Lithia Motors Reports 106% Net Profit Increase on 77% Increase in Sales
28 July 1999
Lithia Motors Reports 106% Net Profit Increase on 77% Increase in Sales In Second Quarter of 1999; Earns 40 Cents Per Share
MEDFORD, Ore., July 28 -- Lithia Motors, Inc.
today announced that net earnings rose 106.3% to $4.58 million in the second
quarter of 1999 compared to $2.22 million in the second quarter of 1998 or
$0.40 per share on 11.57 million diluted shares outstanding versus $0.24 per
share on 9.43 million diluted shares in the same quarter of 1998. This
represents a 67% increase in earnings per share on 23% more shares
outstanding. Cash flow per diluted share (net income plus depreciation and
amortization) was $0.51 per share in the second quarter of 1999 versus $0.32 a
year ago.
Net earnings for the first six months of 1999 rose 103.5% to $7.61 million
compared to $3.74 million in the same period of 1998 or $0.69 per share on
11.09 million diluted shares outstanding in the first half of 1999 vs.
$0.45 per share on 8.41 million diluted shares in the same period of 1998.
This represents a 53% increase in earnings per share on 32% more shares
outstanding. Cash flow per diluted share (net income plus depreciation and
amortization) was $0.91 per share in the first half of 1999 versus $0.63 a
year ago.
Lithia Motors also reported that total revenues increased 77.4% to
$307.8 million in the second quarter of 1999 from $173.5 million in the second
quarter of 1998. For the first six months of 1999, total revenues increased
66.4% to $531.9 million from $319.7 million in the first six months of 1998.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are
pleased to announce these results which exceed the consensus Wall Street
estimate by seven cents. This makes eleven consecutive quarters that Lithia
has exceeded consensus estimates, the longest successful track record of any
company in our sector. This quarter once again demonstrates the discipline of
Lithia's operating model in a number of key areas. We improved our operating
margin from 3.5% to 3.7% and grew our same store sales by 7.0% in the second
quarter compared with the same quarter of 1998. Most importantly, our same
store pre-tax profits increased by 19.8% this quarter versus last year's
second quarter.
"For the six month period, the fastest revenue growth occurred in our
highest margin businesses of service, parts, finance, and insurance. Our
fee-based finance and insurance revenue showed marked improvements as Lithia
continues to add resources in this area. Also, successful inventory
management programs resulted in lower interest expense levels as a percentage
of sales. As a result of these initiatives, we once again grew our bottom
line substantially faster than our top line and we showed a significant fifty
basis point improvement year-over-year in our six month pre-tax margin,"
concluded Sidney B. DeBoer.
"Another key factor in the strength of the first half results is a
9.7% improvement in same-store sales and a 27.3% improvement in same-store
pre-tax profits. These results attest to Lithia's ability to improve the
operations of acquired stores during the first two years of operation. The
thirteen newest stores under management for more than one year improved
same-store sales by 10.6% and same-store pre-tax profits by 40.0% in the first
half of 1999. These thirteen 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 76.6%, used vehicle sales increased by
66.5%, service and parts sales increased by 76.3% and other revenues, which
includes finance and insurance, increased by 180.0% in the second quarter of
1999 compared to the second quarter of 1998. For the six month period, Lithia
sold 12,460 new vehicles and 10,128 retail used vehicles compared to 7,784 and
6,466, respectively, during the same period of 1998. The average price of a
new vehicle sold in the first half of 1999 by Lithia increased by 4.6% to
$22,799 and by 2.5% to $13,144 for retail used vehicles.
In regard to the acquisition pipeline, R. Brad Gray, Executive Vice
President of Acquisitions, 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 flow from operations, Lithia is well
positioned to continue its current disciplined growth plan and increase
earnings per share with each future acquisition."
During the second quarter of 1999, Lithia completed the acquisition of
seven stores of the Moreland Group in Colorado and Nevada which had
$367 million in 1998 revenues and one store in Klamath Falls, Oregon which is
expected to post approximately $20 million in annual revenues. The Klamath
Falls store carries the franchises for Toyota and Dodge/Chrysler/Plymouth/Jeep
and is being operated as a "companion store" to the two stores of the same
brands in Medford, Oregon which is 65 miles away.
Lithia now owns 83 franchises in California, Oregon, Washington, Nevada
and Colorado and sells 24 brands of new vehicles at 36 stores and over the
Internet through "Lithia.com -- America's Car & Truck Store." 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. Lithia retailed 31,353 new and used vehicles in 1998.
Lithia's current annualized revenue run rate, including all completed
acquisitions, is approximately $1.25 billion or approximately 55,000 retail
new and used units.
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.
For additional information on Lithia Motors, contact: Jeff DeBoer, VP
-- Finance/Investor Relations 541-776-6868 or log-on to http://www.lithia.com
(E-mail: invest@lithia.com)
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Three Months Ended Six Months Ended
June 30, June 30,
Unaudited 1998 1999 1998 1999
New Vehicle Sales $94,703 $167,222 $169,612 $284,075
Used Vehicle Sales 55,894 93,049 105,695 164,858
Service, Body & Parts Sales 16,156 28,477 30,748 51,907
Other Revenues 6,788 19,005 13,685 31,058
Total Revenues 173,541 307,753 319,740 531,898
Cost of Sales 146,443 258,967 269,695 447,912
Gross Profit 27,098 48,786 50,045 83,986
SG&A Expense 20,195 36,061 38,111 62,709
Depreciation & Amortization 804 1,364 1,524 2,439
Income from Operations 6,099 11,361 10,410 18,838
Flooring Interest Expense 1,880 2,179 3,516 4,288
Other Interest Expense 777 1,066 1,351 1,695
Other Income (Expense), net 187 (338) 553 (72)
Pre-Tax Profit 3,629 7,778 6,096 12,783
Income Tax 1,407 3,202 2,354 5,178
Income Tax Rate 38.8% 41.2% 38.6% 40.5%
Net Profit $2,222 $4,576 $3,742 $7,605
Shares Outstanding 9.426m 11.570m 8.405m 11.085m
Diluted EPS $0.24 $0.40 $0.45 $0.69
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Three Months Ended Six Months Ended
June 30, June 30,
Key Financial Data: 1998 1999 1998 1999
EBITDA $7,090 $12,387 $12,487 $21,205
EBITDA/Interest Coverage 2.7x 3.8x 2.6x 3.5x
Gross Margin 15.6% 15.9% 15.7% 15.8%
SG&A Expense 11.6% 11.7% 11.9% 11.8%
Operating Margin 3.5% 3.7% 3.3% 3.5%
Pre-Tax Margin 2.1% 2.5% 1.9% 2.4%
Unit Sales:
New 4,362 7,229 7,784 12,460
Used - Retail 3,439 5,875 6,466 10,128
Used - Wholesale 2,446 3,133 4,587 6,328
Total Units Sold 10,247 16,237 19,196 28,916
Three Months Ended Six Months Ended
June 30, June 30,
1998 1999 1998 1999
Average Selling Price:
New $21,711 $23,132 $21,790 $22,799
Used - Retail $12,977 $13,285 $12,823 $13,144
Used - Wholesale $4,605 $4,787 $4,965 $5,015
LITHIA MOTORS, INC.
Unaudited
Balance Sheet Highlights
(In Thousands)
December 31, June 30,
1998 1999
Cash & Cash Equivalents $20,879 $42,001
Inventory 157,455 233,624
Other Current Assets 25,862 36,820
Total Current Assets 204,196 312,445
Property & Equipment, net 32,933 42,726
Goodwill, net 42,951 78,633
Other Assets 14,318 13,111
TOTAL ASSETS $294,398 $446,915
Floorplan Notes Payable $124,167 $185,426
Other Current Liabilities 26,476 42,080
Total Current Liabilities 150,643 227,506
Long-Term Debt 38,994 72,106
Other Liabilities 13,250 17,477
Total Liabilities $202,887 $317,089
Shareholders' Equity 91,511 129,826
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $294,398 $446,915
Key Financial Data:
Current Ratio 1.36x 1.37x
Long-Term Debt to Capitalization 30% 36%
Working Capital $53,553 $84,939