Car Dealer Group Lithia Motors Reports 56% Net Profit Increase on 26% Growth in Sales
MEDFORD, Ore., July 31 Lithia Motors, Inc. announced that net earnings rose 56% to $7.9 million in the second quarter of 2002 compared to $5.1 million in the second quarter of 2001. Earnings per share rose 16% to $0.43 per share versus $0.37 in the same period last year. This was on 18.5 million diluted shares outstanding, which is 34% more than in the second quarter of 2001.
Net earnings for the first six months of 2002 rose 81% to $14.3 million as compared to $7.9 million in the same period last year. Earnings per share increased 47% to $0.85 per share on 16.9 million diluted shares outstanding vs. $0.58 per share on 13.7 million diluted shares in the same period of 2001.
Results for the second quarter and first six months of last year included goodwill amortization, which has been eliminated this year pursuant to Statement of Financial Accounting Standards No. 142 "Goodwill and other Intangible Assets" (SFAS 142). Net income, reflecting this change, would have been $5.6 million and $9.1 million, respectively.
Lithia Motors also reported that total revenues increased 26% to $584.3 million in the second quarter of 2002 from $462.1 million in the second quarter of 2001. For the first six months of 2002, total revenues increased 26% to $1.11 billion from $882.2 million in the first six months of 2001. For the quarter, EBITDA increased 17% from $16.4 million to $19.2 million. For the first six months EBITDA increased 17% to $35.2 million vs. $30.2 million in the same period last year.
For the second quarter, new vehicle sales increased 25%, used vehicle sales increased 30%, parts/service sales increased 21%, and finance/insurance sales increased 25%. Lithia's retail used/new ratio for the quarter was 0.9:1. Finance and Insurance income per retail unit increased $50 to $995 per unit compared to $945 in the second quarter of last year.
For the first six months, new vehicle sales increased 25%, used vehicle sales increased 32%, parts/service sales increased 18%, and finance/insurance sales increased 27%. Lithia's used/new ratio for the first half of the year was 0.9:1. Finance and Insurance income increased $67 to $975 per unit.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "Both sales and earnings were above forecast levels this quarter with double digit growth over the same period last year. New vehicle same-store sales for Lithia were +3.1% for the quarter and +2.9% for the first six months of the year which compares favorably to industry new vehicle sales of -1.9% and -3.0% for the same periods. New vehicle same-store revenue growth was positive and basically the same for both domestic and import brands.
"For the quarter, our operating margin of 3.0% came in at the upper-end of our forecast range as Sales General and Administrative Expense (SG&A) was better than forecast, helping us to exceed the high end of past guidance for the quarter by one cent. SG&A as a percentage of revenues improved 10 basis points year-over-year and 30 basis points sequentially as we are gaining leverage on the infrastructure we have developed for improving operations in our newly acquired stores.
"With our year over year total sales growth of 26% and earnings per share growth of 47% for the first half of the year, we remain on track for double-digit sales and earnings growth in 2002," concluded Mr. DeBoer.
Jeffrey B. DeBoer, Senior Vice President and CFO added, "In late July, Lithia acquired Mercedes of Omaha in Omaha, Nebraska with approximately $22 million in 2001 annualized revenues. This is Lithia's first Mercedes store. Year to date we have acquired 10 stores with nearly $400 million in annualized revenues. Additionally, in May, the company opened a newly awarded Hummer franchise in Bellevue, Washington. Our long-term debt to total capitalization ratio is 22% allowing us ample room to grow our business.
"Same-store retail sales for the quarter were +0.2% which compared favorably with our forecast of a 2 to 5% decline. As compared to past years, our inventory position at this time of the year is conservative.
"We are providing guidance for the third quarter and full year 2002.
Guidance for the full year 2002 has been raised modestly. The third quarter
EPS guidance includes over 33% more shares outstanding than in the third
quarter of 2001."
FORWARD ESTIMATES Full-Year
3Q 2002 2002
Revenue $610 - 630M $2.2 - 2.4B
Diluted EPS $0.56 - 0.58 $1.83 - 1.88
Gross Margin 15.9 - 16.3% 15.8 - 16.2%
SG&A 12.4 - 12.8% 12.5 - 12.9%
Operating Margin 3.3 - 3.6% 3.1 - 3.3%
Interest Expense 0.7 - 1.0% 0.7 - 1.0%
Same Store Sales -2 to -5% -2 to -5%
Tax Rate 38 - 39% 38 - 39%
Shares Outstanding 18.3-18.5M 17.6-17.8M
The quarterly breakout for the remainder of 2002 is estimated as follows for Diluted EPS: Q3; $0.56 - $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.
The Company also announced that Sidney DeBoer, its Chairman and CEO together with Jeffrey B. DeBoer, its CFO have signed and submitted to the Securities Exchange Commission an oath certifying their belief that the financial statements of Lithia Motors are materially complete and accurately reflect the financial condition of the Company. Lithia is one of the 947 largest companies directed by the SEC to provide these assurances to the investing public.
Lithia Motors will be providing more detailed information on the results for the second quarter of 2002 in its conference call scheduled for 11 a.m. PDT today. The live conference call can be accessed 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 sells 25 brands of new vehicles and operates 68 stores and 130 franchises in 10 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 76,835 new and used 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 Six Months Ended
June 30, June 30,
2002 2001 2002 2001
New Vehicle Sales $299,475 $238,651 $566,314 $453,608
Used Vehicle Sales 184,706 142,043 367,004 278,982
Service,
Body & Parts Sales 54,995 45,511 107,033 90,656
Finance & Insurance 22,331 17,854 42,156 33,108
Fleet & Other
Revenues 22,811 17,991 26,209 25,847
Total Revenues 584,318 462,050 1,108,716 882,201
Cost of Sales 491,436 386,840 932,187 738,094
Gross Profit 92,882 75,210 176,529 144,107
SG&A Expense 73,540 58,783 141,276 113,821
Depreciation/
Amortization 1,895 2,226 3,563 4,441
Income from
Operations 17,447 14,201 31,690 25,845
Flooring Interest
Expense 2,882 3,832 5,219 8,487
Other Interest
Expense 1,464 2,078 3,056 4,345
Other Income
(Expense), net (177) (45) (82) (124)
Pre-Tax Profit 12,924 8,246 23,333 12,889
Income Tax 4,989 3,175 9,007 4,963
Income Tax Rate 38.6% 38.5% 38.6% 38.5%
Net Profit $7,935 $5,071 $14,326 $7,926
Shares Outstanding 18,454 13,762 16,927 13,710
Diluted EPS $0.43 $0.37 $0.85 $0.58
Unit Sales:
New 11,861 9,772 22,277 18,504
Used - Retail 10,580 9,119 20,944 17,973
Used - Wholesale 6,151 4,723 12,257 9,048
F&I per retail unit $995 $945 $975 $908
Average Selling Price:
New $25,249 $24,422 $25,421 $24,514
Used - Retail $14,528 $13,270 $14,454 $13,181
Used - Wholesale $5,039 $4,454 $5,245 $4,652
Key Financial Data:
EBITDA $19,165 $16,382 $35,171 $30,162
Gross Profit Margin 15.9% 16.3% 15.9% 16.3%
SG&A as a % of Sales 12.6% 12.7% 12.7% 12.9%
Operating Margin 3.0% 3.1% 2.9% 2.9%
Pre-Tax Margin 2.2% 1.8% 2.1% 1.5%
Total Retail
Same-Store Sales 0.2% (0.3%) 0.6% (3.6%)
LITHIA MOTORS, INC.
Balance Sheet Highlights (Dollars in Thousands)
Unaudited
June 30, December 31,
2002 2001
Cash & Cash Equivalents $64,339 $59,855
Inventory 410,909 275,398
Other Current Assets 54,134 45,156
Total Current Assets 529,382 380,409
Real Estate - Net 104,036 84,739
Equipment & Leases - net 48,297 37,238
Goodwill, net 176,428 149,742
Other Assets 22,617 10,816
Total Assets $880,760 $662,944
Floorplan Notes Payable $333,454 $211,947
Other Current Liabilities 72,144 63,628
Total Current Liabilities 405,598 275,575
Used Vehicle Flooring 70,000 69,000
Real Estate Debt 51,542 40,693
Other Long-Term Debt 31,743 55,137
Other Liabilities 22,020 19,042
Total Liabilities $580,903 $459,447
Shareholders Equity 299,857 203,497
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $880,760 $662,944
Other Balance Sheet Data (Dollars in Thousands)
Current Ratio 1.3x 1.4x
LT Debt/Total Cap. 22% 32%
[Excludes Used Vehicle Flooring]
Working Capital $123,784 $104,834