LAD Lithia Motors Inc

Lithia Motors, Inc. (NYSE:LAD) today announced that first quarter 2007 sales increased 9% to $800.7 million as compared to $736.4 million in the same period last year. New vehicle sales increased 7%, used vehicle sales increased 7%, finance/insurance sales increased 12%, and parts/service sales increased 19%. First quarter 2007 net income from continuing operations was $7.1 million as compared to $10.9 million in the first quarter of 2006. Diluted earnings per share from continuing operations were $0.34 as compared to $0.52 in the first quarter of 2006. For a more accurate comparison of earnings, last year�s fair market value adjustment to our swaps needs to be considered. Our interest rate swaps did not qualify for hedge accounting in 2006, which had the effect of increasing first quarter 2006 earnings per share by 4 cents due to a change in fair market value. Our swaps do qualify for hedge accounting in 2007 and there was no comparable effect on earnings per share in the first quarter. Sid DeBoer, Lithia�s Chairman and CEO, commented, �Lithia earned 34 cents from continuing operations in the first quarter, which met the company�s internal forecast for the quarter. First quarter vehicle sales were weak in January and February and then rebounded substantially in March. We are encouraged by the positive trends we saw in March with healthy sales trends in both the new and used vehicle business. For the quarter, total same-store sales declined 2.1%, however, we had a difficult comparison against 8.4% growth in the first quarter of 2006.� �Lithia�s strategy over the past few years of selling volume and increasing units in operation has continued to benefit the parts and service business, as these buyers return to Lithia stores for their service work. This was apparent in the 4.9% same-store sales growth in the parts and service business for the quarter. Same-store sales also grew 2.9% in the finance and insurance business.� �Vehicle inventories are at conservative levels going into the second quarter of the year. New vehicle inventories at the end of March were 16 days below our historical average levels and the lowest day�s supply that we have seen in the last 5 years. Used vehicle inventories were right at historical average levels for the March ended period,� concluded Mr. DeBoer. Jeffrey B. DeBoer, Senior Vice President and CFO added, �Year to date, we have completed one acquisition of four stores in the Des Moines, Iowa area representing the Honda, Acura, Nissan, Infiniti, VW and Audi brands. The stores had approximately $100 million in annualized revenues.� "Our guidance for the full-year 2007 remains unchanged given that the quarterly results were in line with our expectations. In the first quarter, we had two stores classified as discontinued operations. The full-year 2007 guidance is on a continuing operations basis and assumes a steady pace of acquisitions and dispositions," concluded Jeffrey B. DeBoer. Guidance Earnings per Share FY 2007 From Continuing Operations: $ 1.90 - $2.10� The company currently has a 1,000,000 share repurchase program in place. Prior to the beginning of�2007, 256,831 shares had been purchased. In the first quarter the company purchased 121,800 shares, leaving 621,369 shares still available for repurchase under the program. Conference Call Information Lithia Motors will be providing more detailed information on the results for the first quarter 2007 in its conference call scheduled for today at 2 p.m. PDT and 5 p.m. EDT. The call can be accessed live by calling 973-582-2750; Conference ID #: 8680214. To listen LIVE on our website or for REPLAY: Log-on to www.Lithia.com � Go to Investor Relations � and click on the Conference Call Icon. About Lithia Lithia Motors, Inc. is a Fortune 700 and Russell 2000 Company. Lithia sells 30 brands of new vehicles at 108 stores which are located in 46 markets within 15 states. Internet sales are centralized at www.Lithia.com. 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 109,648 new and used vehicles and had $3.17 billion in total revenue in 2006. Forward Looking Statements This press release includes forward looking statements within the meaning of the �Safe-Harbor� provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation economic conditions, acquisition risk factors and others set forth from time to time in the company�s filings with the SEC. Specific risks in this press release include the accuracy of the company�s internal forecasts, benefits or strength of Lithia�s operating model, anticipated revenues from acquired stores and projected full-year 2007 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 to Investor Relations LITHIA MOTORS, INC. (In Thousands except per share data) � Unaudited Three Months Ended March 31, $ Increase % Increase 2007� 2006� (Decrease) (Decrease) New Vehicle Sales $ 451,156� $ 420,395� $ 30,761� 7.3% Used Vehicle Sales 221,771� 206,506� 15,265� 7.4� Finance & Insurance 30,405� 27,231� 3,174� 11.7� Service, Body & Parts Sales 96,635� 81,084� 15,551� 19.2� Fleet & Other Revenues 689� 1,155� (466) (40.3) Total Revenues 800,656� 736,371� 64,285� 8.7� Cost of Sales 660,665� 608,593� 52,072� 8.6� Gross Profit 139,991� 127,778� 12,213� 9.6� SG&A Expense 111,027� 97,564� 13,463� 13.8� Depreciation/Amortization 4,899� 3,983� 916� 23.0� Income from Operations 24,065� 26,231� (2,166) (8.3) Flooring Interest Expense (7,656) (5,405) 2,251� 41.6� Other Interest Expense (4,976) (3,299) 1,677� 50.8� Other Income, net 212� 378� (166) (43.9) Income from continuing operations before income taxes 11,645� 17,905� (6,260) (35.0) Income Tax Expense 4,576� 6,969� (2,393) (34.3) Income Tax Rate 39.3% 38.9% Net Income from continuing ops. 7,069� 10,936� (3,867) (35.4)% Income (Loss) from discontinued operations, net of income taxes 6� (1,568) 1,574� 100.4� Net Income $ 7,075� $ 9,368� $ (2,293) (24.5)% Diluted Net Income per share: Continuing Operations $ 0.34� $ 0.52� $ (0.18) (34.6)% Discontinued Operations -� (0.07) Net Income per share $ 0.34� $ 0.45� (0.11) (24.4)% Diluted Shares Outstanding 22,131� 22,066� 65� 0.3% LITHIA MOTORS, INC. Three Months Ended March 31, Increase % Increase Unit Sales: 2007� 2006� (Decrease) (Decrease) New Vehicle 15,711� 14,983� 728� 4.9% Used - Retail Vehicle 11,032� 10,629� 403� 3.8� Used - Wholesale 6,274� 5,447� 827� 15.2� Total Units Sold 33,017� 31,059� 1,958� 6.3� � Average Selling Price: New Vehicle $ 28,716� $ 28,058� $ 658� 2.3% Used - Retail Vehicle 16,281� 16,171� 110� 0.7� Used - Wholesale 6,720� 6,357� 363� 5.7� � Key Financial Data: Gross Profit Margin 17.5% 17.4% +10 bps SG&A as a % of Gross Profit 79.3% 76.4% +290 bps Operating Margin 3.0% 3.6% -60 bps Pre-Tax Margin 1.5% 2.4% -90 bps � Gross Margin/Profit Data New Vehicle Retail 7.7% 7.9% -20 bps Used Vehicle Retail 15.0% 15.2% -20 bps Used Vehicle Wholesale 4.0% 5.1% -110 bps Service, Body & Parts 47.5% 47.9% -40 bps Finance & Insurance 100.0% 100.0% -� � New Retail Gross Profit/Unit $ 2,210� $ 2,227� -$17� Used Retail Gross Profit/Unit $ 2,447� $ 2,461� -$14� Used Wholesale Gross Profit/Unit $ 269� $ 324� -$55� Finance & Insurance/Retail Unit $ 1,137� $ 1,063� +$74� � Same Store Data New Vehicle Retail Sales (3.9)% 13.5% Used Vehicle Sales (including Wholesale) (1.9)% 0.5% Total Vehicle Sales (excluding fleet) (3.2)% 8.8% Finance & Insurance Sales 2.9% 5.3% Service, Body & Parts Sales 4.9% 5.8% Total Sales (excluding Fleet) (2.1)% 8.4% Total Gross Profit (excluding Fleet) (1.6)% 5.7% LITHIA MOTORS, INC. � Balance Sheet Highlights (Dollars in Thousands) � March 31, 2007 December 31, 2006 Cash & Cash Equivalents $ 21,023� $ 26,600� Trade Receivables(a) 130,119� 118,528� Inventory 599,942� 603,306� Assets Held for Sale 13,324� 15,485� Other Current Assets 15,709� 15,721� Total Current Assets 780,117� 779,640� � Real Estate, net 339,924� 327,890� Equipment & Leases, net 96,689� 89,213� Goodwill, net 314,877� 307,424� Other Assets 77,379� 75,190� Total Assets $ 1,608,986� $ 1,579,357� � Floorplan Notes Payable $ 495,954� $ 499,679� Liabilities held for sale 9,880� 11,610� Other Current Liabilities 133,756� 118,650� Total Current Liabilities 639,590� 629,939� � Used Vehicle Flooring 95,789� 95,614� Real Estate Debt 149,112� 155,890� Other Long-Term Debt 156,806� 140,879� Other Liabilities 69,910� 63,642� � Total Liabilities 1,111,207� 1,085,964� � Shareholders' Equity 497,779� 493,393� � Total Liabilities & Shareholders' Equity $ 1,608,986� $ 1,579,357� (a) Includes contracts-in-transit of $62,334 and $56,211 for 2007 and 2006. Other Balance Sheet Data (Dollars in Thousands except per share data) � Current Ratio 1.2x 1.2x LT Debt/Total Cap. (Excludes Real Estate) 34% 32% Working Capital $ 140,527� $ 149,701� Book Value per Basic Share $ 25.54� $ 25.32�