Lithia Motors, Inc. Reports Q3 Results
29 October 1997
Lithia Motors, Inc. Reports Results of the Third Quarter 1997
MEDFORD, Ore., Oct. 29 -- Lithia Motors, Inc.
today announced that revenues increased 134.3% to $85.6 million in the third
quarter of 1997 from $36.5 million in the third quarter of 1996. Net earnings
rose 112.7% to $1.58 million compared to $0.74 million in the third quarter of
1996(a) or $0.22 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 47% increase in earnings per share we had to more than double our
earnings, due to the dilution factor following the IPO. Our proven operating
model which focuses on higher margin products underlies our growth, and as we
enter a phase of significant growth, we anticipate continued improvements in
the acquired stores."
New vehicle sales increased by 169.7%, used vehicle sales increased by
92.1%, and other operating revenue increased 144.6%. Lithia sold 2,083 new
vehicles and 1,793 retail used vehicles during the quarter compared to 832 and
1,020 respectively during the third quarter of 1996. This represents
year-on-year unit increases of 150.4% and 75.8%, respectively. The average
price of a new vehicle increased year-on-year by 7.7% to $21,393 and decreased
0.6% to $12,499 for retail used vehicles. Quarter-on-quarter average price
increases were 0.6% and 1.4%, respectively. Revenue benefited from a
combination of in-store growth and the inclusion of Eugene Dodge, Vacaville
Toyota, Concord Dodge, Napa Ford, Sun Valley Ford and Sun Valley Volkswagen,
six stores which were acquired since the fourth quarter of last year.
Same-store total revenue growth came in at 5.7%, in line with the 5.5%
posted in the first half of 1997. Same-store new vehicle revenue rebounded to
a 6.6% increase following a decline of 3.2% in the first half. Same-store
retail used revenue declined by 6.3% following a 11.3% increase in the first
half. Manufacturer incentives at the end of the model year increased the
attraction of new vehicles relative to used vehicles. Same-store other
operating revenue increased 22.2%, slightly better than the 20.0% increase in
the first half, as Lithia continues to emphasize this profitable and more
stable aspect of its business. Year-to-date same store sales increased 5.6%,
with new vehicles increasing by 0.2%, used vehicles increasing by 5.0% and
other operating revenue increasing by 20.8%.
Total gross margin was 16.6% in the third quarter of 1997. This is higher
than the 16.2% gross margin posted in the first half of 1997 and continues to
substantially exceed the average US dealership.
The expense ratio improved from 13.9% to 12.7% of sales versus last year's
third quarter, resulting in a better than expected EBITDA margin of 3.9%.
Interest expense continues to increase as the interest benefit from the IPO
proceeds continues to decline. As predicted, the third quarter pre-tax margin
was 3.0% and continues to be twice as high as the industry average of 1.5% in
1996.
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 well as
targeting strategic 'livable' cities, we anticipate continued operational
improvements in the newly acquired stores as we put in place the proven Lithia
formula for above average industry performance."
Since the end of the third quarter of 1997, Lithia completed the
acquisitions of Bakersfield Nissan and Bakersfield Acura and BMW in
Bakersfield, California and the Donnelly Automotive Group with two dealerships
in Reno and Sparks, Nevada. These acquisitions represent an addition of four
new brands to Lithia's product line-up.
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)
Three Months Ended Nine Months Ended
September 30, September 30,
Unaudited (FIFO Basis)(b) 1996 1997 1996 1997
New Vehicle Revenue $ 16,524 $ 44,562 $ 48,005 $ 101,018
Used Vehicle Revenue 15,075 28,965 43,470 77,382
Other Operating Revenue 4,924 12,046 14,090 28,299
Total Revenue 36,523 85,573 105,565 206,699
Cost of Sales 29,957 71,388 87,392 172,850
Gross Profit 6,566 14,185 18,173 33,849
SG&A Expense 5,090 10,848 14,146 26,039
EBITDA 1,476 3,337 4,027 7,810
Depreciation & Amortization 112 313 328 704
EBIT (Operating Profit) 1,364 3,024 3,699 7,106
Interest Expense (net) 159 450 354 443
Pre-Tax Profit 1,205 2,574 3,345 6,663
Income Tax 462 994 1,284 2,573
Income Tax Rate 38.4% 38.6% 38.4% 38.6%
Net Profit 743 1,580 2,061 4,090
Shares Outstanding 4.893m 7.312m 4.893m 7.281m
EPS $ 0.15 $ 0.22 $ 0.42 $ 0.56
Unit Sales:
New 832 2,083 2,426 4,768
Used - Retail 1,020 1,793 2,929 4,779
Used - Wholesale 565 1,327 1,803 3,553
Average Selling Price:
New $ 19,860 $ 21,393 $ 19,788 $ 21,187
Used - Retail $ 12,573 $ 12,499 $ 12,255 $ 12,327
Used - Wholesale $ 3,982 $ 4,940 $ 4,202 $ 5,199
LITHIA MOTORS, INC.
Balance Sheet Highlights
(in Thousands of Dollars)
Period Ended Period Ended
September 30, 1997 December 31, 1996
Cash & Cash Equivalents $ 7,379 $ 15,413
Inventory 50,748 33,362
Total Current Assets 68,020 54,299
Other Assets 33,221 14,665
Total Assets 101,241 68,964
Floorplan Notes Payable 33,856 19,645
Total Current Liabilities 44,990 28,868
Long-Term Debt 14,662 6,160
Total Liabilities 65,371 41,050
Shareholders Equity 35,870 27,914
Total Liabilities & Shareholders Equity 101,241 68,964
(a) - 3Q 1996 adjusted for FIFO conversion and proforma for income taxes
(b) - 3Q 1996 adjusted for FIFO conversion and proforma for income taxes
SOURCE Lithia Motors Inc.