Lithia Motors Reports Net Profit Increase in Sales In Q3
27 October 1999
Lithia Motors Reports 60% Net Profit Increase on 82% Increase in Sales In Third Quarter of 1999; Earns 49 Cents Per Share
MEDFORD, Ore., Oct. 27 -- Lithia Motors, Inc.
today announced that net earnings for the third quarter of 1999 rose 60% to
$5.85 million compared to $3.66 million in the third quarter of 1998 or
$0.49 per share on 11.99 million diluted shares outstanding versus $0.35 per
share on 10.51 million diluted shares in the same quarter of 1998. This
represents a 40% increase in earnings per share on 14% more shares
outstanding. Cash flow per diluted share (net income plus depreciation and
amortization) was $0.62 per share in the third quarter of 1999 versus $0.44 a
year ago.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990909/LITHIALOGO )
For the first nine months of 1999, net earnings rose 82% to $13.46 million
compared to $7.4 million in the same period of 1998 or $1.16 per share on
11.57 million diluted shares outstanding in the first nine months of 1999 vs.
$0.81 per share on 9.11 million diluted shares in the same period of 1998.
This represents a 43% increase in earnings per share on 27% more shares
outstanding. Cash flow per diluted share (net income plus depreciation and
amortization) was $1.51 per share in the first nine months of 1999 versus
$1.08 a year ago.
Lithia Motors also reported total revenues of $889.3 million in the first
nine months of 1999, an increase of 72% from $515.7 million in the same period
of 1998. For the third quarter of 1999, total revenues increased 82% to
$357.4 million from $195.9 million in the third quarter of 1998.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are
pleased to announce these results which make twelve consecutive quarters, or
three full years, that Lithia has exceeded consensus First Call estimates.
This is also the twelfth consecutive quarter that we have posted
year-over-year growth in earnings per share in excess of 20%. The fourth
quarter outlook for our business remains solid.
"Strength in our used vehicle and finance and insurance businesses were
the highlights of this quarter's results. We have put special effort into
positioning ourselves to grow our used vehicle business in the coming
quarters. We also expect to announce soon a strategic partnership with a
leading publicly traded e-commerce company that will significantly enhance our
new and used on-line car-selling ability and extend our leadership position
with 'lithia.com,'" concluded Mr. DeBoer.
M.L. Dick Heimann, Lithia's President and Chief Operating Officer, stated,
"These results once again demonstrate the discipline of Lithia's operating
model in a number of key areas. Even as we have continuously added new stores
with lower initial profitability than our own, we have continued to improve
our operating margin from 3.0% when we went public in 1996 to 4.0% in this
most recent quarter. We have also managed to realize significant economies of
scale as demonstrated by the fact that our costs (SG&A) as a percentage of
sales have declined steadily from 13.9% of sales in 1996 when we went public
to 11.6% in this most recent quarter. This has been attained by a constant
negotiation and realization of cost saving agreements with our key suppliers
even as we continue to add resources to our operational support teams which
integrate and train our newly acquired and existing dealerships in our common
operating practices.
"We grew our same store sales by 6.9% in the first nine months of this
year on top of a 15.1% increase in 1998. We posted a 4.9% increase in same
store sales growth for the quarter on top of last year's very strong
15.9% increase. This improvement was achieved on top of last year's increase
that was accentuated by the unique opportunity for our Dodge/Jeep and Ford
stores to aggressively pursue market share gains last year during the General
Motors strike. The two strongest components of this quarter's gain in same
store sales were the used vehicle and finance and insurance businesses which
grew by 10.1% and 19.2%, respectively. We have dedicated additional resources
into both areas and are pleased to see the results of our efforts show such
immediate results," concluded Mr. Heimann.
New vehicle sales increased by 80%, retail used vehicle sales increased by
108%, service and parts sales increased by 83% and other revenues, which
includes finance and insurance, increased by 84% in the third quarter of
1999 compared to the third quarter of 1998. For the nine month period, Lithia
sold 20,859 new vehicles and 17,146 retail used vehicles compared to
12,926 and 9,959 respectively, during the same period of 1998. The average
price of a new vehicle sold in the first nine months of 1999 by Lithia
increased by 6.9% to $23,164 and by 2.9% to $13,132 for retail used vehicles.
These price increases are largely the result of a steady shift in consumer
preferences toward the higher priced SUVs, mini-vans and trucks that
collectively made up 68% of Lithia's new vehicles sales in the third quarter.
In regard to the acquisition pipeline, Brian R. Neill, Senior Vice
President and Chief Financial Officer, commented, "The number of attractive
dealerships available for purchase in our target acquisition areas remains
high. With our 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. Our current acquisition facility of $75 million remains
totally undrawn and we are in negotiations with Ford Credit to renew and
expand the existing credit facilities. Finally, it is worth noting that we
were able to pay-down our long term debt during the third quarter, lowering
our long-term debt to total capitalization ratio to 30% from 36% at the end of
June. Our balance sheet remains one of the most conservative in our sector
which enables us to continue to execute our acquisition plans."
So far in 1999, Lithia has completed the acquisition of eleven stores with
annualized revenues of approximately $485 million. Lithia now owns
94 franchises in California, Oregon, Washington, Nevada and Colorado and sells
24 brands of new vehicles at 39 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 over
$1.3 billion or approximately 59,000 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 fourth quarter outlook, used vehicle outlook,
internet partnership, cash flow from operations, 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 Nine Months Ended
September 30, September 30,
Unaudited 1998 1999 1998 1999
New Vehicle Sales $110,498 $199,107 $280,109 $483,182
Used Vehicle Sales 56,604 105,434 162,300 270,292
Service, Body
& Parts Sales 18,509 33,898 49,257 85,805
Other Revenues 10,303 18,930 23,988 49,988
Total Revenues 195,914 357,369 515,654 889,267
Cost of Sales 164,163 300,124 433,858 748,036
Gross Profit 31,751 57,245 81,796 141,231
SG&A Expense 23,241 41,564 61,352 104,273
Depreciation
& Amortization 923 1,560 2,447 3,999
Income from Operations 7,587 14,121 17,997 32,959
Flooring Interest
Expense 1,685 3,091 5,201 7,378
Other Interest Expense 546 1,190 1,897 2,885
Other Income (Expense),
net 609 85 1,162 12
Pre-Tax Profit 5,965 9,925 12,061 22,708
Income Tax 2,307 4,071 4,661 9,249
Income Tax Rate 38.7% 41.0% 38.6% 40.7%
Net Profit $3,658 $5,854 $7,400 $13,459
Shares Outstanding 10.508m 11.992m 9.113m 11.570m
Diluted EPS $0.35 $0.49 $0.81 $1.16
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
Key Financial Data: 1998 1999 1998 1999
EBITDA $9,120 $15,766 $21,607 $36,970
EBITDA/Interest
Coverage 4.1x 3.7x 3.0x 3.6x
Gross Margin 16.2% 16.0% 15.9% 15.9%
SG&A Expense 11.9% 11.6% 11.9% 11.7%
Operating Margin 3.9% 4.0% 3.5% 3.7%
Pre-Tax Margin 3.0% 2.8% 2.3% 2.6%
Three Months Ended Nine Months Ended
September 30, September 30,
Unit Sales: 1998 1999 1998 1999
New Unit 5,142 8,399 12,926 20,859
Used - Retail 3,493 7,018 9,959 17,146
Used - Wholesale 2,542 3,364 7,129 9,692
Total Units Sold 11,177 18,781 30,014 47,697
Average Selling Price:
New $21,489 $23,706 $21,670 $23,164
Used - Retail $12,650 $13,114 $12,763 $13,132
Used - Wholesale $4,885 $3,983 $4,937 $4,657
LITHIA MOTORS, INC.
Balance Sheet Highlights (Unaudited)
(In Thousands)
June 30, 1999 September 30, 1999
Cash & Cash Equivalents $42,001 $26,264
Inventory 233,624 212,323
Other Current Assets 36,820 37,614
Total Current Assets 312,445 276,201
Property & Equipment, net 42,726 44,408
Goodwill, net 78,633 83,048
Other Assets 13,111 11,910
TOTAL ASSETS $446,915 $415,567
Floorplan Notes Payable $185,426 $156,578
Other Current Liabilities 42,080 44,256
Total Current Liabilities 227,506 200,834
Long-Term Debt 72,106 59,685
Other Liabilities 17,477 16,710
Total Liabilities $317,089 $277,229
Shareholders' Equity 129,826 138,338
TOTAL LIABILITIES
& SHAREHOLDERS' EQUITY $446,915 $415,567
Key Financial Data:
Current Ratio 1.37x 1.38x
Long-Term Debt to Capitalization 36% 30%
Working Capital $84,939 $75,367