 45.3
Used vehicle wholesale 38,167 27,918 10,249 36.7
Average selling price
New vehicle retail $ 33,111 $ 33,782 $ (671) (2.0)%
Used vehicle retail 19,443 19,009 434 2.3
Used vehicle wholesale 6,852 7,010 (158) (2.3)
Average gross profit per
unit
New vehicle retail $ 2,039 $ 2,175 $ (136) (6.3)%
Used vehicle retail 2,434 2,501 (67) (2.7)
Used vehicle wholesale 117 131 (14) (10.7)
Finance and insurance 1,196 1,170 26 2.2
Total vehicle(1) 3,420 3,511 (91) (2.6)
Revenue mix
New vehicle retail 57.9% 57.1%
Used vehicle retail 24.5 25.3
Used vehicle wholesale 3.3 3.6
Finance and insurance, net 3.6 3.5
Service, body and parts 9.4 9.5
Fleet and other 1.3 1.0
Adjusted As reported
---------------------- ----------------------
Twelve months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
Other metrics 2015 2014 2015 2014
---------- ---------- ---------- ----------
SG&A as a % of revenue 10.2% 10.3% 10.3% 10.4%
SG&A as a % of gross profit 67.9 67.7 69.0 68.4
Operating profit as a % of
revenue 4.3 4.4 3.8 4.3
Operating profit as a % of
gross profit 28.5 29.1 25.8 28.2
Pretax margin 3.8 4.1 3.3 3.9
Net profit margin 2.4 2.5 2.3 2.5
(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.
Same Store Operating Highlights (Unaudited)
Twelve months ended %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
New vehicle retail $3,327,450 $3,056,366 $ 271,084 8.9%
Used vehicle retail 1,528,803 1,350,813 177,990 13.2
Used vehicle wholesale 210,468 194,926 15,542 8.0
Finance and insurance 216,590 188,913 27,677 14.7
Service, body and parts 560,717 508,585 52,132 10.3
Fleet and other 72,984 51,971 21,013 40.4
---------- ---------- ----------
Total revenues $5,917,012 $5,351,574 $ 565,438 10.6%
Gross profit
New vehicle retail $ 205,802 $ 196,354 $ 9,448 4.8%
Used vehicle retail 197,380 177,999 19,381 10.9
Used vehicle wholesale 4,022 3,782 240 6.3
Finance and insurance 216,590 188,913 27,677 14.7
Service, body and parts 274,855 247,900 26,955 10.9
Fleet and other 2,261 2,121 140 6.6
---------- ---------- ----------
Total gross profit $ 900,910 $ 817,069 $ 83,841 10.3%
Gross margin
New vehicle retail 6.2% 6.4% (20) bps
Used vehicle retail 12.9 13.2 (30) bps
Used vehicle wholesale 1.9 1.9 - bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 49.0 48.7 30 bps
Fleet and other 3.1 4.1 (100) bps
Total gross profit 15.2 15.3 (10) bps
Unit sales
New vehicle retail 96,556 90,352 6,204 6.9%
Used vehicle retail 77,552 70,967 6,585 9.3
Total retail units sold 174,108 161,319 12,789 7.9
Used vehicle wholesale 28,613 27,696 917 3.3
Average selling price
New vehicle retail $ 34,461 $ 33,827 $ 634 1.9%
Used vehicle retail 19,713 19,034 679 3.6
Used vehicle wholesale 7,356 7,038 318 4.5
Average gross profit per
unit
New vehicle retail $ 2,131 $ 2,173 $ (42) (1.9)%
Used vehicle retail 2,545 2,508 37 1.5
Used vehicle wholesale 141 137 4 2.9
Finance and insurance 1,244 1,171 73 6.2
Total vehicle(1) 3,583 3,515 68 1.9
(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.
Segment Operating Highlights (Unaudited)
Three months ended %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
Domestic $ 761,780 $ 673,459 $ 88,321 13.1%
Import 825,227 732,784 92,443 12.6
Luxury 406,581 385,774 20,807 5.4
---------- ---------- ----------
Total segment revenues 1,993,588 1,792,017 201,571 11.2
Corporate and other (306) 1,290 (1,596) NM
---------- ---------- ----------
Total revenues $1,993,282 $1,793,307 $ 199,975 11.2
Segment Income(1)
Domestic $ 23,672 $ 22,360 $ 1,312 5.9%
Import 21,706 13,518 8,188 60.6
Luxury 10,627 11,202 (575) (5.1)
---------- ---------- ----------
56,005 47,080 8,925 19.0
Corporate and other 26,187 23,365 2,822 12.1
Depreciation and
amortization (11,056) (8,964) (2,092) 23.3
Other interest expense (4,791) (4,848) 57 (1.2)
Other (expense) income, net 25 89 (64) (71.9)
---------- ---------- ----------
Income from continuing
operations before income
taxes $ 66,370 $ 56,722 $ 9,648 17.0
(1) Segment income for each of the segments is defined as Income from
continuing operations before income taxes, less Depreciation and
amortization, Other interest expense and Other income, net.
Retail New Vehicle Unit Sales
Domestic 11,074 10,017 1,057 10.6%
Import 18,431 17,090 1,341 7.8
Luxury 4,906 4,987 (81) (1.6)
--------- --------- ---------
Total 34,411 32,094 2,317 7.2
Allocated to management (61) (30) (31) NM
--------- --------- ---------
Total retail new vehicle unit
sales 34,350 32,064 2,286 7.1
NM - not meaningful
Lithia Motors, Inc.
Segment Operating Highlights (Unaudited)
Twelve months ended %
December 31, Increase Increase
----------------------
2015 2014 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
Domestic $3,034,849 $2,566,473 $ 468,376 18.2%
Import 3,334,983 1,893,034 1,441,949 76.2
Luxury 1,490,632 926,856 563,776 60.8
---------- ---------- ----------
Total segment revenues 7,860,464 5,386,363 2,474,101 45.9
Corporate and other 3,788 3,963 (175) (4.4)
---------- ---------- ----------
Total revenues $7,864,252 $5,390,326 $2,473,926 45.9
Segment Income(1)
Domestic $ 115,525 $ 96,888 $ 18,637 19.2%
Import 98,371 50,870 47,501 93.4
Luxury 36,391 25,448 10,943 43.0
---------- ---------- ----------
Total segment income 250,287 173,206 77,081 44.5
Corporate and other 74,514 71,195 3,319 4.7
Depreciation and
amortization (41,600) (26,363) (15,237) 57.8
Other interest expense (19,491) (10,742) (8,749) 81.4
Other (expense) income, net (1,006) 3,199 (4,205) NM
---------- ---------- ----------
Income from continuing
operations before income
taxes $ 262,704 $ 210,495 $ 52,209 24.8
(1) Segment income for each of the segments is defined as Income from
continuing operations before income taxes, less Depreciation and
amortization, Other interest expense and Other income, net.
Retail New Vehicle Unit Sales
Domestic 44,926 39,006 5,920 15.2%
Import 75,245 41,722 33,523 80.3
Luxury 17,556 10,570 6,986 66.1
--------- --------- ---------
Total 137,727 91,298 46,429 50.9
Allocated to management (241) (194) (47) NM
--------- --------- ---------
Total retail new vehicle unit
sales 137,486 91,104 46,382 50.9
NM - not meaningful
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of
December 31, December 31,
-------------- --------------
2015 2014
-------------- --------------
Days Supply(1)
New vehicle inventory 67 62
Used vehicle inventory 55 53
(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 December 31, 2015
-------------------------- -----------------------
Current ratio Not less than 1.10 to 1 1.26 to 1
Fixed charge coverage
ratio Not less than 1.20 to 1 3.36 to 1
Leverage ratio Not more than 5.00 to 1 1.79 to 1
Funded debt restriction Not more than $600 million $413.4 million
Lithia Motors, Inc.
Other Highlights (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
-------------------- ----------------------
2015 2014 2015 2014
--------- --------- ---------- ----------
New vehicle unit sales brand
mix
Honda, Acura 22.2% 22.7% 22.4% 13.2%
Toyota, Lexus 19.7 19.3 19.9 15.6
Chrysler 18.4 17.8 18.8 24.6
General Motors 8.9 9.3 9.2 12.5
Subaru 7.4 7.0 6.9 8.7
BMW, Mini 6.9 7.9 5.9 6.8
Ford 4.9 4.1 4.7 5.6
Nissan 3.5 3.8 3.7 3.7
Volkswagen, Audi 2.9 3.0 3.1 2.8
Hyundai 1.9 1.6 2.1 2.5
Mercedes Benz 1.6 1.9 1.5 2.2
Kia 1.2 1.1 1.3 1.1
Other 0.5 0.5 0.5 0.7
Three months ended Twelve months ended
December 31, December 31,
-------------------- ----------------------
2015 2014 2015 2014
--------- --------- ---------- ----------
Revenue geographic mix
California 22.0% 21.4% 21.6% 15.8%
Oregon 16.8 16.0 16.7 20.2
Texas 13.6 14.9 15.0 20.7
New Jersey 15.1 15.2 14.6 5.0
Montana 6.2 5.5 6.0 7.3
Alaska 5.4 5.4 5.4 6.6
Washington 5.5 5.9 5.2 6.8
Nevada 3.0 3.3 3.0 4.2
New York 2.8 2.8 2.9 0.9
Idaho 2.8 2.9 2.9 3.9
Iowa 2.7 3.1 2.8 3.9
Hawaii 1.9 1.3 1.5 1.5
North Dakota 1.4 1.4 1.5 1.9
New Mexico 0.8 0.9 0.9 1.3
As of February 24, 2016
-------------------------
Current store count mix # of stores % of total
------------ ------------
Chrysler 27 19.4%
Honda, Acura 21 15.1
Toyota, Lexus 20 14.4
General Motors 17 12.2
BMW, Mini 11 7.9
Volkswagen, Audi 8 5.8
Ford 7 5.0
Subaru 8 5.8
Nissan 6 4.3
Hyundai 4 2.9
Mercedes Benz 4 2.9
Other 6 4.3
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
December 31, December 31,
2015 2014
------------- -------------
Cash and cash equivalents $ 45,008 $ 29,898
Trade receivables, net 308,462 295,379
Inventories, net 1,470,987 1,249,659
Other current assets 54,408 32,010
Assets held for sale -- 8,563
------------- -------------
Total current assets $ 1,878,865 $ 1,615,509
Property and equipment, net 876,660 816,745
Goodwill 213,220 199,375
Franchise value 157,699 150,892
Other non-current assets 100,855 98,411
------------- -------------
Total assets $ 3,227,299 $ 2,880,932
============= =============
Floor plan notes payable $ 48,083 $ 41,047
Floor plan notes payable: non trade 1,265,872 1,137,632
Current maturities of long-term debt 38,891 31,912
Trade payables 70,871 70,853
Accrued liabilities 167,108 153,661
Deferred income taxes -- 2,603
Liabilities related to assets held for sale -- 4,892
------------- -------------
Total current liabilities $ 1,590,825 $ 1,442,600
Long-term debt 606,463 609,066
Deferred revenue 66,734 54,403
Deferred income taxes 53,129 42,795
Other long-term liabilities 81,984 58,963
------------- -------------
Total liabilities $ 2,399,135 $ 2,207,827
------------- -------------
Class A common stock 258,410 276,058
Class B common stock 316 319
Additional paid-in capital 38,822 29,775
Accumulated other comprehensive loss (277) (926)
Retained earnings 530,893 367,879
------------- -------------
Total liabilities & stockholders' equity $ 3,227,299 $ 2,880,932
============= =============
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Twelve months ended
December 31,
----------------------------
2015 2014
------------- -------------
Net income $ 182,999 $ 138,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairments 20,124 1,853
Depreciation and amortization 41,600 26,363
Stock-based compensation 11,871 7,436
Loss on disposal of assets 203 271
Gain on sale of franchise (5,919) (5,744)
Deferred income taxes 12,341 13,355
Excess tax benefit from share-based payment
arrangements (5,012) (6,186)
(Increase) decrease:
Trade receivables, net (13,047) (59,474)
Inventories (197,079) (76,002)
Other assets (31,620) (31,182)
Increase (decrease):
Floor plan notes payable, net 7,035 (647)
Trade payables 674 (3,105)
Accrued liabilities 16,273 (13,472)
Other long-term liabilities and deferred
revenue 33,766 38,133
------------- -------------
Net cash provided by operating activities $ 74,209 $ 30,319
============= =============
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 2015 2014
------------- -------------
As reported $ 74,209 $ 30,319
Floor plan notes payable, non-trade, net 136,201 440,341
Borrowings on floor plan notes payable
associated with acquired inventory (25,642) (257,363)
------------- -------------
Adjusted $ 184,768 $ 213,297
============= =============
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended December 31, 2015
-----------------------------------------------
Equity
investment
As Asset fair value
reported Impairments adjustment Adjusted
--------- ------------ ----------- ---------
Asset impairments $ 5,733 $ (1,603) $ (4,130) $ --
Income from operations 76,415 1,603 4,130 82,148
Other (expense) income, net 25 -- 1,733 1,758
Income from continuing
operations before income
taxes $ 66,370 $ 1,603 $ 5,864 $ 73,837
Income tax expense (18,638) (605) (8,516) (27,759)
--------- ------------ ----------- ---------
Net income from continuing
operations $ 47,732 $ 998 $ (2,652) $ 46,078
========= ============ =========== =========
Diluted earnings per share
from continuing operations $ 1.80 $ 0.04 $ (0.10) $ 1.74
Diluted share count 26,462
Three Months Ended December 31, 2014
---------------------------------------------------------
Equity
investment
As Acquisition fair value Tax
reported expenses adjustment attributes Adjusted
--------- ----------- ---------- ---------- ---------
Asset impairments $ 1,853 $ -- $ (1,853) $ -- $ --
Selling, general
and
administrative 184,288 (819) -- -- 183,469
Income from
operations 66,016 819 1,853 -- 68,688
Other (expense)
income, net 90 -- 1,160 -- 1,250
Income from
continuing
operations
before income
taxes $ 56,722 $ 819 $ 3,013 $ -- $ 60,554
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
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Twelve Months Ended December 31, 2015
---------------------------------------------------------------
Disposal
(gain)/ Equity
loss on investment
As sale of Asset Transition fair value
reported stores impairments agreement adjustment Adjusted
--------- -------- ----------- ---------- ---------- ----------
Asset
impairments $ 20,124 $ -- $ (3,603) $ -- $ (16,521) $ --
Selling,
general and
administra-
tive 811,175 5,919 -- (18,296) -- 798,798
Income from
operations 302,735 (5,919) 3,603 18,296 16,521 335,236
Other
(expense)
income, net (1,006) -- -- -- 6,930 5,924
Income from
continuing
operations
before
income
taxes $262,704 $(5,919) $ 3,603 $ 18,296 $ 23,451 $ 302,135
Income tax
expense (79,705) 2,309 (1,385) (6,507) (30,832) (116,120)
-------- ------- ---------- --------- --------- ---------
Net income
from
continuing
operations $182,999 $(3,610) $ 2,218 $ 11,789 $ (7,381) $ 186,015
======== ======= ========== ========= ========= =========
Diluted
earnings
per share
from
continuing
operations $ 6.91 $ (0.14) $ 0.08 $ 0.45 $ (0.28) $ 7.02
Diluted
share count 26,490
Twelve Months Ended December 31, 2014
---------------------------------------------------------------
Equity
investment
As Reserve Acquisition fair value Tax
reported adjustments expenses adjustment attribute Adjusted
--------- ---------- ----------- ---------- --------- --------
Asset
impairments $ 1,853 $ -- $ -- $ (1,853) $ -- $ --
Selling,
general and
administra-
tive 563,207 (3,931) (1,865) -- -- 557,411
Income from
operations 231,899 3,931 1,865 1,853 -- 239,548
Other
(expense)
income, net 3,198 -- -- 1,160 -- 4,358
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
Contact:
John North
VP Finance and Chief Accounting Officer
(541) 618-5748
