Auto Dealership Group Lithia Motors Reports an 87% Increase in Net Income
MEDFORD, Ore., April 24 Lithia Motors, Inc. today announced net earnings of $6.4 million, or $0.42 per share on 15.4 million diluted shares outstanding for the first quarter 2002 as compared to $2.9 million or $0.21 per share on 13.8 million diluted shares earned in the first quarter of 2001. That represents a 124% increase in net income and a 100% increase in earnings per share on 12% more shares outstanding.
The results for 2002 reflect the new accounting standards regarding goodwill which became effective for Lithia on January 1, 2002. Net income before goodwill amortization for the quarter ended March 31, 2001 was $3.4 million or $0.25 per share. On a comparable accounting basis, net income increased 87% and earnings per share increased 68% for the quarter.
Cash flow per share (net income plus depreciation and amortization) was $0.52 per share in the first quarter of 2002 a 41% increase as compared to $0.37 in the same period last year. Net cash provided by operating activities in the first three months was $14.7 million, 69% higher than $8.7 million in the same period last year.
Lithia Motors also reported that total sales increased 25% to $524.4 million in the first quarter of 2002 from $420.2 million in the first quarter of 2001. New vehicle sales increased 24%, used vehicle sales increased 33%, parts/service sales increased 15%, and finance/insurance sales increased 30%.
Lithia retailed 10,364 used units and 10,416 new units, demonstrating a used/new ratio of 1:1. Finance and Insurance sales per retail unit increased 10% to $954 per unit compared to $867 for the first quarter of last year.
Chairman and Chief Executive Officer Sidney B. DeBoer stated, ``We are pleased to report record sales and profits again this quarter. Earnings were $0.42 per share, exceeding by 5 cents the First Call consensus estimate of $0.37 per share. We saw strength again in both our domestic and import brands this quarter. Same-store sales were a positive 1.4% which far exceeded our guidance for the period of a -3 to -6% decline. In our stores, new vehicle sales rebounded in the first quarter and most notably in March. As a result, same-store new vehicle sales were up 3.3% year-over-year while industry new vehicle sales in the period were down more than 4%.''
``We have now reported three consecutive quarters of record earnings and revenue growth. We continue to be successful in executing our acquisition plans and strategic internal initiatives. The retail used vehicle, parts/service and finance/insurance businesses combined represented over 74% of total gross profits for Lithia this quarter. All these business lines, as well as new vehicles, continued to demonstrate strength with double digit growth in both sales and gross profits.''
``In late February of this year, Lithia successfully completed a share offering of 4.5 million new shares at a price of $18.25 per share. Net proceeds from the offering were used to pay down approximately $77 million in debt in preparation for an accelerated acquisition pace in 2002 and 2003. Guidance for 2002 demonstrates growth in EPS that more than offsets the dilution from the newly issued shares,'' concluded Sidney B. DeBoer.
Jeff DeBoer, Senior Vice President and Chief Financial Officer, commented, ``While total sales increased 25%, inventories increased only 6% from the quarter ended March 31, 2001 to the end of the first quarter of this year. New and used vehicle inventories are at their lowest levels in the past five years. As a result of the lower inventory levels, lower rates on our variable rate debt, and aggressive refinancing of our fixed rate mortgages, we realized substantial interest savings this quarter with flooring interest expense down 50% and other interest expense down 30% vs. the prior year period.''
``In early April, Lithia acquired Village Dodge-Hyundai in Midland, Texas with approximately $35 million in annualized revenues. So far this year, we have acquired 6 stores with $203 million in anticipated 2002 annualized revenues.''
``We are providing guidance for the second quarter and full year 2002. The second quarter EPS guidance includes over 18% more shares outstanding than in the first quarter 2002 and over 32% more shares outstanding than in the second quarter of 2001. Full year 2002 guidance rises to $1.79 - $1.87.''
FORWARD ESTIMATES Full-Year
2Q 2002 2002
Revenue $550 - 570M $2.2 - 2.4B
Diluted EPS $0.40 - 0.42 $1.79 - 1.87
Gross Margin 15.9 - 16.3% 16.1 - 16.5%
SG&A 12.7 - 13.1% 12.6 - 13.0%
Operating Margin 2.8 - 3.0% 3.1 - 3.3%
Interest Expense 0.8 - 1.0% 0.8 - 1.0%
Same Store Sales -2 to -5% -2 to -6%
Tax Rate 38 - 39% 38 - 39%
Shares Outstanding 18.3-18.5M 17.6-17.8M
Expected annualized acquisition revenues for the remainder of 2002: $300 to $600 million.
The quarterly breakout for 2002 is estimated as follows for Diluted EPS: Q2: $0.40 - $0.42; Q3: $0.55 - $0.58; and Q4: $0.42 - $0.45.
Management makes the above estimates based upon information available to it at this time. The company, in making these estimates, assumes no burden to update these estimates during the quarter or year even if it appears actual results will differ materially from these estimates.
Lithia Motors will be providing more detailed information on the results for the first quarter 2002 in its conference call scheduled for 11 a.m. PDT today. The call can be accessed live by calling 973-628-9554. To listen to a live webcast or hear a replay, log-on to: 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 operates 127 franchises in California, Oregon, Washington, Nevada, Colorado, Idaho, South Dakota, Alaska and Texas and sells 25 brands of new vehicles at 66 stores 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 76,835 new and used retail vehicles and had $1.87 billion in total revenue in 2001.
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 company performance, sales, stated forward estimates and acquisition assumptions.
For additional information on Lithia Motors, contact: Jeff DeBoer, Senior VP and Chief Financial Officer 541-776-6868 (E-mail: invest@lithia.com) or Dan Retzlaff, Investor Relations at 541-776-6819 or log-on to: www.lithia.com -- go to About Lithia -- Investor Relations.
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Unaudited Three Months Ended
March 31,
2002 2001
New Vehicle Sales $266,839 $214,957
Used Vehicle Sales 182,298 136,939
Service & Parts Sales 52,038 45,145
Finance & Insurance 19,825 15,254
Fleet & Other Revenues 3,398 7,856
Total Revenue $524,398 $420,151
Cost of Sales 440,751 351,254
Gross Profit 83,647 68,897
SG&A Expense 67,736 55,038
Depreciation & Amortization 1,668 2,215
Income from Operations $14,243 $11,644
Flooring Interest Expense 2,337 4,655
Other Interest Expense 1,592 2,267
Other Income (Expense), net 95 (79)
Pre-Tax Profit $10,409 $4,643
Income Tax 4,018 1,788
Income Tax Rate 38.6% 38.5%
Net Profit $6,391 $2,855
Shares Outstanding 15,369 13,772
EPS $0.42 $0.21
Unit Sales:
New 10,416 8,732
Used - Retail 10,364 8,854
Used - Wholesale 6,106 4,325
Average Selling Price:
New $25,618 $24,617
Used - Retail 14,378 13,089
Used - Wholesale 5,452 4,867
Key Financial Data:
EBITDA $16,006 $13,780
Gross Profit Margin 16.0% 16.4%
SG&A as a % of Sales 12.9% 13.1%
Operating Margin 2.7% 2.8%
Pre-Tax Margin 2.0% 1.1%
Balance Sheet Highlights (Dollars in Thousands)
Unaudited
March 31, December 31,
2002 2001
Cash & Cash Equivalents $50,877 $59,855
Inventory 337,426 275,398
Other Current Assets 46,580 45,156
Total Current Assets 434,883 380,409
Real Estate - Net 91,827 84,739
Equipment & Leases - net 39,219 37,238
Goodwill, net 157,672 149,742
Other Assets 17,211 10,816
Total Assets $740,812 $662,944
Floorplan Notes Payable $266,942 $211,947
Other Current Liabilities 63,054 63,628
Total Current Liabilities 329,996 275,575
Used Vehicle Flooring 24,000 69,000
Real Estate Debt 44,284 40,693
Other Long-Term Debt 32,863 55,137
Other Liabilities 20,852 19,042
Total Liabilities $451,995 $459,447
Shareholders Equity 288,817 203,497
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $740,812 $662,944
Other Balance Sheet Data
(Dollars in Thousands)
Current Ratio 1.32x 1.38x
LT Debt/Total Cap. 21% 32%
[Excludes Used Vehicle Flooring]
Working Capital $104,887 $104,834