Lithia Motors Reports Record Revenues; Net Income for the Full-Year 2005
MEDFORD, Ore.--Feb. 8, 2006--Lithia Motors' Highlights for continuing operations for period ended Dec. 3, 20051, 2005:Full-Year 2005
Total Revenues: +10% Total Same-Store Revenues: +1.8% Operating Profits: +24% Net Income: +18%
Lithia Motors, Inc. today announced that net income from continuing operations rose 18% to $51.8 million for the full-year 2005 compared to $44.1 million in 2004. Earnings per share from continuing operations, which is the basis for 2005 company guidance, increased 12% to $2.46 per fully diluted share as compared to $2.19 in 2004. Earnings per share, including discontinued operations, increased 11% to $2.37 per fully diluted share as compared to $2.13 in the same period last year. This was on 6% more diluted shares outstanding.
Full-year 2005 total sales increased 10% to $2.94 billion from $2.66 billion in the same period last year. New vehicle sales increased 9%, used vehicle sales increased 11%, finance/insurance sales increased 13% and parts/service sales increased 10%.
Sidney B. DeBoer, Lithia's Chairman and Chief Executive Officer, commented, "We had a solid year in 2005 with 10% sales growth and 24% operating income growth. Additionally, we grew both total same-store sales and total same-store gross profits. Margins held steady in the new vehicle business and increased in the retail used vehicle and service and parts businesses. Our Sales General and Administrative (SG&A) expense as a percentage of gross profit improved by 220 basis points year over year. As a result of this good margin performance and ability to control costs, we were able to improve operating margins 50 basis points to 4.1%. This is the highest annual operating margin level that the company has achieved as a public company and we have room for further improvement. In addition, we saw year-over-year operating margin improvement in every quarter of the year."
"Our performance in 2005 is due to an ever increasing ability to integrate new stores, and improve the performance of existing stores. Our systems and workforce have grown stronger, more innovative and more efficient, and Lithia's employees deserve a lot of credit for their hard work this year," concluded Mr. DeBoer.
For the fourth quarter, Lithia's net income from continuing operations declined 4% to $10.1 million as compared to $10.5 million in the same period last year. Earnings per share from continuing operations, which is the basis for 2005 company guidance, decreased 6% to $0.48 per fully diluted share as compared to $0.51 in the same period last year. Earnings per share, including discontinued operations declined 6% to $0.45 per fully diluted share as compared to $0.48 in the same period last year. This was on 2% more diluted shares outstanding.
Fourth quarter 2005 sales increased 2% to $666.8 million from $651.0 million in the fourth quarter of 2004. New vehicle sales decreased 2%, used vehicle sales increased 8%, finance/insurance sales increased 4%, and parts/service sales increased 9%.
Jeffrey B. DeBoer, Senior Vice President and CFO added, "For the quarter, earnings per share from continuing operations were $0.48. This was 3 cents above the high end of our guidance range of $0.42 to $0.45. For the quarter, we saw improvements in new vehicle, retail used vehicle and service and parts margins. This lead to a gross margin improvement of 80 basis points and an operating margin improvement of 10 basis points. While same-store sales were down, same store gross profits showed a small gain in the fourth quarter due to the margin improvements."
"Our guidance for the full-year 2006 is included in the table below. We have raised the high end of our full-year 2006 guidance by eleven cents. We exceeded the high end of our fourth quarter 2005 guidance by $0.03. In the fourth quarter, we classified two stores as discontinued operations. This had the affect of increasing earnings per share from continuing operations for the full-year 2005 by $0.08. The full-year 2006 guidance assumes a steady pace of acquisitions and dispositions and includes the effect of FAS 123r, expensing for stock options, that will take affect starting in the first quarter of the year," concluded Jeffrey B. DeBoer.
Earnings Per Share Guidance
FY 2005 FY 2006
-------- ------------
EPS w/o FAS 123r adoption: $2.37 $2.54 - $2.66 (non-gaap)
Effect of FAS 123r N/A ($0.08)
-------- ------------
EPS - Reportable 2006 N/A $2.46 - $2.58
The inclusion of the non-gaap "EPS without FAS 123r amounts" is included in the above guidance because management believes that the absence of a comparable expense in 2005 would obscure the earnings estimate on a comparable basis. As noted above, the EPS guidance is also given for reportable EPS and reconciles to the non-gaap number.
In December 2004, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standards Statement 123 (revised 2004) ("FAS 123r") that will require that the value of all equity-based compensation arrangements, including stock options and employee stock purchase plans, be accounted for using a "fair value" method. Previously, the Company had accounted for such arrangements under the "intrinsic method" permitted by APB 25 and the amounts noted in the footnotes to the company's financials filed on Form 10-K. The new rules, absent any change, will be effective for the Company commencing with the first quarter of 2006. Adoption of this accounting change does not affect the cash flow of the Company.
About Lithia
Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 25 brands of new vehicles and operates 94 stores and 186 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.
Forward Looking Statements
Additional Information
For additional information on Lithia Motors, contact the Investor Relations Department: 541-776-6591 or log-on to: www.lithia.com -- go to Investor Relations
LITHIA MOTORS, INC.
(In Thousands except per share data)
Unaudited Twelve Months Ended
--------- December 31,
----------------------- $ Increase % Increase
2005 2004 (Decrease) (Decrease)
---------- ---------- -------------- -----------
New Vehicle Sales $1,676,607 $1,541,102 $135,505 8.8%
Used Vehicle Sales 816,963 736,694 80,269 10.9
Finance & Insurance 109,408 96,990 12,418 12.8
Service, Body &
Parts Sales 309,494 280,894 28,600 10.2
Fleet & Other
Revenues 22,947 7,680 15,267 198.8
---------- ---------- -------- -----------
Total Revenues 2,935,419 2,663,360 272,059 10.2
Cost of Sales 2,430,977 2,214,995 215,982 9.8
---------- ---------- -------- -----------
Gross Profit 504,442 448,365 56,077 12.5
SG&A Expense 370,991 339,519 31,472 9.3
Depreciation/
Amortization 14,234 12,750 1,484 11.6
---------- ---------- -------- -----------
Income from
Operations 119,217 96,096 23,121 24.1
Flooring Interest
Expense (22,614) (16,243) 6,371 39.2
Other Interest
Expense (12,030) (8,873) 3,157 35.6
Other Income, net 1,178 919 259 28.2
---------- ---------- -------- -----------
Income from
continuing
operations before
income taxes 85,751 71,899 13,852 19.3
Income Tax Expense (33,958) (27,825) 6,133 22.0
Income Tax Rate 39.6% 38.7%
---------- ----------
Net Income from
continuing ops. 51,793 44,074 7,719 17.5%
Income (Loss) from
discontinued
operations, net
of income taxes (1,993) (1,403) (590) (42.1)
---------- ---------- -------- -----------
Net Income $ 49,800 $ 42,671 $ 7,129 16.7%
========== ========== ======== ===========
Diluted Net Income
per share:
Continuing
Operations $ 2.65 $ 2.30 $ 0.35 15.2%
Effects of
convertible senior
sub. notes (0.19) (0.11)
Diluted Net Income
per share after
effect of
convertible notes: $ 2.46 $ 2.19 0.27 12.3%
Discontinued
Operations (0.09) (0.06)
---------- ----------
Net Income per
share $ 2.37 $ 2.13 0.24 11.3%
========== ========== ======== ===========
Diluted Shares
Outstanding 21,807 20,647 1,160 5.6%
LITHIA MOTORS, INC. Twelve Months Ended
December 31, Increase % Increase
-------------------
Unit Sales: 2005 2004 (Decrease) (Decrease)
---------------------------- -------- -------- ---------- ----------
New Vehicle 59,956 54,839 5,117 9.3%
Used - Retail Vehicle 43,377 40,836 2,541 6.2
Used - Wholesale 24,078 22,336 1,742 7.8
Total Units Sold 127,411 118,011 9,400 8.0
Average Selling Price:
----------------------------
New Vehicle $ 27,964 $ 28,102 ($138) (0.5)%
Used - Retail Vehicle 15,562 15,117 445 2.9
Used - Wholesale 5,894 5,344 550 10.3
Key Financial Data:
----------------------------
Gross Profit Margin 17.2% 16.8%
SG&A as a % of Gross Profit 73.5% 75.7%
Operating Margin 4.1% 3.6%
Pre-Tax Margin 2.9% 2.7%
Gross Margin/Profit Data
----------------------------
New Vehicle Retail 7.9% 7.9%
Used Vehicle Retail 15.7% 14.5%
Used Vehicle Wholesale 2.7% 3.1%
Service, Body & Parts 48.7% 48.3%
New Retail Gross Profit/Unit $ 2,218 $ 2,210
Used Retail Gross
Profit/Unit $ 2,444 $ 2,196
Used Wholesale Gross
Profit/Unit $ 159 $ 167
Finance & Insurance/Retail
Unit $ 1,059 $ 1,014
Same Store Data
----------------------------
New Vehicle Retail Sales 0.8% (1.9)%
Used Vehicle Sales (includes
Wholesale) 3.8% (5.8)%
Total Vehicle Sales
(excludes fleet) 1.8% (3.2)%
Finance & Insurance Sales 1.4% 2.0%
Service, Body & Parts Sales 2.5% 3.3%
Total Sales (Excluding
Fleet) 1.8% (2.4)%
Total Gross Profit
(Excluding Fleet) 3.1% 2.4%
LITHIA MOTORS, INC.
(In Thousands except per share data)
Unaudited Three Months Ended
--------- December 31, $ Increase % Increase
-------------------
2005 2004 (Decrease) (Decrease)
-------- -------- ------------ ----------------
New Vehicle Sales $368,072 $373,909 $(5,837) (1.6)%
Used Vehicle Sales 192,354 178,784 13,570 7.6
Finance & Insurance 25,126 24,116 1,010 4.2
Service, Body &
Parts Sales 79,026 72,477 6,549 9.0
Fleet & Other
Revenues 2,231 1,750 481 27.5
-------- -------- ------- ----------------
Total Revenues 666,809 651,036 15,773 2.4
Cost of Sales 548,108 540,362 7,746 1.4
-------- -------- ------- ----------------
Gross Profit 118,701 110,674 8,027 7.3
SG&A Expense 89,948 83,270 6,678 8.0
Depreciation/
Amortization 3,816 3,746 70 1.9
-------- -------- ------- ----------------
Income from
Operations 24,937 23,658 1,279 5.4
Flooring Interest
Expense (5,978) (4,341) 1,637 37.7
Other Interest
Expense (3,152) (2,705) 447 16.5
Other Income, net 460 265 195 73.6
-------- -------- ------- ----------------
Income from
continuing
operations before
income taxes 16,267 16,877 (610) (3.6)
Income Tax Expense (6,171) (6,367) (196) (3.1)
Income Tax Rate 37.9% 37.7%
-------- --------
Net Income from
continuing ops. 10,096 10,510 (414) (3.9)%
Income (Loss) from
discontinued
operations, net of
income taxes (593) (628) 35 (5.6)
-------- -------- ------- ----------------
Net Income $ 9,503 $ 9,882 $ (379) (3.8)%
======== ======== ======= ================
Diluted Net Income
per share
Continuing
Operations $ 0.51 $ 0.55 $ (0.04) (7.3)%
Effects of
convertible senior
notes (0.03) (0.04)
Diluted Net Income
per share after
effect of
convertible notes: $ 0.48 $ 0.51 (0.03) (5.9)%
Discontinued
Operations (0.03) (0.03)
-------- --------
Net Income per share $ 0.45 $ 0.48 (0.03) (6.2)%
======== ======== ======= ================
Diluted Shares
Outstanding 21,929 21,516 413 1.9%
LITHIA MOTORS, INC. Three Months Ended
December 31, Increase % Increase
------------------
Unit Sales: 2005 2004 (Decrease) (Decrease)
----------------------------- ------- ------- ---------- ----------
New Vehicle 12,809 12,904 (95) (0.7)%
Used - Retail Vehicle 9,899 9,710 189 1.9
Used - Wholesale 5,740 4,989 751 15.1
Total Units Sold 28,448 27,603 845 3.1
Average Selling Price:
-----------------------------
New Vehicle $28,735 $28,976 ($241) (0.8)%
Used - Retail Vehicle 15,879 15,496 383 2.5
Used - Wholesale 6,128 5,676 452 8.0
Key Financial Data:
-----------------------------
Gross Profit Margin 17.8% 17.0%
SG&A as a % of Gross Profit 75.8% 75.2%
Operating Margin 3.7% 3.6%
Pre-Tax Margin 2.4% 2.6%
Gross Margin/Profit Data
-----------------------------
New Vehicle Retail 8.0% 7.8%
Used Vehicle Retail 15.7% 14.4%
Used Vehicle Wholesale 1.1% 1.7%
Service, Body & Parts 48.8% 48.1%
New Retail Gross Profit/Unit $ 2,311 $ 2,267
Used Retail Gross Profit/Unit $ 2,492 $ 2,230
Used Wholesale Gross
Profit/Unit $ 68 $ 96
Finance & Insurance/Retail
Unit $ 1,106 $ 1,066
Same Store Data
-----------------------------
New Vehicle Retail Sales (7.0)% (2.5)%
Used Vehicle Sales (includes
Wholesale) 2.5% 1.4%
Total Vehicle Sales (excludes
fleet) (3.9)% (1.3)%
Finance & Insurance Sales (5.3)% 6.2%
Service, Body & Parts Sales 3.0% 3.7%
Total Sales (Excluding Fleet) (3.2)% (0.5)%
Total Gross Profit (Excluding
Fleet) 0.3% 3.5%
LITHIA MOTORS, INC.
Balance Sheet Highlights (Dollars in Thousands)
December 31, December 31,
2005 2004
--------------- -------------
Unaudited
---------------
Cash & Cash Equivalents $ 48,566 $ 28,869
Trade Receivables(a) 106,443 84,958
Inventory 606,047 536,510
Assets Held for Sale 27,411 135
Other Current Assets 15,781 12,382
----------- ----------
Total Current Assets 804,248 662,854
Real Estate, net 255,372 226,357
Equipment & Leases, net 77,805 73,274
Goodwill, net 260,899 244,532
Other Assets 54,390 49,866
----------- ----------
Total Assets $ 1,452,714 $1,256,883
=========== ==========
Floorplan Notes Payable $ 530,452 $ 450,860
Liabilities held for sale 22,388 -
Other Current Liabilities 95,560 85,817
----------- ----------
Total Current Liabilities 648,400 536,677
Used Vehicle Flooring - -
Real Estate Debt 154,046 139,703
Other Long-Term Debt 136,505 127,608
Other Liabilities 54,130 46,949
----------- ----------
Total Liabilities 993,081 850,937
----------- ----------
Shareholders' Equity 459,633 405,946
----------- ----------
Total Liabilities &
Shareholders' Equity $ 1,452,714 $1,256,883
=========== ==========
--------
(a) Includes contracts-in-transit of $52,453 and $42,913 for 2005 and
2004.
Other Balance Sheet Data (Dollars in Thousands except per share data)
Current Ratio 1.2x 1.2x
LT Debt/Total Cap.
(Excludes Used -Vehicle Flooring
and Real Estate) 23% 24%
Working Capital $155,848 $126,177
Book Value per Basic Share $23.97 $21.62