Lithia Motors, Inc. (NYSE:LAD) today announced that net loss
from continuing operations in the fourth quarter of 2008 was
$419,000 or two cents per diluted share, compared to the prior year
net loss from continuing operations of $409,000 or two cents per
share, due to restatement of last year�s results following
discontinued operations designations. The Company realized a
benefit of $3.6 million, or eight cents per share after tax, from
early retirement of convertible notes. After adjusting for this
item as shown in the attached financial tables, net loss from
continuing operations for the 2008 fourth quarter was $2.0 million,
or ten cents per share.
Consolidated net loss was twenty-one cents per share after
inclusion of nine cents per share operating loss and ten cents per
share impairment on discontinued operations for the fourth quarter
of 2008.
After adjusting for impairment charges and certain other items
disclosed in the attached financial tables, net income from
continuing operations for the full year 2008 was $3.0 million or
$0.15 per diluted share.
Same store sales for new and used vehicles declined 39.2% and
17.4% respectively, when compared to the same quarter last year.
Parts and service same-store sales held relatively stable with a
slight decline of 1.7% compared to the same quarter last year.
Sid DeBoer, Lithia�s Chairman and CEO, commented, �With
continuing challenges in the marketplace, Lithia Motors is steadily
executing its right sizing and cost cutting initiatives. We will
continue to take necessary measures to keep our company strong, and
to position our company for high performance once the economy does
improve.
�Our fourth quarter operating results were essentially flat with
the same quarter last year, even though national economic
conditions had deteriorated significantly. This illustrates the
significant headway our company has made in our restructuring
actions and cost reductions.
�These restructuring actions are ongoing, and we have shown
great progress on the plans outlined over the past five quarters.
We have aggressively cut costs, raised capital, paid down debt, and
right-sized our company beginning in the third quarter of 2007 when
we first saw signs of the economy shifting.�
�The Company raised approximately $100 million dollars in 2008
from the sale of stores, financing of real estate, and the sale of
development properties � excluding construction loan financing.
Proceeds from these activities went toward reducing the line of
credit from $184 million at the start of the year to approximately
$86 million at the end of the fourth quarter. Additionally, the
Company repurchased and retired half of their convertible notes in
2008 at a discount, which resulted in a pre-tax gain of
approximately $5.2 million.�
�We have accelerated cost cutting measures to be proportional to
the rapid and unexpected decline in the economy. Since these cost
reduction efforts began, we have completed $43 million of
annualized SG&A cost reductions in continuing operations. These
cuts are more than double our initial $18 million target announced
in June of 2008. All cost reductions have been designed to not
impact customer service or sales volumes. Of these completed cost
reductions, approximately $15 million are reflected in our 2008
results, as they occurred throughout the latter half of the year.
We will pursue additional cost savings and endeavor to expand our
market share in a declining market. We will report on the quarterly
progress as it is achieved,� concluded Mr. DeBoer.
About Lithia
Lithia Motors, Inc. is a Fortune 700 Company, selling 27 brands
of new and all brands of used vehicles at 93 stores, which are
located in 39 markets within 13 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.
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
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, future economic conditions and others set forth from
time to time in the company�s filings with the SEC. We make
forward-looking statements about (i) the execution of our cost
cutting measures and our restructuring plan, (ii) our ability to
reduce our store count and effect a balanced import/export new
vehicle sales mix, (iii) anticipated reduction in vehicle
inventories, (iv) projected annualized interest expense reduction
and (v) expected future profitability. Specific risks in this press
release include execution of the restructuring plan and expense
reductions, future interest rates and macro-economic and market
factors affecting the company�s sales levels and profitability.
The attached financial tables contain certain non-GAAP financial
measures as defined under SEC rules, such as net income and diluted
earnings per share from continuing operations, adjusted in each
case to exclude certain items disclosed in the attached financial
tables. As required by SEC rules, the Company has provided
reconciliations of these measures to the most directly comparable
GAAP measures, which are set forth in the attachments to this
release. The Company believes that each of the foregoing non-GAAP
financial measures improves the transparency of the Company's
disclosure, provides a meaningful presentation of the Company's
results from its core business operations excluding the impact of
items not related to the Company's ongoing core business
operations, and improves the period-to-period comparability of the
Company's results from its core business operations.
LITHIA MOTORS, INC.
(In Thousands except per share
data)
� �
Unaudited Three Months Ended % December
31, Increase Increase 2008 � �
2007
�
(Decrease) (Decrease) New vehicle sales $205,331
$335,329 $(129,998 ) (38.8 ) % Used vehicle sales 110,929 142,396
(31,467 ) (22.1 ) Finance and insurance 14,028 20,045 (6,017 )
(30.0 ) Service, body and parts 74,650 76,064 (1,414 ) (1.9 ) Fleet
and other revenues 1,655 � 1,014 � 641 � 63.2 �
Total
revenues 406,593 574,848 (168,255 )
(29.3 ) � � � � Cost of sales 328,741 � 479,063 �
(150,322 ) (31.4 ) Gross Profit 77,852 95,785 (17,933 ) (18.7 )
SG&A expense 69,112 82,173 (13,061 ) (15.9 ) Depreciation and
amortization 4,279 � 4,639 � (360 ) (7.8 )
Income from
operations 4,461 8,973 (4,512 )
(50.3 ) � Floorplan interest expense (5,527 ) (5,438
) 89 1.6 Other interest expense (4,047 ) (4,265 ) (218 ) (5.1 )
Other income, net 3,643 � 279 � 3,364 � 1,205.7 �
Loss from continuing operations
before income taxes
(1,470 ) (451 ) (1,019 )
225.9 � Income tax benefit (1,051 ) (42 ) (1,009 ) 2,402.4
Income Tax Rate 71.5 % 9.3 % � �
Loss from continuing
operations (419 ) (409 ) (10
) 2.4 � Discontinued Operations: Loss from
operations,
net of income tax
(1,786 ) (1,795 ) 9 NM Loss on disposal activities,
net of income tax
(2,073 ) (2,502 ) 429 � NM �
Net loss
$(4,278 ) $(4,706 ) 428 �
NM � �
Diluted net loss per share: Continuing
Operations (0.02 ) (0.02 ) 0 0 Discontinued Operations:
Loss from operations, net of
income tax
(0.09 ) (0.09 )
Loss on disposal activities, net
of income tax
(0.10 ) (0.13 ) � � Net loss per share $(0.21 ) $(0.24 ) $0.03 �
(12.5 ) Diluted shares outstanding 20,354 � 19,597 � 757 � 3.9 � %
�
NM � Not Meaningful
Lithia Motors, Inc.
� � �
(Continuing Operations)
Unaudited
Three Months Ended
December 31,
Increase
%
Increase
2008 �
2007
(Decrease) (Decrease)
Unit Sales:
� New Vehicle 6,797 11,254 (4,457) (39.6) % Used - Retail Vehicle
6,119 6,515 (396) (6.1) Used - Wholesale 2,941 4,362 (1,421) (32.6)
Total Units Sold 15,857 22,131 (6,274) (28.3) �
Average Selling Price:
New Vehicle $ 30,209 $ 29,796 $ 413 1.4 % Used - Retail Vehicle
15,675 17,455 (1,780) (10.2) Used - Wholesale 5,105 6,575 (1,470)
(22.4) �
Gross Margin/Profit Data
New Vehicle Retail 8.4 % 7.6 % 80 bps Used Vehicle Retail 11.5 %
12.5 % -100 bps Used Vehicle Wholesale (4.5) % 1.0 % -550 bps
Service, Body & Parts 47.9 % 46.7 % 120 bps Finance &
Insurance 100.0 % 100.0 % 0 Gross Profit Margin 19.1 % 16.7 % 240
bps New Retail Gross Profit/Unit $2,543 $2,251 $292 Used Retail
Gross Profit/Unit 1,808 2,174 (366) Used Wholesale Gross
Profit/Unit (228) 65 (293) Finance & Insurance/Retail Unit
1,086 1,128 (42) �
Revenue Mix:
New Vehicles 50.5 % 58.3 % Used Retail Vehicles 23.6 % 19.8 % Used
Wholesale Vehicles 3.6 % 5.0 % Finance and Insurance, Net 3.5 % 3.5
% Service and Parts 18.4 % 13.2 % Fleet and other 0.4 % 0.2 % �
New Vehicle Unit Sales Brand
Mix:
Chrysler Brands 32.3 % 32.8 % General Motors & Saturn 15.8 %
17.8 % Toyota 17.1 % 15.9 % Honda 8.5 % 8.8 % Ford 4.8 % 4.7 % BMW
5.3 % 5.2 % Hyundai 3.4 % 3.2 % Nissan 2.8 % 4.2 % Volkswagen, Audi
4.0 % 3.1 % Subaru 3.9 % 2.3 % Other 2.1 % 2.0 %
LITHIA MOTORS, INC.
(Selected Same Store
Data)
Unaudited Three Months Ended
December 31,
2008 �
2007
Same Store Total Sales Geographic
Mix:
Texas 26.3 %
27.1
%
Oregon 13.9 %
15.4
%
California 12.7 %
12.8
%
Alaska 9.6 %
8.3
%
Washington 9.1 %
9.4
%
Iowa 7.4 %
6.8
%
Montana 7.0 %
7.1
%
Idaho 6.6 %
5.9
%
Nevada 4.6 %
4.4
%
Colorado 1.7 %
1.6
%
Nebraska 1.1 %
1.2
%
� �
Same Store Revenue:
New Vehicle Retail Sales (39.2 ) %
(4.8
)%
Used Vehicle Retail Sales (17.4 ) %
(6.1
)%
Used Wholesale Sales (50.2 ) %
(7.0
)%
Total Vehicle Sales (excluding Fleet) (34.7 ) %
(5.2
)%
Finance & Insurance Sales (32.0 ) %
(10.2
)%
Service, Body and Parts Sales (1.7 ) %
3.7
%
Total Sales (excluding Fleet) (30.3 ) %
(4.3
)%
Total Gross Profit (excluding Fleet) (19.9 ) %
(9.1
)%
LITHIA MOTORS, INC.
(In Thousands except per share
data)
Unaudited Twelve Months Ended � �
%
December 31, Increase Increase 2008 � �
2007 �
(Decrease) (Decrease) New vehicle sales
$1,172,807 $1,528,246 $(355,439 ) (23.3 ) % Used vehicle sales
574,373 686,728 (112,355 ) (16.4 ) Finance and insurance 78,970
99,727 (20,757 ) (20.8 ) Service, body and parts 306,743 304,302
2,441 0.8 Fleet and other revenues 4,911 � 5,279 � (368 ) (7.0 )
Total revenues 2,137,804 2,624,282
(486,478 ) (18.5 ) Cost of sales
1,767,760 � 2,177,493 � (409,733 ) (18.8 ) Gross Profit 370,044
446,789 (76,745 ) (17.2 ) Asset impairment charges 295,905 -
295,905 NM SG&A expense 316,183 349,283 (33,100 ) (9.5 )
Depreciation and amortization 17,732 � 16,862 � 870 � 5.2 �
Income (loss) from operations (259,776 )
80,644 (340,420 ) NM � Floorplan
interest expense (20,398 ) (24,373 ) (3,975 ) (16.3 ) Other
interest expense (17,350 ) (15,985 ) 1,365 8.5 Other income, net
6,673 � 641 � 6,032 � 941.0 �
Income (loss) from continuing
operations before income taxes (290,851 )
40,927 (331,778 ) NM � Income tax
expense (benefit) (91,703 ) 16,485 (108,188 ) NM Income Tax Rate
31.5 % 40.3 % � �
Income (loss) from continuing operations
(199,148 ) 24,442 (223,590 )
NM � Discontinued Operations:
Gain (loss) from operations, net
of income tax
(9,898 ) 1,826 (11,724 ) NM
Loss on disposal activities, net
of income tax
(43,540 ) (4,719 ) (38,821 ) 822.7 �
Net income (loss)
$(252,586 ) $21,549 �
$(274,135
) NM � �
Diluted net income (loss) per share:
Continuing Operations $ (9.95 ) $ 1.19 $(11.14 ) NM Discontinued
Operations:
Gain (loss) from operations, net
of income tax
(0.49 ) 0.08
Loss on disposal activities, net
of income tax
(2.18 ) (0.21 ) � � Net income (loss) per share $(12.62 ) $1.06 �
$(13.68 ) NM � Diluted shares outstanding
20,017
(A)
22,082 � (2,065 ) (9.4 ) % �
(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.
� �
(Continuing Operations)
Unaudited
Twelve Months Ended
December 31,
Increase
%
Increase
2008 �
2007
(Decrease) (Decrease)
Unit Sales:
New Vehicle 40,206 52,512 (12,306 ) (23.4 ) % Used - Retail Vehicle
28,853 32,700 (3,847 ) (11.8 ) Used - Wholesale 16,631 20,264
(3,633 ) (17.9 ) Total Units Sold 85,690 105,476 (19,786 ) (18.8 )
�
Average Selling Price:
New Vehicle $29,170 $29,103 $67 0.2 % Used - Retail Vehicle $16,522
$16,896 $(374 ) (2.2 ) Used - Wholesale $5,872 $6,625 $(753 ) (11.4
) �
Gross Margin/Profit Data
New Vehicle Retail 7.8 % 7.8 % 0 Used Vehicle Retail 11.3 % 14.1 %
-280 bps Used Vehicle Wholesale (3.1 ) % 2.3 % -540 bps Service,
Body & Parts 47.9 % 47.7 % 20 bps Finance & Insurance 100.0
% 100.0 % 0 Gross Profit Margin 17.3 % 17.0 % 30 bps New Retail
Gross Profit/Unit $2,283 $2,280 $ 3 Used Retail Gross Profit/Unit
1,871 2,376 (505 ) Used Wholesale Gross Profit/Unit (184 ) 156 (340
) Finance & Insurance/Retail Unit 1,144 1,170 (26 ) �
Revenue Mix:
New Vehicles 54.9 % 58.2 % Used Retail Vehicles 22.3 % 21.1 % Used
Wholesale Vehicles 4.6 % 5.1 % Finance and Insurance, Net 3.7 % 3.8
% Service and Parts 14.3 % 11.6 % Fleet and other 0.2 % 0.2 % �
New Vehicle Unit Sales Brand
Mix:
Chrysler Brands 30.5 % 34.4 % General Motors & Saturn 18.6 %
17.2 % Toyota 17.0 % 15.8 % Honda 9.2 % 8.1 % Ford 4.3 % 5.4 % BMW
4.7 % 4.6 % Hyundai 3.3 % 3.4 % Nissan 3.9 % 4.3 % Volkswagen, Audi
3.3 % 2.6 % Subaru 2.7 % 2.0 % Other 2.5 % 2.2 %
LITHIA MOTORS, INC.
(Selected Same Store
Data)
Unaudited Twelve Months Ended December 31,
2008 �
2007
Same Store Total Sales Geographic
Mix:
Texas 28.2 % 25.6 % Oregon 14.3 % 16.3 % California 12.7 % 13.9 %
Alaska 9.0 % 8.0 % Washington 8.7 % 8.8 % Iowa 7.2 % 6.2 % Montana
6.7 % 7.1 % Idaho 5.8 % 6.2 % Nevada 4.5 % 4.8 % Colorado 1.7 % 1.7
% Nebraska 1.2 % 1.4 % �
Same Store Revenue:
New Vehicle Retail Sales (24.1 ) % (3.6 ) % Used Vehicle Retail
Sales (15.8 ) % (7.1 ) % Used Wholesale Sales (29.3 ) % 3.6 % Total
Vehicle Sales (excluding Fleet) (22.3 ) % (4.1 ) % Finance &
Insurance Sales (20.8 ) % (3.1 ) % Service, Body and Parts Sales
(0.3 ) % 4.0 % Total Sales (excluding Fleet) (19.7 ) % (3.2 ) %
Total Gross Profit (excluding Fleet) (18.6 ) % (4.4 ) %
LITHIA MOTORS, INC.
�
Balance Sheet Highlights (Dollars in Thousands)
Unaudited December 31, 2008 December 31, 2007
Cash & Cash Equivalents $10,874 $21,665 Trade Receivables*
69,615 109,387 Inventory 422,812 601,759 Assets held for sale
161,423 23,807 Other Current Assets 31,828 21,920
Total Current
Assets 696,552 778,538 � Real Estate, net 284,088
363,391 Equipment & Other, net 62,188 98,355 Goodwill, net -
311,527 Other Assets 90,631 74,924
Total Assets
$1,133,459 $1,626,735 � Flooring Notes Payable
$337,700 $451,590 Liabilities held for sale 108,172 17,857 Current
maturities of senior subordinated convertible notes 42,500 - Other
Current Liabilities 108,656 115,644
Total Current
Liabilities 597,028 585,091 � Real Estate Debt
163,708 179,160 Other Long-Term Debt 101,476 276,335 Other
Liabilities 22,904 77,937
Total Liabilities $885,116
$1,118,523 � Shareholders' Equity 248,343 508,212 � �
Total Liabilities & Shareholders' Equity
$1,133,459 $1,626,735 � � � *Note: Includes
contracts-in-transit of $27,799 and $48,474 for 2008 and 2007 �
Other Balance Sheet Data (Dollars in Thousands) � Current
Ratio 1.2x 1.3x LT Debt/Total Cap.(Excludes Real Estate) 29% 35%
Working Capital $99,524 $193,447 Book Value per Basic Share 12.41
26.02
The following table reconciles reported GAAP pretax income
(loss) per the income statement to non-GAAP pretax income
(loss): Three Months Ended December 31, �
Twelve
months ended December 31, 2008 �
2007 2008
�
2007
Income (loss) from continuing
operations before income taxes - as reported
(1,470 ) (451 ) (290,851 ) 40,927 Add back: Goodwill and other
asset impairment - - 301,000 - Reduce by: Gain on convertible debt
repurchases (3,605 ) - � (5,248 ) - �
Pretax income (loss) from
continuing operations - non-GAAP
(5,075 ) (451 ) 4,901 � 40,927 � �
Income (loss) from discontinued
operations before income taxes - as reported
(5,221 ) (5,632 ) (85,435 ) (3,295 )
Add back: Goodwill and other asset
impairment
2,934 � 2,230 � 70,063 � 5,923 �
Pretax loss from discontinued
operations - non-GAAP
(2,287 ) (3,402 ) (15,372 ) 2,628 � � Total Pretax income (loss) -
as reported (6,691 ) (6,083 ) (376,286 ) 37,632 Add back: Goodwill
and other asset impairment 2,934 2,230 371,063 5,923 Reduce by:
Gain on convertible debt repurchases (3,605 ) - � (5,248 ) - �
Total Pretax income (loss) - non-GAAP (7,362 ) (3,853 ) (10,471 )
43,555 � �
The following table reconciles reported GAAP income
(loss) per the income statement to non-GAAP income (loss):
Three Months Ended December 31, Twelve months ended
December 31, 2008 2007 2008 2007
Income (loss) from continuing operations - as reported (419 ) (409
) (199,148 ) 24,442 Add back: Goodwill and other asset impairment -
- 204,752 - Reduce by: Gain on convertible debt repurchases (1,529
) - � (2,568 ) - � Income (loss) from continuing operations -
non-GAAP (1,948 ) (409 ) 3,036 � 24,442 � � Income (loss) from
discontinued operations - as reported (3,859 ) (4,297 ) (53,438 )
(2,893 ) Add back: Goodwill and other asset impairment 784 � 2,502
� 43,540 � 4,719 � Income (loss) from discontinued operations -
non-GAAP (3,075 ) (1,795 ) (9,898 ) 1,826 � � Net income (loss) -
as reported (4,278 ) (4,706 ) (252,586 ) 21,549 Add back: Goodwill
and other asset impairment 784 2,502 248,292 4,719 Reduce by: Gain
on convertible debt repurchases (1,529 ) - � (2,568 ) - � Net
income (loss) - non-GAAP (5,023 ) (2,204 ) (6,862 ) 26,268 � � � �
The following table reconciles reported GAAP diluted earnings
(loss) per share ("EPS") to non-GAAP diluted earnings (loss) per
share: Three Months Ended December 31, Twelve months
ended December 31, 2008 2007 2008
2007
Diluted net income per share from
Continuing Operations - as reported
(0.02 ) (0.02 ) (9.95 ) 1.19 Add back: Goodwill and other asset
impairment - - 10.23 - Reduce by: Gain on convertible debt
repurchases (0.08 ) - � (0.13 ) - �
Diluted net income per share from
Continuing Operations - non-GAAP
(0.10 ) (0.02 ) 0.15 � 1.19 � �
Diluted net income per share from
Discontinued Operations - as reported
(0.19 ) (0.22 ) (2.67 ) (0.13 ) Add back: Goodwill and other asset
impairment 0.04 � 0.13 � 2.18 � 0.21 �
Diluted net income per share from
Discontinued Operations - non-GAAP
(0.15 ) (0.09 ) (0.49 ) 0.08 � � Diluted net income per share - as
reported (0.21 ) (0.24 ) (12.62 ) 1.06 Add back: Goodwill and other
asset impairment 0.04 0.13 12.41 0.21 Reduce by: Gain on
convertible debt repurchases (0.08 ) - � (0.13 ) - � Diluted net
income per share - non-GAAP (0.25 ) (0.11 ) (0.34 ) 1.27 �
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