Lithia Motors Reports 123% Increase in Sales
24 February 1999
Lithia Motors Reports 123% Increase in Sales and $1.14 per Share Earnings In 1998
MEDFORD, Ore., Feb. 23 -- Lithia Motors, Inc.
today announced that revenues increased 76% to $199.1 million in the fourth
quarter of 1998 from $113.1 million in the fourth quarter of 1997. Net
earnings rose 81% to $3.39 million compared to $1.87 million in the fourth
quarter of 1997 or $0.32 per share on 10.5 million diluted shares outstanding
vs. $0.25 per share on 7.4 million diluted shares in the same quarter of 1997.
For the full year of 1998, Lithia reported that revenues increased 123% to
$714.7 million from $319.8 million in 1997. Net earnings rose 80% to
$10.79 million compared to $6.0 million in 1997 or $1.14 per share on
9.5 million diluted shares outstanding in 1998 vs. $0.82 per share on
7.3 million diluted shares in 1997.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are
pleased to announce these results which exceed even the most aggressive
estimates that Wall Street had set for us for both the year and the quarter.
This makes nine consecutive quarters that Lithia has exceeded consensus
estimates, the longest successful track record in our sector. We improved our
operating margins from 4.0% to 4.4% in the fourth quarter, a level which is
70 basis points higher than the next highest pure-play operator in our sector
for the same quarter. We attained 14.7% same-store sales growth for the full
year of 1998, also the highest in our sector. Lithia remains the premier
operator/consolidator in our sector and has a plan to continue to deliver
steady growth in earnings per share. We plan to continue to add and develop
well-run operating platforms in new geographic areas from which to continue
executing our strategy of buying stores very accretively then improving the
operations."
In 1998, new vehicle sales increased by 140.8%, used vehicle sales
increased by 95.0%, service, body and parts sales increased by 142.1% and
other revenue increased 115.4%. Lithia sold 40,885 new and used vehicles in
1998 compared to 19,631 in 1997, an increase of 108.3%. The average price of
a new vehicle sold by Lithia increased year-on-year by 1.9% to $21,935 and for
retail used vehicles by 3.0% to $12,768, as the sales mix continues to shift
to higher priced trucks and mini-vans.
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 at reasonable prices, particularly for platform
acquisitions. 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. Lithia now has the ability to
acquire new stores with revenues in excess of $1.5 billion with the unutilized
$75 million acquisition credit facility from Ford Credit, current cash
resources in excess of $45 million and expected future internal cash
generation from operations. This estimate assumes an average 50/50 split
between cash and shares for acquisition currency."
During the fourth quarter of 1998, Lithia completed the acquisitions of
Camp Automotive in Spokane, Washington and Hutchins Toyota and Nissan in
Eugene/Springfield, Oregon. Lithia has successfully completed all previously
announced acquisitions. Lithia now operates 28 dealerships in California,
Oregon, Washington and Nevada. The company sells 23 brands of new vehicles
through 56 franchises. 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. The company operates
three collision repair centers. Lithia's current annualized revenue run rate
is over $850 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. Specific risk statements
in this press release include expected earning per share growth, acquisition
pricing and availability, operational improvements and the availability of
financing sources.
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Audited
Three Months Ended Fiscal Year Ended
December 31, December 31
1997 1998 1997 1998
New Vehicle Sales $60,276 $108,322 $161,294 $388,431
Used Vehicle Sales 35,717 58,245 113,099 220,544
Service, Body & Parts Sales 11,806 22,959 29,828 72,216
Other Revenues 5,297 9,560 15,574 33,549
Total Revenues 113,096 199,086 319,795 714,740
Cost of Sales(A) 93,216 165,521 265,049 599,379
Gross Profit 19,880 33,565 54,746 115,361
SG&A Expense 14,586 23,845 40,625 85,188
Depreciation & Amortization(A) 762 1,013 2,483 3,469
Income from Operations 4,532 8,707 11,638 26,704
Flooring Interest Expense 1,214 1,907 2,179 7,108
Other Interest Expense 416 837 824 2,735
Other Income, net -69 -242 862 921
Pre-Tax Profit 2,833 5,721 9,497 17,782
Income Tax 965 2,332 3,538 6,993
Income Tax Rate 34.1% 40.8% 37.3% 39.3%
Net Profit $1,868 $3,389 $5,959 $10,789
Shares Outstanding 7.356m 10.532m 7.303m 9.470m
Fully Diluted EPS $0.25 $0.32 $0.82 $1.14
(A) Depreciation on leased vehicles has been reclassified from cost of
sales to depreciation and amortization expense.
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Audited
Three Months Ended Fiscal Year Ended
December 31, December 31,
Other Data: 1997 1998 1997 1998
EBITDA $5,225 $9,478 $14,983 $31,094
EBITDA/Interest Coverage 3.2x 3.5x 5.0x 3.2x
Gross Margin 17.6% 16.9% 17.1% 16.1%
SG&A Expense 12.9% 12.0% 12.7% 11.9%
Operating Margin 4.0% 4.4% 3.6% 3.7%
Pre-tax Margin 2.5% 2.9% 3.0% 2.5%
Unit Sales:
New 2,725 4,782 7,493 17,708
Used - Retail 2,354 3,686 7,148 13,645
Used - Wholesale 1,452 2,403 4,990 9,532
Total Units Sold 6,531 10,871 19,631 40,885
Average Selling Price:
New $22,120 $22,652 $21,526 $21,935
Used - Retail $12,509 $12,783 $12,391 $12,768
Used - Wholesale $4,319 $4,630 $4,915 $4,860
Balance Sheet Highlights
(In Thousands) Period Ended Period Ended
December 31, December 31,
1997 1998
Cash & Cash Equivalents $18,454 $20,879
Inventories 89,845 157,455
Other Current Assets 11,588 25,862
Total Current Assets 119,887 204,196
Property & Equipment, net 16,265 32,933
Goodwill, net 24,062 42,951
Other Assets 6,312 14,318
TOTAL ASSETS $166,526 $294,398
Floorplan Notes Payable $82,598 $124,167
Other Current Liabilities 13,418 26,476
Total Current Liabilities 96,016 150,643
Long-Term Debt 24,242 38,994
Other Liabilities 8,391 13,250
Total Liabilities $128,649 $202,887
Shareholders' Equity 37,877 91,511
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $166,526 $294,398