Lithia Motors Reports 99% Net Profit Increase Q1
28 April 1999
Lithia Motors Reports 99% Net Profit Increase on 53% Increase in Sales in First Quarter of 1999; Earns 29 Cents per Share
MEDFORD, Ore., April 28 -- Lithia Motors, Inc.
today announced that revenues increased 53.3% to $224.1 million in the first
quarter of 1999 from $146.2 million in the first quarter of 1998. Net
earnings rose 99.3% to $3.03 million compared to $1.52 million in the first
quarter of 1998 or $0.29 per share on 10.6 million diluted shares outstanding
vs. $0.21 per share on 7.37 million diluted shares in the same quarter of
1998. This represents a 38% increase in earnings per share on 44% more shares
outstanding. Cash flow per share (net income plus depreciation and
amortization) was $0.39 per share in the first quarter of 1999 versus $0.30 a
year ago.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are
pleased to announce these results which exceed the consensus Wall Street
estimate by four cents. Lithia is the only public auto retailer in the nation
that has exceeded analyst estimates for ten consecutive quarters. This
quarter demonstrates the discipline of Lithia's operating model in a number of
key areas. The fastest growth occurred in our highest margin businesses of
service, parts, finance, and insurance. Our fee-based finance and insurance
revenue showed marked improvements. Also, our costs grew at a lower rate than
our sales, particularly in the area of flooring interest expense through
managing our inventory levels. As a result, our bottom line grew faster than
our top line and we showed a significant fifty basis point improvement year-
over-year in our pre-tax margin."
"Another key factor in the strength of this quarter's results is a 12.9%
improvement in same-store sales and a 43.5% improvement in same-store pre-tax
profits. These results attest to Lithia's ability to improve the operations
of newly acquired stores during the first two years of operation. As a group,
the eight newest stores improved same-store sales by 14.6% and same-store
pre-tax profits by 110.3%. These eight stores are expected to continue to
improve towards Lithia's targeted levels over the coming year," added M.L.
Dick Heimann, Lithia's President and Chief Operating Officer.
New vehicle sales increased by 56.0%, used vehicle sales increased by
44.2%, service and parts sales increased by 60.6% and other revenues, which
includes finance and insurance, increased by 74.8% in the first quarter of
1999 compared to the first quarter of 1998. Lithia sold 5,231 new vehicles
and 4,253 retail used vehicles during the first quarter compared to 3,422 and
3,027, respectively, during the first quarter of 1998. The average price of a
new vehicle increased year-on-year by 2.0% to $22,338 and by 2.4% to
$12,948 for retail used vehicles.
Sid DeBoer commented, "We continue to be reassured by the number of
attractive dealerships available for purchase in our target acquisition areas.
With our $75 million acquisition facility from Ford Credit and expected future
internal cash generation from operations, Lithia is well positioned to
continue its current disciplined growth plan and increase earnings per share
with each future acquisition. Our long-term debt to total capitalization of
23% continues to be among the lowest in our sector."
In March, Lithia announced the pending acquisition of the seven core
stores of the Moreland Group in Colorado with revenues of $390 million.
Lithia expects to close on this acquisition by the end of the second quarter.
Including announced pending acquisitions, Lithia will operate 35 stores
located in California, Oregon, Washington, Nevada and Colorado. The company
will sell 24 brands of new vehicles through 77 franchises. Lithia also sells
used vehicles, arranges finance, warranty, and credit insurance contracts,
provides vehicle parts, maintenance, and repair services at all of its
locations. The company will operate 6 collision repair centers. Lithia's
annual revenue run-rate is now over $1.2 billion, including announced pending
acquisitions.
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
March 31,
Unaudited 1998 1999 % Change
New Vehicle Sales $74,908 $116,853 +56%
Used Vehicle Sales 49,801 71,809 +44%
Service & Parts Sales 14,592 23,430 +61%
Other Revenues 6,897 12,053 +75%
Total Revenue 146,198 224,145 +53%
Cost of Sales 123,252 188,945 +53%
Gross Profit 22,946 35,200 +53%
SG&A Expense 17,916 26,648 +49%
Depreciation & Amortization 720 1,075 +49%
Income from Operations 4,310 7,477 +73%
Flooring Interest Expense 1,636 2,109 +29%
Other Interest Expense 574 629 +10%
Other Income, net 366 266 -27%
Pre-Tax Profit 2,466 5,005 +103%
Income Tax 947 1,976 +109%
Income Tax Rate 38.4% 39.5%
Net Profit $1,519 $3,029 +99%
Shares Outstanding 7.371m 10.605m +44%
EPS $0.21 $0.29 +38%
Unit Sales:
New 3,422 5,231 +53%
Used - Retail 3,027 4,253 +41%
Used - Wholesale 2,141 3,195 +49%
LITHIA MOTORS, INC.
Three Months Ended
March 31,
1998 1999 % Change
Average Selling Price:
New $21,890 $22,338 +2%
Used - Retail $12,649 $12,948 +2%
Used - Wholesale $5,377 $5,239 -3%
Key Financial Data:
Gross Profit Margin 15.7% 15.7%
SG&A as a % of Sales 12.3% 11.9%
Operating Margin 2.9% 3.3%
Pre-Tax Margin 1.7% 2.2%
Balance Sheet Highlights:
(In Thousands of Dollars) Period Ended Period Ended
December 31, 1998 March 31, 1999
Cash & Cash Equivalents $20,879 $24,789
Inventory 157,455 153,321
Other Current Assets 25,862 23,223
Total Current Assets 204,196 201,333
Property & Equipment, net 32,933 33,200
Goodwill, net 42,951 43,390
Other Assets 14,318 13,557
TOTAL ASSETS $294,398 $291,480
Floorplan Notes Payable $124,167 $122,708
Other Current Liabilities 26,476 32,148
Total Current Liabilities 150,643 154,856
Long-Term Debt 38,994 28,600
Other Liabilities 13,250 13,195
Total Liabilities $202,887 $196,651
Shareholders Equity 91,511 94,829
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $294,398 $291,480