LAD Lithia Motors Inc

Lithia Motors, Inc. (NYSE:LAD) today announced that, excluding a one-time after-tax expense of $1.3 million (or seven cents per share) related to the recently completed investigation, losses from continuing operations were three cents per share. The company�s guidance for the quarter was for a loss of five to ten cents per share. First quarter 2008 sales were $699.3 million, a 9.7% decrease from $774.5 million in the same period last year. First quarter 2008 loss from continuing operations was $1.9 million. This compared to earnings of $7.2 million in the first quarter of 2007, which included extremely strong sales in March. Sid DeBoer, Lithia�s Chairman and CEO, commented, �Sales improved each month of the first quarter. With the stronger selling season upon us, we feel well positioned to perform going forward. Spring and summer will help give us what we need to push through the current economic challenges just as we have in past recessionary environments. We are continuing necessary cost-cutting measures, largely in the area of personnel. We are increasing productivity, and improving our customer offerings and our marketing message. Our business model�s strength lies in our ability to adapt to changing retail environments.� Jeff DeBoer, Senior Vice President and CFO, added, �We are providing second quarter EPS guidance and are maintaining our full year 2008 guidance as shown below.� �Our guidance is based on income from continuing operations and assumes a continuation of challenging economic conditions and fifteen to twenty cents of annual start up costs associated with L2,� concluded Jeff DeBoer. 2008 Key Earnings Guidance Assumptions: � Sales $3.1 billion - $3.2 billion Same Store Sales Decline 5.0% - 6.0% Gross Margin 16.9% - 17.0% SG&A as % of Sales 13.1% - 13.4% SG&A as % of Gross Profit 78.0% - 81.0% Operating Margin 2.6% - 2.8% Flooring Interest Expense 0.7% - 0.8% Other Interest Expense 0.7% - 0.8% Tax Rate 39.5% - 40.5% Net Margin � 0.7% - 0.9% Earnings per Share from Continuing Operations: Guidance � Guidance Q2 2008 � FY 2008 $0.25 - $0.30 $1.00 - $1.30 Conference Call Information Lithia Motors will be providing more detailed information on the results for the first quarter 2008 in its conference call scheduled for today at 2 p.m. PT and 5 p.m. ET. The call can be accessed live by calling 973-409-9255; Conference ID #: 43227703. 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 28 brands of new and all brands of used vehicles at 110 stores which are located in 46 markets within 15 states. Internet sales are centralized at www.Lithia.com, or through www.L2Auto.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 105,108 new and used vehicles and had $3.22 billion in total revenue in 2007. 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 comments and predictions related to the retail sales environment and its ability to successfully adjust to those conditions and achieve the earnings per share projected. Additional Information For additional information on Lithia Motors, contact the Investor Relations Department: 541-618-5770 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 30, Increase Increase � 2008 � � � 2007 � (Decrease) (Decrease) New vehicle sales $ 373,692 $ 437,507 $ (63,815 ) (14.6 ) % Used vehicle sales 201,460 213,034 (11,574 ) (5.4 ) Finance and insurance 25,683 29,644 (3,961 ) (13.4 ) Service, body and parts 97,520 93,642 3,878 4.1 Fleet and other revenues � 953 � � 690 � � 263 � 38.1 � Total revenues 699,308 774,517 (75,209 ) (9.7 ) � � � � Cost of sales � 581,237 � � 638,653 � � 57,416 � (9.0 ) Gross Profit 118,071 135,864 (17,793 ) (13.1 ) SG&A expense 103,451 107,430 (3,979 ) (3.7 ) Depreciation and amortization � 5,771 � � 4,763 � � 1,008 � 21.2 � Income from operations 8,849 23,671 (14,822 ) (62.2 ) � Floorplan interest expense (6,326 ) (7,354 ) (1,028 ) (14.0 ) Other interest expense (5,600 ) (4,628 ) 972 21.0 Other income, net � 98 � � 212 � � (114 ) (53.8 ) Income (loss) from continuing operations before income taxes (2,979 ) 11,901 14,880 NM � Income tax expense (benefit) (1,108 ) 4,676 (5,784 ) NM Income Tax Rate � 37.2 % � 39.3 % � � Income (loss) from continuing operations (1,871 ) 7,225 (9,096 ) NM � Discontinued Operations: Loss from operations, net of income tax � (290 ) � (150 ) � 140 � 93.3 � Net income (loss) $ (2,161 ) $ 7,075 � $ 9,236 � NM � � Diluted net income (loss) per share: Continuing Operations $ (0.10 ) $ 0.35 $ (0.45 ) NM Discontinued Operations: Loss from operations, net of income tax � (0.01 ) � (0.01 ) � � Net income (loss) per share $ (0.11 ) $ 0.34 � $ (0.45 ) NM � Diluted shares outstanding � 19,687(A ) � 22,131 � � (2,444 ) (11.0 ) % � � (A) Excludes shares issuable upon conversion of the convertible debt as well as common stock equivalents, as their effect on EPS would be antidilutive. NM - Not Meaningful LITHIA MOTORS, INC. � � (Selected Same Store Data) Unaudited Three Months Ended % March 30, Increase Increase � 2008 � � 2007 � (Decrease) (Decrease) Same Store Unit Sales: New Vehicle 12,425 15,313 (2,888 ) (18.9 ) % Used - Retail Vehicle 8,784 10,659 (1,875 ) (17.6 ) Used - Wholesale 5,599 6,067 (468 ) (7.7 ) Total Units Sold 26,808 32,039 (5,231 ) (16.3 ) � Same Store Average Selling Price: New Vehicle $ 29,530 $ 28,631 $ 899 3.1 % Used - Retail Vehicle 17,257 16,214 1,043 6.4 Used - Wholesale 6,556 6,712 (156 ) (2.3 ) � Same Store Revenue: New Vehicle Retail Sales (16.3 ) % (3.4 ) % Used Vehicle Retail Sales (12.3 ) % (4.5 ) % Used Wholesale Sales (9.9 ) % 15.8 % Total Vehicle Sales (excluding Fleet) (14.8 ) % (2.6 ) % Finance & Insurance Sales (15.0 ) % 3.2 % Service, Body and Parts Sales 1.5 % 5.0 % Total Sales (excluding Fleet) (12.9 ) % (1.6 ) % Total Gross Profit (excluding Fleet) (16.7 ) % (1.6 ) % � Same Store Average Gross Profit Data: New Retail Gross Profit/Unit $ 2,255 $ 2,260 $ (5 ) Used Retail Gross Profit/Unit $ 1,873 $ 2,365 $ (492 ) Used Wholesale Gross Profit/Unit $ (97 ) $ 269 $ (366 ) � Same Store Total Sales Geographic Mix: Texas 24.3 % 19.6 % Oregon 13.3 % 15.1 % California 12.2 % 13.6 % Washington 10.4 % 10.7 % Alaska 6.6 % 6.3 % Montana 6.1 % 5.7 % Colorado 5.9 % 6.7 % Idaho 5.6 % 6.0 % Iowa 4.7 % 3.8 % Nevada 3.7 % 4.4 % Nebraska 2.7 % 2.7 % South Dakota 1.9 % 2.2 % New Mexico 1.1 % 1.1 % North Dakota 1.0 % 1.5 % Wisconsin 0.5 % 0.6 % Balance Sheet Highlights (Dollars in Thousands) Unaudited � � � � � March 31, 2008 December 31, 2007 Cash & Cash Equivalents $ 27,855 $ 21,665 Trade Receivables(A) 102,374 109,387 Inventory 640,480 601,759 Assets held for sale 22,887 23,807 Other Current Assets � 25,860 � � 21,920 � Total Current Assets 819,456 778,538 � Real Estate, net 367,595 363,391 Equipment & Other, net 100,665 98,355 Goodwill, net 311,954 311,527 Other Assets � 74,782 � � 74,924 � Total Assets $ 1,674,452 � $ 1,626,735 � � Flooring Notes Payable $ 493,980 $ 451,590 Liabilities held for sale 17,243 17,857 Other Current Liabilities � 114,042 � � 115,644 � Total Current Liabilities 625,265 585,091 � Used Vehicle Flooring 117,811 122,550 Real Estate Debt 197,732 179,160 Other Long-Term Debt 147,584 153,785 Other Liabilities � 83,011 � � 77,937 � Total Liabilities $ 1,171,403 � $ 1,118,523 � � Shareholders' Equity 503,049 508,212 � � Total Liabilities & Shareholders' Equity $ 1,674,452 � $ 1,626,735 � � � � (A) Includes contracts-in-transit of $42,567 and $48,474 for 2008 and 2007 � Other Balance Sheet Data (Dollars in Thousands) � Current Ratio 1.3x 1.3x LT Debt/Total Cap.(Excludes Real Estate) 35 % 35 % Working Capital $ 194,191 $ 193,447 Book Value per Basic Share 25.55 26.02