OR (State or other jurisdiction of incorporation) | 001-14733 (Commission File Number) | 93-0572810 (IRS Employer Identification Number) | ||
150 N. Bartlett St, Medford, OR (Address of principal executive offices) | 97501 (Zip Code) | |||
541-776-6401 (Registrant's telephone number, including area code) | ||||
Not Applicable (Former Name or Former Address, if changed since last report) |
Dated: | July 28, 2017 | LITHIA MOTORS, INC. | |
By: | /s/ John F. North III | ||
John F. North III | |||
Senior Vice President and Chief Financial Officer |
Exhibit Index | |
Exhibit No. | Description |
99.1 | Press Release of Lithia Motors, Inc. dated July 28, 2017 |
• | Total same store sales increased 3% |
• | New vehicle same store sales increased 1% |
• | Used vehicle retail same store sales increased 4% |
• | Service, body and parts same store sales increased 7% |
• | Same store F&I per unit increased $81 to $1,352 |
• | Adjusted SG&A expense as a percentage of gross profit was 67.0% |
• | Total revenue of $9.6 to $9.9 billion |
• | New vehicle same store sales increasing 1.0% |
• | New vehicle gross margin of 5.6% to 5.8% |
• | Used vehicle same store sales increasing 5.0% |
• | Used vehicle gross margin of 11.5% to 11.7% |
• | Service body and parts same store sales increasing 7.0% |
• | Service body and parts gross margin of 48.5% to 49.0% |
• | Finance and insurance same store gross profit of $1,325 to $1,350 per unit |
• | Tax rate of 39.5% |
• | Average diluted shares outstanding of 25.1 million |
• | Expected operating results, such as improved store efficiency and performance; generating 2017 full year earnings of $8.35 to $8.50 per diluted share and all projections set forth under the headings "2017 Earnings Guidance"; |
• | Our ability to improve store performance; |
• | Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future, and our ability to improve earnings and achieve returns on investments; |
• | Anticipated revenues from acquired and open point stores; and |
• | Anticipated availability of liquidity from our credit facility and unfinanced operating real estate. |
Three months ended | % | |||||||||||
June 30, | Increase | Increase | ||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||
Revenues: | ||||||||||||
New vehicle retail | $ | 1,384,055 | $ | 1,209,037 | $ | 175,018 | 14.5 | % | ||||
Used vehicle retail | 633,635 | 553,647 | 79,988 | 14.4 | ||||||||
Used vehicle wholesale | 69,512 | 66,714 | 2,798 | 4.2 | ||||||||
Finance and insurance | 94,851 | 81,043 | 13,808 | 17.0 | ||||||||
Service, body and parts | 246,005 | 202,265 | 43,740 | 21.6 | ||||||||
Fleet and other | 38,978 | 20,633 | 18,345 | 88.9 | ||||||||
Total revenues | 2,467,036 | 2,133,339 | 333,697 | 15.6 | % | |||||||
Cost of sales: | ||||||||||||
New vehicle retail | 1,303,516 | 1,136,175 | 167,341 | 14.7 | ||||||||
Used vehicle retail | 559,129 | 486,422 | 72,707 | 14.9 | ||||||||
Used vehicle wholesale | 67,800 | 65,228 | 2,572 | 3.9 | ||||||||
Service, body and parts | 123,525 | 103,666 | 19,859 | 19.2 | ||||||||
Fleet and other | 37,795 | 19,812 | 17,983 | 90.8 | ||||||||
Total cost of sales | 2,091,765 | 1,811,303 | 280,462 | 15.5 | ||||||||
Gross profit | 375,271 | 322,036 | 53,235 | 16.5 | % | |||||||
Asset impairments | — | 3,498 | (3,498 | ) | (100.0 | ) | ||||||
SG&A expense | 257,290 | 215,526 | 41,764 | 19.4 | ||||||||
Depreciation and amortization | 14,031 | 12,503 | 1,528 | 12.2 | ||||||||
Income from operations | 103,950 | 90,509 | 13,441 | 14.9 | % | |||||||
Floor plan interest expense | (9,332 | ) | (6,209 | ) | 3,123 | 50.3 | ||||||
Other interest expense | (7,169 | ) | (5,502 | ) | 1,667 | 30.3 | ||||||
Other (expense) income, net | 387 | (1,495 | ) | (1,882 | ) | NM | ||||||
Income before income taxes | 87,836 | 77,303 | 10,533 | 13.6 | % | |||||||
Income tax expense | (34,636 | ) | (25,875 | ) | 8,761 | 33.9 | ||||||
Income tax rate | 39.4 | % | 33.5 | % | ||||||||
Net income | $ | 53,200 | $ | 51,428 | $ | 1,772 | 3.4 | % | ||||
Diluted net income per share: | ||||||||||||
Net income per share | $ | 2.12 | $ | 2.01 | $ | 0.11 | 5.5 | % | ||||
Diluted shares outstanding | 25,106 | 25,534 | (428 | ) | (1.7 | )% |
Three months ended | % | |||||||||||||
June 30, | Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||||
Gross margin | ||||||||||||||
New vehicle retail | 5.8 | % | 6.0 | % | (20 | )bps | ||||||||
Used vehicle retail | 11.8 | 12.1 | (30 | ) | ||||||||||
Used vehicle wholesale | 2.5 | 2.2 | 30 | |||||||||||
Finance and insurance | 100.0 | 100.0 | — | |||||||||||
Service, body and parts | 49.8 | 48.7 | 110 | |||||||||||
Fleet and other | 3.0 | 4.0 | (100 | ) | ||||||||||
Gross profit margin | 15.2 | 15.1 | 10 | |||||||||||
Unit sales | ||||||||||||||
New vehicle retail | 40,876 | 36,059 | 4,817 | 13.4 | % | |||||||||
Used vehicle retail | 32,171 | 27,716 | 4,455 | 16.1 | ||||||||||
Total retail units sold | 73,047 | 63,775 | 9,272 | 14.5 | ||||||||||
Used vehicle wholesale | 10,906 | 9,774 | 1,132 | 11.6 | ||||||||||
Average selling price | ||||||||||||||
New vehicle retail | $ | 33,860 | $ | 33,529 | $ | 331 | 1.0 | % | ||||||
Used vehicle retail | 19,696 | 19,976 | (280 | ) | (1.4 | ) | ||||||||
Used vehicle wholesale | 6,374 | 6,826 | (452 | ) | (6.6 | ) | ||||||||
Average gross profit per unit | ||||||||||||||
New vehicle retail | $ | 1,970 | $ | 2,021 | $ | (51 | ) | (2.5 | )% | |||||
Used vehicle retail | 2,316 | 2,425 | (109 | ) | (4.5 | ) | ||||||||
Used vehicle wholesale | 157 | 152 | 5 | 3.3 | ||||||||||
Finance and insurance | 1,298 | 1,271 | 27 | 2.1 | ||||||||||
Total vehicle(1) | 3,444 | 3,491 | (47 | ) | (1.3 | ) | ||||||||
Revenue mix | ||||||||||||||
New vehicle retail | 56.1 | % | 56.7 | % | ||||||||||
Used vehicle retail | 25.7 | 26.0 | ||||||||||||
Used vehicle wholesale | 2.8 | 3.1 | ||||||||||||
Finance and insurance, net | 3.8 | 3.8 | ||||||||||||
Service, body and parts | 10.0 | 9.5 | ||||||||||||
Fleet and other | 1.6 | 0.9 |
Adjusted | As reported | |||||||||||
Three months ended June 30, | Three months ended June 30, | |||||||||||
Other metrics | 2017 | 2016 | 2017 | 2016 | ||||||||
SG&A as a % of revenue | 10.2 | % | 10.1 | % | 10.4 | % | 10.1 | % | ||||
SG&A as a % of gross profit | 67.0 | 66.9 | 68.6 | 66.9 | ||||||||
Operating profit as a % of revenue | 4.5 | 4.4 | 4.2 | 4.2 | ||||||||
Operating profit as a % of gross profit | 29.3 | 29.2 | 27.7 | 28.1 | ||||||||
Pretax margin | 3.8 | 3.9 | 3.6 | 3.6 | ||||||||
Net profit margin | 2.3 | 2.4 | 2.2 | 2.4 |
Three Months Ended June 30, | % | |||||||||||
Increase | Increase | |||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||
Revenues | ||||||||||||
New vehicle retail | $ | 1,217,563 | $ | 1,208,561 | $ | 9,002 | 0.7 | % | ||||
Used vehicle retail | 575,410 | 552,634 | 22,776 | 4.1 | ||||||||
Used vehicle wholesale | 57,789 | 66,583 | (8,794 | ) | (13.2 | ) | ||||||
Finance and insurance | 87,653 | 80,988 | 6,665 | 8.2 | ||||||||
Service, body and parts | 216,112 | 201,863 | 14,249 | 7.1 | ||||||||
Fleet and other | 32,818 | 20,633 | 12,185 | 59.1 | ||||||||
Total revenues | $ | 2,187,345 | $ | 2,131,262 | $ | 56,083 | 2.6 | |||||
Gross profit | ||||||||||||
New vehicle retail | $ | 71,492 | $ | 72,759 | $ | (1,267 | ) | (1.7 | )% | |||
Used vehicle retail | 69,273 | 67,121 | 2,152 | 3.2 | ||||||||
Used vehicle wholesale | 1,377 | 1,528 | (151 | ) | (9.9 | ) | ||||||
Finance and insurance | 87,653 | 80,988 | 6,665 | 8.2 | ||||||||
Service, body and parts | 107,604 | 98,437 | 9,167 | 9.3 | ||||||||
Fleet and other | 951 | 822 | 129 | 15.7 | ||||||||
Total gross profit | $ | 338,350 | $ | 321,655 | $ | 16,695 | 5.2 | |||||
Gross margin | ||||||||||||
New vehicle retail | 5.9 | % | 6.0 | % | (10 | )bps | ||||||
Used vehicle retail | 12.0 | 12.1 | (10 | ) | ||||||||
Used vehicle wholesale | 2.4 | 2.3 | 10 | |||||||||
Finance and insurance | 100.0 | 100.0 | — | |||||||||
Service, body and parts | 49.8 | 48.8 | 100 | |||||||||
Fleet and other | 2.9 | 4.0 | (110 | ) | ||||||||
Gross profit margin | 15.5 | 15.1 | 40 | |||||||||
Unit sales | ||||||||||||
New vehicle retail | 35,893 | 36,042 | (149 | ) | (0.4 | )% | ||||||
Used vehicle retail | 28,937 | 27,657 | 1,280 | 4.6 | ||||||||
Total retail units sold | 64,830 | 63,699 | 1,131 | 1.8 | ||||||||
Used vehicle wholesale | 8,912 | 9,754 | (842 | ) | (8.6 | ) | ||||||
Average selling price | ||||||||||||
New vehicle retail | $ | 33,922 | $ | 33,532 | $ | 390 | 1.2 | % | ||||
Used vehicle retail | 19,885 | 19,982 | (97 | ) | (0.5 | ) | ||||||
Used vehicle wholesale | 6,484 | 6,826 | (342 | ) | (5.0 | ) | ||||||
Average gross profit per unit | ||||||||||||
New vehicle retail | $ | 1,992 | $ | 2,019 | $ | (27 | ) | (1.3 | )% | |||
Used vehicle retail | 2,394 | 2,427 | (33 | ) | (1.4 | ) | ||||||
Used vehicle wholesale | 155 | 157 | (2 | ) | (1.3 | ) | ||||||
Finance and insurance | 1,352 | 1,271 | 81 | 6.4 | ||||||||
Total vehicle(1) | 3,545 | 3,491 | 54 | 1.5 |
Six months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
Revenues: | |||||||||||||
New vehicle retail | $ | 2,594,359 | $ | 2,305,092 | $ | 289,267 | 12.5 | % | |||||
Used vehicle retail | 1,235,858 | 1,086,373 | 149,485 | 13.8 | |||||||||
Used vehicle wholesale | 141,015 | 131,860 | 9,155 | 6.9 | |||||||||
Finance and insurance | 181,628 | 158,681 | 22,947 | 14.5 | |||||||||
Service, body and parts | 478,579 | 398,940 | 79,639 | 20.0 | |||||||||
Fleet and other | 71,698 | 35,254 | 36,444 | 103.4 | |||||||||
Total revenues | 4,703,137 | 4,116,200 | 586,937 | 14.3 | % | ||||||||
Cost of sales: | |||||||||||||
New vehicle retail | 2,443,702 | 2,165,464 | 278,238 | 12.8 | |||||||||
Used vehicle retail | 1,092,569 | 954,871 | 137,698 | 14.4 | |||||||||
Used vehicle wholesale | 137,786 | 128,544 | 9,242 | 7.2 | |||||||||
Service, body and parts | 242,905 | 204,222 | 38,683 | 18.9 | |||||||||
Fleet and other | 69,252 | 33,881 | 35,371 | 104.4 | |||||||||
Total cost of sales | 3,986,214 | 3,486,982 | 499,232 | 14.3 | |||||||||
Gross profit | 716,923 | 629,218 | 87,705 | 13.9 | |||||||||
Asset impairments | — | 6,996 | (6,996 | ) | (100.0 | ) | |||||||
SG&A expense | 500,062 | 434,632 | 65,430 | 15.1 | |||||||||
Depreciation and amortization | 26,770 | 24,166 | 2,604 | 10.8 | |||||||||
Income from operations | 190,091 | 163,424 | 26,667 | 16.3 | |||||||||
Floor plan interest expense | (17,384 | ) | (12,118 | ) | 5,266 | 43.5 | |||||||
Other interest expense | (13,840 | ) | (10,961 | ) | 2,879 | 26.3 | |||||||
Other income (expense), net | 10,232 | (3,021 | ) | (13,253 | ) | NM | |||||||
Income before income taxes | 169,099 | 137,324 | 31,775 | 23.1 | |||||||||
Income tax expense | (65,172 | ) | (45,626 | ) | 19,546 | 42.8 | |||||||
Income tax rate | 38.5 | % | 33.2 | % | |||||||||
Net income | $ | 103,927 | $ | 91,698 | $ | 12,229 | 13.3 | % | |||||
Diluted net income per share: | |||||||||||||
Net income per share | $ | 4.13 | $ | 3.56 | $ | 0.57 | 16.0 | % | |||||
Diluted shares outstanding | 25,177 | 25,754 | (577 | ) | (2.2 | )% |
Six months ended June 30, | % | ||||||||||||||
Increase | Increase | ||||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||||
Gross margin | |||||||||||||||
New vehicle retail | 5.8 | % | 6.1 | % | (30 | )bps | |||||||||
Used vehicle retail | 11.6 | 12.1 | (50 | ) | |||||||||||
Used vehicle wholesale | 2.3 | 2.5 | (20 | ) | |||||||||||
Finance and insurance | 100.0 | 100.0 | — | ||||||||||||
Service, body and parts | 49.2 | 48.8 | 40 | ||||||||||||
Fleet and other | 3.4 | 3.9 | (50 | ) | |||||||||||
Gross profit margin | 15.2 | 15.3 | (10 | ) | |||||||||||
Unit sales | |||||||||||||||
New vehicle retail | 76,492 | 68,808 | 7,684 | 11.2 | % | ||||||||||
Used vehicle retail | 62,954 | 55,147 | 7,807 | 14.2 | |||||||||||
Total retail units sold | 139,446 | 123,955 | 15,491 | 12.5 | |||||||||||
Used vehicle wholesale | 21,746 | 19,287 | 2,459 | 12.7 | |||||||||||
Average selling price | |||||||||||||||
New vehicle retail | $ | 33,917 | $ | 33,500 | $ | 417 | 1.2 | % | |||||||
Used vehicle retail | 19,631 | 19,700 | (69 | ) | (0.4 | ) | |||||||||
Used vehicle wholesale | 6,485 | 6,837 | (352 | ) | (5.1 | ) | |||||||||
Average gross profit per unit | |||||||||||||||
New vehicle retail | $ | 1,970 | $ | 2,029 | $ | (59 | ) | (2.9 | )% | ||||||
Used vehicle retail | 2,276 | 2,385 | (109 | ) | (4.6 | ) | |||||||||
Used vehicle wholesale | 148 | 172 | (24 | ) | (14.0 | ) | |||||||||
Finance and insurance | 1,302 | 1,280 | 22 | 1.7 | |||||||||||
Total vehicle(1) | 3,434 | 3,494 | (60 | ) | (1.7 | ) | |||||||||
Revenue mix | |||||||||||||||
New vehicle retail | 55.2 | % | 56.0 | % | |||||||||||
Used vehicle retail | 26.3 | 26.4 | |||||||||||||
Used vehicle wholesale | 3.0 | 3.2 | |||||||||||||
Finance and insurance, net | 3.9 | 3.9 | |||||||||||||
Service, body and parts | 10.2 | 9.7 | |||||||||||||
Fleet and other | 1.4 | 0.8 |
Adjusted | As reported | |||||||||||
Six Months Ended June 30, | Six months ended June 30, | |||||||||||
Other metrics | 2017 | 2016 | 2017 | 2016 | ||||||||
SG&A as a % of revenue | 10.5 | % | 10.5 | % | 10.6 | % | 10.6 | % | ||||
SG&A as a % of gross profit | 68.9 | 68.9 | 69.8 | 69.1 | ||||||||
Operating profit as a % of revenue | 4.2 | 4.2 | 4.0 | 4.0 | ||||||||
Operating profit as a % of gross profit | 27.4 | 27.2 | 26.5 | 26.0 | ||||||||
Pretax margin | 3.5 | 3.6 | 3.6 | 3.3 | ||||||||
Net profit margin | 2.2 | 2.2 | 2.2 | 2.2 |
Six months ended June 30, | % | |||||||||||||||
Increase | Increase | |||||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||||||
Revenues | ||||||||||||||||
New vehicle retail | $ | 2,314,266 | $ | 2,302,695 | $ | 11,571 | 0.5 | % | ||||||||
Used vehicle retail | 1,137,210 | 1,083,257 | 53,953 | 5.0 | ||||||||||||
Used vehicle wholesale | 120,921 | 131,596 | (10,675 | ) | (8.1 | ) | ||||||||||
Finance and insurance | 169,784 | 158,446 | 11,338 | 7.2 | ||||||||||||
Service, body and parts | 426,953 | 397,751 | 29,202 | 7.3 | ||||||||||||
Fleet and other | 61,565 | 35,253 | 26,312 | 74.6 | ||||||||||||
Total revenues | $ | 4,230,699 | $ | 4,108,998 | $ | 121,701 | 3.0 | |||||||||
Gross profit | ||||||||||||||||
New vehicle retail | $ | 135,303 | $ | 139,512 | $ | (4,209 | ) | (3.0 | )% | |||||||
Used vehicle retail | 134,190 | 131,217 | 2,973 | 2.3 | ||||||||||||
Used vehicle wholesale | 2,803 | 3,380 | (577 | ) | (17.1 | ) | ||||||||||
Finance and insurance | 169,784 | 158,446 | 11,338 | 7.2 | ||||||||||||
Service, body and parts | 210,754 | 194,160 | 16,594 | 8.5 | ||||||||||||
Fleet and other | 2,056 | 1,371 | 685 | 50.0 | ||||||||||||
Total gross profit | $ | 654,890 | $ | 628,086 | $ | 26,804 | 4.3 | |||||||||
Gross margin | ||||||||||||||||
New vehicle retail | 5.8 | % | 6.1 | % | (30 | )bps | ||||||||||
Used vehicle retail | 11.8 | 12.1 | (30 | ) | ||||||||||||
Used vehicle wholesale | 2.3 | 2.6 | (30 | ) | ||||||||||||
Finance and insurance | 100.0 | 100.0 | — | |||||||||||||
Service, body and parts | 49.4 | 48.8 | 60 | |||||||||||||
Fleet and other | 3.3 | 3.9 | (60 | ) | ||||||||||||
Total gross profit | 15.5 | 15.3 | 20 | |||||||||||||
Unit sales | ||||||||||||||||
New vehicle retail | 68,108 | 68,729 | (621 | ) | (0.9 | )% | ||||||||||
Used vehicle retail | 57,438 | 54,977 | 2,461 | 4.5 | ||||||||||||
Total retail units sold | 125,546 | 123,706 | 1,840 | 1.5 | ||||||||||||
Used vehicle wholesale | 18,506 | 19,242 | (736 | ) | (3.8 | ) | ||||||||||
Average selling price | ||||||||||||||||
New vehicle retail | $ | 33,979 | $ | 33,504 | $ | 475 | 1.4 | % | ||||||||
Used vehicle retail | 19,799 | 19,704 | 95 | 0.5 | ||||||||||||
Used vehicle wholesale | 6,534 | 6,839 | (305 | ) | (4.5 | ) | ||||||||||
Average gross profit per unit | ||||||||||||||||
New vehicle retail | $ | 1,987 | $ | 2,030 | $ | (43 | ) | (2.1 | )% | |||||||
Used vehicle retail | 2,336 | 2,387 | (51 | ) | (2.1 | ) | ||||||||||
Used vehicle wholesale | 151 | 176 | (25 | ) | (14.2 | ) | ||||||||||
Finance and insurance | 1,352 | 1,281 | 71 | 5.5 | ||||||||||||
Total vehicle(1) | 3,521 | 3,497 | 24 | 0.7 |
Three months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
Revenues | |||||||||||||
Domestic | $ | 954,949 | $ | 830,410 | $ | 124,539 | 15.0 | % | |||||
Import | 1,101,314 | 930,317 | 170,997 | 18.4 | |||||||||
Luxury | 413,088 | 371,866 | 41,222 | 11.1 | |||||||||
Total segment revenues | 2,469,351 | 2,132,593 | 336,758 | 15.8 | |||||||||
Corporate and other | (2,315 | ) | 746 | (3,061 | ) | NM | |||||||
Total revenues | $ | 2,467,036 | $ | 2,133,339 | $ | 333,697 | 15.6 | ||||||
Segment Income(1) | |||||||||||||
Domestic | $ | 27,857 | $ | 28,999 | $ | (1,142 | ) | (3.9 | )% | ||||
Import | 32,465 | 29,680 | 2,785 | 9.4 | |||||||||
Luxury | 10,088 | 9,730 | 358 | 3.7 | |||||||||
Total segment income | 70,410 | 68,409 | 2,001 | 2.9 | |||||||||
Corporate and other | 38,239 | 28,394 | 9,845 | 34.7 | |||||||||
Depreciation and amortization | (14,031 | ) | (12,503 | ) | 1,528 | 12.2 | |||||||
Other interest expense | (7,169 | ) | (5,502 | ) | 1,667 | 30.3 | |||||||
Other (expense) income, net | 387 | (1,495 | ) | (1,882 | ) | NM | |||||||
Income before income taxes | $ | 87,836 | $ | 77,303 | $ | 10,533 | 13.6 |
Retail New Vehicle Unit Sales | |||||||||||||
Domestic | 13,256 | 11,712 | 1,544 | 13.2 | % | ||||||||
Import | 23,287 | 20,080 | 3,207 | 16.0 | |||||||||
Luxury | 4,423 | 4,317 | 106 | 2.5 | |||||||||
Total | 40,966 | 36,109 | 4,857 | 13.5 | |||||||||
Allocated to management | (90 | ) | (50 | ) | (40 | ) | NM | ||||||
Total retail new vehicle unit sales | 40,876 | 36,059 | 4,817 | 13.4 |
Six months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
Revenues | |||||||||||||
Domestic | $ | 1,854,707 | $ | 1,602,312 | $ | 252,395 | 15.8 | % | |||||
Import | 2,072,787 | 1,793,060 | 279,727 | 15.6 | |||||||||
Luxury | 776,891 | 718,679 | 58,212 | 8.1 | |||||||||
Total segment revenues | 4,704,385 | 4,114,051 | 590,334 | 14.3 | |||||||||
Corporate and other | (1,248 | ) | 2,149 | (3,397 | ) | NM | |||||||
Total revenues | $ | 4,703,137 | $ | 4,116,200 | $ | 586,937 | 14.3 | ||||||
Segment Income(1) | |||||||||||||
Domestic | $ | 53,299 | $ | 52,129 | $ | 1,170 | 2.2 | % | |||||
Import | 54,637 | 53,943 | 694 | 1.3 | |||||||||
Luxury | 14,801 | 14,312 | 489 | 3.4 | |||||||||
Total segment income | 122,737 | 120,384 | 2,353 | 2.0 | |||||||||
Corporate and other | 76,740 | 55,088 | 21,652 | 39.3 | |||||||||
Depreciation and amortization | (26,770 | ) | (24,166 | ) | 2,604 | 10.8 | |||||||
Other interest expense | (13,840 | ) | (10,961 | ) | 2,879 | 26.3 | |||||||
Other income (expense), net | 10,232 | (3,021 | ) | (13,253 | ) | NM | |||||||
Income before income taxes | $ | 169,099 | 137,324 | $ | 31,775 | 23.1 |
Retail New Vehicle Unit Sales | |||||||||||||
Domestic | 25,496 | 22,441 | 3,055 | 13.6 | % | ||||||||
Import | 43,122 | 38,114 | 5,008 | 13.1 | |||||||||
Luxury | 8,039 | 8,380 | (341 | ) | (4.1 | ) | |||||||
Total | 76,657 | 68,935 | 7,722 | 11.2 | |||||||||
Allocated to management | (165 | ) | (127 | ) | (38 | ) | NM | ||||||
Total retail new vehicle unit sales | 76,492 | 68,808 | 7,684 | 11.2 |
As of | |||||
June 30, | December 31, | June 30, | |||
2017 | 2016 | 2016 | |||
Days Supply(1) | |||||
New vehicle inventory | 75 | 68 | 77 | ||
Used vehicle inventory | 60 | 56 | 57 |
Financial covenants | ||||
Requirement | As of June 30, 2017 | |||
Current ratio | Not less than 1.10 to 1 | 1.28 | to 1 | |
Fixed charge coverage ratio | Not less than 1.20 to 1 | 2.96 | to 1 | |
Leverage ratio | Not more than 5.00 to 1 | 2.02 | to 1 | |
Funded debt restriction | Not more than $900 million | $518.8 million |
Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
New vehicle unit sales brand mix | ||||||||||||
Honda, Acura | 23.3 | % | 23.8 | % | 23.1 | % | 23.5 | % | ||||
Toyota, Lexus | 19.1 | 19.8 | 18.4 | 19.7 | ||||||||
Chrysler, Fiat | 17.3 | 19.1 | 17.8 | 19.0 | ||||||||
General Motors | 8.3 | 8.7 | 8.6 | 8.8 | ||||||||
Subaru | 8.2 | 6.8 | 8.4 | 7.0 | ||||||||
Ford | 6.8 | 4.6 | 7.0 | 4.9 | ||||||||
Nissan | 3.9 | 3.8 | 4.1 | 3.8 | ||||||||
BMW, Mini | 4.1 | 5.3 | 4.0 | 5.4 | ||||||||
Volkswagen, Audi | 3.7 | 2.9 | 3.6 | 2.8 | ||||||||
Hyundai | 2.3 | 2.1 | 2.2 | 2.0 | ||||||||
Kia | 1.7 | 1.3 | 1.5 | 1.3 | ||||||||
Mercedes Benz | 1.1 | 1.3 | 1.0 | 1.3 | ||||||||
Other | 0.2 | 0.5 | 0.3 | 0.5 |
Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Revenue geographic mix | ||||||||||||
California | 21.7 | % | 22.5 | % | 22.3 | % | 22.7 | % | ||||
Oregon | 14.8 | 16.7 | 15.3 | 16.7 | ||||||||
New Jersey | 13.6 | 14.4 | 13.0 | 14.2 | ||||||||
Texas | 11.1 | 13.7 | 11.5 | 13.8 | ||||||||
New York | 7.3 | 3.0 | 7.4 | 3.0 | ||||||||
Montana | 5.6 | 6.4 | 5.7 | 6.4 | ||||||||
Washington | 4.6 | 5.2 | 4.7 | 5.3 | ||||||||
Alaska | 4.3 | 5.1 | 4.2 | 4.9 | ||||||||
Nevada | 2.7 | 2.9 | 2.8 | 3.1 | ||||||||
Idaho | 2.7 | 2.7 | 2.7 | 2.7 | ||||||||
Hawaii | 2.4 | 2.0 | 2.6 | 2.0 | ||||||||
Iowa | 2.4 | 2.7 | 2.3 | 2.6 | ||||||||
Pennsylvania | 2.8 | — | 1.5 | — | ||||||||
North Dakota | 1.2 | 1.4 | 1.2 | 1.3 | ||||||||
Vermont | 0.9 | — | 0.9 | — | ||||||||
New Mexico | 0.7 | 0.8 | 0.8 | 0.9 | ||||||||
Massachusetts | 0.7 | 0.5 | 0.6 | 0.4 | ||||||||
Wyoming | 0.5 | — | 0.5 | — |
As of July 28, 2017 | ||||||
Current store count mix | # of stores | % of total | ||||
Chrysler, Fiat | 29 | 18.1 | % | |||
Honda, Acura | 24 | 15.0 | ||||
Toyota, Lexus | 22 | 13.8 | ||||
General Motors | 19 | 11.9 | ||||
Ford | 13 | 8.1 | ||||
BMW, Mini | 11 | 6.9 | ||||
Volkswagen, Audi | 10 | 6.3 | ||||
Subaru | 10 | 6.3 | ||||
Nissan | 7 | 4.4 | ||||
Hyundai | 5 | 3.1 | ||||
Kia | 4 | 2.5 | ||||
Mercedes Benz | 4 | 2.5 | ||||
Other | 2 | 1.1 |
June 30, 2017 | December 31, 2016 | |||||
Cash and cash equivalents | $ | 31,177 | $ | 50,282 | ||
Trade receivables, net | 359,010 | 417,714 | ||||
Inventories, net | 1,878,780 | 1,772,587 | ||||
Other current assets | 54,801 | 46,611 | ||||
Total current assets | $ | 2,323,768 | $ | 2,287,194 | ||
Property and equipment, net | 1,067,104 | 1,006,130 | ||||
Goodwill | 259,399 | 259,399 | ||||
Franchise value | 184,763 | 184,268 | ||||
Other non-current assets | 141,461 | 107,159 | ||||
Total assets | $ | 3,976,495 | $ | 3,844,150 | ||
Floor plan notes payable | $ | 99,932 | $ | 94,602 | ||
Floor plan notes payable: non trade | 1,534,715 | 1,506,895 | ||||
Current maturities of long-term debt | 20,901 | 20,965 | ||||
Trade payables | 89,795 | 88,423 | ||||
Accrued liabilities | 212,309 | 211,109 | ||||
Total current liabilities | $ | 1,957,652 | $ | 1,921,994 | ||
Long-term debt | 777,814 | 769,916 | ||||
Deferred revenue | 92,335 | 81,929 | ||||
Deferred income taxes | 57,919 | 59,075 | ||||
Other long-term liabilities | 102,948 | 100,460 | ||||
Total liabilities | $ | 2,988,668 | $ | 2,933,374 | ||
Class A common stock | 158,527 | 165,512 | ||||
Class B common stock | 157 | 219 | ||||
Additional paid-in capital | 34,280 | 41,225 | ||||
Retained earnings | 794,863 | 703,820 | ||||
Total liabilities & stockholders' equity | $ | 3,976,495 | $ | 3,844,150 |
Six Months Ended June 30, | ||||||
2017 | 2016 | |||||
Net income | $ | 103,927 | $ | 91,698 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Asset impairments | — | 6,996 | ||||
Depreciation and amortization | 26,770 | 24,166 | ||||
Stock-based compensation | 5,432 | 6,018 | ||||
(Gain) loss on disposal of assets | 256 | (4,512 | ) | |||
Gain on sale of franchise | — | (1,102 | ) | |||
Deferred income taxes | (1,156 | ) | 5,704 | |||
(Increase) decrease: | ||||||
Trade receivables, net | 70,908 | 6,564 | ||||
Inventories | (36,078 | ) | (114,052 | ) | ||
Other assets | 479 | 5,652 | ||||
Increase (decrease): | ||||||
Floor plan notes payable, net | 1,330 | 8,685 | ||||
Trade payables | 414 | 6,678 | ||||
Accrued liabilities | (3,684 | ) | 17,595 | |||
Other long-term liabilities and deferred revenue | 9,957 | 10,668 | ||||
Net cash provided by operating activities | $ | 178,555 | $ | 70,758 |
Six Months Ended June 30, | ||||||
Net cash provided by operating activities | 2017 | 2016 | ||||
As reported | $ | 178,555 | $ | 70,758 | ||
Floor plan notes payable, non-trade, net | (32,124 | ) | 58,622 | |||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory | — | (4,854 | ) | |||
Adjusted | $ | 146,431 | $ | 124,526 |
Three Months Ended June 30, 2017 | ||||||||||||||||
As reported | Reserve adjustments | Acquisition expenses | Adjusted | |||||||||||||
Selling, general and administrative | $ | 257,290 | $ | (3,878 | ) | $ | (2,137 | ) | $ | 251,275 | ||||||
Income from operations | 103,950 | 3,878 | 2,137 | 109,965 | ||||||||||||
Other (expense) income, net | 387 | — | — | 387 | ||||||||||||
Income before income taxes | $ | 87,836 | $ | 3,878 | $ | 2,137 | $ | 93,851 | ||||||||
Income tax expense | (34,636 | ) | (1,231 | ) | (821 | ) | (36,688 | ) | ||||||||
Net income | $ | 53,200 | $ | 2,647 | $ | 1,316 | $ | 57,163 | ||||||||
Diluted earnings per share | $ | 2.12 | $ | 0.11 | $ | 0.05 | $ | 2.28 | ||||||||
Diluted share count | 25,106 |
Three Months Ended June 30, 2016 | ||||||||||||
As reported | Equity investment fair value adjustment | Adjusted | ||||||||||
Asset impairments | $ | 3,498 | $ | (3,498 | ) | $ | — | |||||
Selling, general and administrative | 215,526 | — | 215,526 | |||||||||
Income from operations | 90,509 | 3,498 | 94,007 | |||||||||
Other (expense) income, net | (1,495 | ) | 2,065 | 570 | ||||||||
Income before income taxes | $ | 77,303 | $ | 5,563 | $ | 82,866 | ||||||
Income tax expense | (25,875 | ) | (6,837 | ) | (32,712 | ) | ||||||
Net income | $ | 51,428 | $ | (1,274 | ) | $ | 50,154 | |||||
Diluted earnings per share | $ | 2.01 | $ | (0.05 | ) | $ | 1.96 | |||||
Diluted share count | 25,534 |
Six Months Ended June 30, 2017 | ||||||||||||||||||||
As reported | Reserve adjustments | Acquisition expenses | OEM settlement | Adjusted | ||||||||||||||||
Selling, general and administrative | $ | 500,062 | $ | (3,878 | ) | $ | (2,137 | ) | $ | — | $ | 494,047 | ||||||||
Income from operations | 190,091 | 3,878 | 2,137 | — | 196,106 | |||||||||||||||
Other income (expense), net | 10,232 | — | — | (9,111 | ) | 1,121 | ||||||||||||||
Income before income taxes | $ | 169,099 | 3,878 | $ | 2,137 | $ | (9,111 | ) | $ | 166,003 | ||||||||||
Income tax expense | (65,172 | ) | (1,231 | ) | (821 | ) | 3,423 | (63,801 | ) | |||||||||||
Net income | $ | 103,927 | 2,647 | $ | 1,316 | $ | (5,688 | ) | $ | 102,202 | ||||||||||
Diluted earnings per share | $ | 4.13 | 0.11 | $ | 0.05 | $ | (0.23 | ) | $ | 4.06 | ||||||||||
Diluted share count | 25,177 |
Six Months Ended June 30, 2016 | ||||||||||||||||||||
As reported | Disposal gain on sale of store | Equity investment fair value adjustment | Legal reserve | Adjusted | ||||||||||||||||
Asset impairments | $ | 6,996 | $ | — | $ | (6,996 | ) | $ | — | $ | — | |||||||||
Selling, general and administrative | 434,632 | 1,087 | — | (1,906 | ) | 433,813 | ||||||||||||||
Income from operations | 163,424 | (1,087 | ) | 6,996 | 1,906 | 171,239 | ||||||||||||||
Other income (expense), net | (3,021 | ) | — | 4,131 | — | 1,110 | ||||||||||||||
Income before income taxes | $ | 137,324 | $ | (1,087 | ) | $ | 11,127 | $ | 1,906 | $ | 149,270 | |||||||||
Income tax expense | (45,626 | ) | 426 | (12,782 | ) | (747 | ) | (58,729 | ) | |||||||||||
Net income | $ | 91,698 | $ | (661 | ) | $ | (1,655 | ) | $ | 1,159 | $ | 90,541 | ||||||||
Diluted earnings per share | $ | 3.56 | $ | (0.03 | ) | $ | (0.06 | ) | $ | 0.05 | $ | 3.52 | ||||||||
Diluted share count | 25,754 |
Three months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
EBITDA and Adjusted EBITDA | |||||||||||||
Net income | $ | 53,200 | $ | 51,428 | $ | 1,772 | 3.4 | % | |||||
Other interest expense | 7,169 | 5,502 | 1,667 | 30.3 | |||||||||
Income tax expense | 34,636 | 25,875 | 8,761 | 33.9 | |||||||||
Depreciation and amortization | 14,031 | 12,503 | 1,528 | 12.2 | |||||||||
EBITDA | $ | 109,036 | $ | 95,308 | $ | 13,728 | 14.4 | % | |||||
Other adjustments: | |||||||||||||
Less: used vehicle line of credit interest expense | (1,131 | ) | (873 | ) | (258 | ) | 29.6 | ||||||
Add: equity investment fair value adjustment | — | 5,563 | (5,563 | ) | (100.0 | ) | |||||||
Add: acquisition expenses | 2,137 | — | 2,137 | NM | |||||||||
Add: insurance reserve | 3,878 | — | 3,878 | NM | |||||||||
Adjusted EBITDA | $ | 113,920 | $ | 99,998 | $ | 13,922 | 13.9 | % | |||||
Leveraged Free Cash Flow | |||||||||||||
Adjusted EBITDA | $ | 113,920 | $ | 99,998 | $ | 13,922 | 13.9 | % | |||||
Less: Capital expenditures | (16,227 | ) | (27,347 | ) | 11,120 | (40.7 | ) | ||||||
Leveraged free cash flow | $ | 97,693 | $ | 72,651 | $ | 25,042 | 34.5 | % | |||||
Six months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
EBITDA and Adjusted EBITDA | |||||||||||||
Net income | $ | 103,927 | $ | 91,698 | $ | 12,229 | 13.3 | % | |||||
Other interest expense | 13,840 | 10,961 | 2,879 | 26.3 | |||||||||
Income tax expense | 65,172 | 45,626 | 19,546 | 42.8 | |||||||||
Depreciation and amortization | 26,770 | 24,166 | 2,604 | 10.8 | |||||||||
EBITDA | $ | 209,709 | $ | 172,451 | $ | 37,258 | 21.6 | % | |||||
Other adjustments: | |||||||||||||
Less: used vehicle line of credit interest expense | (2,157 | ) | (1,690 | ) | (467 | ) | 27.6 | ||||||
Add: equity investment fair value adjustment | — | 11,127 | (11,127 | ) | (100.0 | ) | |||||||
Less: OEM settlement | (9,111 | ) | — | (9,111 | ) | NM | |||||||
Add: acquisition expenses | 2,137 | — | 2,137 | NM | |||||||||
Add: insurance reserve | 3,878 | — | 3,878 | NM | |||||||||
Adjusted EBITDA | $ | 204,456 | $ | 181,888 | $ | 22,568 | 12.4 | % | |||||
Leveraged Free Cash Flow | |||||||||||||
Adjusted EBITDA | $ | 204,456 | $ | 181,888 | $ | 22,568 | 12.4 | % | |||||
Less: capital expenditures | (32,266 | ) | (43,247 | ) | 10,981 | (25.4 | ) | ||||||
Leveraged free cash flow | $ | 172,190 | $ | 138,641 | $ | 33,549 | 24.2 | % | |||||
As of | |||||||
June 30, 2017 | June 30, 2016 | ||||||
Total Debt | $ | 2,433,362 | $ | 2,025,978 | |||
Less: floor plan notes payable | (99,932 | ) | (56,767 | ) | |||
Less: floor plan notes payable: non-trade | (1,534,715 | ) | (1,316,747 | ) | |||
Less: used vehicle line of credit | (213,093 | ) | (190,313 | ) | |||
Adjusted total debt | $ | 585,622 | $ | 462,151 | |||
Annualized adjusted EBITDA | $ | 408,912 | $ | 363,776 | |||
Ratio of adjusted total debt to adjusted EBITDA | 1.43 | 1.27 |