Lithia Dealer Group Increases Earnings
19 February 1998
Lithia Motors Reports a 203% Increase in Sales and a 234% Increase in Net Earnings in the Fourth Quarter of 1997 Versus 1996;
82 Cents Per Share Earnings in 1997
MEDFORD, Ore., Feb. 19 -- Lithia Motors, Inc.
today announced that revenues increased 203% to $113.1 million in the fourth
quarter of 1997 from $37.3 million in the fourth quarter of 1996. Net
earnings rose 234% to $1.87 million compared to $0.56 million in the fourth
quarter of 1996 or $0.25 per share on 7.4 million shares outstanding vs. $0.11
per share on 5.2 million shares in the same quarter of 1996.
For the fiscal year of 1997, Lithia reported that revenues increased 124%
to $319.8 million from $142.8 million in fiscal 1996. Net earnings rose 129%
to $6.0 million compared to $2.6 million in 1996 or $0.82 per share on 7.3
million shares outstanding vs. $0.52 per share on 5.0 million shares in 1996.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are
pleased to announce these results which exceeded even the most aggressive
estimates that Wall Street had set for us in our first year as a public
company. We located and purchased ten auto retailing locations in under-
dealered markets at attractive prices in 1997. Our proven operating model has
allowed us to turn average stores into above-average stores by focusing on
higher margin products, such as used cars, service and parts, and finance and
insurance products. In 1998, we have already announced four fill-in
acquisitions in three different markets and will focus our efforts on
implementing our proven operating model at the 14 locations that we have had
under ownership for less than one year."
In 1997, new vehicle sales increased by 147.8%, used vehicle sales
increased by 93.0%, and other operating revenue increased 137.2%. Lithia sold
7,493 new vehicles and 7,148 retail used vehicles in 1997 compared to 3,274
and 4,156, respectively, during 1996. This represents year-on-year unit
increases of 128.9% and 72.0%, respectively. The average price of a new
vehicle increased year-on-year by 8.3% to $21,526 and for retail used vehicles
by 5.8% to $12,391. Revenue benefited from a combination of 4.8% same-store
growth and the inclusion of 12 locations acquired since December 1996. The
4.8% same-store growth breaks down into a 3.1% increase in vehicle sales and a
20.7% increase in other revenue, which includes the highest margin products of
service, parts, finance fees and insurance. The trend towards stronger new
car sales and weaker used car sales continued in the fourth quarter as
manufacturer incentives increased the attraction of new vehicles relative to
used vehicles.
Total gross margin was 16.7% in 1997 vs. 17.2% in 1996 as Lithia has added
multiple stores that do not yet operate at the levels achievable once Lithia's
operating model has been put in place. The average US dealership posted a
12.9% gross profit through November 1997, according to the National Auto
Dealers Association. The sales and general administration expense ratio
improved from 13.9% to 12.7% of sales in 1997 versus 1996, resulting in a
better than expected earnings before interest, tax, depreciation and
amortization (EBITDA) margin of 4.0%. The fourth quarter EBITDA margin of
4.4% was higher than the 3.6-3.9% range achieved in the first three quarters
of 1997. Interest expense continues to increase as the interest benefit from
the IPO proceeds ended in the fourth quarter. The 1997 pre-tax margin was
3.0%, the same level as in 1996, and continues to be twice as high as the
industry average of 1.5% in 1996.
Dick Heimann, President and COO, 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 operating model."
Since the end of the fourth quarter of 1997, Lithia completed the
acquisitions of Fresno Nissan and Fresno Jeep/Hyundai in Fresno, California,
Medford Nissan/BMW in Medford, Oregon and Reno Volkswagen in Reno, Nevada.
These acquisitions are all fill-ins which will allow Lithia to expand market
share and leverage expenses even further in these three markets.
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)
Audited
Three Months Ended Fiscal Year Ended
December 31, December 31,
1996 1997 1996 1997
New Vehicle Revenue $17,087 $60,276 $65,093 $161,294
Used Vehicle Revenue 15,140 35,717 58,610 113,099
Other Operating Revenue 5,051 17,103 19,141 45,402
Total Revenue 37,278 113,096 142,844 319,795
Cost of Sales 30,941 93,513 118,333 266,363
Gross Profit 6,337 19,583 24,511 53,432
SG&A Expense 5,684 14,586 19,831 40,625
EBITDA 653 4,997 4,680 12,807
Depreciation &
Amortization 119 465 447 1,169
EBIT (Operating Profit) 534 4,532 4,233 11,638
Interest Expense (net) (350) 1,698 4 2,141
Pre-Tax Profit 884 2,834 4,229 9,497
Income Tax 324 965 1,624 3,538
Income Tax Rate 36.7% 34.1% 38.4% 37.3%
Net Profit 560 1,869 2,605 5,959
Shares Outstanding 5.204m 7.356m 4.973m 7.303m
Diluted EPS $0.11 $0.25 $0.52 $0.82
Unit Sales:
New 848 2,725 3,274 7,493
Used - Retail 1,099 2,354 4,156 7,148
Used - Wholesale 545 1,452 2,348 4,990
Total Units Sold 2,492 6,531 9,778 19,631
Average Selling Price:
New $20,150 $22,120 $19,882 $21,526
Used - Retail $11,649 $12,509 $11,717 $12,391
Used - Wholesale $4,289 $4,319 $4,222 $4,915
LITHIA MOTORS, INC.
Balance Sheet Highlights
(In Thousands of Dollars)
Period Ended Period Ended
December 31, December 31,
1997 1996
Cash & Cash Equivalents $18,454 $15,413
Inventory 89,845 33,362
Total Current Assets 119,887 54,299
Other Assets 46,639 14,665
Total Assets 166,526 68,964
Floorplan Notes Payable 82,598 19,645
Total Current Liabilities 96,016 28,868
Long-Term Debt 24,242 6,160
Total Liabilities 128,649 41,050
Shareholders Equity 37,877 27,914
Total Liabilities &
Shareholders Equity 166,526 68,964
SOURCE Lithia Motors, Inc.