EX-99.1 2 lad2019q3-8k_ex99.htm EXHIBIT 99.1 Exhibit


lithiamotorsinclogoa31.jpg


LITHIA REPORTS RECORD THIRD QUARTER 2019 RESULTS AND SOLID SAME STORE GROWTH IN ALL BUSINESS LINES
________________________________________________

DECLARES DIVIDEND OF $0.30 PER SHARE FOR THIRD QUARTER

Medford, Oregon, October 23, 2019 - Lithia Motors, Inc. (NYSE: LAD) today reported the highest third quarter revenue in company history.

Third quarter 2019 revenue increased 8% to a record $3.3 billion from $3.1 billion in the third quarter of 2018.

Third quarter 2019 net income per diluted share was $3.64, a 5% decrease over $3.84 per diluted share reported in the third quarter of 2018. Adjusted third quarter 2019 net income per diluted share was $3.39, a 20% increase compared to net income of $2.83 per diluted share in the same period of 2018. Third quarter 2019 net income was $85 million, a 8% decrease compared to net income of $93 million in the same period of 2018. Adjusted third quarter 2019 net income was $79 million, a 16% increase compared to net income of $69 million for the same period of 2018.

As shown in the attached non-GAAP reconciliation tables, the 2019 third quarter adjusted results exclude a $0.25 net non-core benefit related to gain on sale of stores, offset by weather related events and acquisition expenses. The 2018 third quarter adjusted results exclude a $1.01 net non-core benefit due to gain on sale of stores and a tax attribute.

Third Quarter-over-Quarter Operating Highlights:
•
Total adjusted net income per diluted share increased 19.8%
•
Total same store sales increased 7.6%
•
Same store new vehicle retail sales increased 4.6%
•
Same store used vehicle retail sales increased 14.0%
•
Same store F&I per unit increased 7.3% to $1,471
•
Same store service, body and parts sales increased 9.5%
•
Same store total gross profit per unit increased 3.1% to $3,631

"We achieved record results during the third quarter driven by strong growth in all business lines," said Bryan DeBoer, President and CEO. "Our stores' successful commitment to serve customers wherever, whenever, however they choose is evident in our results."

For the first nine months of 2019 revenues increased 6% to $9.4 billion, compared to $8.8 billion in 2018.

Net income for the first nine months of 2019 was $8.72 per diluted share, compared to $8.31 per diluted share in 2018, an increase of 5%. Adjusted net income per diluted share for the first nine months of 2019 increased 19% to $8.81 from $7.41 in 2018.

Corporate Development
Earlier this month, we acquired John Howard Subaru, Waterfront Jeep, and Urse Chrysler Dodge Ram Fiat in Morgantown, West Virginia. For the year, we have acquired seven stores and anticipated revenues of over $475 million.
"The acquisition market remains robust and we are well positioned to accelerate our growth strategy in the coming quarters," said DeBoer. "In addition to our expanding physical network, our phenomenal teams, and owned inventory of over 70,000 vehicles, our digital solutions broaden the foundation that allow us to be the leading provider of personal transportation solutions for consumers."
As announced last week, we activated proprietary technology in our Pittsburgh market allowing consumers to sell us vehicles within minutes from the comfort of their own home. These scalable, digital solutions will drive improvements and efficiencies across our entire network.





Balance Sheet Update
At the end of the third quarter, our leverage ratio, calculated as debt excluding floorplan financing to adjusted EBITDA, was less than 2.0, representing the low end of our targeted range. Our liquidity in cash, availability on our credit facility and unfinanced real estate, combined with our ability to access the debt and equity markets, position us for continued growth through acquisitions and investments in innovation.

Dividend Payment
Our Board of Directors approved a dividend of $0.30 per share related to third quarter 2019 financial results. We expect to pay the dividend on November 22, 2019 to shareholders of record on November 8, 2019.

Third Quarter Earnings Conference Call and Updated Presentation
The third 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 third 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 invests 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

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

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 September 30,
 
%
 
Nine months ended September 30,
 
%
 
 
 
Increase
 
 
Increase
 
 
2019
 
2018
 
(Decrease)
 
2019
 
2018
 
(Decrease)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
1,824.8

 
$
1,733.0

 
5.3
 %
 
$
4,993.3

 
$
4,914.5

 
1.6
 %
Used vehicle retail
 
916.3

 
805.9

 
13.7

 
2,632.4

 
2,325.6

 
13.2

Used vehicle wholesale
 
74.4

 
92.0

 
(19.1
)
 
233.5

 
253.2

 
(7.8
)
Finance and insurance
 
136.3

 
121.1

 
12.6

 
382.7

 
342.1

 
11.9

Service, body and parts
 
340.5

 
311.3

 
9.4

 
993.3

 
908.4

 
9.3

Fleet and other
 
40.1

 
28.7

 
39.7

 
168.6

 
104.4

 
61.5

Total revenues
 
3,332.4

 
3,092.0

 
7.8
 %
 
9,403.8

 
8,848.2

 
6.3
 %
Cost of sales:
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
1,724.8

 
1,632.1

 
5.7

 
4,711.9

 
4,625.2

 
1.9

Used vehicle retail
 
816.6

 
719.6

 
13.5

 
2,355.0

 
2,078.5

 
13.3

Used vehicle wholesale
 
73.3

 
90.6

 
(19.1
)
 
229.7

 
249.0

 
(7.8
)
Service, body and parts
 
169.0

 
156.9

 
7.7

 
492.2

 
461.9

 
6.6

Fleet and other
 
37.8

 
26.6

 
42.1

 
159.8

 
98.5

 
62.2

Total cost of sales
 
2,821.5

 
2,625.8

 
7.5

 
7,948.6

 
7,513.1

 
5.8

Gross profit
 
510.9

 
466.2

 
9.6
 %
 
1,455.2

 
1,335.1

 
9.0
 %
Asset impairments
 
—

 
—

 
NM

 
0.5

 
—

 
NM

SG&A expense
 
343.2

 
309.0

 
11.1

 
1,021.5

 
939.9

 
8.7

Depreciation and amortization
 
20.9

 
19.6

 
6.6

 
60.9

 
55.3

 
10.1

Income from operations
 
146.8

 
137.6

 
6.7
 %
 
372.3

 
339.9

 
9.5
 %
Floor plan interest expense
 
(17.9
)
 
(16.0
)
 
11.9

 
(55.5
)
 
(45.1
)
 
23.1

Other interest expense
 
(14.8
)
 
(15.0
)
 
(1.3
)
 
(45.0
)
 
(40.7
)
 
10.6

Other income, net
 
3.3

 
2.4

 
NM

 
8.9

 
5.4

 
NM

Income before income taxes
 
117.4

 
109.0

 
7.7
 %
 
280.7

 
259.5

 
8.2
 %
Income tax expense
 
(32.2
)
 
(15.9
)
 
102.5

 
(77.2
)
 
(53.7
)
 
43.8

Income tax rate
 
27.4
%
 
14.6
%
 


 
27.5
%
 
20.7
%
 
 
Net income

$
85.2

 
$
93.1

 
(8.5
)%
 
$
203.5

 
$
205.8

 
(1.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per share:
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share
 
$
3.64

 
$
3.84

 
(5.2)
 %
 
$
8.72

 
$
8.31

 
4.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted shares outstanding
 
23.4
 
24.3
 
(3.7)
 %
 
23.3
 
24.8
 
(6.0
)%
NM - not meaningful




Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
 
 
Three months ended September 30,
 
%
 
Nine months ended September 30,
 
%
 
 
 
Increase
 
 
Increase
 
 
2019
 
2018
 
(Decrease)
 
2019
 
2018
 
(Decrease)
Gross margin
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
5.5
%
 
5.8
%
 
(30
)bps
 
5.6
%
 
5.9
%
 
(30
)bps
Used vehicle retail
 
10.9

 
10.7

 
20

 
10.5

 
10.6

 
(10
)
Finance and insurance
 
100.0

 
100.0

 
—

 
100.0

 
100.0

 
—

Service, body and parts
 
50.4

 
49.6

 
80

 
50.4

 
49.2

 
120

Gross profit margin
 
15.3

 
15.1

 
20

 
15.5

 
15.1

 
40

 
 
 
 
 
 
 
 
 
 
 
 
 
Unit sales
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
48,508

 
48,790

 
(0.6)
 %
 
134,090

 
139,314

 
(3.7)
 %
Used vehicle retail
 
44,143

 
39,751

 
11.0

 
127,683

 
114,961

 
11.1

Total retail units sold
 
92,651

 
88,541

 
4.6

 
261,773

 
254,275

 
2.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Average selling price
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
37,618

 
$
35,519

 
5.9
 %
 
$
37,238

 
$
35,276

 
5.6
 %
Used vehicle retail
 
20,756

 
20,274

 
2.4

 
20,617

 
20,229

 
1.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Average gross profit per unit
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
2,061

 
$
2,068

 
(0.3
)%
 
$
2,098

 
$
2,077

 
1.0
 %
Used vehicle retail
 
2,258

 
2,172

 
4.0

 
2,173

 
2,149

 
1.1

Finance and insurance
 
1,471

 
1,367

 
7.6

 
1,462

 
1,345

 
8.7

Total vehicle(1)
 
3,638

 
3,498

 
4.0

 
3,611

 
3,471

 
4.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue mix
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
54.8
%
 
56.0
%
 
 
 
53.1
%
 
55.5
%
 
 
Used vehicle retail
 
27.5

 
26.1

 
 
 
28.0

 
26.3

 
 
Used vehicle wholesale
 
2.2

 
3.0

 
 
 
2.5

 
2.9

 
 
Finance and insurance, net
 
4.1

 
3.9

 
 
 
4.1

 
3.9

 
 
Service, body and parts
 
10.2

 
10.1

 
 
 
10.6

 
10.3

 
 
Fleet and other
 
1.2

 
0.9

 
 
 
1.7

 
1.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit Mix
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
19.6
%
 
21.6
%
 
 
 
19.3
%
 
21.7
%
 
 
Used vehicle retail
 
19.5

 
18.5

 
 
 
19.1

 
18.5

 
 
Used vehicle wholesale
 
0.2

 
0.3

 
 
 
0.3

 
0.3

 
 
Finance and insurance, net
 
26.7

 
26.0

 
 
 
26.3

 
25.6

 
 
Service, body and parts
 
33.5

 
33.2

 
 
 
34.4

 
33.5

 
 
Fleet and other
 
0.5

 
0.4

 
 
 
0.6

 
0.4

 
 
 
 
Adjusted
 
As reported
 
Adjusted
 
As reported
 
 
Three months ended September 30,
 
Three months ended September 30,
 
Nine months ended September 30,
 
Nine months ended September 30,
Other metrics
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
SG&A as a % of revenue
 
10.5
%
 
10.5
%
 
10.3
%
 
10.0
%
 
10.8
%
 
10.7
%
 
10.9
%
 
10.6
%
SG&A as a % of gross profit
 
68.8

 
69.6

 
67.2

 
66.3

 
70.0

 
71.2

 
70.2

 
70.4

Operating profit as a % of revenue
 
4.2

 
3.9

 
4.4

 
4.4

 
4.0

 
3.7

 
4.0

 
3.8

Operating profit as a % of gross profit
 
27.1

 
26.1

 
28.7

 
29.5

 
25.8

 
24.6

 
25.6

 
25.5

Pretax margin
 
3.3

 
3.0

 
3.5

 
3.5

 
3.0

 
2.8

 
3.0

 
2.9

Net profit margin
 
2.4

 
2.2

 
2.6

 
3.0

 
2.2

 
2.1

 
2.2

 
2.3

(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 September 30,
 
%
 
Nine months ended September 30,
 
%
 
 
 
Increase
 
 
Increase
 
 
2019
 
2018
 
(Decrease)
 
2019
 
2018
 
(Decrease)
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
1,772.9

 
$
1,695.7

 
4.6
 %
 
$
4,801.1

 
$
4,765.7

 
0.7
 %
Used vehicle retail
 
898.8

 
788.2

 
14.0

 
2,543.2

 
2,257.9

 
12.6

Finance and insurance
 
133.0

 
118.3

 
12.4

 
371.3

 
331.9

 
11.9

Service, body and parts
 
332.0

 
303.2

 
9.5

 
955.3

 
879.0

 
8.7

Total revenues
 
3,249.7

 
3,018.8

 
7.6

 
9,060.1

 
8,573.3

 
5.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
96.6

 
$
98.6

 
(2.0)
 %
 
$
269.5

 
$
280.0

 
(3.8
)%
Used vehicle retail
 
97.7

 
85.4

 
14.4

 
269.9

 
241.7

 
11.7

Finance and insurance
 
133.0

 
118.3

 
12.4

 
371.3

 
331.9

 
11.9

Service, body and parts
 
167.6

 
150.9

 
11.1

 
483.0

 
433.4

 
11.4

Total gross profit
 
498.5

 
456.8

 
9.1

 
1,405.9

 
1,296.9

 
8.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
5.4
%
 
5.8
%
 
(40
)bps
 
5.6
%
 
5.9
%
 
(30
)bps
Used vehicle retail
 
10.9

 
10.8

 
10

 
10.6

 
10.7

 
(10
)
Finance and insurance
 
100.0

 
100.0

 
—

 
100.0

 
100.0

 
—

Service, body and parts
 
50.5

 
49.8

 
70

 
50.6

 
49.3

 
130

Gross profit margin
 
15.3

 
15.1

 
20

 
15.5

 
15.1

 
40

 
 
 
 
 
 
 
 
 
 
 
 
 
Unit sales
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
47,141

 
47,590

 
(0.9)
 %
 
129,001

 
134,509

 
(4.1
)%
Used vehicle retail
 
43,305

 
38,717

 
11.9

 
123,555

 
111,094

 
11.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Average selling price
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
37,609

 
$
35,631

 
5.6
 %
 
$
37,217

 
$
35,430

 
5.0
 %
Used vehicle retail
 
20,754

 
20,358

 
1.9

 
20,584

 
20,324

 
1.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Average gross profit per unit
 
 
 
 
 
 
 
 
 
 
 
 
New vehicle retail
 
$
2,049

 
$
2,073

 
(1.2
)%
 
$
2,089

 
$
2,081

 
0.4
 %
Used vehicle retail
 
2,257

 
2,205

 
2.4

 
2,184

 
2,175

 
0.4

Finance and insurance
 
1,471

 
1,371

 
7.3

 
1,470

 
1,351

 
8.8

Total vehicle(1)
 
3,631

 
3,521

 
3.1

 
3,619

 
3,493

 
3.6

(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
 
September 30,
 
December 31,
 
September 30,
 
2019
 
2018
 
2018
Days Supply(1)
 
 
 
 
 
New vehicle inventory
77
 
71
 
77
Used vehicle inventory
67
 
66
 
64
(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 September 30, 2019
Current ratio
Not less than 1.10 to 1
 
1.28 to 1
Fixed charge coverage ratio
Not less than 1.20 to 1
 
2.36 to 1
Leverage ratio
Not more than 5.00 to 1
 
2.51 to 1





Lithia Motors, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions)
 
 
September 30, 2019
 
December 31, 2018
Cash and cash equivalents
 
$
27.1

 
$
31.6

Trade receivables, net
 
459.7

 
529.4

Inventories, net
 
2,386.4

 
2,365.3

Other current assets
 
56.7

 
65.1

Total current assets
 
$
2,929.9

 
$
2,991.4

 
 
 
 
 
Property and equipment, net
 
1,482.6

 
1,448.0

Intangibles
 
765.9

 
723.6

Other non-current assets
 
559.1

 
221.0

Total assets
 
$
5,737.5

 
$
5,384.0

 
 
 
 
 
Floor plan notes payable
 
2,002.0

 
2,057.7

Other current liabilities
 
481.4

 
435.8

Total current liabilities
 
$
2,483.4

 
$
2,493.5

 
 
 
 
 
Long-term debt
 
1,287.8

 
1,358.2

Other long-term liabilities and deferred revenue
 
607.1

 
335.1

Total liabilities
 
$
4,378.3

 
$
4,186.8

 
 
 
 
 
Stockholder's Equity
 
1,359.2

 
1,197.2

Total liabilities & stockholders' equity
 
$
5,737.5

 
$
5,384.0






Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In millions)
 
 
Nine months ended September 30,
 
 
2019
 
2018
Net income
 
$
203.5

 
$
205.8

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Asset impairments
 
0.5

 
—

Depreciation and amortization
 
60.9

 
55.3

Stock-based compensation
 
11.8

 
9.8

Gain on disposal of assets
 
—

 
(0.1
)
Gain on sale of franchises
 
(9.1
)
 
(15.4
)
Deferred income taxes
 
39.5

 
19.5

(Increase) decrease:
 
 
 
 
Trade receivables, net
 
69.7

 
63.4

Inventories
 
(4.1
)
 
(14.5
)
Other assets
 
22.3

 
12.0

Increase (decrease):
 
 
 
 
Floor plan notes payable, net
 
83.1

 
8.1

Trade payables
 
0.1

 
3.6

Accrued liabilities
 
(36.5
)
 
8.6

Other long-term liabilities and deferred revenue
 
11.8

 
23.1

Net cash provided by operating activities
 
$
453.5

 
$
379.2




Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In millions)
 
 
Nine months ended September 30,
Net cash provided by operating activities
 
2019
 
2018
As reported
 
$
453.5

 
$
379.2

Floor plan notes payable, non-trade, net
 
(114.0
)
 
61.7

Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory
 
(46.0
)
 
(120.9
)
Adjusted
 
$
293.5

 
$
320.0






Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In millions, except for per share data)

 
 
Three Months Ended September 30, 2019
 
 
As reported
 
Acquisition expense
 
Net disposal gain on sale of stores
 
Insurance reserves
 
Adjusted
Selling, general and administrative
 
$
343.2

 
$
(0.2
)
 
$
9.4

 
$
(1.1
)
 
$
351.3

 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
146.8

 
0.2

 
(9.4
)
 
1.1

 
138.7

 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
$
117.4

 
$
0.2

 
$
(9.4
)
 
$
1.1

 
$
109.3

Income tax (provision) benefit
 
(32.2
)
 
(0.1
)
 
2.7

 
(0.3
)
 
(29.9
)
Net income
 
$
85.2

 
$
0.1

 
$
(6.7
)
 
$
0.8

 
$
79.4

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
3.64

 
$
—

 
$
(0.28
)
 
$
0.03

 
$
3.39

Diluted share count
 
23.4

 
 
 
 
 
 
 
 

 
 
Three Months Ended September 30, 2018
 
 
As reported
 
Net disposal gain on sale of stores
 
Tax attribute
 
Adjusted
Selling, general and administrative
 
$
309.0

 
$
15.7

 
$
—

 
$
324.7

 
 
 
 
 
 
 
 
 
Income from operations
 
137.6

 
(15.7
)
 
—

 
121.9

 
 
 
 
 
 
 
 
 
Income before income taxes
 
$
109.0

 
$
(15.7
)
 
$
—

 
$
93.3

Income tax (provision) benefit
 
(15.9
)
 
4.1

 
(12.8
)
 
(24.6
)
Net income
 
$
93.1

 
$
(11.6
)
 
$
(12.8
)
 
$
68.7

 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
3.84

 
$
(0.48
)
 
$
(0.53
)
 
$
2.83

Diluted share count
 
24.3

 
 
 
 
 
 





Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In millions, except for per share data)

 
 
Nine Months Ended September 30, 2019
 
 
As reported
 
Acquisition expense
 
Net disposal gain on sale of stores
 
Insurance reserves
 
Asset impairment
 
Adjusted
Asset impairments
 
$
0.5

 
$
—

 
$
—

 
$
—

 
$
(0.5
)
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
 
1,021.5

 
(1.9
)
 
9.1

 
(9.5
)
 
—

 
1,019.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
372.3

 
1.9

 
(9.1
)
 
9.5

 
0.5

 
375.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
$
280.7

 
$
1.9

 
$
(9.1
)
 
$
9.5

 
$
0.5

 
$
283.5

Income tax (provision) benefit
 
(77.2
)
 
(0.5
)
 
2.6

 
(2.6
)
 
(0.1
)
 
(77.8
)
Net income
 
$
203.5

 
$
1.4

 
$
(6.5
)
 
$
6.9

 
$
0.4

 
$
205.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
8.72

 
$
0.06

 
$
(0.28
)
 
$
0.29

 
0.02

 
$
8.81

Diluted share count
 
23.3

 
 
 
 
 
 
 
 
 
 

 
 
Nine Months Ended September 30, 2018
 
 
As reported
 
Acquisition expense
 
Net disposal gain on sale of store
 
Insurance reserves
 
Tax attribute
 
Adjusted
Selling, general and administrative
 
$
939.9

 
$
(3.3
)
 
$
15.7

 
$
(1.5
)
 
$
—

 
$
950.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
339.9

 
3.3

 
(15.7
)
 
1.5

 
—

 
329.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
$
259.5

 
$
3.3

 
$
(15.7
)
 
$
1.5

 
$
—

 
$
248.6

Income tax (provision) benefit
 
(53.7
)
 
(0.9
)
 
4.1

 
(0.4
)
 
(14.2
)
 
(65.1
)
Net income
 
$
205.8

 
$
2.4

 
$
(11.6
)
 
$
1.1

 
$
(14.2
)
 
$
183.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
 
$
8.31

 
$
0.10

 
$
(0.47
)
 
$
0.04

 
$
(0.57
)
 
$
7.41

Diluted share count
 
24.8

 
 
 
 
 
 
 
 
 
 






Lithia Motors, Inc.
Adjusted EBITDA and Leveraged Free Cash Flow (Unaudited)
(In millions)
 
 
Three months ended September 30,
 
%
 
Nine months ended September 30,
 
%
 
 
 
Increase
 
 
Increase
 
 
2019
 
2018
 
(Decrease)
 
2019
 
2018
 
(Decrease)
EBITDA and Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
85.2

 
$
93.1

 
(8.5)
 %
 
$
203.5

 
$
205.8

 
(1.1)
 %
Flooring interest expense
 
17.9

 
16.0

 
11.9

 
55.5

 
45.1

 
23.1

Other interest expense
 
14.8

 
15.0

 
(1.3
)
 
45.0

 
40.7

 
10.6

Income tax expense
 
32.2

 
15.9

 
102.5

 
77.2

 
53.7

 
43.8

Depreciation and amortization
 
20.9

 
19.6

 
6.6

 
60.9

 
55.3

 
10.1

EBITDA
 
$
171.0

 
$
159.6

 
7.1
 %
 
$
442.1

 
$
400.6

 
10.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Less: flooring interest expense
 
$
(17.9
)
 
$
(16.0
)
 
11.9

 
$
(55.5
)
 
$
(45.1
)
 
23.1

Less: used vehicle line of credit interest
 
(1.2
)
 
(0.4
)
 
200.0

 
(3.9
)
 
(1.0
)
 
290.0

Add: acquisition expenses
 
0.2

 
—

 
NM

 
1.9

 
3.3

 
(42.4
)
Less: gain on divestitures
 
(9.4
)
 
(15.7
)
 
(40.1
)
 
(9.1
)
 
(15.7
)
 
(42.0
)
Add: insurance reserve
 
1.1

 
—

 
NM

 
9.5

 
1.5

 
533.3

Add: asset impairment
 
—

 
—

 
NM

 
0.5

 
—

 
NM

Adjusted EBITDA
 
$
143.8

 
$
127.5

 
12.8
 %
 
$
385.5

 
$
343.6

 
12.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Leveraged EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
143.8

 
$
127.5

 
12.8
 %
 
$
385.5

 
$
343.6

 
12.2
 %
Less: Capital expenditures
 
(34.1
)
 
(41.0
)
 
(16.8
)
 
(91.9
)
 
(113.4
)
 
(19.0
)
Leveraged EBITDA
 
$
109.7

 
$
86.5

 
26.8
 %
 
$
293.6

 
$
230.2

 
27.5
 %
NM - not meaningful