Lithia Motors Reports Record Sales and Net Profits Same Store Sales Increase 11%
MEDFORD, Ore., Oct. 30, 2002; Lithia Motors, Inc. today announced that net earnings rose 39% to $10.7 million in the third quarter of 2002 compared to $7.7 million in the third quarter of 2001. Earnings per share rose 5% to $0.59 per share versus $0.56 in the same period last year. This was on 33% more diluted shares outstanding than in the third quarter of 2001.Net earnings for the first nine months of 2002 rose 60% to $25.1 million as compared to $15.6 million in the same period last year. Earnings per share increased 26% to $1.44 per share on 17.4 million diluted shares outstanding vs. $1.14 per share on 13.8 million diluted shares in the same period of 2001. This represents 26% more shares outstanding for the period.
Third Quarter Highlights (vs. Third Quarter 2001):
Total Revenues: +46% New Vehicle Sales: +57%
Same-Store Sales: +11% Used Vehicle Sales: +32%
Net Profits: +39% Parts/Service Sales: +31%
Finance/Insurance Sales: +32%
Lithia Motors reported that total revenues increased 46% to $687.6 million in the third quarter of 2002 from $471.3 million in the third quarter of 2001. For the first nine months of 2002, total revenues increased 33% to $1.80 billion from $1.35 billion in the first nine months of 2001. For the quarter, EBITDA increased 21% to $24.1 million from $19.9 million. For the first nine months, EBITDA increased 18% to $59.3 million vs. $50.1 million in the same period last year.
For the third quarter, Lithia retailed 11,538 used retail vehicles and 14,972 new vehicles for a used/new ratio of 0.8:1. Finance and Insurance income per new and used retail unit was $927.
For the first nine months, new vehicle sales increased 36%, used vehicle sales increased 32%, parts/service sales increased 23%, and finance/insurance sales increased 29%. Lithia retailed 32,482 used retail vehicles and 37,249 new vehicles for a used/new ratio of 0.9:1. Finance and Insurance income per new and used retail unit was $957.
Chairman and Chief Executive Officer Sidney B. DeBoer stated, "We are pleased to report record sales and profits in what proved to be a very strong quarter. Earnings for the quarter were $0.59 per share, exceeding our past guidance. A strong incentive environment and an aggressive strategy of gaining share in our markets lead to total retail same-store sales growth of 11% for the quarter. Lithia's new vehicle same store sales for the quarter increased 23% as compared to industry growth of approximately 9% for the same period. For the first nine months of the year, new vehicle same-store sales for Lithia grew 10% as compared to an industry increase of approximately 1% for the same period. Our operational focus has allowed us to exceed industry levels for the quarter and throughout the year."
"While the aggressive incentive environment has stimulated new vehicle sales, a combination of our strategic internal initiatives and successful execution of our acquisition plans enabled us to continue to deliver double digit growth in both sales and gross profits in all business lines this quarter and year-to-date. This is despite the ongoing anemic conditions in most of the markets where we operate. Lithia's strategy of making conservative acquisitions and adding improvements across every business line should make it possible for us to grow consistently in the years to come. Lithia has been structured for the long-term as the most fully integrated auto retailer in the public sector with all stores sharing uniform computer and information systems, common operating and marketing strategies, uniform payroll system, common CRM products and all our stores are speaking a common Lithia language," concluded Sidney B. DeBoer.
Jeffrey B. DeBoer, Senior Vice President and CFO, added, "In 2003, we expect to add from $300 to $400 million in annualized acquisition revenues which will contribute $150 to $200 million in 2003. We have the capital in place to execute this acquisition plan. Lithia's balance sheet is financially sound as our long-term debt to total capitalization ratio has improved to 24%. Inventories are at historically low levels. On the balance sheet, inventories have grown 29% from the first nine months of 2001 through the first nine months of 2002 due to acquisitions, while total interest expense on the income statement for the same period has declined 28% as we have taken advantage of the lower rates and continued to refinance real estate with better rates and terms."
"We are narrowing and affirming guidance for the fourth quarter and full year 2002 and providing initial guidance for the full year 2003. The fourth quarter EPS guidance includes over 33% more shares outstanding than in the fourth quarter of 2001."
FORWARD ESTIMATES Full-Year Full-Year
4Q 2002 2002 2003
Revenue $555 - 585M $2.35 - 2.38B $2.45 - 2.65B
Gross Margin 15.8 - 16.2% 15.5 - 15.9% 15.8 - 16.2%
SG&A 12.7 - 13.1% 12.4 - 12.8% 12.2 - 12.6%
Operating Margin 2.9 - 3.1% 2.8 - 3.0% 3.2 - 3.4%
Interest Expense 0.8 - 1.0% 0.8 - 1.0% 0.9 - 1.1%
Same Store Sales -8 to -11% 0 to -2% -3 to -5%
Tax Rate 38 - 39% 38 - 39% 38 - 39%
Diluted EPS $0.42 - 0.44 $1.84 - 1.87 $2.00 - 2.12
Shares Outstanding 18.4-18.6M 17.6-17.8M 18.9-19.1M
The quarterly breakout for 2003 is estimated as follows for Diluted EPS: Q1: $0.43 - $0.46; Q2: $0.49 - $0.52; Q3: $0.63 - $0.66; and Q4: $0.45 -- $0.48. The first quarter 2003 EPS guidance includes approximately 23% more shares outstanding than in the same period of 2002.
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 third quarter 2002 in its conference call scheduled for 11 a.m. PST, 2 p.m. EST 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: 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 69 stores and 128 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, new and used vehicle sales levels, changes in interest rates, availability of capital, inventory management, 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 (dretzlaff@lithia.com) 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
September 30, Increase % Increase
2002 2001 (Decrease) (Decrease)
New Vehicle Sales $388,811 $247,487 $141,324 57.1%
Used Vehicle Sales 198,402 149,795 48,607 32.4
Service, Body &
Parts Sales 62,964 47,884 15,080 31.5
Finance & Insurance 24,565 18,579 5,986 32.2
Fleet & Other Revenues 12,903 7,573 5,330 70.4
Total Revenues 687,645 471,318 216,327 45.9
Cost of Sales 583,039 391,450 191,589 48.9
Gross Profit 104,606 79,868 24,738 31.0
SG&A Expense 80,209 59,696 20,513 34.4
Depreciation/
Amortization 2,044 2,372 (328) (13.8)
Income from Operations 22,353 17,800 4,553 25.6
Flooring Interest
Expense 2,943 3,390 (447) (13.2)
Other Interest Expense 1,581 1,608 (27) (1.7)
Other Income
(Expense), net (252) (241) 11 4.6
Pre-Tax Profit 17,577 12,561 5,016 39.9
Income Tax 6,848 4,865 1,983 40.8
Income Tax Rate 39.0% 38.7%
Net Profit $10,729 $7,696 $3,033 39.4%
Shares Outstanding 18,269 13,781 4,488 32.6%
Diluted EPS $0.59 $0.56 $0.03 5.4%
Unit Sales:
New 14,972 10,072 4,900 48.6%
Used - Retail 11,538 9,825 1,713 17.4
Used - Wholesale 6,923 4,833 2,090 43.2
Total Units Sold 33,433 24,730 8,703 35.2
Finance/Insurance
per retail unit $927 $934 ($7) (0.7)
Average Selling Price:
New $25,969 $24,572 $1,397 5.7%
Used - Retail 14,382 13,005 1,377 10.6
Used - Wholesale 4,690 4,557 133 2.9
Key Financial Data:
EBITDA $24,145 $19,931 $4,214 21.1%
Gross Profit Margin 15.2% 16.9%
SG&A as a % of Sales 11.7% 12.7%
Operating Margin 3.3% 3.8%
Pre-Tax Margin 2.6% 2.7%
Total Retail
Same-Store Sales 11.1% (6.7%)
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Unaudited Nine Months Ended
September 30, Increase % Increase
2002 2001 (Decrease) (Decrease)
New Vehicle Sales $955,125 $701,095 $254,030 36.2%
Used Vehicle Sales 565,406 428,777 136,629 31.9
Service, Body &
Parts Sales 169,997 138,540 31,457 22.7
Finance & Insurance 66,721 51,687 15,034 29.1
Fleet & Other Revenues 39,112 33,420 5,692 17.0
Total Revenues 1,796,361 1,353,519 442,842 32.7
Cost of Sales 1,515,226 1,129,544 385,682 34.1
Gross Profit 281,135 223,975 57,160 25.5
SG&A Expense 221,485 173,517 47,968 27.6
Depreciation/
Amortization 5,607 6,813 (1,206) (17.7)
Income from Operations 54,043 43,645 10,398 23.8
Flooring Interest
Expense 8,162 11,877 (3,715) (31.3)
Other Interest Expense 4,637 5,953 (1,316) (22.1)
Other Income
(Expense), net (334) (365) (31) (8.5)
Pre-Tax Profit 40,910 25,450 15,460 60.7
Income Tax 15,855 9,828 6,027 61.3
Income Tax Rate 38.8% 38.6%
Net Profit $25,055 $15,622 $9,433 60.4%
Shares Outstanding 17,381 13,754 3,627 26.4%
Diluted EPS $1.44 $1.14 $0.30 26.3%
Unit Sales:
New 37,249 28,576 8,673 30.4%
Used - Retail 32,482 27,798 4,684 16.9
Used - Wholesale 19,180 13,881 5,299 38.2
Total Units Sold 88,911 70,255 18,656 26.6
Finance/Insurance
per retail unit $957 $917 $40 4.4
Average Selling Price:
New $25,642 $24,534 $1,108 4.5%
Used - Retail 14,428 13,118 1,310 10.0
Used - Wholesale 5,044 4,619 425 9.2
Key Financial Data:
EBITDA $59,316 $50,093 $9,223 18.4%
Gross Profit Margin 15.7% 16.5%
SG&A as a % of Sales 12.3% 12.8%
Operating Margin 3.0% 3.2%
Pre-Tax Margin 2.3% 1.9%
Total Retail
Same-Store Sales 4.3% (4.7%)
LITHIA MOTORS, INC.
Balance Sheet Highlights (Dollars in Thousands)
Unaudited
September 30, December 31,
2002 2001
Cash & Cash Equivalents $63,518 $59,855
Inventory 399,281 275,398
Other Current Assets 51,114 45,156
Total Current Assets 513,913 380,409
Real Estate - Net 112,677 84,739
Equipment & Leases - net 55,818 37,238
Goodwill, net 182,152 149,742
Other Assets 25,191 10,816
Total Assets $889,751 $662,944
Floorplan Notes Payable $312,854 $211,947
Other Current Liabilities 67,804 63,628
Total Current Liabilities 380,658 275,575
Used Vehicle Flooring 75,000 69,000
Real Estate Debt 65,372 40,693
Other Long-Term Debt 31,457 55,137
Other Liabilities 25,961 19,042
Total Liabilities $578,448 $459,447
Shareholders Equity 311,303 203,497
Total Liabilities &
Shareholders' Equity $889,751 $662,944
Other Balance Sheet Data (Dollars in Thousands)
Current Ratio 1.4x 1.4x
LT Debt/Total Cap. (Excludes
Used -- Vehicle Flooring) 24% 32%
Working Capital $133,255 $104,834
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