EX-99.1 2 f8klad2ndqea072607ex991.htm EXHIBIT 99.1 f8klad2ndqea072607ex991.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

EXHIBIT 99.1

LITHIA MOTORS Q2 REVENUES GROW 11% TO A RECORD $885 MILLION;
EARNINGS FROM CONTINUING OPERATIONS OF 50 CENTS PER SHARE

MEDFORD, OREGON, July 26, 2007 (4:05 p.m. EDT) – Lithia Motors, Inc. (NYSE: LAD) today announced that second quarter 2007 sales increased 11% to $885.1 million as compared to $801.2 million in the same period last year. New vehicle sales increased 10%, used vehicle sales increased 9%, finance/insurance sales increased 5%, and parts/service sales increased 19%.

Second quarter 2007 net income from continuing operations was $10.7 million as compared to $12.1 million in the second quarter of 2006. Diluted earnings per share from continuing operations were $0.50 as compared to $0.57 in the second quarter of 2006. For a more accurate comparison of earnings, last year’s fair market value adjustment to our swaps needs to be considered. Our interest rate swaps did not qualify for hedge accounting in 2006, which had the effect of increasing second quarter 2006 earnings per share by 3 cents. Our swaps do qualify for hedge accounting in 2007 and there was no comparable effect on earnings per share in the second quarter.

Sid DeBoer, Lithia’s Chairman and CEO, commented, “The highlight of the quarter was Lithia’s parts and service business which continued its strong performance with same-store sales growth of 4.6% on top of 8.0% growth in the second quarter of last year.”

“Total sales grew 11% in the second quarter driven by strong parts and service sales and revenues from acquisitions made in the past 12 months. Second quarter total same-store sales declined 2.0%; however, we had a difficult comparison against 9.3% growth in the second quarter of 2006. Regardless of the difficult year over year comparisons, retail sales have been lackluster in the first half of the year. We believe that we are seeing a challenging retail environment for automotive sales in our markets that will continue for the rest of the year. This is related to the ripple affects from the slowdown in residential construction, high gas prices and customer concerns over personal debt.”

“Vehicle inventories are at low levels going into the third quarter of the year. New vehicle inventories at the end of June were 9 days below our historical average levels. Finally, earnings per share from continuing operations in the second quarter were down 12% from last year as a result of the retail sales environment, continuing costs related to L2 Auto and our future operating initiatives and higher year over year interest expense,” concluded Mr. DeBoer.

For the six-month period ending June 30, 2007, total sales increased 10% to $1.66 billion as compared to $1.51 billion in the same period last year. New vehicle sales increased 9%, used vehicle sales increased 9%, finance/insurance sales increased 8%, and parts/service sales increased 20%.

For the first six-months, Lithia’s net income from continuing operations was $17.9 million as compared to $22.9 million in 2006. Diluted earnings per share from continuing operations were $0.85 as compared to $1.08 in the first six-months of 2006. Last year’s fair market value adjustment to our swaps had the effect of increasing first half 2006 earnings per share by 7 cents. There was no comparable effect on earnings per share in the first half of this year.

Jeffrey B. DeBoer, Senior Vice President and CFO added, “We are lowering our guidance for the full-year 2007. Our initial 2007 guidance was in-line with what we had earned for the full-year 2006. We are adjusting guidance lower to take into account the slower than expected retail environment in the first half of the year and the costs associated with the investments, for the future, we are making in our company this year. We do not foresee an impact to the company’s dividend or current operating initiatives as a result of our updated projections for the year.”

“In the second quarter, we had five stores and one body shop classified as discontinued operations as we continue to dispose of our lowest performing operations. Of the 12 cents in discontinued operations, 1 cent is related to operating losses and 11 cents are due to a one-time non-cash write-off of intangibles related to the discontinued stores.”

“The full-year 2007 guidance is on a continuing operations basis and assumes a steady pace of acquisitions and dispositions," concluded Jeffrey B. DeBoer.

        Guidance 
Earnings per Share        FY 2007 
From Continuing Operations:                   
$1.60 - $1.80 

Conference Call Information
Lithia Motors will be providing more detailed information on the results for the second quarter 2007 in its conference call scheduled for today at 2 p.m. PDT and 5 p.m. EDT. The call can be accessed live by calling 973-582-2750; Conference ID #: 9010604. To listen LIVE on our website or for REPLAY: Log-on to www.Lithia.com – Go to Investor Relations – and click on the Conference Call Icon.

About Lithia
Lithia Motors, Inc. is a Fortune 700 and Russell 2000 Company. Lithia sells 30 brands of new vehicles at 108 stores which are located in 46 markets within 15 states. Internet sales are centralized at www.Lithia.com. 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 109,648 new and used vehicles and had $3.17 billion in total revenue in 2006.

Forward Looking Statements
This press release includes forward looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, 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 and others set forth from time to time in the company’s filings with the SEC. Specific risks in this press release include the accuracy of the company’s internal forecasts, comments

and predictions related to the retail sales environment, anticipated costs related to new initiatives and projected full-year 2007 earnings per share guidance.

Additional Information
For additional information on Lithia Motors, contact the Investor Relations Department: (541) 776-6591 or log-on to: www.lithia.com – go to Investor Relations

LITHIA MOTORS, INC.                                     
(In Thousands except per share data)                            
 
Unaudited        Three Months Ended                  
                             June 30,         $ Increase     % Increase  
        2007         2006         (Decrease)     (Decrease)  
New Vehicle Sales      $515,234       $468,710       $46,524     9.9 % 
Used Vehicle Sales        238,936         219,149         19,787     9.0  
Finance & Insurance        33,143         31,487         1,656     5.3  
Service, Body & Parts Sales        96,490         81,062         15,428     19.0  
Fleet & Other Revenues            1,306                796                510      64.1  
Total Revenues        885,109         801,204         83,905     10.5  
Cost of Sales        736,797         664,909            71,888      10.8  
Gross Profit        148,312         136,295         12,017     8.8  
SG&A Expense        112,135         100,482         11,653     11.6  
Depreciation/Amortization            5,097             4,007             1,090      27.2  
Income from Operations        31,080         31,806         (726 )    (2.3 ) 
Flooring Interest Expense        (8,480 )        (7,800 )        680     8.7  
Other Interest Expense        (5,039 )        (3,312 )        1,727     52.1  
Other Income, net              113               261              (148 )     (56.7 ) 
Income from continuing operations                            
 before income taxes        17,674         20,955         (3,281 )    (15.7 ) 
Income Tax Expense        7,022         8,834         (1,812 )    (20.5 ) 
Income Tax Rate             39.7 %              42.2 %                 
Income from continuing ops.        10,652         12,121         (1,469 )    (12.1 )% 
Discontinued Operations:                                     
 Loss from operations, net of tax        (228 )        (230 )                 
 Loss from impairment, net of tax           (2,481 )                  0                  
Loss from discontinued                                     
 operations, net of income tax           (2,709 )               (230 )             2,479       1,077.8  
Net Income         $7,943         $11,891         $(3,185 )         (26.8 )% 
 
Diluted Net Income per share:                                     
Continuing Operations      $0.50       $0.57       $(0.07 )    $(12.3 )% 
Discontinued Operations:                                     
 Loss from operations        (0.01 )        (0.01 )                 
 Loss from impairment           (0.11 )               0                  
Total Discontinued Operations            (0.12 )          (0.01 )                 
Net Income per share         $0.38         $0.56           (0.18 )      (32.1 )% 
Diluted Shares Outstanding        22,109         22,150         (41 )    (0.2 )% 

LITHIA MOTORS, INC.        Three Months Ended                  
(Continuing Operations)                         June 30,         Increase     % Increase  
Unit Sales:        2007         2006         (Decrease)     (Decrease)  
New Vehicle        17,882         17,326         556     3.2 % 
Used – Retail Vehicle        11,814         11,328         486     4.3  
Used - Wholesale        6,625         5,999         626     10.4  
Total Units Sold        36,321         34,653         1,668     4.8  
 
Average Selling Price:                                     
New Vehicle      $28,813       $27,052       $1,761     6.5 % 
Used – Retail Vehicle        16,676         16,161         515     3.2  
Used - Wholesale        6,329         6,013         316     5.3  
 
Key Financial Data:                                     
Gross Profit Margin        16.8 %        17.0 %        -20bps        
SG&A as a % of Gross Profit        75.6 %        73.7 %      +190bps        
Operating Margin        3.5 %        4.0 %        -50bps        
Pre-Tax Margin        2.0 %        2.6 %        -60bps        
 
Gross Margin/Profit Data                                     
New Vehicle Retail        7.3 %        7.3 %        -        
Used Vehicle Retail        15.0 %        15.8 %        -80bps        
Used Vehicle Wholesale        2.7 %        2.8 %        -10bps        
Service, Body & Parts        48.2 %        49.3 %        -110bps        
Finance & Insurance        100.0 %        100.0 %        -        
New Retail Gross Profit/Unit      $2,101       $1,988       +$113        
Used Retail Gross Profit/Unit      $2,497       $2,560       -$63        
Used Wholesale Gross Profit/Unit      $173       $170       +$3        
Finance & Insurance/Retail Unit      $1,116       $1,099       +$17        
 
Revenue Mix:                                     
New Vehicles        58.2 %        58.5 %                 
Used Retail Vehicles        22.3 %        22.9 %                 
Used Wholesale Vehicles        4.7 %        4.5 %                 
Finance and Insurance, Net        3.7 %        3.9 %                 
Service and Parts        10.9 %        10.1 %                 
Fleet and other        0.2 %        0.1 %                 
 
New Vehicle Unit Sales Brand Mix:                                     
Chrysler Brands        38.9 %        39.5 %                 
General Motors & Saturn        15.7 %        17.2 %                 
Toyota        14.2 %        13.0 %                 
Honda        6.6 %        5.4 %                 
Ford        5.7 %        7.4 %                 
Hyundai        4.1 %        4.8 %                 
BMW        3.8 %        2.3 %                 
Nissan        3.2 %        3.4 %                 
Subaru        2.0 %        2.8 %                 
Volkswagen        2.0 %        1.5 %                 
Mercedes-Benz        1.1 %        0.7 %                 
Other        2.7 %        2.0 %                 
        100 %        100 %                 

Lithia Motors Selected Same Store Data                            
 
        Three Months Ended                  
                       June 30,         Increase     % Increase  
Same Store Unit Sales:        2007         2006         (Decrease)     (Decrease)  
New Vehicle        15,956         17,204         (1,248 )    (7.3 )% 
Used – Retail Vehicle        10,624         11,297         (673 )    (6.0 ) 
Used - Wholesale        5,902         5,999         (97 )    (1.6 ) 
Total Units Sold        32,482         34,500         (2,018 )    (5.8 ) 
 
Same Store Average Selling Price:                                     
New Vehicle      $28,353       $27,041       $1,312     4.9 % 
Used – Retail Vehicle        16,452         16,160         292     1.8  
Used - Wholesale        6,363         6,013         350     5.8  
 
Same Store Retail Revenue                                     
New Vehicle Retail Sales        (2.8 )%        8.1 %                 
Used Vehicle Retail Sales        (4.3 )%        12.0 %                 
Used Vehicle Wholesale Sales        4.1 %        10.1 %                 
Total Vehicle Sales (excluding fleet)        (2.8 )%        9.2 %                 
Finance & Insurance Sales        (1.4 )%        15.8 %                 
Service, Body & Parts Sales        4.6 %        8.0 %                 
Total Sales (excluding Fleet)        (2.0 )%        9.3 %                 
Total Gross Profit (excluding Fleet)        (3.0 )%        7.5 %                 
 
Same Store Average Gross Profit Data                            
New Retail Gross Profit/Unit      $2,058       $1,989       +$69        
Used Retail Gross Profit/Unit      $2,450       $2,537       -$87        
Used Wholesale Gross Profit/Unit      $166       $170       -$4        
 
Same Store Total Sales Geographic Mix:                            
Texas        21.9 %        19.0 %                 
Oregon        16.2 %        17.3 %                 
California        12.1 %        13.5 %                 
Washington        11.8 %        11.7 %                 
Alaska        7.4 %        7.6 %                 
Montana        7.0 %        5.9 %                 
Colorado        6.9 %        7.3 %                 
Idaho        6.0 %        6.4 %                 
Nevada        4.4 %        5.0 %                 
Nebraska        2.8 %        3.1 %                 
South Dakota        2.3 %        2.1 %                 
New Mexico        1.2 %        1.1 %                 
        100 %        100 %                 

LITHIA MOTORS, INC.                                     
(In Thousands except per share data)                            
 
Unaudited        Six Months Ended                  
                              June 30,         $ Increase     % Increase  
        2007         2006         (Decrease)     (Decrease)  
New Vehicle Sales      $952,741       $872,799       $79,942     9.2 % 
Used Vehicle Sales        451,970         415,269         36,701     8.8  
Finance & Insurance        62,787         57,905         4,882     8.4  
Service, Body & Parts Sales        190,107         158,685         31,422     19.8  
Fleet & Other Revenues              1,996               1,949                 47         2.4  
Total Revenues        1,659,601         1,506,607         152,994     10.2  
Cost of Sales        1,375,311         1,247,132         128,179       10.3  
Gross Profit        284,290         259,475         24,815     9.6  
SG&A Expense        219,679         194,391         25,288     13.0  
Depreciation/Amortization              9,860               7,848             2,012       25.6  
Income from Operations        54,751         57,236         (2,485 )    (4.3 ) 
Flooring Interest Expense        (15,834 )        (12,861 )        2,973     23.1  
Other Interest Expense        (9,667 )        (6,335 )        3,332     52.6  
Other Income, net                 325                  637              (312 )     (49.0 ) 
Income from continuing operations                            
 before income taxes        29,575         38,677         (9,102 )    (23.5 ) 
Income Tax Expense        11,698         15,737         (4,039 )    (25.7 ) 
Income Tax Rate               39.6 %               40.7 %                 
Income from continuing ops.        17,877         22,940         (5,063 )    (22.1 )% 
Discontinued Operations:                                     
 Loss from operations, net of tax        (378 )        (1,681 )                 
 Loss from impairment, net of tax            (2,481 )                   0                  
Loss from discontinued                                     
 operations, net of income tax            (2,859 )            (1,681 )            1,178       70.1  
Net Income       $15,018        $21,259         $(6,241 )     (29.4 )% 
 
Diluted Net Income per share:                                     
Continuing Operations      $0.85       $1.08       $(0.23 )    (21.3 )% 
Discontinued Operations:                                     
 Loss from operations        (0.02 )        (0.08 )                 
 Loss from impairment            (0.11 )                 0                  
Discontinued Operations            (0.13 )            (0.08 )                 
Net Income per share          $0.72          $1.00             (0.28 )     (28.0 )% 
Diluted Shares Outstanding        22,116         22,109         7     0.0 % 

LITHIA MOTORS, INC.        Six Months Ended                  
(Continuing Operations)                          June 30,         Increase     % Increase  
Unit Sales:        2007         2006         (Decrease)     (Decrease)  
New Vehicle        33,165         31,798         1,367     4.3 % 
Used – Retail Vehicle        22,447         21,544         903     4.2  
Used - Wholesale        12,687         11,174         1,513     13.5  
Total Units Sold        68,299         64,516         3,783     5.9  
 
Average Selling Price:                                     
New Vehicle      $28,727       $27,448       $1,279     4.7 % 
Used – Retail Vehicle        16,456         16,098         358     2.2  
Used - Wholesale        6,509         6,126         383     6.3  
 
Key Financial Data:                                     
Gross Profit Margin        17.1 %        17.2 %        -10bps        
SG&A as a % of Gross Profit        77.3 %        74.9 %      +240bps        
Operating Margin        3.3 %        3.8 %        -50bps        
Pre-Tax Margin        1.8 %        2.6 %        -80bps        
 
Gross Margin/Profit Data                                     
New Vehicle Retail        7.5 %        7.6 %        -10bps        
Used Vehicle Retail        15.0 %        15.7 %        -70bps        
Used Vehicle Wholesale        3.4 %        4.0 %        -60bps        
Service, Body & Parts        47.8 %        48.5 %        -70bps        
Finance & Insurance        100.0 %        100.0 %        -        
 
New Retail Gross Profit/Unit      $2,155       $2,096       +$59        
Used Retail Gross Profit/Unit      $2,476       $2,521       -$45        
Used Wholesale Gross Profit/Unit      $219       $244       -$25        
Finance & Insurance/Retail Unit      $1,129       $1,086       +$43        
 
Revenue Mix:                                     
New Vehicles        57.4 %        57.9 %                 
Used Retail Vehicles        22.3 %        23.0 %                 
Used Wholesale Vehicles        4.9 %        4.7 %                 
Finance and Insurance, Net        3.8 %        3.8 %                 
Service and Parts        11.5 %        10.5 %                 
Fleet and other        0.1 %        0.1 %                 
 
New Vehicle Unit Sales Brand Mix:                                     
Chrysler Brands        39.9 %        41.1 %                 
General Motors & Saturn        16.2 %        16.2 %                 
Toyota        13.5 %        12.4 %                 
Ford        6.1 %        7.4 %                 
Honda        6.0 %        5.4 %                 
BMW        3.8 %        2.3 %                 
Hyundai        3.7 %        4.4 %                 
Nissan        3.4 %        3.6 %                 
Subaru        2.2 %        2.9 %                 
Volkswagen        1.7 %        1.4 %                 
Mercedes-Benz        1.1 %        0.6 %                 
Other        2.4 %        2.3 %                 
        100 %        100 %                 

Lithia Motors Selected Same Store Data                            
 
        Six Months Ended                  
                         June 30,         Increase     % Increase  
Same Store Unit Sales:        2007         2006         (Decrease)     (Decrease)  
New Vehicle        29,830         31,676         (1,846 )    (5.8 )% 
Used – Retail Vehicle        20,383         21,513         (1,130 )    (5.3 ) 
Used - Wholesale        11,488         11,173         315     2.8  
Total Units Sold        61,701         64,362         (2,661 )    (4.1 ) 
 
Same Store Average Selling Price:                                     
New Vehicle      $28,254       $27,444       $810     3.0 % 
Used – Retail Vehicle        16,249         16,097         152     0.9  
Used - Wholesale        6,528         6,123         405     6.6  
 
Same Store Retail Revenue                                     
New Vehicle Retail Sales        (3.0 )%        9.4 %                 
Used Vehicle Retail Sales        (4.4 )%        4.4 %                 
Used Vehicle Wholesale Sales        9.6 %        3.7 %                 
Total Vehicle Sales (excluding fleet)        (2.7 )%        7.7 %                 
Finance & Insurance Sales        0.7 %        9.5 %                 
Service, Body & Parts Sales        5.1 %        5.3 %                 
Total Sales (excluding Fleet)        (1.8 )%        7.5 %                 
Total Gross Profit (excluding Fleet)        (2.1 )%        5.3 %                 
 
Same Store Average Gross Profit Data                            
New Retail Gross Profit/Unit      $2,122       $2,097       +$25        
Used Retail Gross Profit/Unit      $2,428       $2,490       -$62        
Used Wholesale Gross Profit/Unit      $213       $254       -$41        
 
Same Store Total Sales Geographic Mix:                            
Texas        21.3 %        18.3 %                 
Oregon        16.5 %        17.9 %                 
California        12.0 %        13.5 %                 
Washington        11.9 %        11.5 %                 
Alaska        7.2 %        7.3 %                 
Colorado        7.2 %        7.4 %                 
Montana        6.7 %        6.1 %                 
Idaho        6.0 %        6.3 %                 
Nevada        4.7 %        5.2 %                 
Nebraska        2.9 %        3.2 %                 
South Dakota        2.4 %        2.2 %                 
New Mexico        1.2 %        1.1 %                 
        100 %        100 %                 

LITHIA MOTORS, INC.                 
 
Balance Sheet Highlights (Dollars in Thousands)         
 
        June 30, 2007        December 31, 2006 
        Unaudited         
Cash & Cash Equivalents        $32,903        $26,600 
   Trade Receivables*        131,278        118,528 
   Inventory        684,926        603,306 
   Assets Held for Sale        68,859        15,485 
   Other Current Assets            16,080            15,721 
Total Current Assets        934,046        779,640 
 
Real Estate, net        333,540        327,890 
Equipment & Leases, net        95,513        89,213 
Goodwill, net        309,065        307,424 
Other Assets            74,938            75,190 
Total Assets        $1,747,102        $1,579,357 
 
   Floorplan Notes Payable        $573,332        $499,679 
   Liabilities held for sale        48,513        11,610 
   Other Current Liabilities           121,060           118,650 
Total Current Liabilities        742,905        629,939 
 
Used Vehicle Flooring        111,843        95,614 
Real Estate Debt        161,629        155,890 
Other Long-Term Debt        152,324        140,879 
Other Liabilities           71,580           63,642 
 
Total Liabilities        1,240,281        1,085,964 
 
Shareholders’ Equity          506,821          493,393 
 
Total Liabilities &                 
         Shareholders’ Equity        $1,747,102        $1,579,357 

* Includes contracts-in-transit of $60,281 and $56,211 for 2007 and 2006.

                 

Other Balance Sheet Data (Dollars in Thousands except per share data)

Current Ratio 1.3x 1.2x
LT Debt/Total Cap. 
 (Excludes Real Estate)  34% 32%
Working Capital  $191,141 $149,701
Book Value per Basic Share  $26.01 $25.32