Lithia Motors Reports Another Record Quarter
23 October 2000
Lithia Motors Reports Another Record Quarter; Earns 55 Cents Per Share; Posts Sales Over $1.25 Billion in the First Nine Months of 2000
MEDFORD, Ore., Oct. 23 Lithia Motors, Inc.
today announced that net earnings rose 29% to $7.52 million in the third
quarter of 2000 compared to $5.85 million in the third quarter of 1999 or
$0.55 per share on 13.76 million diluted shares outstanding vs. $0.47 per
share on 12.49 million diluted shares in the same quarter of 1999. Cash flow
per diluted share (net income plus depreciation and amortization) was
$0.69 per share in the third quarter of 2000 vs. $0.59 a year ago.
Net earnings for the first nine months of 2000 rose 39% to $18.68 million
compared to $13.46 million in the same period of 1999 or $1.36 per share on
13.75 million diluted shares outstanding in the first nine months of 2000 vs.
$1.16 per share on 11.57 million diluted shares in the same period of 1999.
Cash flow per diluted share (net income plus depreciation and amortization)
was $1.76 per share in the first nine months of 2000 vs. $1.51 a year ago.
Lithia Motors also reported that total revenues increased 24% to
$443.1 million in the third quarter of 2000 from $357.4 million in the third
quarter of 1999. EBITDA increased 29% from $15.8 million to $20.3 million.
For the first nine months of 2000, total revenues increased 41% to
$1.26 billion from $889.3 million in the first nine months of 1999. EBITDA
increased 49% to $55.1 million vs. $37.0 million in the same period last year.
For the third quarter, new vehicle sales increased 22%, used vehicle sales
increased 22%, service and parts sales increased 25% and other revenues
increased 51% compared to the same period last year.
For the nine-month period, new vehicle sales increased by 41%, used
vehicle sales increased by 35%, service and parts sales increased by 41% and
other revenues, which includes our highest margin finance and insurance,
increased by 74% compared to the same nine-month period in 1999.
Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "Once
again we have shown strong quarterly performance and exceeded the consensus
Wall Street estimate for the sixteenth consecutive time. For the quarter we
were able to improve our operating margin to 4.1% from 4.0%. Sales General
& Administrative (SG&A) as a percent of revenues improved 10 basis points to
11.5% and SG&A as a percent of gross profit improved 60 basis points to 72%
compared to the same period last year, as Lithia continues to realize
economies of scale from its increasing size."
"For the quarter, same store retail sales increased 3.1% compared to the
third quarter last year, and margins remained very strong with a sector
leading gross margin of 16.0% and operating margin of 4.1%. Lithia's SG&A was
11.5% and the pretax margin was 2.7%. For the nine-month period, same store
retail sales increased 2.3% compared to the first nine months of last year.
The nine month period had a gross margin of 16.0%, operating margin of 3.9%,
SG&A of 11.7% and pretax margin of 2.4%. Year to date, we have improved our
operating margins by 20 basis points. Our margins remain at the highest
levels in the industry, which is important considering we acquire stores with
much lower initial margins. It serves to demonstrate the strength of our
operating model and the improvements that our operational teams are able to
bring to our acquired stores."
Senior Vice President and CFO, Jeff DeBoer, commented, "Our Company has
continued to generate a very strong balance sheet without any high priced
sub-debt. Inventories have decreased 20% since June 2000 due to a combination
of seasonality and a concerted effort to lower days supply. Our current ratio
increased 20 basis points. It is also worth noting that Lithia's Tangible Net
Worth (Total Shareholder's Equity less Goodwill) has increased 26% over the
past nine months to $56.5 million. This is an often overlooked, important
metric when considering companies that grow through acquisitions."
"Starting with this press release, forward looking revenue and margin
ranges will be provided which are important for determining future growth. We
are comfortable with analyst estimates for the fourth quarter and 2001. In
the fourth quarter 2000 and full year 2001 we are assuming approximately
$425 - $475 million in annualized acquisition revenues. These acquisitions
will contribute approximately $200 to $250 million in revenues throughout
2001. We already have signed agreements on approximately one third of the
previously described amount. These acquisitions will require $45 - $65
million in capital that will be funded from cash flow and our $115 million
acquisition credit facility."
FORWARD ESTIMATES
4Q 2000 2001
Revenue: $410 - 430M $1.9 - 2.0B
Diluted EPS $0.42 - 0.43 $1.95 - 2.00
Gross Margin: 15.8 - 16.2% 15.6 - 16.1%
SG&A 11.9 - 12.3% 11.7 - 12.2%
Operating Margin: 3.6 - 3.8% 3.7 - 3.9%
Flooring Interest Exp. 1.1 - 1.2% 1.1 - 1.2%
Same Store Sales 0 to -2% 0 to -2%
Tax Rate 39 - 40% 39 - 40%
No further interest rate increases have been factored into our estimates
The quarterly breakout for 2001 is estimated as follows for Diluted EPS:
Q1 $0.36 - $0.38; Q2 $0.47 - $0.49; Q3 $0.58 - $0.60; and
Q4 $0.52 - $0.54.
The above estimates are made by management based upon information
available to it at this time. The company in making these estimates assumes
no burden to update these estimates during the quarter even if it appears
actual results will differ materially from these estimates.
LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
Unaudited
New Vehicle Sales $243,169 $199,107 $683,217 $483,182
Used Vehicle Sales 128,960 105,434 364,935 270,292
Service, Body & Parts Sales 42,333 33,898 121,266 85,805
Other Revenues 28,604 18,930 87,102 49,988
Total Revenues 443,066 357,369 1,256,520 889,267
Cost of Sales 372,146 300,124 1,055,552 748,036
Gross Profit 70,920 57,245 200,968 141,231
SG&A Expense 51,041 41,564 146,770 104,273
Depreciation 1,133 1,032 3,238 2,738
Amortization 799 528 2,301 1,261
Income from Operations 17,947 14,121 48,659 32,959
Flooring Interest Expense 5,321 3,090 13,894 7,378
Other Interest Expense 1,271 1,191 4,928 2,885
Other Income (Expense), net 451 84 884 12
Pre-Tax Profit 11,806 9,924 30,721 22,708
Income Tax 4,283 4,071 12,040 9,249
Income Tax Rate (a) 36.3% 41.0% 39.2% 40.7%
Net Profit $7,523 $5,853 $18,681 $13,459
Weighted Avg. Shares Outstanding 13,757 12,486 13,746 11,570
Diluted EPS $0.55 $0.47 $1.36 $1.16
(a) The effective tax rate declined due to the mix of corporate vs. asset
acquisitions
Three Months Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
Unit Sales:
New 10,222 8,399 28,555 20,859
Used - Retail 8,320 7,018 23,453 17,146
Used - Wholesale 4,606 3,364 12,637 9,692
Total Units Sold 23,148 18,781 64,645 47,697
Average Selling Price:
New $23,789 $23,706 $23,926 $23,164
Used - Retail $13,068 $13,114 $13,161 $13,132
Used - Wholesale $4,393 $3,983 $4,452 $4,657
Key Financial Data:
EBITDA $20,330 $15,765 $55,082 $36,970
Gross Margin 16.0% 16.0% 16.0% 15.9%
SG&A Expense 11.5% 11.6% 11.7% 11.7%
Operating Margin 4.1% 4.0% 3.9% 3.7%
Pre-Tax Margin 2.7% 2.8% 2.4% 2.6%
LITHIA MOTORS, INC.
Balance Sheet Highlights: (Dollars in Thousands)
September 30, December 31,
2000 1999
Unaudited
Cash & Cash Equivalents $52,520 $30,364
Inventory 261,899 268,281
Other Current Assets 41,872 35,999
Total Current Assets 356,291 334,644
Real Estate - Net 47,620 31,301
Equipment & Leases - Net 31,828 23,875
Goodwill, net 119,262 110,677
Other Assets 3,812 5,936
TOTAL ASSETS $558,813 $506,433
Floorplan Notes Payable $202,029 $208,403
Other Current Liabilities 43,625 51,242
Total Current Liabilities 245,654 259,645
Used Vehicle Flooring 56,000 35,500
Real Estate Debt 26,205 18,963
Other Long-Term Debt 38,564 19,252
Other Liabilities 16,652 17,435
Total Liabilities $383,075 $350,795
Shareholders' Equity 175,738 155,638
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $558,813 $506,433
Other Balance Sheet Data:
Current Ratio 1.5x 1.3x
Long-Term Debt to Capitalization
[Excludes Used Vehicle Flooring] 27% 20%
Working Capital $110,637 $74,999