LAD Lithia Motors Inc

Lithia Motors Third Quarter EPS Grows 17%; Earns Record 69 Cents Per Share; Announces Quarterly Dividend of $0.07 Per Share MEDFORD, Ore., Oct. 28 /PRNewswire-FirstCall/ -- Lithia Motors, Inc. today announced that net earnings rose 20% to a record level of $12.9 million in the third quarter of 2003 compared to $10.7 million in the third quarter of 2002. Earnings per share rose 17% to $0.69 per share versus $0.59 in the same period last year. This exceeds First Call estimates of $0.59 by ten cents. In addition, Lithia announced today that it has declared a dividend of $0.07 per share for the third quarter of 2003. Shareholders of record as of November 7, 2003 will receive the dividend that will be payable November 21, 2003. Third Quarter Highlights (vs. Third Quarter 2002): Operating Profits: +19% Gross Margin: 16.1% Net Profits: +20% SG&A as a % of Sales: 12.0% Earnings per Share: +17% Operating Margin (EBIT): 3.7% Lithia Motors reported that total revenues for the third quarter increased 6% to a record level of $728.3 million in the third quarter of 2003 from $687.6 million in the third quarter of 2002. New vehicle sales increased 10%, used vehicle sales increased 1%, parts/service sales increased 13%, and finance/insurance sales increased 17%. Same store retail sales for the third quarter declined 0.6% as compared to a gain of 11.1% in the same period last year. Lithia retailed 16,056 new vehicles and 11,732 used vehicles in the quarter. Finance and Insurance income per new and used retail unit increased $98 to $932 from $834 in the same period last year. Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are pleased to report solid results this quarter. We have seen steady improvements in our gross margin and increasing leverage on our SG&A expenses, as compared to the first and second quarters of the year. This resulted in a 40 basis point year-over-year improvement in operating margin to 3.7% for the third quarter. This is near Lithia's historical averages for the third quarter. The margin improvements were most notable in the used vehicle business, in fact, used vehicle margins have improved throughout the year. The new vehicle side of the business continues to demonstrate strong results. Last year in the third quarter, new vehicle same store sales were up 23%. We were able to add an additional 1.5% of new vehicle same store sales growth, on top of the large increase last year. Year to date new vehicle same store sales are up 6.9% for Lithia. This exceeds the national new vehicle sales levels that were down approximately 1.6% for the same period. Our operational focus continues to allow us to exceed industry sales levels even though we operate in some of the country's most challenging economic environments." Jeffrey B. DeBoer, Senior Vice President and CFO, added, "The acquisition pipeline remains strong. Lithia's balance sheet is financially sound with a long-term debt to total capitalization ratio of 29%. Inventories in both new and used vehicles are at low levels. New vehicle inventories at the end of the quarter were approximately 19 days below our year-end 2002 days supply levels and at average levels for this time of the year. Used vehicle inventories are currently at the lowest levels seen by Lithia since it has been a public company. We are well positioned going into the winter selling season." "Finally, our annual guidance for 2003 has been increased to $1.82 - $1.85 per share. For the full-year 2004 we are providing guidance of $1.90 to $2.00, which includes a steady pace of acquisitions," concluded Jeffrey B. DeBoer. Lithia Motors will be providing more detailed information on the results for the third quarter 2003 in its conference call scheduled for 7 a.m. PT, 10 a.m. ET today. The live conference call can be accessed by calling 973-582-2700. To listen to a live webcast or hear a replay, log-on to: http://www.lithia.com/ -- go to Investor Relations -- and click on the Live Conference Call icon. Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 24 brands of new vehicles and operates 78 stores and 145 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 91,478 new and used vehicles and had $2.38 billion in total revenue in 2002. 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 margin improvements and SG&A expense leverage, revenue growth rates, market conditions and the inventory position going into the fourth quarter of the year. Additional Information For additional information on Lithia Motors, contact: Jeff DeBoer, Senior VP and Chief Financial Officer 541-776-6868 (E-mail: ) or Dan Retzlaff, Director Investor Relations at 541-776-6819 () or log-on to: http://www.lithia.com/ -- go to About Lithia -- Investor Relations LITHIA MOTORS, INC. (In Thousands except per share and unit data) Unaudited Three Months Ended September 30, Increase % Increase 2003 2002 (Decrease) (Decrease) New Vehicle Sales $429,434 $390,229 $39,205 10.0% Used Vehicle Sales 200,899 199,443 1,456 0.7 Service, Body & Parts Sales 71,155 62,964 8,191 13.0 Finance & Insurance 25,908 22,107 3,801 17.2 Fleet & Other Revenues 888 12,902 (12,014) (93.1) Total Revenues 728,284 687,645 40,639 5.9 Cost of Sales 611,280 583,039 28,241 4.8 Gross Profit 117,004 104,606 12,398 11.9 SG&A Expense 87,730 80,209 7,521 9.4 Depreciation/ Amortization 2,681 2,044 637 31.2 Income from Operations 26,593 22,353 4,240 19.0 Flooring Interest Expense (3,413) (2,943) (470) 16.0 Other Interest Expense (1,510) (1,581) 71 (4.5) Other Income (Expense), net (272) (252) (20) 7.9 Pre-Tax Profit 21,398 17,577 3,821 21.7 Income Tax 8,517 6,848 1,669 24.4 Income Tax Rate 39.8% 39.0% Net Profit $12,881 $10,729 $2,152 20.1% Shares Outstanding 18,708 18,269 439 2.4% Diluted EPS $0.69 $0.59 $0.10 16.9% Unit Sales: New 16,056 14,972 1,084 7.2% Used - Retail 11,732 11,538 194 1.7 Used - Wholesale 7,207 6,923 284 4.1 Total Units Sold 34,995 33,433 1,562 4.7 Finance/Insurance per retail unit $932 $834 98 11.8 Average Selling Price: New $26,746 $26,064 $682 2.6% Used - Retail 14,358 14,472 (114) (0.8) Used - Wholesale 4,503 4,690 (187) (4.0) Key Financial Data: Gross Profit Margin 16.1% 15.2% SG&A as a % of Sales 12.0% 11.7% Operating Margin 3.7% 3.3% Pre-Tax Margin 2.9% 2.6% Total Retail Same-Store Sales (0.6)% 11.1% LITHIA MOTORS, INC. (In Thousands except per share and unit data) Unaudited Nine Months Ended September 30, Increase % Increase 2003 2002 (Decrease) (Decrease) New Vehicle Sales $1,134,504 $958,651 $175,853 18.3% Used Vehicle Sales 574,205 568,415 5,790 1.0 Service, Body & Parts Sales 195,267 169,997 25,270 14.9 Finance & Insurance 70,486 60,186 10,300 17.1 Fleet & Other Revenues 4,833 39,112 (34,279) (87.6) Total Revenues 1,979,295 1,796,361 182,934 10.2 Cost of Sales 1,663,896 1,515,226 148,670 9.8 Gross Profit 315,399 281,135 34,264 12.2 SG&A Expense 249,342 221,485 27,857 12.6 Depreciation/ Amortization 7,406 5,607 1,799 32.1 Income from Operations 58,651 54,043 4,608 8.5 Flooring Interest Expense (10,954) (8,162) (2,792) 34.2 Other Interest Expense (4,506) (4,637) 131 (2.8) Other Income (Expense), net (724) (334) (390) 116.8 Pre-Tax Profit 42,467 40,910 1,557 3.8 Income Tax 16,902 15,855 1,047 6.6 Income Tax Rate 39.8% 38.8% Net Profit $25,565 $25,055 $510 2.0% Shares Outstanding 18,430 17,381 1,049 6.0% Diluted EPS $1.39 $1.44 $(0.05) (3.5)% Unit Sales: New 43,108 37,249 5,859 15.7% Used - Retail 32,811 32,482 329 1.0 Used - Wholesale 20,547 19,180 1,367 7.1 Total Units Sold 96,466 88,911 7,555 8.5 Finance/Insurance per retail unit $928 $863 $65 7.5 Average Selling Price: New $26,318 $25,736 $582 2.3% Used - Retail 14,503 14,521 (18) (0.1) Used - Wholesale 4,786 5,044 (258) (5.1) Key Financial Data: Gross Profit Margin 15.9% 15.7% SG&A as a % of Sales 12.6% 12.3% Operating Margin 3.0% 3.0% Pre-Tax Margin 2.1% 2.3% Total Retail Same-Store Sales 1.6% 4.3% LITHIA MOTORS, INC. Balance Sheet Highlights (Dollars in Thousands) Unaudited September 30, December 31, 2003 2002 Cash & Cash Equivalents $50,231 $15,932 Trade Receivables* 85,540 82,173 Inventory 448,019 445,908 Other Current Assets 12,984 11,765 Total Current Assets 596,774 555,778 Real Estate, net 141,358 118,696 Equipment & Leases, net 64,659 58,215 Goodwill, net 206,442 185,212 Other Assets 30,403 24,148 Total Assets $1,039,636 $942,049 Floorplan Notes Payable $376,337 $364,635 Other Current Liabilities 87,329 64,835 Total Current Liabilities 463,666 429,470 Used Vehicle Flooring 58,149 63,000 Real Estate Debt 79,706 73,798 Other Long-Term Debt 59,704 30,914 Other Liabilities 30,203 24,874 Total Liabilities $691,428 $622,056 Shareholders Equity 348,208 319,993 Total Liabilities & Shareholders' Equity $1,039,636 $942,049 *Note: Includes contracts-in-transit of $42,632 and $41,493 for 2003 and 2002. Other Balance Sheet Data (Dollars in Thousands) Current Ratio 1.3x 1.3x LT Debt/Total Cap. (Excludes Used - Vehicle Flooring) 29% 25% Working Capital $133,108 $126,308 http://www.newscom.com/cgi-bin/prnh/19990909/LITHIALOGO http://photoarchive.ap.org/ DATASOURCE: Lithia Motors, Inc. CONTACT: Jeff DeBoer, Senior VP and Chief Financial Officer, +1-541-776-6868, or , or Dan Retzlaff, Director Investor Relations, +1-541-776-6819, or Web site: http://www.lithia.com/

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