Lithia Motors Reports Increase in Sales In the Q2 of 1998
30 July 1998
Lithia Motors Reports 24 Cents per Share on a 161% Increase in Sales In the Second Quarter of 1998
MEDFORD, Ore., July 30 -- Lithia Motors, Inc.
today announced that revenues increased 161.3% to $173.5 million in the second
quarter of 1998 from $66.4 million in the second quarter of 1997. Net
earnings rose 62.0% to $2.22 million compared to $1.37 million in the second
quarter of 1997 or $0.24 per share on a weighted average of 9.4 million
diluted shares outstanding vs. $0.19 per share on 7.3 million diluted shares
in the same quarter of 1997. The additional shares are the result of the
follow-on equity offering of 3.15 million shares of Class A Common Stock
completed in May 1998.
For the first half of 1998, Lithia reported that revenues increased
164.0% to $319.7 million from $121.1 million in the first half of fiscal 1997.
Net earnings rose 49.0% to $3.74 million compared to $2.51 million in 1997 or
$0.45 per share on a weighted average of 8.4 million diluted shares
outstanding vs. $0.35 per share on 7.3 million diluted shares in 1997.
Chairman and Chief Executive Officer, Sidney D. DeBoer, stated, "We are
pleased to announce these results which exceed the consensus Wall Street
estimate. Lithia is the only pure auto retailer in the nation that has
exceeded analyst estimates for seven consecutive quarters. Our sales in the
first half of this year have already equaled our sales for the entire year of
1997. Second quarter same-store sales growth of 18.3% attests to our ability
to improve the operations of newly acquired stores within the first year of
operation. Our proven operating model has allowed us to improve the
profitability in the dealerships that we have acquired by focusing on higher
margin products, such as used cars, service and parts, and finance and
insurance products. In 1998, we have already announced seven fill-in
acquisitions in four established markets and two acquisitions in one new
market and our acquisition pipeline continues to remain very full."
Dick Heimann, President and Chief Operating Officer, commented, "Our
strategy of acquiring dealerships in middle-markets and improving the
operations definitely works. Recently acquired dealerships that have come
into same-store sales this quarter have all shown the type of improvement we
expect when our operating model is put into place. As a group, these
dealerships had combined year-on-year revenue growth of 40.7% in the second
quarter of 1998 and a 79.8% combined increase in pre-tax income for the same
period. Furthermore, Lithia's annualized after-tax return on investment for
this same group of dealerships was 29.3%."
In the first half of 1998, new vehicle sales increased by 200.4%, used
vehicle sales increased by 118.3%, and other operating revenue increased
173.4%. Lithia sold 7,946 new vehicles and 6,555 retail used vehicles in the
first half of 1998 compared to 2,685 and 2,986, respectively, during the first
half of 1997. This represents year-on-year unit increases of 195.9% and
119.5%, respectively. The average price of a new vehicle increased
year-on-year by 1.5% to $21,343 and for retail used vehicles by 3.5% to
$12,650. First half revenue benefited from a combination of 14.5% same-store
growth and the inclusion of 15 locations acquired since June 1997.
Total gross margin was 15.5% in the second quarter of 1998 vs. 16.1% in
the second quarter of 1997 as Lithia has added multiple stores that do not yet
operate at the levels achieved by stores in which Lithia's operating model has
been put in place. The average US dealership posted a 12.7% gross profit in
1997 according to the National Auto Dealers Association. The sales and
general administration expense ratio improved from 12.3% to 11.6% of sales in
the second quarter of 1998 versus the same period of 1997, resulting in an
earnings before interest, tax, depreciation and amortization (EBITDA) margin
of 3.8%, the same level as in 1997.
Since the end of the first quarter of 1998, Lithia completed the
acquisitions of Rodway Chevrolet and Boyland Toyota in Redding, and announced
the pending acquisitions of Hutchins Toyota and Hutchins Nissan in Eugene,
Oregon. These last two acquisitions are fill-ins which will allow Lithia to
expand market share and leverage expenses even further in the Eugene market.
Lithia is the leading publicly-owned automotive retailer in the western
United States. The company's 26 dealerships in California (14), Oregon (9)
and Nevada (3), sell 23 brands of new vehicles through 49 franchises in
11 different cities. Lithia also sells used vehicles, arranges finance,
warranty and credit insurance contracts, and provides vehicle maintenance and
repair services at all of its locations. Since becoming a public company in
December 1996, Lithia has acquired 21 stores with annual revenues of
approximately $595 million, boosting its revenue run rate to over
$730 million. Its headquarters are in Medford, Oregon, the site of Lithia's
original group of dealerships.
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 Six Months Ended
June 30, June 30,
Unaudited 1997 1998 1997 1998
New Vehicle Revenue $31,627 $94,681 $56,457 $169,611
Used Vehicle Revenue 25,775 55,894 48,417 105,695
Other Operating Revenue 9,020 22,966 16,252 44,433
Total Revenue 66,422 173,541 121,126 319,739
Cost of Sales 55,706 146,677 101,462 270,152
Gross Profit 10,716 26,864 19,664 49,587
SG&A Expense 8,192 20,205 15,191 38,112
EBITDA 2,524 6,659 4,473 11,475
Depreciation & Amortization 224 569 403 1,066
EBIT (Operating Profit) 2,300 6,090 4,070 10,409
Interest Expense (net) 73 2,460 -19 4,314
Pre-Tax Profit 2,227 3,630 4,089 6,095
Income Tax 859 1,407 1,579 2,354
Income Tax Rate 38.6% 38.8% 38.6% 38.6%
Net Profit 1,368 2,223 2,510 3,741
Diluted Shares Outstanding 7.309m 9.377m 7.265m 8.380m
Diluted EPS $0.19 $0.24 $0.35 $0.45
Three Months Ended Six Months Ended
June 30, June 30,
1997 1998 1997 1998
Unit Sales:
New 1,488 4,362 2,685 7,946
Used - Retail 1,536 3,439 2,986 6,555
Used - Wholesale 1,197 2,446 2,226 4,695
Average Selling Price:
New $21,255 $21,706 $21,027 $21,343
Used - Retail $12,329 $12,977 $12,224 $12,650
Used - Wholesale $5,713 $4,605 $5,353 $4,851
LITHIA MOTORS, INC.
Balance Sheet Highlights
(In Thousands)
Period Ended Period Ended
March 31, June 30,
1998 1998
Cash & Cash Equivalents $14,181 $27,136
Inventory 120,743 138,137
Total Current Assets 149,335 182,792
Other Assets 58,667 69,012
Total Assets 208,002 251,804
Floorplan Notes Payable 94,642 119,963
Total Current Liabilities 110,119 138,824
Long-Term Debt 50,340 20,266
Other Liabilities 8,094 8,331
Total Liabilities 168,553 167,421
Shareholders Equity 39,449 84,383
Total Liabilities & Shareholders Equity 208,002 251,804