Lithia Motors, Inc. Reports Q2D 1997 Results
30 July 1997
Lithia Motors, Inc. Reports Results of the Second Quarter 1997
MEDFORD, Ore., July 30 -- Lithia Motors, Inc.
today announced that revenues increased 81.3% to $66.4 million in the second
quarter of 1997 from $36.6 million in the second quarter of 1996. Net
earnings rose 84.3% to $1.37 million compared to $741,100 in the second
quarter of 1996(A) or $0.19 per share on 7.3 million shares outstanding vs.
$0.15 per share on 4.9 million shares in the same quarter of 1996.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We
continue to accomplish the growth rates we set out to achieve. In order to
post a 27% increase in earnings per share we had to nearly double our
earnings, due to the dilution factor following the IPO. Cost efficiencies
continue to be realized at the management company even as we enter a phase of
significant and sustainable growth."
Lithia sold 1,488 new vehicles and 1,536 retail used vehicles during the
quarter compared to 840 and 1,142 respectively during the second quarter of
1996. This represents year-on-year increases of 77.1% and 34.5%,
respectively. The average price of a new vehicle increased year-on-year by
7.1% to $21,255 and by 11.8% to $12,329 for retail used vehicles. Quarter on
quarter average price increases were 2.5% and 1.8%, respectively. New vehicle
sales increased by 89.8% and used vehicle sales increased by 70.1% with other
operating revenue up 87.2%. Revenue benefited from a combination of in-store
growth and the inclusion of Eugene Dodge, Vacaville Toyota and Concord Dodge,
three stores which were acquired since the fourth quarter of last year.
Same-store total revenue growth came in at 7.6%, even stronger than the
3.2% posted in the first quarter of 1997. Same-store used retail revenue and
other operating revenue increased 12.5% and 19.2%, respectively, as Lithia
continues to emphasize these profitable and more stable aspects of its
business. This was partially offset by a 3.0% decline in same-store new
vehicle sales.
Total gross margin declined from 16.5% to 16.1% as certain key stores
posted large volume increases. In general, both gross margins and costs as a
percentage of sales decrease when sales volumes increase. Lithia's gross
margin of 16.1% continues to exceed the average US dealership.
The decline in gross margin was more than offset by an improvement in the
expense ratio from 12.8% to 12.3% of sales, resulting in an improved operating
margin of 3.5%. The pre-tax margin improved over last year's second quarter
from 3.3% to 3.4%, which is double the industry average.
Sid DeBoer commented, "We continue to be reassured by the number of
attractive dealerships available for purchase in our target acquisition areas.
By clustering valuable franchises within strong regional economies, as we've
done in our home market of Medford, Oregon, we anticipate significant
operational improvements and good returns on our investments as we put in
place the proven Lithia formula for above industry performance."
Since the end of the second quarter of 1997, Lithia completed the
acquisition of Magnussen-Barbee Ford Lincoln Mercury in Napa, California and
is expected to complete the acquisition of Sun Valley Ford Volkswagen in
Concord, California by mid-August. Lithia recently announced pending
acquisitions of Bakersfield Nissan and Bakersfield BMW/Acura in Bakersfield,
California and the Donnelly Automotive Group with two dealerships in Reno and
Sparks, Nevada.
This press release includes forward looking statements, 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, manufacturer approval, and others set forth from
time to time in the company's filings with the SEC.
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Unaudited (FIFO Basis) (B)
Three months ended June 31 1996 1997
New Vehicle Revenue $16,665 $31,627
Used Vehicle Revenue 15,156 25,775
Other Operating Revenue 4,818 9,019
Total Revenue 36,639 66,421
Cost of Sales 30,588 55,707
Gross Profit 6,051 10,714
SG&A Expense 4,687 8,192
EBITDA 1,364 2,522
Depreciation & Amortization 110 222
EBIT (Operating Profit) 1,254 2,300
Interest Expense (net) 51 75
Pre-Tax Profit 1,203 2,225
Income Tax 462 859
Income Tax Rate 38.4% 38.6%
Net Profit 741 1,366
Shares Outstanding 4.893m 7.309m
EPS $0.15 $0.19
Unit Sales:
New 840 1,488
Used - Retail 1,142 1,536
Used - Wholesale 616 1,197
Average Selling Price:
New $19,839 $21,255
Used - Retail $11,026 $12,329
Used - Wholesale $4,163 $5,713
(A) 2Q 1996 adjusted for FIFO conversion and proforma for income taxes
(B) 2Q 1996 adjusted for FIFO conversion and proforma for income taxes
SOURCE Lithia Motors Inc.