Lithia Motors Reports Revenues of $3.17 Billion for the Full-Year 2006; Earnings from Continuing Operations of $1.91 Per Share
MEDFORD, Ore.--Lithia Motors, Inc. today announced that full-year 2006 sales increased 11% to $3.17 billion as compared to $2.85 billion in the same period last year. New vehicle sales increased 13%, used vehicle sales increased 7%, finance/insurance sales increased 12% and parts/service sales increased 14%.
Full-year 2006 net income from continuing operations was $40.3 million as compared to $56.0 million in 2005. Diluted earnings per share from continuing operations were $1.91 including the $0.12 effect of accounting for equity compensation under FAS123(R), and the $0.05 effect of accounting for derivative instruments and hedging activities under SFAS 133.
Full-year 2006 earnings per share from continuing operations, excluding the effect of accounting for equity compensation under FAS123(R) and excluding the accounting for derivative instruments and hedging activities SFAS 133, were $2.08 as compared to $2.53 in the same period last year.
Sid DeBoer, Lithia’s Chairman and CEO, commented, “We were able to drive positive same-store sales growth in all business lines for the full-year 2006 and the result was total same-store revenue growth of 3.7%. New vehicle same store sales for Lithia grew 4.8% as compared to an industry that saw total sales down nearly 3%. Total same-store gross profit for the year increased 2.1%. One highlight was in parts and service, where we saw our same store customer pay business increase 7% for the year.”
“In the fourth quarter we were successful in our efforts to reduce inventories. Our new vehicle day’s supply at the end of December was more than 30 days below December 2005 levels, and 8 days below our average levels for the end of the year. At the end of January our day’s supply of new vehicle inventory had dropped another 11 days. This positions our inventories well going into the first quarter of 2007.”
“Our focus on pushing new vehicle sales in the fourth quarter combined with the fact that fuel costs continued to stabilize, lead to a sequential increase in truck and SUV sales, as a percent of total sales, from the third to the fourth quarter of the year. Additionally, interest rates have continued to remain steady, and combined with the lower inventory position this should help ensure no further increases in flooring costs.”
“Full year earnings were lower than last year due to a combination of factors. First, there was a 29 cent difference in year over year earnings due to an accounting change for equity compensation under FAS123(R), and a change year over year in derivative instruments and hedging activities under FAS 133. Effective January 1, 2007, we expect that the derivative transactions will qualify for fair value accounting as hedge transactions.”
“Other factors that impacted full-year and fourth quarter earnings were higher inventory flooring costs resulting from higher inventory levels and higher interest rates; lower retail vehicle gross profit margins due to poor inventory mix; L2 start-up costs; and the increased costs resulting from company-wide operational initiatives that we have been implementing throughout the year,” concluded Mr. DeBoer.
For the fourth quarter, total sales increased 12% to $735.8 million from $655.3 million in the same period last year. New vehicle sales increased 18%, used vehicle sales were even with last year, finance/insurance sales increased 8%, and parts/service sales increased 16%.
For the fourth quarter, Lithia’s net income from continuing operations was $6.6 million as compared to $11.8 million in the fourth quarter of 2005. Diluted earnings per share from continuing operations were $0.32, including the $0.03 effect of accounting for equity compensation under FAS123(R) and the $0.01 effect of accounting for derivative instruments and hedging activities under SFAS 133.
Fourth quarter earnings per share from continuing operations, excluding the affect of accounting for equity compensation under FAS123(R) and excluding the accounting for derivative instruments and hedging activities under SFAS 133, were $0.36 as compared to $0.54 in the same period last year..
Jeffrey B. DeBoer, Senior Vice President and CFO added, “For the full-year 2006 we completed acquisitions with approximately $470 million in annualized revenues. This represents over 16% growth on our 2005 total revenues of $2.85 billion.”
"Our guidance for the full-year 2007 is included in the table below. As was outlined in more detail in our earnings press release for the period ended September 30, 2006; operational projects and initiatives; start up costs for our first independent used vehicle retail outlets; increased company health and benefit plan costs and our domestic product mix will continue to negatively impact earnings in 2007.”
Guidance
Earnings per Share FY 2007
-------------
From Continuing Operations: $1.90 - $2.10
In December of 2006, Lithia filed its restated financial statements for the quarters ended March 31, 2006 and June 30, 2006, and for the years ended December 31, 2005, 2004 and 2003. These financial statements were restated as a result of an accounting error relating to the Company's derivative accounting under Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). Neither cash flows nor shareholder equity was affected by these restatements.
Conference Call Information
Lithia Motors will be providing more detailed information on the results for the fourth quarter and full-year 2006 in its conference call scheduled for 2 p.m. PT today. The call can be accessed live by calling 973-582-2750. 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 700 and Russell 2000 Company. Lithia sells 28 brands of new vehicles at 104 stores, which are located in 45 markets within 15 states. Internet sales are centralized at www.Lithia.com. 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
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 items which impact earnings, industry data, projections on how interest rates, fuel costs and the companies inventories may impact future results, anticipated revenues of recent acquisitions, and projected full-year 2007 earnings per share guidance.
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.
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LITHIA MOTORS, INC. |
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(In Thousands except per share and unit data) |
||||||||||||
| Unaudited |
Twelve Months Ended December 31, |
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|
$Increase (Decrease) |
% Increase (Decrease) |
|||||||||||
|
2006 |
2005 |
|||||||||||
| New Vehicle Sales | $ | 1,841,463 | $ | 1,631,316 | $ | 210,147 | 12.9% | |||||
| Used Vehicle Sales | 862,397 | 805,448 | 56,949 | 7.1 | ||||||||
| Finance & Insurance | 119,936 | 107,564 | 12,372 | 11.5 | ||||||||
| Service, Body & Parts Sales | 343,747 | 302,960 | 40,787 | 13.5 | ||||||||
| Fleet & Other Revenues | 5,351 | 4,410 | 941 | 21.3 | ||||||||
| Total Revenues |
3,172,894 |
2,851,698 |
321,196 |
11.3 |
||||||||
| Cost of Sales | 2,634,417 | 2,359,999 | 274,418 | 11.6 | ||||||||
| Gross Profit | 538,477 | 491,699 | 46,778 | 9.5 | ||||||||
| SG&A Expense | 406,569 | 357,617 | 48,952 | 13.7 | ||||||||
|
Depreciation/ Amortization |
17,071 | 13,975 | 3,096 | 22.2 | ||||||||
| Income from Operations |
114,837 |
120,107 |
(5,270) | (4.4) | ||||||||
| Flooring Interest Expense | (34,636) | (17,580) | 17,056 | 97.0 | ||||||||
| Other Interest Expense | (15,453) | (11,891) | 3,562 | 30.0 | ||||||||
| Other Income, net | 958 | 953 | 5 | 0.5 | ||||||||
| Income from continuing operations before income taxes | ||||||||||||
| 65,706 | 91,589 | (25,883) | (28.3) | |||||||||
| Income Tax Expense | (25,369) | (35,610) | (10,241) | (28.8) | ||||||||
| Income Tax Rate | 38.6% | 38.9% | ||||||||||
| Net Income from continuing ops. | 40,337 | 55,979 | (15,642) |
(27.9) |
% |
|||||||
| Income (Loss) from discontinued operations, net of income taxes | ||||||||||||
| (3,033) | (2,352) | 681 | 29.0 | |||||||||
| Net Income | $ | 37,304 | $ | 53,627 | ($16,323) |
(30.4) |
% |
|||||
| Diluted Net Income per share: | ||||||||||||
| Continuing Operations before following accounting adjustments: | ||||||||||||
| $ | 2.08 | $ | 2.53 | $ | (0.45) |
(17.8) |
% |
|||||
| Effect of SFAS 133 | (0.05) | 0.12 | ||||||||||
| Effects of FAS123(R) | (0.12) | - | ||||||||||
| Continuing Operations Net Income per share: | ||||||||||||
| $ | 1.91 | $ | 2.65 | (0.74) |
(27.9) |
% |
||||||
| Discontinued Operations | (0.14) | (0.11) | ||||||||||
| Net Income per share | $ | 1.77 | $ | 2.54 | (0.77) |
(30.3) |
% |
|||||
| Diluted Shares Outstanding | 22,102 | 21,807 | 295 | 1.4% | ||||||||
| LITHIA MOTORS, INC. | |||||||||||
|
Twelve Months Ended December 31, |
$Increase (Decrease) |
% Increase (Decrease) |
|||||||||
| Unit Sales: | 2006 | 2005 | |||||||||
| New Vehicle | 66,224 | 58,372 | 7,852 | 13.5% | |||||||
| Used - Retail Vehicle | 43,424 | 42,831 | 593 | 1.4 | |||||||
| Used - Wholesale | 25,282 | 23,608 | 1,674 | 7.1 | |||||||
| Total Units Sold | 134,930 | 124,811 | 10,119 | 8.1 | |||||||
| Average Selling Price: | 2006 | 2005 | |||||||||
| New Vehicle | $ | 27,807 | $ | 27,947 | ($140) |
(0.5) |
% |
||||
| Used - Retail Vehicle | 16,290 | 15,564 | 726 | 4.7 | |||||||
| Used - Wholesale | 6,132 | 5,880 | 252 | 4.3 | |||||||
| Key Financial Data: | 2006 | 2005 | |||||||||
| Gross Profit Margin | 17.0% | 17.2% | -20 bps | ||||||||
| SG&A as a % of Gross Profit | 75.5% | 72.7% | +280 bps | ||||||||
| Operating Margin | 3.6% | 4.2% | -60 bps | ||||||||
| Pre-Tax Margin | 2.1% | 3.2% | -110 bps | ||||||||
| Gross Margin/Profit Data | 2006 | 2005 | |||||||||
| New Vehicle Retail | 7.7% | 8.0% | -30 bps | ||||||||
| Used Vehicle Retail | 14.9% | 15.6% | -70 bps | ||||||||
| Used Vehicle Wholesale | 2.4% | 2.7% | -30 bps | ||||||||
| Service, Body & Parts | 48.5% | 47.8% | +70 bps | ||||||||
| New Retail Gross Profit/Unit | $ | 2,129 | $ | 2,231 | -$102 | ||||||
| Used Retail Gross Profit/Unit | $ | 2,426 | $ | 2,423 | +$3 | ||||||
| Used Wholesale Gross Profit/Unit | $ | 149 | $ | 160 | -$11 | ||||||
| Finance & Insurance/Retail Unit | $ | 1,094 | $ | 1,063 | +$31 | ||||||
| Same Store Data | 2006 | 2005 | |||||||||
| New Vehicle Retail Sales | 4.8% | 0.9% | |||||||||
| Used Vehicle Sales (includes Wholesale) | 0.6% | 3.7% | |||||||||
| Total Vehicle Sales (excludes fleet) | 3.4% | 1.8% | |||||||||
| Finance & Insurance Sales | 5.1% | 1.7% | |||||||||
| Service, Body & Parts Sales | 5.3% | 2.9% | |||||||||
| Total Sales (Excluding Fleet) | 3.7% | 1.9% | |||||||||
| Total Gross Profit (Excluding Fleet) | 2.1% | 3.2% | |||||||||
| LITHIA MOTORS, INC. | ||||||||||||
| (In Thousands except per share and unit data) | ||||||||||||
| Unaudited |
|
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|
Three Months Ended December 31, |
$Increase (Decrease) |
% Increase (Decrease) |
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| 2006 | 2005 | |||||||||||
| New Vehicle Sales | $ | 427,217 | $ | 361,222 | $ | 65,995 | 18.3% | |||||
| Used Vehicle Sales | 190,282 | 190,538 | (256) | (0.1) | ||||||||
| Finance & Insurance | 26,757 | 24,881 | 1,876 | 7.5 | ||||||||
| Service, Body & Parts Sales | 89,999 | 77,819 | 12,180 | 15.7 | ||||||||
| Fleet & Other Revenues | 1,566 | 847 | 719 | 84.9 | ||||||||
| Total Revenues | 735,821 | 655,307 | 80,514 | 12.3 | ||||||||
| Cost of Sales | 609,717 | 539,243 | 70,474 | 13.1 | ||||||||
| Gross Profit | 126,104 | 116,064 | 10,040 | 8.7 | ||||||||
| SG&A Expense | 98,585 | 86,481 | 12,104 | 14.0 | ||||||||
|
Depreciation/ Amortization |
4,592 | 3,752 | 840 | 22.4 | ||||||||
| Income from Operations | 22,927 | 25,831 | (2,904) | (11.2) | ||||||||
| Flooring Interest Expense | (8,142) | (5,217) | 2,925 | 56.1 | ||||||||
| Other Interest Expense | (4,765) | (3,120) | 1,645 | 52.7 | ||||||||
| Other Income, net | 189 | 402 | (213) | (53.0) | ||||||||
| Income from continuing operations before income taxes | ||||||||||||
| 10,209 | 17,896 | (7,687) | (43.0) | |||||||||
| Income Tax Expense | (3,620) | (6,124) | (2,504) | (40.9) | ||||||||
| Income Tax Rate | 35.5% | 34.2% | ||||||||||
| Income from continuing ops. | 6,589 | 11,772 | (5,183) | (44.0) | ||||||||
| Income (Loss) from discontinued operations, net of income taxes | ||||||||||||
| (1,060) | (1,282) | (222) | (17.3) | |||||||||
| Net Income | $ | 5,529 | $ | 10,490 | ($4,961) |
(47.3) |
% |
|||||
| Diluted Net Income per share: | ||||||||||||
| Continuing Operations before following accounting adjustments: | ||||||||||||
| $ | 0.36 | $ | 0.54 | $ | (0.18) |
(33.3) |
% |
|||||
| Effect of SFAS 133 | (0.01) | 0.02 | ||||||||||
| Effects of FAS123(R) | (0.03) | - | ||||||||||
| Continuing Operations | ||||||||||||
| Net Income per share: | $ | 0.32 | $ | 0.56 | (0.24) |
(42.9) |
% |
|||||
| Discontinued Operations | (0.05) | (0.06) | ||||||||||
| Net Income per share | $ | 0.27 | $ | 0.50 | (0.23) |
(46.0) |
% |
|||||
| Diluted Shares Outstanding | 22,041 | 21,929 | 112 | 0.5% | ||||||||
| LITHIA MOTORS, INC. | |||||||||||
|
Three Months Ended |
|||||||||||
| December 31, |
$Increase (Decrease) |
% Increase (Decrease) |
|||||||||
| Unit Sales: | 2006 | 2005 | |||||||||
| New Vehicle | 14,770 | 12,568 | 2,202 | 17.5% | |||||||
| Used - Retail Vehicle | 9,227 | 9,815 | (588) | (6.0) | |||||||
| Used - Wholesale | 6,021 | 5,658 | 363 | 6.4 | |||||||
| Total Units Sold | 30,018 | 28,041 | 1,977 | 7.1 | |||||||
| Average Selling Price: | 2006 | 2005 | |||||||||
| New Vehicle | $ | 28,925 | $ | 28,741 | $ | 184 | 0.6% | ||||
| Used - Retail Vehicle | 16,540 | 15,898 | 642 | 4.0 | |||||||
| Used - Wholesale | 6,255 | 6,097 | 158 | 2.6 | |||||||
| Key Financial Data: | |||||||||||
| Gross Profit Margin | 17.1% | 17.7% | -60 bps | ||||||||
| SG&A as a % of Gross Profit | 78.2% | 74.5% | +370 bps | ||||||||
| Operating Margin | 3.1% | 3.9% | -80 bps | ||||||||
| Pre-Tax Margin | 1.4% | 2.7% | -130 bps | ||||||||
| Gross Margin/Profit Data | 2006 | 2005 | |||||||||
| New Vehicle Retail | 7.8% | 8.0% | -20 bps | ||||||||
| Used Vehicle Retail | 14.3% | 15.5% | -120 bps | ||||||||
| Used Vehicle Wholesale | 1.4% | 1.1% | +30 bps | ||||||||
| Service, Body & Parts | 48.1% | 47.9% | +20 bps | ||||||||
| New Retail Gross Profit/Unit | $ | 2,257 | $ | 2,299 | -$42 | ||||||
| Used Retail Gross Profit/Unit | $ | 2,365 | $ | 2,471 | -$106 | ||||||
| Used Wholesale Gross Profit/Unit | $ | 87 | $ | 69 | -$18 | ||||||
| Finance & Insurance/Retail Unit | $ | 1,115 | $ | 1,112 | +$3 | ||||||
| Same Store Data | 2006 | 2005 | |||||||||
| New Vehicle Retail Sales | 6.6% |
(5.7) |
% |
||||||||
| Used Vehicle Sales (includes Wholesale) |
(7.4) |
% |
3.4% |
||||||||
| Total Vehicle Sales (excludes fleet) | 1.8% |
(2.7) |
% |
||||||||
| Finance & Insurance Sales | 3.4% |
(4.1) |
% |
||||||||
| Service, Body & Parts Sales | 3.6% | 3.7% | |||||||||
| Total Sales (Excluding Fleet) |
2.1% |
(2.1) |
% |
||||||||
| Total Gross Profit (Excluding Fleet) |
(0.9) |
% |
1.1% | ||||||||
| LITHIA MOTORS, INC. | |||||
| Balance Sheet Highlights (Dollars in Thousands) | |||||
| December 31, 2006 | December 31, 2005 | ||||
| Unaudited | |||||
| Cash & Cash Equivalents | $ | 26,600 | $ | 48,566 | |
|
Trade Receivables(a) |
118,528 | 106,443 | |||
| Inventory | 603,306 | 606,047 | |||
| Assets Held for Sale | 15,485 | 27,411 | |||
| Other Current Assets | 15,721 | 15,781 | |||
| Total Current Assets | 779,640 | 804,248 | |||
| Real Estate, net | 327,890 | 255,372 | |||
| Equipment & Leases, net | 89,213 | 77,805 | |||
| Goodwill, net | 307,424 | 260,899 | |||
| Other Assets | 75,190 | 54,390 | |||
| Total Assets | $ | 1,579,357 | $ | 1,452,714 | |
| Floorplan Notes Payable | $ | 499,679 | $ | 530,452 | |
| Liabilities held for sale | 11,610 | 22,388 | |||
| Other Current Liabilities | 118,650 | 94,962 | |||
| Total Current Liabilities | 629,939 | 647,802 | |||
| Used Vehicle Flooring | 95,614 | - | |||
| Real Estate Debt | 155,890 | 154,046 | |||
| Other Long-Term Debt | 140,879 | 136,505 | |||
| Other Liabilities | 63,642 | 54,130 | |||
| Total Liabilities | 1,085,964 | 992,483 | |||
| Shareholders' Equity | 493,393 | 460,231 | |||
| Total Liabilities & | |||||
| Shareholders' Equity | $ | 1,579,357 | $ | 1,452,714 | |
|
(a) Includes contracts-in-transit of $56,211 and $52,453 at December 31, 2006 and December 31, 2005 respectively. |
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|
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) | 22% | 23% | |||
| Working Capital | $ | 149,701 | $ | 156,446 | |
| Book Value per Basic Share | $ | 25.32 | $ | 24.00 | |