Lithia Motors Reports a 25% Increase in Net Income; Record 2Q Revenues and Earnings Per Share of 56 Cents
MEDFORD, Ore.--July 22, 2004--Lithia Motors' Second-Quarter 2004 Highlights for continuing operations:
Operating Income: +22%
Net Income: +25%
Earnings Per Share: +19%
Lithia Motors, Inc. today announced that net earnings from continuing operations rose 25% to $10.8 million in the second quarter of 2004 compared to $8.6 million in the second quarter of 2003. Earnings per share from continuing operations rose 19% to $0.56 per share versus $0.47 in the same period last year. This was on 4% more diluted shares outstanding.
Second-quarter 2004 sales increased 7% to $682.3 million from $640.3 million in the second quarter of 2003. New vehicle sales increased 10%, used vehicle sales decreased 4%, parts/service sales increased 18%, and finance/insurance sales increased 10%.
Sidney B. DeBoer, Lithia's Chairman and Chief Executive Officer, commented, "Lithia's second-quarter performance resulted from overall sales growth, margin improvements in all business lines, and strength in the parts and service business."
"Lithia continues to fully integrate each store on the day of acquisition and we have been successful in our efforts to standardize and apply common operating systems across our entire store network. The benefits of this model are apparent in our ability to control and even increase margins in a volatile vehicle sales environment where margins are declining for many auto retailers. Our new and used vehicle gross margins increased 30 and 70 basis points, respectively, for the quarter as compared to the same period last year. Service and Parts gross margins improved 190 basis points for the quarter. A focus on service-advisor training and margin improvements in the wholesale parts business have led to increases in the parts and service business. Our operating margin for the quarter improved 50 basis points to 3.6%. Lithia has experienced year-over-year operating margin improvements for 4 consecutive quarters."
"Total retail same-store sales for the quarter declined 5.3%. We faced a difficult comparison of 5.7% growth in the same period last year. For the first six months, total retail same-store sales have declined 2.0%. Total retail same-store gross profits for the first six months are positive due to increased gross margins," concluded Mr. DeBoer.
For the six-month period ending June 30, 2004, Lithia's net earnings from continuing operations rose 42% to $18.3 million as compared to $12.9 million in the same period last year. Earnings per share rose 37% to $0.96 per share versus $0.70 in the same period last year. This was on 4% more diluted shares outstanding.
For the first six months, sales increased 10% to $1.32 billion from $1.20 billion in the same period last year. New vehicle sales increased 12%, used vehicle sales increased 3%, parts/service sales increased 20%, and finance/insurance sales increased 12%.
Jeffrey B. DeBoer, Senior Vice President and CFO, added, "In the second quarter, Lithia completed two acquisitions: Chevrolet of Anchorage and Chevrolet of Wasilla, Alaska. These stores have combined annualized sales of approximately $125 million. We now have five stores in the major Alaskan markets, which have been very favorable for Lithia. More recently in July, we acquired a Toyota store in Odessa Texas with approximately $20 million in annualized sales. So far this year we have completed acquisitions with approximately $240 million in annualized sales. Over the past 12 months, we have acquired $395 million in annualized sales, which represents approximately 16% growth on our total revenues for the same period. We will continue to make acquisitions throughout the rest of the year."
"Finally, our annual guidance for 2004 is from $2.11 - $2.16 per share. We expect third-quarter earnings per share in the range of $0.68 to $0.70," concluded Jeffrey B. DeBoer.
Conference Call Information
Lithia Motors will be providing more detailed information on the results for the second quarter 2004 in its conference call scheduled for 11 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.
About Lithia
Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 24 brands of new vehicles and operates 83 stores and 152 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 95,255 new and used vehicles and had $2.51 billion in total revenue in 2003.
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 the benefits of Lithia's operating model, anticipated revenues of recently acquired stores, ability to complete additional acquisitions in 2004 and projected third-quarter and full-year 2004 earnings-per-share guidance, which are subject to potential changes in accounting standards.
Additional Information
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
--------- June 30,
--------------- $ Increase % Increase
2004 2003 (Decrease) (Decrease)
---- ---- ---------- ----------
New Vehicle Sales $ 400,217 $ 363,845 $ 36,372 10.0%
Used Vehicle Sales 184,186 191,092 (6,906) (3.6)
Service, Body & Parts Sales 71,753 61,032 10,721 17.6
Finance & Insurance 24,744 22,478 2,266 10.1
Fleet & Other Revenues 1,367 1,865 (498) (26.7)
--------- --------- --------- ---------
Total Revenues 682,267 640,312 41,955 6.6
Cost of Sales 566,328 538,573 27,755 5.2
--------- --------- --------- ---------
Gross Profit 115,939 101,739 14,200 14.0
SG&A Expense 88,565 79,585 8,980 11.3
Depreciation/Amortization 3,089 2,254 835 37.0
--------- --------- --------- ---------
Income from Operations 24,285 19,900 4,385 22.0
Flooring Interest Expense (4,123) (3,672) 451 12.3
Other Interest Expense (2,157) (1,564) 593 37.9
Other Expense, net (358) (255) 103 40.4
--------- --------- --------- ---------
Income from continuing
operations before income
taxes 17,647 14,409 3,238 22.5
Income Tax Expense 6,882 5,808 1,074 18.5
Income Tax Rate 39.0% 40.3%
Net Income from continuing
ops. 10,765 8,601 2,164 25.2
--------- --------- --------- ---------
Income (Loss) from
discontinued operations,
net of income taxes 75 (82) 157
Net Income $ 10,840 $ 8,519 $ 2,321 27.2%
========= ========= ========= =========
Diluted Net income per
share:
Continuing Operations $ 0.56 $ 0.47 $ 0.09 19.1%
Discontinued Operations 0.01 (0.01)
--------- ---------
Net Income $ 0.57 $ 0.46 $ 0.11 23.9%
========= ========= ========= =========
Diluted Shares Outstanding 19,142 18,379 763 4.2%
Unit Sales: 2004 2003
----------- ---- ----
New Vehicle 14,398 13,720 678 4.9%
Used -- Retail Vehicle 10,253 10,792 (539) (5.0)
Used -- Wholesale 5,720 6,794 (1,074) (15.8)
Total Units Sold 30,371 31,306 (935) (3.0)
Average Selling Price:
----------------------
New Vehicle $ 27,797 $ 26,519 $ 1,278 4.8%
Used -- Retail Vehicle 14,977 14,699 278 1.9
Used -- Wholesale 5,354 4,778 576 12.1
Key Financial Data:
-------------------
Gross Profit Margin 17.0% 15.9%
SG&A as a % of Gross Profit 76.4% 78.2%
Operating Margin 3.6% 3.1%
Pre-Tax Margin 2.6% 2.3%
Total Retail Same-Store Sales (5.3)% 5.7%
LITHIA MOTORS, INC.
(In Thousands except per-share and unit data)
Unaudited Six Months Ended
--------- June 30,
--------------- $ Increase % Increase
2004 2003 (Decrease) (Decrease)
---- ---- ---------- ----------
New Vehicle Sales $ 753,818 $ 672,339 $ 81,479 12.1%
Used Vehicle Sales 374,092 363,188 10,904 3.0
Service, Body & Parts Sales 141,179 117,517 23,662 20.1
Finance & Insurance 48,129 42,888 5,241 12.2
Fleet & Other Revenues 2,898 3,940 (1,042) (26.4)
--------- --------- --------- ---------
Total Revenues 1,320,116 1,199,872 120,244 10.0
Cost of Sales 1,097,943 1,009,646 88,297 8.7
--------- --------- --------- ---------
Gross Profit 222,173 190,226 31,947 16.8
SG&A Expense 173,752 153,814 19,938 13.0
Depreciation/Amortization 6,043 4,385 1,658 37.8
--------- --------- --------- ---------
Income from Operations 42,378 32,027 10,351 32.3
Flooring Interest Expense (7,739) (7,218) 521 7.2
Other Interest Expense (3,897) (2,952) 945 32.0
Other Expense, net (697) (402) 295 73.4
--------- --------- --------- ---------
Income from continuing
operations before income
taxes 30,045 21,455 8,590 40.0
Income Tax Expense 11,718 8,539 3,179 37.2
Income Tax Rate 39.0% 39.8%
Net Income from continuing
ops. 18,327 12,916 5,411 41.9
--------- --------- --------- ---------
Income (Loss) from
discontinued operations,
net of income taxes (8) (232) 224 96.6
Net Income $ 18,319 $ 12,684 $ 5,635 44.4%
========= ========= ========= =========
Diluted Net income per
share:
Continuing Operations $ 0.96 $ 0.70 $ 0.26 37.1%
Discontinued Operations 0 (0.01)
--------- ---------
Net Income $ 0.96 $ 0.69 $ 0.27 39.1%
========= ========= ========= =========
Diluted Shares Outstanding 19,127 18,326 801 4.4%
Unit Sales: 2004 2003
----------- ---- ----
New Vehicle 27,243 25,730 1,513 5.9%
Used -- Retail Vehicle 21,030 20,544 486 2.4
Used -- Wholesale 11,807 12,941 (1,134) (8.8)
Total Units Sold 60,080 59,215 865 1.5
Average Selling Price:
----------------------
New Vehicle $ 27,670 $ 26,131 $ 1,539 5.9%
Used -- Retail Vehicle 14,801 14,603 198 1.4
Used -- Wholesale 5,320 4,882 438 9.0
Key Financial Data:
-------------------
Gross Profit Margin 16.8% 15.9%
SG&A as a % of Gross Profit 78.2% 80.9%
Operating Margin 3.2% 2.7%
Pre-Tax Margin 2.3% 1.8%
Total Retail Same-Store Sales (2.0)% 3.3%
Balance Sheet Highlights (Dollars in Thousands)
June 30, 2004 December 31, 2003
------------- -----------------
Unaudited
---------
Cash & Cash Equivalents $ 9,971 $ 74,408
Trade Receivables (a) 84,266 86,908
Inventory 604,449 445,281
Assets Held for Sale 16,537 20,408
Other Current Assets 12,919 9,932
---------- ----------
Total Current Assets 728,142 636,937
Real Estate, net 195,389 164,676
Equipment & Leases, net 71,476 62,637
Goodwill, net 233,500 207,027
Other Assets 44,639 31,505
---------- ----------
Total Assets $1,273,146 $1,102,782
========== ==========
Floorplan Notes Payable $ 514,750 $ 378,961
Liabilities Held for Sale 3,292 13,045
Other Current Liabilities 82,607 84,865
---------- ----------
Total Current Liabilities 600,649 476,871
Used Vehicle Flooring 0 56,267
Real Estate Debt 112,364 80,159
Other Long-Term Debt 136,607 98,308
Other Liabilities 41,428 32,251
---------- ----------
Total Liabilities 891,048 743,856
---------- ----------
Shareholders' Equity 382,098 358,926
---------- ----------
Total Liabilities &
Shareholders' Equity $1,273,146 $1,102,782
========== ==========
(a) Includes contracts-in-transit of $40,698 and $44,709 for 2004
and 2003 respectively.
Other Balance Sheet Data (Dollars in Thousands)
Current Ratio 1.2x 1.3x
LT Debt/Total Cap. (Excludes
Used Vehicle Flooring) 39% 33%
Working Capital $127,493 $160,066