Lithia Reports Record Second Quarter 2019 Results and Same Store Increases in All Business Lines

DECLARES DIVIDEND OF $0.30 PER SHARE FOR SECOND QUARTER

MEDFORD, Ore.--()--Lithia Motors, Inc. (NYSE: LAD) today reported the highest second quarter revenue and earnings per share in company history.

Second quarter 2019 revenue increased 4% to a record $3.2 billion from $3.1 billion in the second quarter of 2018.

Second quarter 2019 net income per diluted share was $2.63, an 8% increase over $2.44 per diluted share reported in the second quarter of 2018. Adjusted second quarter 2019 net income per diluted share was $2.95, a 17% increase compared to net income of $2.52 per diluted share in the same period of 2018. Second quarter 2019 net income was $62 million, a 2% increase compared to net income of $61 million in the same period of 2018. Adjusted second quarter 2019 net income was $69 million, an 11% increase compared to net income of $63 million for the same period of 2018.

As shown in the attached non-GAAP reconciliation tables, the 2019 second quarter adjusted results exclude a $0.32 net non-core charge primarily due to weather related events and acquisition expenses. The 2018 second quarter adjusted results exclude an $0.08 net non-core charge related to acquisition expenses and weather related events partially offset by a tax attribute.

Second Quarter-over-Quarter Operating Highlights:

  • Total income from operations increased 7.6%
  • Total same store sales increased 5.8%
  • Same store new vehicle retail sales increased 0.2%
  • Same store used vehicle retail sales increased 12.3%
  • Same store F&I per unit increased 11.3% to $1,451
  • Same store service, body and parts sales increased 9.7%
  • Same store total gross profit per unit increased 3.7% to $3,602

"Our second quarter results demonstrate the success of our operating model," said Bryan DeBoer, President and CEO. "Our commitment to serve customers wherever, whenever, however they desire is improving our performance with same store increases in all business lines."

For the first six months of 2019 revenues increased 5% to $6.1 billion, compared to $5.8 billion in 2018.

Net income for the first six months of 2019 was $5.08 per diluted share, compared to $4.50 per diluted share in 2018. Adjusted net income per diluted share for the first six months of 2019 increased 18% to $5.42 from $4.59 in 2018.

Corporate Development

During the second quarter, we continued the optimization of our network with the addition of Hamilton Honda in Hamilton Township, New Jersey and Ford Lincoln of Morgantown in Morgantown, West Virginia. In July, we added our first Jaguar Land Rover franchise in Mission Viejo, California. These acquisitions are expected to add over $320 million in annualized revenue.

We invest in innovation to advance our position as a leading provider of personal transportation solutions. Initiatives are pursued in several categories, including investments to drive improvements and efficiencies in our existing operations, vertical and horizontal adjacencies to our core business, and through bold partnerships with emerging disruptors.

"Expanding our physical network combined with enhanced digital solutions will allow for us to further increase market reach and drive profitability," said DeBoer. "The acquisition market remains active and we are well positioned to accelerate our growth strategy in the coming quarters."

Balance Sheet Update

We ended the second quarter with $45 million in cash and $218 million in availability under our credit facility. Additionally, approximately $329 million of our operating real estate is currently unfinanced, which we estimate could provide $247 million in capital, for total potential liquidity of approximately $510 million.

"Our disciplined capital deployment strategy is a catalyst for our growth combined with maintaining low leverage," said Tina Miller, Senior Vice President and CFO. "We prioritize allocating capital for acquisitions, internal investments, innovation and shareholder return."

Dividend Payment

Our Board of Directors approved a dividend of $0.30 per share related to second quarter 2019 financial results. We expect to pay the dividend on August 23, 2019 to shareholders of record on August 9, 2019.

Second Quarter Earnings Conference Call and Updated Presentation

The second quarter 2019 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the second quarter 2019 results has been added to our investor relations website. To listen live on our website or for replay, visit www.lithiainvestorrelations.com and click on webcasts.

About Lithia

Lithia Motors, Inc. is one of the largest providers of personal transportation solutions in the United States and is among the fastest growing companies in the Fortune 500 (#265-2019). Lithia is a growth company powered by people and innovation. By purchasing and building strong businesses that have yet to realize their potential, Lithia generates significant cash flows while maintaining low leverage. Operational excellence is achieved by refocusing the business on the consumer experience and by utilizing proprietary performance measurements to increase market share and profitability. Lithia’s unique growth model reinvests to expand its nationwide network and to fund innovations that create personal transportation solutions wherever, whenever and however consumers desire.

Sites
www.lithia.com
www.shift.com

www.lithiainvestorrelations.com
www.lithiacareers.com

Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors

Lithia Motors on Twitter
http://twitter.com/lithiamotors

Forward-Looking Statements

Certain statements in this presentation, and at times made by our officers and representatives, constitute forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as “project,” “outlook,” “target,” “may,” “will,” “would,” “should,” “seek,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “likely,” “goal,” “strategy,” “future,” “maintain,” and “continue” or the negative of these terms or other comparable terms. Examples of forward-looking statements in this presentation include, among others, statements regarding:

  • Future market conditions, including anticipated national new car sales levels;
  • Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses (“SG&A”) as a percentage of gross profit and all projections;
  • Anticipated integration, success and growth of acquired stores;
  • Anticipated ability to capture additional market share;
  • Anticipated ability to find accretive acquisitions;
  • Expected revenues from acquired stores;
  • Anticipated synergies, ability to monetize our investment in digital innovation;
  • Anticipated additions of dealership locations to our portfolio in the future;
  • Anticipated availability of liquidity from our unfinanced operating real estate;
  • Anticipated levels of capital expenditures in the future; and
  • Our strategies for customer retention, growth, market position, financial results and risk management.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this presentation. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation:

  • future economic and financial conditions (both nationally and locally);
  • changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers;
  • risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms);
  • the adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level;
  • disruptions to our technology network including computer systems and software, as well as natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of our operating systems, structures, facilities or equipment; and
  • government regulations, legislation and others set forth throughout “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Part I, Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K, and from time to time in our other filings with the SEC.

Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

This presentation contains non-GAAP financial measures such as adjusted net income and diluted earnings per share, adjusted SG&A as a percentage of revenue and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, adjusted pre-tax margin, EBITDA, adjusted EBITDA, leveraged EBITDA and adjusted total debt. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures.

Lithia Motors, Inc.

Consolidated Statements of Operations (Unaudited)

(In millions except per share data)

 

 

 

Three months ended June 30,

 

%

 

Six months ended June 30,

 

%

 

 

 

Increase

 

 

Increase

 

 

2019

 

2018

 

(Decrease)

 

2019

 

2018

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

1,707.4

 

 

$

1,726.8

 

 

(1.1

)%

 

$

3,168.5

 

 

$

3,181.5

 

 

(0.4

)%

Used vehicle retail

 

888.3

 

 

804.1

 

 

10.5

 

 

1,716.2

 

 

1,519.7

 

 

12.9

 

Used vehicle wholesale

 

81.7

 

 

85.3

 

 

(4.2

)

 

159.1

 

 

161.3

 

 

(1.4

)

Finance and insurance

 

129.0

 

 

114.5

 

 

12.7

 

 

246.5

 

 

221.0

 

 

11.5

 

Service, body and parts

 

335.5

 

 

311.4

 

 

7.7

 

 

652.9

 

 

597.1

 

 

9.3

 

Fleet and other

 

79.8

 

 

54.4

 

 

46.7

 

 

128.2

 

 

75.6

 

 

69.6

 

Total revenues

 

3,221.7

 

 

3,096.5

 

 

4.0

%

 

6,071.4

 

 

5,756.2

 

 

5.5

%

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

1,612.0

 

 

1,625.3

 

 

(0.8

)

 

2,987.2

 

 

2,993.1

 

 

(0.2

)

Used vehicle retail

 

795.1

 

 

717.0

 

 

10.9

 

 

1,538.4

 

 

1,359.0

 

 

13.2

 

Used vehicle wholesale

 

79.9

 

 

83.4

 

 

(4.2

)

 

156.4

 

 

158.4

 

 

(1.3

)

Service, body and parts

 

165.2

 

 

157.7

 

 

4.8

 

 

323.1

 

 

305.0

 

 

5.9

 

Fleet and other

 

75.9

 

 

52.4

 

 

44.8

 

 

122.0

 

 

71.9

 

 

69.7

 

Total cost of sales

 

2,728.1

 

 

2,635.8

 

 

3.5

 

 

5,127.1

 

 

4,887.4

 

 

4.9

 

Gross profit

 

493.6

 

 

460.7

 

 

7.1

%

 

944.3

 

 

868.8

 

 

8.7

%

Asset impairments

 

 

 

 

 

NM

 

 

0.5

 

 

 

 

NM

 

SG&A expense

 

356.5

 

 

333.3

 

 

7.0

 

 

678.3

 

 

630.8

 

 

7.5

 

Depreciation and amortization

 

20.2

 

 

18.8

 

 

7.4

 

 

40.0

 

 

35.7

 

 

12.0

 

Income from operations

 

116.9

 

 

108.6

 

 

7.6

%

 

225.5

 

 

202.3

 

 

11.5

%

Floor plan interest expense

 

(19.4

)

 

(15.6

)

 

24.4

 

 

(37.5

)

 

(29.2

)

 

28.4

 

Other interest expense

 

(15.0

)

 

(13.8

)

 

8.7

 

 

(30.3

)

 

(25.6

)

 

18.4

 

Other income, net

 

3.0

 

 

1.6

 

 

NM

 

 

5.6

 

 

3.0

 

 

NM

 

Income before income taxes

 

85.5

 

 

80.8

 

 

5.8

%

 

163.3

 

 

150.5

 

 

8.5

%

Income tax expense

 

(23.6

)

 

(20.1

)

 

17.4

 

 

(45.0

)

 

(37.8

)

 

19.0

 

Income tax rate

 

27.6

%

 

24.9

%

 

 

 

27.6

%

 

25.1

%

 

 

Net income

 

$

61.9

 

 

$

60.7

 

 

2.0

%

 

$

118.3

 

 

$

112.7

 

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

$

2.63

 

 

$

2.44

 

 

7.8

%

 

$

5.08

 

 

$

4.50

 

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted shares outstanding

 

23.5

 

 

24.9

 

 

(5.6

)%

 

23.3

 

 

25.0

 

 

(6.8

)%

NM - not meaningful

Lithia Motors, Inc.

Key Performance Metrics (Unaudited)

 

 

 

Three months ended June 30,

 

%

 

Six months ended June 30,

 

%

 

 

 

Increase

 

 

Increase

 

 

2019

 

2018

 

(Decrease)

 

2019

 

2018

 

(Decrease)

Gross margin

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

5.6

%

 

5.9

%

 

(30

)bps

 

5.7

%

 

5.9

%

 

(20

)bps

Used vehicle retail

 

10.5

 

 

10.8

 

 

(30

)

 

10.4

 

 

10.6

 

 

(20

)

Finance and insurance

 

100.0

 

 

100.0

 

 

 

 

100.0

 

 

100.0

 

 

 

Service, body and parts

 

50.8

 

 

49.4

 

 

140

 

 

50.5

 

 

48.9

 

 

160

 

Gross profit margin

 

15.3

 

 

14.9

 

 

40

 

 

15.6

 

 

15.1

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

45,887

 

 

49,027

 

 

(6.4

)%

 

85,582

 

 

90,524

 

 

(5.5

)%

Used vehicle retail

 

42,865

 

 

39,096

 

 

9.6

 

 

83,540

 

 

75,210

 

 

11.1

 

Total retail units sold

 

88,752

 

 

88,123

 

 

0.7

 

 

169,122

 

 

165,734

 

 

2.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average selling price

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

37,208

 

 

$

35,221

 

 

5.6

%

 

$

37,023

 

 

$

35,146

 

 

5.3

%

Used vehicle retail

 

20,724

 

 

20,567

 

 

0.8

 

 

20,543

 

 

20,206

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average gross profit per unit

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

2,078

 

 

$

2,070

 

 

0.4

%

 

$

2,119

 

 

$

2,082

 

 

1.8

%

Used vehicle retail

 

2,174

 

 

2,228

 

 

(2.4

)

 

2,128

 

 

2,137

 

 

(0.4

)

Finance and insurance

 

1,453

 

 

1,299

 

 

11.9

 

 

1,457

 

 

1,333

 

 

9.3

 

Total vehicle(1)

 

3,598

 

 

3,461

 

 

4.0

 

 

3,596

 

 

3,457

 

 

4.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue mix

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

53.0

%

 

55.8

%

 

 

 

52.2

%

 

55.3

%

 

 

Used vehicle retail

 

27.6

 

 

26.0

 

 

 

 

28.3

 

 

26.4

 

 

 

Used vehicle wholesale

 

2.5

 

 

2.8

 

 

 

 

2.6

 

 

2.8

 

 

 

Finance and insurance, net

 

4.0

 

 

3.7

 

 

 

 

4.1

 

 

3.8

 

 

 

Service, body and parts

 

10.4

 

 

10.1

 

 

 

 

10.8

 

 

10.4

 

 

 

Fleet and other

 

2.5

 

 

1.6

 

 

 

 

2.0

 

 

1.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Mix

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

19.3

%

 

22.0

%

 

 

 

19.2

%

 

21.7

%

 

 

Used vehicle retail

 

18.9

 

 

18.9

 

 

 

 

18.8

 

 

18.5

 

 

 

Used vehicle wholesale

 

0.4

 

 

0.4

 

 

 

 

0.3

 

 

0.3

 

 

 

Finance and insurance, net

 

26.1

 

 

24.9

 

 

 

 

26.1

 

 

25.5

 

 

 

Service, body and parts

 

34.5

 

 

33.4

 

 

 

 

34.9

 

 

33.6

 

 

 

Fleet and other

 

0.8

 

 

0.4

 

 

 

 

0.7

 

 

0.4

 

 

 

 

 

Adjusted

 

As reported

 

Adjusted

 

As reported

 

 

Three months ended
June 30,

 

Three months ended
June 30,

 

Six months ended
June 30,

 

Six months ended
June 30,

Other metrics

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

 

2019

 

2018

SG&A as a % of revenue

 

10.7

%

 

10.6

%

 

11.1

%

 

10.8

%

 

11.0

%

 

10.9

%

 

11.2

%

 

11.0

%

SG&A as a % of gross profit

 

70.1

 

 

71.3

 

 

72.2

 

 

72.4

 

 

70.7

 

 

72.1

 

 

71.8

 

 

72.6

 

Operating profit as a % of revenue

 

3.9

 

 

3.7

 

 

3.6

 

 

3.5

 

 

3.9

 

 

3.6

 

 

3.7

 

 

3.5

 

Operating profit as a % of gross profit

 

25.8

 

 

24.6

 

 

23.7

 

 

23.6

 

 

25.0

 

 

23.8

 

 

23.9

 

 

23.3

 

Pretax margin

 

3.0

 

 

2.8

 

 

2.7

 

 

2.6

 

 

2.9

 

 

2.7

 

 

2.7

 

 

2.6

 

Net profit margin

 

2.2

 

 

2.0

 

 

1.9

 

 

2.0

 

 

2.1

 

 

2.0

 

 

1.9

 

 

2.0

 

(1)

Includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail

Lithia Motors, Inc.

Same Store Operating Highlights (Unaudited)

 

 

 

Three months ended June 30,

 

%

 

Six months ended June 30,

 

%

 

 

 

Increase

 

 

Increase

 

 

2019

 

2018

 

(Decrease)

 

2019

 

2018

 

(Decrease)

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

1,679.7

 

 

$

1,675.8

 

 

0.2

%

 

$

3,048.7

 

 

$

3,090.5

 

 

(1.4

)%

Used vehicle retail

 

875.9

 

 

780.1

 

 

12.3

 

 

1,653.7

 

 

1,477.8

 

 

11.9

 

Finance and insurance

 

126.7

 

 

111.1

 

 

14.0

 

 

239.5

 

 

214.8

 

 

11.5

 

Service, body and parts

 

330.2

 

 

301.1

 

 

9.7

 

 

626.8

 

 

579.6

 

 

8.1

 

Total revenues

 

3,173.3

 

 

3,000.2

 

 

5.8

 

 

5,846.2

 

 

5,588.9

 

 

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

94.0

 

 

$

98.1

 

 

(4.2

)%

 

$

174.2

 

 

$

182.6

 

 

(4.6

)%

Used vehicle retail

 

92.1

 

 

84.9

 

 

8.5

 

 

173.2

 

 

157.1

 

 

10.2

 

Finance and insurance

 

126.7

 

 

111.1

 

 

14.0

 

 

239.5

 

 

214.8

 

 

11.5

 

Service, body and parts

 

167.7

 

 

149.0

 

 

12.6

 

 

317.2

 

 

284.3

 

 

11.6

 

Total gross profit

 

486.2

 

 

446.8

 

 

8.8

 

 

912.7

 

 

845.1

 

 

8.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

5.6

%

 

5.9

%

 

(30

)bps

 

5.7

%

 

5.9

%

 

(20

)bps

Used vehicle retail

 

10.5

 

 

10.9

 

 

(40

)

 

10.5

 

 

10.6

 

 

(10

)

Finance and insurance

 

100.0

 

 

100.0

 

 

 

 

100.0

 

 

100.0

 

 

 

Service, body and parts

 

50.8

 

 

49.5

 

 

130

 

 

50.6

 

 

49.0

 

 

160

 

Gross profit margin

 

15.3

 

 

14.9

 

 

40

 

 

15.6

 

 

15.1

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit sales

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

45,046

 

 

47,431

 

 

(5.0

)%

 

82,529

 

 

87,606

 

 

(5.8

)%

Used vehicle retail

 

42,250

 

 

37,778

 

 

11.8

 

 

80,779

 

 

72,860

 

 

10.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average selling price

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

37,289

 

 

$

35,332

 

 

5.5

%

 

$

36,941

 

 

$

35,278

 

 

4.7

%

Used vehicle retail

 

20,731

 

 

20,649

 

 

0.4

 

 

20,472

 

 

20,282

 

 

0.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average gross profit per unit

 

 

 

 

 

 

 

 

 

 

 

 

New vehicle retail

 

$

2,087

 

 

$

2,068

 

 

0.9

%

 

$

2,110

 

 

$

2,084

 

 

1.2

%

Used vehicle retail

 

2,179

 

 

2,247

 

 

(3.0

)

 

2,144

 

 

2,156

 

 

(0.6

)

Finance and insurance

 

1,451

 

 

1,304

 

 

11.3

 

 

1,467

 

 

1,339

 

 

9.6

 

Total vehicle(1)

 

3,602

 

 

3,473

 

 

3.7

 

 

3,608

 

 

3,473

 

 

3.9

 

(1)

Includes the sales and gross profit related to new, used retail, used wholesale and finance and insurance and unit sales for new and used retail

Lithia Motors, Inc.

Other Highlights (Unaudited)

 

 

As of

 

June 30,

 

December 31,

 

June 30,

 

2019

 

2018

 

2018

Days Supply(1)

 

 

 

 

 

New vehicle inventory

77

 

71

 

77

Used vehicle inventory

61

 

66

 

62

(1) Days supply calculated based on current inventory levels, excluding in-transit vehicles, and a 30-day historical cost of sales level.

Financial covenants

 

 

 

 

Requirement

 

As of June 30, 2019

Current ratio

Not less than 1.10 to 1

 

1.25 to 1

Fixed charge coverage ratio

Not less than 1.20 to 1

 

2.09 to 1

Leverage ratio

Not more than 5.00 to 1

 

2.66 to 1

Lithia Motors, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

 

 

June 30, 2019

December 31, 2018

Cash and cash equivalents

$

44.7

$

31.6

Trade receivables, net

489.2

529.4

Inventories, net

2,431.9

2,365.3

Other current assets

65.7

65.1

Total current assets

$

3,031.5

$

2,991.4

 

 

 

Property and equipment, net

1,463.0

1,448.0

Intangibles

766.4

723.6

Other non-current assets

513.7

221.0

Total assets

$

5,774.6

$

5,384.0

 

 

 

Floor plan notes payable

2,123.7

2,057.7

Other current liabilities

481.6

435.8

Total current liabilities

$

2,605.3

$

2,493.5

 

 

 

Long-term debt

1,324.1

1,358.2

Other long-term liabilities and deferred revenue

570.5

335.1

Total liabilities

$

4,499.9

$

4,186.8

 

 

 

Stockholder's Equity

1,274.7

1,197.2

Total liabilities & stockholders' equity

$

5,774.6

$

5,384.0

 

Lithia Motors, Inc.

Summarized Cash Flow from Operations (Unaudited)

(In millions)

 

 

 

Six months ended June 30,

 

 

2019

 

2018

Net income

 

$

118.3

 

 

$

112.7

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Asset impairments

 

0.5

 

 

 

Depreciation and amortization

 

40.0

 

 

35.7

 

Stock-based compensation

 

7.4

 

 

6.8

 

(Gain) loss on disposal of assets

 

 

 

(0.1

)

Gain on sale of franchises

 

0.3

 

 

0.4

 

Deferred income taxes

 

7.6

 

 

0.3

 

(Increase) decrease:

 

 

 

 

Trade receivables, net

 

40.1

 

 

47.9

 

Inventories

 

(63.0

)

 

(35.5

)

Other assets

 

6.4

 

 

20.6

 

Increase (decrease):

 

 

 

 

Floor plan notes payable, net

 

89.7

 

 

15.1

 

Trade payables

 

3.5

 

 

2.9

 

Accrued liabilities

 

(8.8

)

 

5.5

 

Other long-term liabilities and deferred revenue

 

2.4

 

 

24.0

 

Net cash provided by operating activities

 

$

244.4

 

 

$

236.3

 

 

Lithia Motors, Inc.

Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)

(In millions)

 

 

 

Six months ended June 30,

Net cash provided by operating activities

 

2019

 

2018

As reported

 

$

244.4

 

 

$

236.3

 

Floor plan notes payable, non-trade, net

 

(11.1

)

 

85.8

 

Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory

 

(19.3

)

 

(120.9

)

Adjusted

 

$

214.0

 

 

$

201.2

 

 

Lithia Motors, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)

(In millions, except for per share data)

 

 

 

Three Months Ended June 30, 2019

 

 

As reported

 

Acquisition
expense

 

Net disposal
loss on sale
of stores

 

Insurance
reserves

 

Adjusted

Selling, general and administrative

 

$

356.5

 

 

$

(1.5

)

 

$

(0.4

)

 

$

(8.4

)

 

$

346.2

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

116.9

 

 

1.5

 

 

0.4

 

 

8.4

 

 

127.2

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

85.5

 

 

$

1.5

 

 

$

0.4

 

 

$

8.4

 

 

$

95.8

 

Income tax benefit (expense)

 

(23.6

)

 

(0.4

)

 

(0.1

)

 

(2.3

)

 

(26.4

)

Net income

 

$

61.9

 

 

$

1.1

 

 

$

0.3

 

 

$

6.1

 

 

$

69.4

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

2.63

 

 

$

0.05

 

 

$

0.01

 

 

$

0.26

 

 

$

2.95

 

Diluted share count

 

23.5

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

 

 

As reported

 

Acquisition

expense

 

Insurance

reserve

 

Tax

attribute

 

Adjusted

Selling, general and administrative

 

$

333.3

 

 

$

(3.3

)

 

$

(1.5

)

 

$

 

 

$

328.5

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

108.6

 

 

3.3

 

 

1.5

 

 

 

 

113.4

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

80.8

 

 

$

3.3

 

 

$

1.5

 

 

$

 

 

$

85.6

 

Income tax expense

 

(20.1

)

 

(0.9

)

 

(0.4

)

 

(1.4

)

 

(22.8

)

Net income

 

$

60.7

 

 

$

2.4

 

 

$

1.1

 

 

$

(1.4

)

 

$

62.8

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

2.44

 

 

$

0.10

 

 

$

0.04

 

 

$

(0.06

)

 

$

2.52

 

Diluted share count

 

24.9

 

 

 

 

 

 

 

 

 

 

Lithia Motors, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)

(In millions, except for per share data)

 

 

 

Six Months Ended June 30, 2019

 

 

As reported

 

Acquisition
expense

 

Net disposal
loss on sale
of stores

 

Insurance
reserve

 

Asset
impairment

 

Adjusted

Asset impairments

 

$

0.5

 

 

$

 

 

$

 

 

$

 

 

$

(0.5

)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

678.3

 

 

(1.7

)

 

(0.3

)

 

(8.4

)

 

 

 

667.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

225.5

 

 

1.7

 

 

0.3

 

 

8.4

 

 

0.5

 

 

236.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

163.3

 

 

$

1.7

 

 

$

0.3

 

 

$

8.4

 

 

$

0.5

 

 

$

174.2

 

Income tax benefit (expense)

 

(45.0

)

 

(0.5

)

 

(0.1

)

 

(2.3

)

 

(0.1

)

 

(48.0

)

Net income

 

$

118.3

 

 

$

1.2

 

 

$

0.2

 

 

$

6.1

 

 

$

0.4

 

 

$

126.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

5.08

 

 

$

0.05

 

 

$

0.01

 

 

$

0.26

 

 

0.02

 

 

$

5.42

 

Diluted share count

 

23.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

 

As reported

 

Acquisition
expense

 

Insurance
reserves

 

Tax
attribute

 

Adjusted

Selling, general and administrative

 

$

630.8

 

 

$

(3.3

)

 

$

(1.5

)

 

$

 

 

$

626.0

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

202.3

 

 

3.3

 

 

1.5

 

 

 

 

207.1

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

150.5

 

 

$

3.3

 

 

$

1.5

 

 

$

 

 

$

155.3

 

Income tax benefit (expense)

 

(37.8

)

 

(0.9

)

 

(0.4

)

 

(1.4

)

 

(40.5

)

Net income

 

$

112.7

 

 

$

2.4

 

 

$

1.1

 

 

$

(1.4

)

 

$

114.8

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

4.50

 

 

$

0.11

 

 

$

0.04

 

 

$

(0.06

)

 

$

4.59

 

Diluted share count

 

25.0

 

 

 

 

 

 

 

 

 

 

Lithia Motors, Inc.

Adjusted EBITDA and Leveraged Free Cash Flow (Unaudited)

(In millions)

 

 

 

Three months ended
June 30,

 

%

 

Six months ended
June 30,

 

%

 

 

 

Increase

 

 

Increase

 

 

2019

 

2018

 

(Decrease)

 

2019

 

2018

 

(Decrease)

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

61.9

 

 

$

60.7

 

 

2.0

%

 

$

118.3

 

 

$

112.7

 

 

5.0

%

Flooring interest expense

 

19.4

 

 

15.6

 

 

24.4

 

 

37.5

 

 

29.2

 

 

28.4

 

Other interest expense

 

15.0

 

 

13.8

 

 

8.7

 

 

30.3

 

 

25.6

 

 

18.4

 

Income tax expense

 

23.6

 

 

20.1

 

 

17.4

 

 

45.0

 

 

37.8

 

 

19.0

 

Depreciation and amortization

 

20.2

 

 

18.8

 

 

7.4

 

 

40.0

 

 

35.7

 

 

12.0

 

EBITDA

 

$

140.1

 

 

$

129.0

 

 

8.6

%

 

$

271.1

 

 

$

241.0

 

 

12.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Other adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Less: flooring interest expense

 

$

(19.4

)

 

$

(15.6

)

 

24.4

 

 

$

(37.5

)

 

$

(29.2

)

 

28.4

 

Less: used vehicle line of credit interest

 

(1.1

)

 

 

 

NM

 

 

(2.7

)

 

(0.5

)

 

440.0

 

Add: acquisition expenses

 

1.5

 

 

3.3

 

 

(54.5

)

 

1.7

 

 

3.3

 

 

(48.5

)

Less: (gain) loss on divestitures

 

0.4

 

 

 

 

NM

 

 

0.3

 

 

 

 

NM

 

Add: insurance reserve

 

8.4

 

 

1.5

 

 

460.0

 

 

8.4

 

 

1.5

 

 

460.0

 

Add: asset impairment

 

 

 

 

 

NM

 

 

0.5

 

 

 

 

NM

 

Adjusted EBITDA

 

$

129.9

 

 

$

118.2

 

 

9.9

%

 

$

241.8

 

 

$

216.1

 

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Leveraged EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

129.9

 

 

$

118.2

 

 

9.9

%

 

$

241.8

 

 

$

216.1

 

 

11.9

%

Less: Capital expenditures

 

(28.7

)

 

(30.4

)

 

(5.6

)

 

(57.8

)

 

(72.4

)

 

(20.2

)

Leveraged EBITDA

 

$

101.2

 

 

$

87.8

 

 

15.3

%

 

$

184.0

 

 

$

143.7

 

 

28.0

%

NM - not meaningful

 

Contacts

Eric Pitt
VP, Investor Relations and Treasurer
EPitt@lithia.com
(541) 864-1748

Contacts

Eric Pitt
VP, Investor Relations and Treasurer
EPitt@lithia.com
(541) 864-1748