Lithia Motors, Inc. (NYSE:LAD) today announced that first quarter
2006 net income from continuing operations increased 2% to $10.6
million from $10.5 million in the first quarter of 2005. Diluted
earnings per share from continuing operations were $0.50 as
compared to $0.50 in the first quarter of 2005. For the first
quarter of 2006, diluted net income per share includes the affect
of accounting for equity-based compensation under FAS 123(R). The
affect was to increase compensation expense, which is included in
SG&A. First quarter 2006 earnings per share from continuing
operations, excluding the affect of accounting for equity
compensation under FAS 123(R) was $0.53 as compared to $0.50 in the
same period last year. First quarter 2006 earnings per share
including discontinued operations and the affect of accounting for
equity compensation under FAS 123(R) was $0.44. First quarter 2006
sales increased 14% to $748.2 million as compared to $658.9 million
in the same period last year. New vehicle sales increased 19%, used
vehicle sales increased 6%, finance/insurance sales increased 12%,
and parts/service sales increased 11%. Sid DeBoer, Lithia's
Chairman and CEO, commented, "The first quarter can be
characterized by a week January, an improved February and a very
strong March. Total same-store sales increased 7.1% and total
same-store gross profits were up 4.9% for the quarter. Same-store
sales and gross profits were up across all business lines except
used vehicles, where they were essentially flat with last year.
"Nationally, the vehicle sales environment in the first quarter was
lackluster. Our response was to push new vehicle sales in an
attempt to gain market share and create long-term parts and service
business that will benefit the company in future periods. Our
efforts produced a new vehicle same-store sales increase of 11.5%
for the quarter while new vehicle same-store units were up 10.9%
for the quarter, with domestic same-store units increasing 11.5%
and import same-store units increasing 9.7%. Another highlight was
our same-store service and parts revenues which increased 5.1% for
the quarter. "Lithia's team members did a great job demonstrating
the flexibility of our company's business model. We had made a
strategic decision to stock high new vehicle inventories going into
the first quarter. Through company-wide promotional initiatives, we
were able to reduce our excess inventories to normal levels going
into the stronger spring and summer selling season ahead,"
concluded Mr. DeBoer. Jeffrey B. DeBoer, Senior Vice President and
CFO added, "Year to date, we have completed one acquisition; a
Dodge store in Fresno, California with approximately $50 million in
annualized revenues, which is now named Lithia Dodge of Fresno.
Additionally, in the last quarter, we completed the sale of Lithia
Chevrolet in Salinas, California. This store was included in
discontinued operations for the quarter and year-end 2005. "Our
guidance for the full-year 2006 remains unchanged and is in the
table below. In the first quarter, we had two stores classified as
discontinued operations. 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 FAS
123(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. -0- *T Earnings Per Share Guidance FY
2005 FY 2006 ------------------- ------------------------- EPS w/o
FAS 123(R) $ 2.37 $ 2.58 - $2.70(non-GAAP) adoption: Effect of FAS
123(R): N/A ($0.12) ------------------- -------------------------
EPS - Reportable 2006: N/A $ 2.46 - $2.58 *T 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)
("FAS 123(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.
Previously, 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 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 first
quarter 2006 in its conference call scheduled for 11 a.m. PT, April
25, 2006. 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 to Investor Relations -- and click on the Live
Webcast icon. About Lithia Lithia Motors, Inc. is a Fortune 1000
and Russell 2000 Company that sells 25 brands of new vehicles and
operates 94 stores and 189 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 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 company monthly performance, benefits or
strength of Lithia's operating model, inventory levels, anticipated
revenues of recently acquired stores and projected 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 to Investor
Relations. -0- *T LITHIA MOTORS, INC. (In Thousands except per
share data) Unaudited --------- Three Months Ended March 31,
----------------------- $ Increase % Increase 2006 2005 (Decrease)
(Decrease) ----------- ----------- ---------- ---------- New
Vehicle Sales $ 427,750 $ 359,619 $ 68,131 18.9% Used Vehicle Sales
209,078 197,322 11,756 6.0 Finance & Insurance 27,554 24,616
2,938 11.9 Service, Body & Parts Sales 82,473 74,265 8,208 11.1
Fleet & Other Revenues 1,330 3,104 (1,774) (57.2) -----------
----------- --------- ---------- Total Revenues 748,185 658,926
89,259 13.5 Cost of Sales 617,404 541,694 75,710 14.0 -----------
----------- --------- ---------- Gross Profit 130,781 117,232
13,549 11.6 SG&A Expense 100,717 89,132 11,585 13.0
Depreciation/ Amortization 4,046 3,388 658 19.4 -----------
----------- --------- ---------- Income from Operations 26,018
24,712 1,306 5.3 Flooring Interest Expense (6,615) (5,102) 1,513
29.7 Other Interest Expense (3,331) (2,805) 526 18.8 Other Income,
net 427 285 142 49.8 ----------- ----------- --------- ----------
Income from continuing operations before income taxes 16,499 17,090
(591) (3.5) Income Tax Expense 5,870 6,614 (744) (11.2) Income Tax
Rate 35.6% 38.7% ----------- ----------- Net Income from continuing
ops. 10,629 10,476 153 1.5% Income (Loss) from discontinued
operations, net of income taxes (1,321) (486) 835 171.8 -----------
----------- --------- ---------- Net Income $ 9,308 $ 9,990 $ (682)
(6.8)% =========== =========== ========= ========== Diluted Net
Income per share: Continuing Operations $ 0.53 $ 0.50 $ 0.03 6.0%
Effects of FAS123(R) (0.03) - Diluted Net Income per share after
effect of FAS123(R): $ 0.50 $ 0.50 0.00 0% Discontinued Operations
(0.06) (0.02) ----------- ----------- Net Income per share $ 0.44 $
0.48 (0.04) (8.3)% =========== =========== ========= ==========
Diluted Shares Outstanding 22,066 21,704 362 1.7% LITHIA MOTORS,
INC. Three Months Ended March 31, -------------------- Increase %
Increase Unit Sales: 2006 2005 (Decrease) (Decrease) -----------
---------- ------- ---------- ---------- New Vehicle 15,241 12,864
2,377 18.5% Used - Retail Vehicle 10,757 10,820 (63) (0.6) Used -
Wholesale 5,534 5,544 (10) (0.2) Total Units Sold 31,532 29,228
2,304 7.9 Average Selling Price: ---------------------- New Vehicle
$ 28,066 $27,955 $ 111 0.4% Used - Retail Vehicle 16,162 15,219 943
6.2 Used - Wholesale 6,364 5,890 474 8.0 Key Financial Data:
------------------- Gross Profit Margin 17.5% 17.8% SG&A as a %
of Gross Profit 77.0% 76.0% Operating Margin 3.5% 3.8% Pre-Tax
Margin 2.2% 2.6% Gross Margin/Profit Data ------------------------
New Vehicle Retail 7.9% 8.1% Used Vehicle Retail 15.4% 15.4% Used
Vehicle Wholesale 5.1% 4.4% Service, Body & Parts 48.8% 48.6%
New Retail Gross Profit/Unit $ 2,230 $ 2,278 Used Retail Gross
Profit/Unit $ 2,486 $ 2,349 Used Wholesale Gross Profit/Unit $ 325
$ 262 Finance & Insurance/Retail Unit $ 1,060 $ 1,039 Same
Store Data --------------- New Vehicle Retail Sales 11.5% (5.8)%
Used Vehicle Sales (including Wholesale) 0.3% (2.1)% Total Vehicle
Sales (excluding fleet) 7.5% (4.5)% Finance & Insurance Sales
4.1% (1.5)% Service, Body & Parts Sales 5.1% 0.3 % Total Sales
(excluding Fleet) 7.1% (3.9)% Total Gross Profit (excluding Fleet)
4.9% 1.5 % LITHIA MOTORS, INC. Balance Sheet Highlights (Dollars in
Thousands) March 31, 2006 December 31, 2005 --------------
----------------- Cash & Cash Equivalents $ 33,425 $ 48,566
Trade Receivables(a) 103,768 106,443 Inventory 651,938 606,047
Assets Held for Sale 19,165 27,411 Other Current Assets 13,979
15,781 ------------- ---------------- Total Current Assets 822,275
804,248 Real Estate, net 264,064 255,372 Equipment & Leases,
net 79,314 77,805 Goodwill, net 261,442 260,899 Other Assets 57,943
54,390 ------------- ---------------- Total Assets $ 1,485,038 $
1,452,714 ============= ================ Floorplan Notes Payable $
549,467 $ 530,452 Liabilities held for sale 16,780 22,388 Other
Current Liabilities 102,614 95,560 ------------- ----------------
Total Current Liabilities 668,861 648,400 Used Vehicle Flooring - -
Real Estate Debt 167,171 154,046 Other Long-Term Debt 123,480
136,505 Other Liabilities 55,202 54,130 -------------
---------------- Total Liabilities 1,014,714 993,081 -------------
---------------- Shareholders' Equity 470,324 459,633 -------------
---------------- Total Liabilities & Shareholders' Equity $
1,485,038 $ 1,452,714 ============= ================ (a) Includes
contracts-in-transit of $51,659 and $52,453 for 2006 and 2005.
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) 21% 23% Working Capital $
153,414 $ 155,848 Book Value per Basic Share $ 24.21 $ 23.97 *T
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