Car Dealer Lithia Motors Earns 23 Cents Per Share on Record First Quarter Sales
MEDFORD, Ore., April 25 -- Lithia Motors, Inc. today announced that total sales increased to $583.5 million compared to $524.4 million in the first quarter of last year. Net earnings for the quarter were $4.17 million compared to $6.39 million in the same period last year. Lithia earned $0.23 per diluted share on 19% more diluted shares outstanding than in the first quarter of last year. This is two cents above recently revised First Call estimates of $0.21 per share.
For the first quarter, new vehicle sales increased 21%, used vehicle sales declined 4%, parts/service sales increased 15% and finance/insurance sales increased 19%. Finance and Insurance income per new and used retail unit increased 9% to $938, the highest level ever achieved by Lithia in the first quarter of a year. Total retail units sold in the quarter were 22,627, a 9% increase over the same period last year. Lithia retailed 10,006 used units and 12,621 new units, for a used/new ratio of 0.8:1.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "Lithia's new vehicle same store sales were up 7.7% in the first quarter vs. national new vehicle sales that were down over 4% in the same period. We are pleased with our new vehicle sales performance in the quarter."
"Finance and insurance same store sales were up 7.3% for the quarter. We improved our finance and insurance penetration rate to 77% of all new and used retail units vs. 75% in the same period last year. We also had 41% service contract penetration vs. 40% last year and 34% Lifetime Oil/Filter product penetration vs. 29% in the same period last year. Strong new vehicle sales combined with greater penetration rates in F&I, service contracts and our Lifetime Oil & Filter product ensure continued parts and service business and increased customer contact in the years to come."
"Parts and Service same store sales for the quarter were down 2.6%, driven mostly by declining warranty repairs at our domestic stores as product quality improvements take hold. Used vehicle same store sales were down 14.5% as there was continued pressure by heavily incentivised new vehicle sales programs and the recessionary environment in our markets. Total retail same store sales for the quarter declined by 0.2%. This was better than we had expected at the beginning of the quarter."
"We continue to see slowing economies in our markets. We believe the total new and used vehicle market, in the areas where we operate, was down over 10% in the quarter as compared to the same period last year. However, our combined new and used retail same store sales for the quarter held steady with the same period last year. We took an aggressive approach to gain new vehicle sales in the first quarter of 2003 because of higher than normal new vehicle inventories at the end of 2002 and the existence of increased incentives on new vehicles. We chose to increase our market share by implementing a volume based sales strategy. Behind our aggressive volume strategy is our belief that starting new customer relationships now is essential to the long-term success of our business. What we do now to gain customers will come back in the form of parts and service business and repeat and referral sales down the road. In addition, gaining new vehicle sales in a slow new vehicle sales environment is fundamental to maintaining a healthy long-term relationship with our manufacturer partners."
Jeffrey B. DeBoer, Senior Vice President and CFO added, "For the full-year 2003, we are forecasting earnings of $1.50 to $1.60 per share which assumes approximately $350 -- $450 million in annualized revenues from new acquisitions. Our most recent acquisition was a Chrysler/Dodge store in Missoula, Montana. Year to date, we have closed on approximately $100 million in revenues. On the balance sheet, our long-term debt to total capitalization ratio was 26%. With our new acquisition credit facility of up to $200 million from Daimler Chrysler Services of North America and expected internal cash flow from operations, Lithia has positioned itself to capitalize on the increasing acquisition opportunities we have seen so far this year."
"In the first quarter, Lithia entered into two interest rate swap agreements totaling $50 million. The higher interest rates on these swaps and additional inventories from acquisition activity are responsible for the increase in flooring interest expense in the period."
"In the first quarter of the year, Lithia reinstituted its previously approved share buyback program with the repurchase of shares. We currently have over 940,000 shares available for repurchase under the program."
"Of further note, recently the Emerging Issues Task Force of the Financial Accounting Standards Board issued pronouncement number 02-16 relating to the timing and classification of vendor credits. For Lithia, this relates mostly to flooring and advertising credits received from manufacturers. Consistent with the pronouncement, we do not recognize these credits as income until the vehicle is sold. Therefore, we do not have any adjustment to earnings from this pronouncement."
Lithia Motors will be providing more detailed information on the results for the first quarter 2003 in its conference call scheduled for 10 a.m. PDT today. The call can be accessed live 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 Webcast icon.
Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 24 brands of new vehicles and operates 73 stores and 140 franchises in 11 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.
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, economic data 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, Director 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
March 31, Increase % Increase
2003 2002 (Decrease) (Decrease)
New Vehicle Sales $323,448 $267,817 $55,631 20.8%
Used Vehicle Sales 176,986 183,312 (6,326) (3.5)
Service, Body &
Parts Sales 59,751 52,038 7,713 14.8
Finance & Insurance 21,214 17,832 3,382 19.0
Fleet & Other
Revenues 2,078 3,399 (1,321) (38.9)
Total Revenues 583,477 524,398 59,079 11.3
Cost of Sales 492,142 440,751 51,391 11.7
Gross Profit 91,335 83,647 7,688 9.2
SG&A Expense 76,964 67,736 9,228 13.6
Depreciation/
Amortization 2,287 1,668 619 37.1
Income from
Operations 12,084 14,243 (2,159) (15.2)
Flooring Interest
Expense (3,702) (2,337) (1,365) 58.4
Other Interest
Expense (1,410) (1,592) 182 (11.4)
Other Income
(Expense), net (172) 95 (267)
Pre-Tax Profit 6,800 10,409 (3,609) (34.7)
Income Tax 2,635 4,018 (1,383) (34.4)
Income Tax Rate 38.8% 38.6%
Net Profit $4,165 $6,391 $(2,226) (34.8)%
Shares Outstanding 18,272 15,369 2,903 18.9%
Diluted EPS $0.23 $0.42 ($0.19) (45.2)
Unit Sales:
New 12,621 10,416 2,205 21.2%
Used - Retail 10,006 10,364 (358) (3.5)
Used - Wholesale 6,351 6,106 245 4.0
Total Units Sold 28,978 26,886 2,092 7.8
Finance/Insurance
per retail unit $938 $858 $80 9.3
Average Selling Price:
New $25,628 $25,712 $(84) (0.3)%
Used - Retail 14,464 14,476 (12) (0.1)
Used - Wholesale 5,080 5,452 (372) (6.8)
Key Financial Data:
Gross Profit Margin 15.7% 16.0%
SG&A as a % of Sales 13.2% 12.9%
Operating Margin 2.1% 2.7%
Pre-Tax Margin 1.2% 2.0%
Total Retail
Same-Store Sales (0.2%) 1.0%
Balance Sheet Highlights (Dollars in Thousands)
Unaudited
March 31, December 31,
2003 2002
Cash & Cash Equivalents $29,593 $15,932
Trade Receivables* 83,495 82,173
Inventory 468,478 445,908
Other Current Assets 12,114 11,765
Total Current Assets 593,680 555,778
Real Estate, net 119,896 118,696
Equipment & Leases, net 60,545 58,215
Goodwill, net 191,799 185,212
Other Assets 26,601 24,148
Total Assets $992,521 $942,049
Floorplan Notes Payable $396,128 $364,635
Other Current Liabilities 69,602 64,835
Total Current Liabilities 465,730 429,470
Used Vehicle Flooring 62,000 63,000
Real Estate Debt 84,186 73,798
Other Long-Term Debt 30,652 30,914
Other Liabilities 25,030 24,874
Total Liabilities $667,598 $622,056
Shareholders Equity 324,923 319,993
Total Liabilities &
Shareholders' Equity $992,521 $942,049
*Note: Includes contracts-in-transit of $45,155 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) 26% 25%
Working Capital $127,950 $126,308
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