Lithia Motors, Inc. (NYSE:LAD), today reported 2009 third
quarter income from continuing operations, net of income taxes, of
$7.0 million, or $0.32 cents per diluted share, compared to
year-ago income from continuing operations of $2.5 million, or
$0.12 per diluted share. After adjusting for certain items
disclosed in the attached financial tables, income from continuing
operations for the 2009 third quarter was $0.33 cents per share,
compared to $0.07 per share in the prior year.
Third quarter 2009 revenue from continuing operations totaled
$458 million, compared to $507 million in the year-ago period,
driven primarily by lower new vehicle sales. Same store new vehicle
sales declined 14.3% while used vehicle retail sales increased 3.9%
when compared to the prior year. Service, body and parts same store
sales declined 2.8% compared to the prior year.
Other Third Quarter Operating Highlights:
- Gross profit margin improved 190
basis points over the prior year to 18.7%. New vehicle margin
improved 110 basis points to 8.8%, used vehicle retail margin
improved 490 basis points to 15.3%, and used vehicle wholesale
margin improved 510 basis points to 0.4%.
- SG&A expense as a percentage
of gross profit decreased by 730 basis points over the prior year
to 75.1%. This was also a reduction of 360 basis points compared to
the second quarter of 2009. This improvement was driven in part by
the elimination of approximately $65 million in annualized fixed
costs.
- Lithia improved same store used
vehicle retail sales 3.9% while maintaining used vehicle inventory
of $67 million, a 15% reduction from September 30, 2008.
Sid DeBoer, Lithia’s Chairman and CEO, commented, “We continue
to produce solid gross margins and strong used vehicle retail
sales. Our third quarter results also benefited from the CARS
program. This incremental boost in revenue demonstrates our
earnings potential as new vehicle sales levels recover and we
leverage our lower cost structure. We continue to right-size to
match industry sales volumes and our internal performance
metrics.”
At the end of the third quarter and before the equity offering
completed in October, Lithia had approximately $34 million in cash
and credit availability and remained well within the limits of the
financial covenants in its debt agreements.
Jeff DeBoer, Senior Vice President and CFO, said, “Adjusted cash
flows from operations were $80.9 million for the year-to-date
period. In October 2009, we completed a follow-on stock offering
raising $43.5 million, net of underwriting commissions, and have
executed an amendment to our revolving line of credit to provide
$50 million in borrowing capacity. These sources of cash allow us
to pursue acquisition opportunities and capitalize on current
market conditions.”
For the nine-month period ending September 30, 2009, total sales
declined 21% to $1.2 billion, as compared to $1.6 billion in the
same period last year. Same store new vehicle sales decreased
30.3%, retail used vehicle sales decreased 1.6% and service, body
and parts sales decreased 4.6%. For the first nine months, income
from continuing operations was $0.53 per share, compared to a loss
of $9.90 per share in 2008. After adjusting for certain items
disclosed in the attached financial tables, including the non-cash
impairment of goodwill, Lithia’s adjusted income from continuing
operations was $0.53 per share, as compared to $0.19 per share in
the prior year.
The third quarter conference call may be accessed at 2:00 p.m.
Pacific Time today by phone at 800-254-5933, Conference ID:
35111411. A playback of the conference call will be available after
5 p.m. Pacific Time October 29, 2009, through November 5, 2009, by
calling 800-642-1687, access code: 35111411.
About Lithia
Lithia Motors, Inc., is a Fortune 700 Company, selling 27 brands
of new and all brands of used vehicles at 87 stores, which are
located in 12 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.
Non-GAAP Financial
Measures
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 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 % September 30,
Increase Increase 2009 2008
(Decrease) (Decrease) New vehicle sales $241,577
$282,669 $(41,092) (14.5) % Used vehicle sales 136,164 137,230
(1,066) (0.8) Finance and insurance 14,685 19,400 (4,715) (24.3)
Service, body and parts 64,960 66,728 (1,768) (2.6) Fleet and other
revenues 814 846 (32) (3.8)
Total revenues 458,200
506,873 (48,673) (9.6)
Cost of sales 372,367 421,834 (49,467) (11.7) Gross profit
85,833 85,039 794 0.9 SG&A expense 64,492 70,079 (5,587) (8.0)
Depreciation and amortization 3,923 4,073 (150) (3.7)
Income
from operations 17,418 10,887 6,531
60.0 Floorplan interest expense (2,886) (4,300)
1,414
32.9
Other interest expense (2,943) (4,070)
1,127
27.7
Other income, net 24 1,881 (1,857) (98.7)
Income from continuing
operations before income taxes 11,613 4,398
7,215 164.1 Income tax expense 4,631 1,911
2,720 142.3 Income tax rate 39.9% 43.5%
Income
from continuing operations 6,982 2,487
4,495 180.7 % Loss from discontinued
operations,
net of income tax
(1,269) (4,850) 3,581 73.8
%
Net income (loss) $5,713 $(2,363)
$8,076
NM
Diluted net income (loss) per share: Continuing
operations 0.32 0.12 0.20 166.7 % Discontinued operations (0.06)
(0.24) 0.18 75.0 Net income (loss) per share $0.26 $(0.12) $0.38
NM
Diluted shares outstanding 21,573 20,371 1,202 5.9 %
NM – not meaningful
LITHIA MOTORS, INC.
(Continuing operations)
Unaudited
Three Months Ended
September 30,
Increase
%
Increase
2009 2008 (Decrease) (Decrease)
Unit
sales:
New vehicle 8,364 9,450 (1,086) (11.5) % Used - retail vehicle
7,156 7,059 97 1.4 Used - wholesale 3,817 3,884 (67) (1.7) Total
units sold 19,337 20,393 (1,056) (5.2)
Average
selling price: New vehicle $ 28,883 $ 29,912 $ (1,029)
(3.4) % Used - retail vehicle 16,445 16,166 279 1.7 Used -
wholesale 4,843 5,951 (1,108) (18.6)
Gross
margin/profit data New vehicle retail 8.8 % 7.7 % 110
bps Used vehicle retail 15.3 % 10.4 % 490 bps Used vehicle
wholesale 0.4 % (4.7) % 510 bps Service, body & parts 48.4 %
49.2 % (80) bps Finance & insurance 100.0 % 100.0 % - Gross
profit margin 18.7 % 16.8 % 190 bps New retail gross profit/unit
$2,550 $2,291 $259 Used retail gross profit/unit 2,519 1,678 841
Used wholesale gross profit/unit 18 (279) 297 Finance &
insurance/retail unit 946 1,175 (229)
Revenue
mix: New vehicles 52.7 % 55.8 % Used retail vehicles
25.7 % 22.5 % Used wholesale vehicles 4.0 % 4.6 % Finance and
insurance, net 3.2 % 3.8 % Service and parts 14.2 % 13.2 % Fleet
and other 0.2 % 0.1 % LITHIA MOTORS, INC.
(Continuing operations)
Unaudited
Three Months Ended
September 30,
2009 2008 New vehicle unit sales
brand mix: Chrysler Brands 27.3 % 30.3 % General Motors
& Saturn 16.1 % 20.5 % Toyota 15.9 % 15.6 % Honda 9.3 % 8.7 %
Ford 4.4 % 3.4 % BMW 4.8 % 5.9 % Hyundai 6.2 % 3.7 % Nissan 4.9 %
3.9 % Volkswagen, Audi 3.7 % 3.1 % Subaru 5.2 % 3.2 % Mercedes 0.6
% 0.6 % Other 1.6 % 1.1 %
(Selected Same Store
Data)
Unaudited
Three Months Ended September 30,
2009
vs.
2008
2008
vs.
2007
Same store revenue: New vehicle retail sales
(14.3) % (24.9) % Chrysler Brands (21.3) % (37.2) % General Motors
& Saturn (29.0) % (5.3) % Toyota (14.8) % (17.8) % All other
brands 1.8 % (23.8) % Used vehicle retail sales 3.9 % (14.5) % Used
wholesale sales (19.1) % (37.3) % Total vehicle sales (excluding
fleet) (9.6) % (23.2) % Finance & insurance sales (23.3) %
(21.5) % Service, body and parts sales (2.8) % (0.4) % Total sales
(excluding fleet) (9.2) % (20.7) % Total gross profit (excluding
fleet) 1.4 % (20.4) %
LITHIA MOTORS, INC.
(In thousands except per share
data)
Unaudited
Nine Months Ended % September 30,
Increase Increase 2009 2008
(Decrease) (Decrease) New vehicle sales $612,138
$881,116 $(268,978) (30.5) % Used vehicle sales 382,242 413,163
(30,921) (7.5) Finance and insurance 41,255 59,735 (18,480) (30.9)
Service, body and parts 190,051 199,349 (9,298) (4.7) Fleet and
other revenues 1,947 3,188 (1,241) (38.9)
Total revenues
1,227,633 1,556,551 (328,918) (21.1)
Cost of sales 992,708 1,293,755
(301,047) (23.3) Gross profit 234,925 262,796 (27,871) (10.6) Asset
impairment charges - 294,075 (294,075) (100.0) SG&A expense
188,286 222,381 (34,095) (15.3) Depreciation and amortization
11,988 12,632 (644) (5.1)
Income (loss) from operations
34,651 (266,292) 300,943 113.0
Floorplan interest expense (8,008) (13,758) 5,750 41.8 Other
interest expense (9,545) (12,490) 2,945 23.6 Other income, net
1,447 3,004 (1,557) (51.8)
Income (loss) from continuing
operations before income taxes 18,545 (289,536)
308,081 NM Income tax expense (benefit) 7,429
(90,720) 98,149 NM Income tax (benefit) rate 40.1% (31.3)%
Income (loss) from continuing operations
11,116 (198,816) 209,932 NM
Loss from discontinued operations,
net of income tax
(411) (49,492) 49,081 NM
Net income (loss)
$10,705 $(248,308)
$259,013
NM
Diluted net income (loss) per share: Continuing
operations 0.53 (9.90) 10.43 NM
Discontinued operations (0.02) (2.46) 2.44 NM Net income (loss) per
share $0.51 $(12.36) $12.87 NM Diluted shares outstanding 21,595
20,086 1,509 7.5 %
NM – not meaningful
LITHIA MOTORS, INC.
(Continuing Operations)
Unaudited
Nine Months Ended
September 30,
Increase
%
Increase
2009 2008 (Decrease) (Decrease)
Unit sales: New vehicle 20,746 30,167 (9,421)
(31.2) % Used - retail vehicle 20,568 19,970 598 3.0 Used -
wholesale 9,557 12,153 (2,596) (21.4) Total units sold 50,871
62,290 (11,419) (18.3)
Average selling
price: New vehicle $ 29,506 $ 29,208 $ 298 1.0 % Used -
retail vehicle 16,146 16,951 (805) (4.7) Used - wholesale 5,249
6,143 (894) (14.6)
Gross margin/profit
data New vehicle retail 8.6 % 7.8 % 80 bps Used vehicle
retail 14.3 % 11.5 % 280 bps Used vehicle wholesale 0.9 % (2.8) %
370 bps Service, body & parts 48.6 % 48.5 % 10 bps Finance
& insurance 100.0 % 100.0 % - Gross profit margin 19.1 % 16.9 %
220 bps New retail gross profit/unit $2,523 $2,266 $257 Used retail
gross profit/unit 2,310 1,949 361 Used wholesale gross profit/unit
48 (173) 221 Finance & insurance/retail unit 999 1,191 (192)
Revenue mix: New vehicles 49.9 % 56.6 %
Used retail vehicles 27.0 % 21.7 % Used wholesale vehicles 4.1 %
4.8 % Finance and insurance, net 3.4 % 3.8 % Service and parts 15.5
% 12.8 % Fleet and other 0.1 % 0.3 % LITHIA MOTORS,
INC.
(Continuing operations)
Unaudited
Nine Months Ended
September 30,
2009 2008 New vehicle
unit sales brand mix: Chrysler Brands 29.5 % 31.1 %
General Motors & Saturn 16.4 % 18.8 % Toyota 15.2 % 16.0 %
Honda 9.4 % 9.1 % Ford 4.6 % 3.9 % BMW 5.2 % 5.1 % Hyundai 5.0 %
3.7 % Nissan 4.3 % 4.6 % Volkswagen, Audi 3.7 % 2.9 % Subaru 4.6 %
2.8 % Mercedes 0.7 % 0.6 % Other 1.4 % 1.4 %
(Selected same store
data)
Unaudited
Nine Months Ended September 30,
2009
vs.
2008
2008
vs.
2007
Same store revenue: New vehicle retail sales
(30.3 ) %
(19.9
) % Chrysler Brands (34.4 ) %
(29.5
) % General Motors & Saturn (36.4 ) %
(6.8
) % Toyota (35.5 ) %
(9.3
) % All other brands (20.6 ) %
(20.3
) % Used vehicle retail sales (1.6 ) %
(15.5
) % Used wholesale sales (33.2 ) %
(23.0
) % Total vehicle sales (excluding fleet) (23.0 ) %
(19.0
) % Finance & insurance sales (30.2 ) %
(18.1
) % Service, body and parts sales (4.6 ) %
0.7
% Total sales (excluding fleet) (20.8 ) %
(16.9
) % Total gross profit (excluding fleet) (10.0 ) %
(18.2
) %
LITHIA MOTORS, INC.
Balance sheet highlights (dollars in thousands)
Unaudited September 30, 2009 December 31, 2008
Cash & cash equivalents $4,382 $10,874 Trade receivables*
49,687 69,615 Inventory 255,036 422,812 Assets held for sale
124,845 161,423 Other current assets 8,948 31,828
Total current
assets 442,898 696,552 Real estate, net
274,435 284,088 Equipment & other, net 48,836 62,188 Other
assets 91,052 90,631
Total assets $857,221
$1,133,459 Flooring notes payable $179,420 $337,700
Liabilities related to assets held for sale 74,723 108,172 Current
maturities of senior subordinated convertible notes -
42,500
Other current liabilities 95,821 108,656
Total current
liabilities 349,964 597,028 Real estate
debt 181,718 163,708 Other long-term debt 32,196 101,476 Other
liabilities 29,588 22,904
Total liabilities $593,466
$885,116 Shareholders' equity 263,755 248,343
Total liabilities & shareholders' equity
$857,221 $1,133,459 *Note: Includes
contracts-in-transit of $18,899 and $27,799 for 2009 and 2008,
respectively
Other balance sheet data Lt
debt/total cap (excludes real estate) 11% 29% Book value per basic
share $12.56 $12.30
Debt covenant ratios
Requirement As of September 30, 2009 Minimum
net worth Not less than $183 million $263.8 million Fixed charge
coverage ratio Not less than 1.00 to 1 1.30 to 1 Cash flow leverage
ratio Not more than 3.25 to 1 0.94 to 1 Minimum current ratio Not
less than 1.05 to 1 1.27 to 1
The following table reconciles reported GAAP income (loss) per
the income statement to non-GAAP income (loss):
Unaudited Three Months Ended September 30,
Net Income / (Loss)
Diluted earnings per
share
Continuing Operations 2009
2008 2009 2008 As reported $6,982
$2,487 $0.32 $0.12 Asset impairments 227 75 0.01 - Gain on
extinguishment of debt - (1,111) - (0.05) Adjusted $7,209 $1,451
$0.33 $0.07
Discontinued Operations As
reported $(1,269) $(4,850) $(0.06) $(0.24) Impairments and disposal
loss 1,668 3,103 0.08 0.15 Adjusted $399 $(1,747) 0.02 $(0.09)
Consolidated Operations As reported
$5,713 $(2,363) $0.26 $(0.12) Adjusted $7,608 $(296) $0.35 $(0.02)
Nine Months Ended September 30, Net Income /
(Loss)
Diluted earnings per
share
Continuing Operations 2009
2008 2009 2008 As reported
$11,116 $(198,816) $0.53 $(9.90) Asset impairments 572 203,920 0.03
10.15 Gain on extinguishment of debt (700) (1,111) (0.03) (0.06)
Adjusted $10,988 $3,993 $0.53 $0.19
Discontinued
Operations As reported $(411) $(49,492) $(0.02) $(2.46)
Impairments and disposal (gain) loss (715) 42,658 (0.03) 2.12
Adjusted $(1,126) $(6,834) $(0.05) $(0.34)
Consolidated Operations As reported $10,705
$(248,308) $0.51 $(12.36) Adjusted $9,862 $(2,841) $0.48 $(0.15)
The following table reconciles GAAP cash flows from operations
per the statement of cash flows to non-GAAP cash flows from
operations:
Consolidated Statement of Cash
Flows
Nine Months Ended
September 30, 2009
As reported Cash flows from Operations $73,483 Flooring notes
payable: non-trade 7,384 Adjusted $80,867
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