Lithia Motors Reports Q1 Earnings Per Share from Continuing Operations of 50 Cents Per Share
MEDFORD, Ore.--April 24, 2006--Lithia Motors, Inc. today announced that first quarter 2006 net income from continuing operations increased 2% to $10.6 million from $10.5 million in the first quarter of 2005. Diluted earnings per share from continuing operations were $0.50 as compared to $0.50 in the first quarter of 2005. For the first quarter of 2006, diluted net income per share includes the affect of accounting for equity-based compensation under FAS 123(R). The affect was to increase compensation expense, which is included in SG&A.First quarter 2006 earnings per share from continuing operations, excluding the affect of accounting for equity compensation under FAS 123(R) was $0.53 as compared to $0.50 in the same period last year. First quarter 2006 earnings per share including discontinued operations and the affect of accounting for equity compensation under FAS 123(R) was $0.44.
First quarter 2006 sales increased 14% to $748.2 million as compared to $658.9 million in the same period last year. New vehicle sales increased 19%, used vehicle sales increased 6%, finance/insurance sales increased 12%, and parts/service sales increased 11%.
Sid DeBoer, Lithia's Chairman and CEO, commented, "The first quarter can be characterized by a week January, an improved February and a very strong March. Total same-store sales increased 7.1% and total same-store gross profits were up 4.9% for the quarter. Same-store sales and gross profits were up across all business lines except used vehicles, where they were essentially flat with last year.
"Nationally, the vehicle sales environment in the first quarter was lackluster. Our response was to push new vehicle sales in an attempt to gain market share and create long-term parts and service business that will benefit the company in future periods. Our efforts produced a new vehicle same-store sales increase of 11.5% for the quarter while new vehicle same-store units were up 10.9% for the quarter, with domestic same-store units increasing 11.5% and import same-store units increasing 9.7%. Another highlight was our same-store service and parts revenues which increased 5.1% for the quarter.
"Lithia's team members did a great job demonstrating the flexibility of our company's business model. We had made a strategic decision to stock high new vehicle inventories going into the first quarter. Through company-wide promotional initiatives, we were able to reduce our excess inventories to normal levels going into the stronger spring and summer selling season ahead," concluded Mr. DeBoer.
Jeffrey B. DeBoer, Senior Vice President and CFO added, "Year to date, we have completed one acquisition; a Dodge store in Fresno, California with approximately $50 million in annualized revenues, which is now named Lithia Dodge of Fresno. Additionally, in the last quarter, we completed the sale of Lithia Chevrolet in Salinas, California. This store was included in discontinued operations for the quarter and year-end 2005.
"Our guidance for the full-year 2006 remains unchanged and is in the table below. In the first quarter, we had two stores classified as discontinued operations. The full-year 2006 guidance is on a continuing operations basis. It assumes a steady pace of acquisitions and dispositions and includes the effect of FAS 123(R), expensing for stock options and our employee stock purchase plan, that took affect starting in the first quarter of this year," concluded Jeffrey B. DeBoer.
Earnings Per Share Guidance
FY 2005 FY 2006
------------------- -------------------------
EPS w/o FAS 123(R) $ 2.37 $ 2.58 - $2.70(non-GAAP)
adoption:
Effect of FAS 123(R): N/A ($0.12)
------------------- -------------------------
EPS - Reportable 2006: N/A $ 2.46 - $2.58
The inclusion of the non-GAAP "EPS without FAS 123(R) 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 123(R)") that required 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 under the fair value method were presented in the footnotes to the company's financials filed on Form 10-K. The new rules became 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.
Conference Call Information
Lithia Motors will be providing more detailed information on the results for the first quarter 2006 in its conference call scheduled for 11 a.m. PT, April 25, 2006. 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 25 brands of new vehicles and operates 94 stores and 189 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 103,333 new and used vehicles and had $2.9 billion in total revenue in 2005.
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 company monthly performance, benefits or strength of Lithia's operating model, inventory levels, anticipated revenues of recently acquired stores and projected full-year 2006 earnings per share guidance, and potential changes in accounting standards.
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
--------- Three Months Ended
March 31,
----------------------- $ Increase % Increase
2006 2005 (Decrease) (Decrease)
----------- ----------- ---------- ----------
New Vehicle Sales $ 427,750 $ 359,619 $ 68,131 18.9%
Used Vehicle Sales 209,078 197,322 11,756 6.0
Finance & Insurance 27,554 24,616 2,938 11.9
Service, Body & Parts
Sales 82,473 74,265 8,208 11.1
Fleet & Other Revenues 1,330 3,104 (1,774) (57.2)
----------- ----------- --------- ----------
Total Revenues 748,185 658,926 89,259 13.5
Cost of Sales 617,404 541,694 75,710 14.0
----------- ----------- --------- ----------
Gross Profit 130,781 117,232 13,549 11.6
SG&A Expense 100,717 89,132 11,585 13.0
Depreciation/
Amortization 4,046 3,388 658 19.4
----------- ----------- --------- ----------
Income from Operations 26,018 24,712 1,306 5.3
Flooring Interest
Expense (6,615) (5,102) 1,513 29.7
Other Interest Expense (3,331) (2,805) 526 18.8
Other Income, net 427 285 142 49.8
----------- ----------- --------- ----------
Income from continuing
operations before income
taxes 16,499 17,090 (591) (3.5)
Income Tax Expense 5,870 6,614 (744) (11.2)
Income Tax Rate 35.6% 38.7%
----------- -----------
Net Income from
continuing ops. 10,629 10,476 153 1.5%
Income (Loss) from
discontinued operations,
net of income taxes (1,321) (486) 835 171.8
----------- ----------- --------- ----------
Net Income $ 9,308 $ 9,990 $ (682) (6.8)%
=========== =========== ========= ==========
Diluted Net Income per
share:
Continuing Operations $ 0.53 $ 0.50 $ 0.03 6.0%
Effects of FAS123(R) (0.03) -
Diluted Net Income per
share after effect of
FAS123(R): $ 0.50 $ 0.50 0.00 0%
Discontinued Operations (0.06) (0.02)
----------- -----------
Net Income per share $ 0.44 $ 0.48 (0.04) (8.3)%
=========== =========== ========= ==========
Diluted Shares
Outstanding 22,066 21,704 362 1.7%
LITHIA MOTORS, INC. Three Months Ended
March 31,
-------------------- Increase % Increase
Unit Sales: 2006 2005 (Decrease) (Decrease)
----------- ---------- ------- ---------- ----------
New Vehicle 15,241 12,864 2,377 18.5%
Used - Retail Vehicle 10,757 10,820 (63) (0.6)
Used - Wholesale 5,534 5,544 (10) (0.2)
Total Units Sold 31,532 29,228 2,304 7.9
Average Selling Price:
----------------------
New Vehicle $ 28,066 $27,955 $ 111 0.4%
Used - Retail Vehicle 16,162 15,219 943 6.2
Used - Wholesale 6,364 5,890 474 8.0
Key Financial Data:
-------------------
Gross Profit Margin 17.5% 17.8%
SG&A as a % of Gross Profit 77.0% 76.0%
Operating Margin 3.5% 3.8%
Pre-Tax Margin 2.2% 2.6%
Gross Margin/Profit Data
------------------------
New Vehicle Retail 7.9% 8.1%
Used Vehicle Retail 15.4% 15.4%
Used Vehicle Wholesale 5.1% 4.4%
Service, Body & Parts 48.8% 48.6%
New Retail Gross
Profit/Unit $ 2,230 $ 2,278
Used Retail Gross
Profit/Unit $ 2,486 $ 2,349
Used Wholesale Gross
Profit/Unit $ 325 $ 262
Finance & Insurance/Retail
Unit $ 1,060 $ 1,039
Same Store Data
---------------
New Vehicle Retail Sales 11.5% (5.8)%
Used Vehicle Sales
(including Wholesale) 0.3% (2.1)%
Total Vehicle Sales
(excluding fleet) 7.5% (4.5)%
Finance & Insurance Sales 4.1% (1.5)%
Service, Body & Parts Sales 5.1% 0.3 %
Total Sales (excluding
Fleet) 7.1% (3.9)%
Total Gross Profit
(excluding Fleet) 4.9% 1.5 %
LITHIA MOTORS, INC.
Balance Sheet Highlights (Dollars in Thousands)
March 31, 2006 December 31, 2005
-------------- -----------------
Cash & Cash Equivalents $ 33,425 $ 48,566
Trade Receivables(a) 103,768 106,443
Inventory 651,938 606,047
Assets Held for Sale 19,165 27,411
Other Current Assets 13,979 15,781
------------- ----------------
Total Current Assets 822,275 804,248
Real Estate, net 264,064 255,372
Equipment & Leases, net 79,314 77,805
Goodwill, net 261,442 260,899
Other Assets 57,943 54,390
------------- ----------------
Total Assets $ 1,485,038 $ 1,452,714
============= ================
Floorplan Notes Payable $ 549,467 $ 530,452
Liabilities held for sale 16,780 22,388
Other Current Liabilities 102,614 95,560
------------- ----------------
Total Current Liabilities 668,861 648,400
Used Vehicle Flooring - -
Real Estate Debt 167,171 154,046
Other Long-Term Debt 123,480 136,505
Other Liabilities 55,202 54,130
------------- ----------------
Total Liabilities 1,014,714 993,081
------------- ----------------
Shareholders' Equity 470,324 459,633
------------- ----------------
Total Liabilities &
Shareholders' Equity $ 1,485,038 $ 1,452,714
============= ================
(a) Includes contracts-in-transit of $51,659 and $52,453 for 2006 and
2005.
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) 21% 23%
Working Capital $ 153,414 $ 155,848
Book Value per Basic Share $ 24.21 $ 23.97