UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K CURRENT REPORT
Pursuant to Section 13 or 15(d) of the |
Date of Report: April 24, 2013
(Date of earliest event reported)
Lithia Motors, Inc.
(Exact name of registrant as specified in its charter)
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)
|
Item 2.02. Results of Operations and Financial Condition On April 24, 2013, Lithia Motors, Inc. issued a press release announcing financial results for the 2013 1st quarter. A copy of the press release is attached as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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|
Dated: April 24, 2013 |
LITHIA MOTORS, INC.
By: /s/ Christopher S. Holzshu |
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| Exhibit No. | Description |
| 99.1 | Press Release of Lithia Motors, Inc. dated April 24, 2013 |
MEDFORD, OR -- (Marketwire - April 24, 2013) - Lithia Motors, Inc. (NYSE: LAD) today reported 2013 first quarter income from continuing operations was $21.9 million, or $0.84 per diluted share. This compares to 2012 first quarter adjusted income from continuing operations of $15.6 million, or $0.59 per diluted share.
First Quarter-over-Quarter Operating Highlights:
First quarter 2013 revenue from continuing operations increased $164.9 million, or 22%, to $903.1 million from $738.2 million in the first quarter of 2012.
"We grew quarterly EPS 42% over the adjusted prior year," said Bryan DeBoer, President and CEO. "Total same store sales increased 19% in 2013, on top of an increase of 21% in 2012. We are pleased with our performance in the service, body and parts business, which increased 7% on a same store basis, despite two fewer selling days in 2013 compared to 2012. Warranty sales increased over 9% for the second consecutive quarter, suggesting that the number of vehicles eligible for warranty repair is growing."
We did not have any adjustments to the 2013 first quarter results from continuing operations. As shown in the attached reconciliation table, the 2012 first quarter adjusted results from continuing operations exclude a net benefit of $0.04 per share for an asset impairment charge, the gain on the disposal of assets, an adjustment to an investment and a non-core tax attribute. Unadjusted, net income from continuing operations for the first quarter of 2012 was $16.6 million, or $0.63 per diluted share.
Commenting on SG&A performance, Chris Holzshu, Senior Vice President and Chief Financial Officer, stated, "Cost control remains a key initiative to drive earnings growth. Our incremental throughput, or the percentage of additional gross profit dollars that flow to operating income, was 49% on a same store basis in the first quarter. This was just shy of our objective of 50%. We are focused on effective spending in personnel and advertising, which make up the majority of controllable SG&A expense."
Corporate Development
On April 11, 2013, Lithia was granted a new franchise to sell MINI vehicles in Anchorage, Alaska. The store will be located next to our Anchorage BMW location.
"Developing strong relationships with our manufacturer partners is a key to our success," said Bryan DeBoer. "We appreciate the vote of confidence from MINI in awarding us the franchise. By understanding our customers and increasing our share of vehicles sold in each market we serve, we hope to find additional opportunities with manufacturers in the future."
Share Repurchases
During the first quarter, we repurchased 127,900 shares of our Class A common stock at a weighted average price of $40.76 per share. Our total remaining repurchase authorization is 1,726,953 shares.
Balance Sheet Update
We ended the first quarter with $15 million in cash and $151 million in available credit on our credit facilities. Additionally, approximately $149 million of operating real estate is currently unfinanced, which could provide up to an additional $112 million in available liquidity, for total liquidity of $278 million.
In March, we strategically retired $26 million in mortgages. As a result, we have $165 million in mortgage debt outstanding, of which 78% are fixed rate mortgages. Our nearest maturities, totaling $29 million, are in 2016. We have no convertible notes or high-yield debt outstanding.
Increased Outlook for 2013
We project 2013 second quarter earnings of $0.86 to $0.88 per diluted share and full-year 2013 earnings of $3.48 to $3.55 per diluted share. Both projections are based on the following annual assumptions:
First Quarter Earnings Conference Call and Updated Presentation
The first quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the first quarter results has been added to www.LithiaInvestorRelations.com.
To listen live on our website or for replay, visit www.LithiaInvestorRelations.com and click on webcasts. A playback of the conference call will be available on April 24, 2013 through May 8, 2013 by calling 877-660-6853 (Conference ID: 412411).
About Lithia
Lithia Motors, Inc. is the ninth largest automotive retailer in the United States. Lithia sells 27 brands of new vehicles and all brands of used vehicles at 88 stores in 11 states. Lithia also arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.
Sites
www.lithia.com
www.lithiacareers.com
www.assuredservice.com
Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors
Lithia Motors on Twitter
http://twitter.com/lithiamotors
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. Forward looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "project," "outlook," "expect," "anticipate," "intend," "plan," "believe," "estimate," "may," "seek," "would," "should," "likely," or "will" and similar references to future periods. Examples of forward-looking statements in this press release include our outlook of earnings per share results and the assumptions that underlie them.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events that depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. 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), government regulations, legislation and others set forth from time to time in our filings with the SEC. We urge you to carefully consider this information and not place undue reliance on forward-looking statements. We undertake no duty to update our forward-looking statements, including our earnings outlook, which are made as of the date of this release.
Non-GAAP Financial Measures
This press release and the attached financial tables contain non-GAAP financial measures such as adjusted net income and diluted earnings per share from continuing operations, adjusted SG&A as a percentage of revenues and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, and adjusted pre-tax margin. 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 thousands except per share data)
Three months ended %
March 31, Increase Increase
----------------------
2013 2012 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues:
New vehicle retail $ 493,441 $ 392,946 $ 100,495 25.6%
Used vehicle retail 239,228 190,619 48,609 25.5
Used vehicle wholesale 39,506 33,357 6,149 18.4
Finance and insurance 31,663 24,876 6,787 27.3
Service, body and parts 90,440 83,544 6,896 8.3
Fleet and other 8,802 12,904 (4,102) (31.8)
---------- ---------- ---------- ----------
Total revenues 903,080 738,246 164,834 22.3
Cost of sales:
New vehicle retail 458,794 362,694 96,100 26.5
Used vehicle retail 204,255 162,342 41,913 25.8
Used vehicle wholesale 38,532 32,960 5,572 16.9
Service, body and parts 46,661 43,409 3,252 7.5
Fleet and other 8,400 12,507 (4,107) (32.8)
---------- ---------- ---------- ----------
Total cost of sales 756,642 613,912 142,730 23.2
---------- ---------- ---------- ----------
Gross profit 146,438 124,334 22,104 17.8
Asset Impairments - 115 (115) NM
SG&A expense 101,131 88,439 12,692 14.4
Depreciation and
amortization 4,721 4,138 583 14.1
---------- ---------- ---------- ----------
Income from operations 40,586 31,642 8,944 28.3
Floor plan interest expense (3,449) (2,902) 547 18.8
Other interest expense (2,361) (2,727) (366) (13.4)
Other income, net 801 498 303 60.8
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes 35,577 26,511 9,066 34.2
Income tax expense (13,695) (9,877) 3,818 38.7
Income tax rate 38.5% 37.3%
---------- ---------- ---------- ----------
Income from continuing
operations $ 21,882 $ 16,634 $ 5,248 31.5%
Income from discontinued
operations, net of tax 173 162 11 6.8
---------- ---------- ---------- ----------
Net income $ 22,055 $ 16,796 $ 5,259 31.3%
Diluted net income per
share:
Continuing operations $ 0.84 $ 0.63 $ 0.21 33.3%
Discontinued operations 0.01 - 0.01 NM
---------- ---------- ---------- ----------
Net income per share $ 0.85 $ 0.63 $ 0.22 34.9%
========== ========== ========== ==========
Diluted shares outstanding 26,054 26,478 (424) (1.6)%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended %
March 31, Increase Increase
----------------------
2013 2012 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Gross margin
New vehicle retail 7.0% 7.7% (70) bps
Used vehicle retail 14.6 14.8 (20) bps
Used vehicle wholesale 2.5 1.2 130 bps
Finance and insurance 100.0 100.0 - bps
Service, body and parts 48.4 48.0 40 bps
Fleet and Other 4.6 3.1 150 bps
Gross profit margin 16.2 16.8 (60) bps
Unit sales
New vehicle retail 14,720 12,138 2,582 21.3%
Used vehicle retail 13,661 11,207 2,454 21.9
Used vehicle wholesale 5,324 4,481 843 18.8
Total units sold 33,705 27,826 5,879 21.1
Average selling price
New vehicle retail $ 33,522 $ 32,373 $ 1,149 3.5%
Used vehicle retail 17,512 17,009 503 3.0
Used vehicle wholesale 7,420 7,444 (24) (0.3)
Average gross profit per
unit
New vehicle retail $ 2,354 $ 2,492 $ (138) (5.5)%
Used vehicle retail 2,560 2,523 37 1.5
Used vehicle wholesale 183 89 94 105.6
Finance and insurance 1,116 1,066 50 4.7
Revenue mix
New vehicle retail 54.6% 53.2%
Used vehicle retail 26.5 25.8
Used vehicle wholesale 4.4 4.5
Finance and insurance, net 3.5 3.4
Service, body and parts 10.0 11.3
Fleet and other 1.0 1.8
Adjusted As reported
---------------------- ----------------------
Three months ended Three months ended
March 31, March 31,
---------------------- ----------------------
Other metrics 2013 2012 2013 2012
---------- ---------- ---------- ----------
SG&A as a % of revenue 11.2% 12.1% 11.2% 12.0%
SG&A as a % of gross profit 69.1 71.7 69.1 71.1
Operating profit as a % of
revenue 4.5 4.2 4.5 4.3
Operating profit as a % of
gross profit 27.7 24.9 27.7 25.4
Pretax margin 3.9 3.5 3.9 3.6
Net profit margin 2.4 2.1 2.4 2.3
NM - not meaningful
Lithia Motors, Inc.
Same Store Operating Highlights (Unaudited)
Three months ended %
March 31, Increase Increase
---------------------
2013 2012 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
New vehicle retail $ 474,019 $ 388,466 $ 85,553 22.0%
Used vehicle retail 227,748 187,500 40,248 21.5
Used vehicle wholesale 36,436 32,743 3,693 11.3
Finance and insurance 29,978 23,969 6,009 25.1
Service, body and parts 87,747 82,366 5,381 6.5
Fleet and other 8,639 12,737 (4,098) (32.2)
---------- ---------- ----------
Total revenues $ 864,567 $ 727,781 $ 136,786 18.8
Gross profit
New vehicle retail $ 32,906 $ 29,794 $ 3,112 10.4%
Used vehicle retail 33,749 27,968 5,781 20.7
Used vehicle wholesale 899 447 452 101.1
Finance and insurance 29,978 23,969 6,009 25.1
Service, body and parts 41,826 38,728 3,098 8.0
Fleet and other 267 270 (3) (1.1)
---------- ---------- ----------
Total gross profit $ 139,625 $ 121,176 $ 18,449 15.2
Unit sales
New vehicle retail 14,151 12,004 2,147 17.9%
Used vehicle retail 13,050 11,015 2,035 18.5
Used vehicle wholesale 4,990 4,387 603 13.7
Total units sold 32,191 27,406 4,785 17.5
Average selling price
New vehicle retail $ 33,497 $ 32,361 $ 1,136 3.5%
Used vehicle retail 17,452 17,022 430 2.5
Used vehicle wholesale 7,302 7,464 (162) (2.2)
Average gross profit per unit
New vehicle retail $ 2,325 $ 2,482 $ (157) (6.3)%
Used vehicle retail 2,586 2,539 47 1.9
Used vehicle wholesale 180 102 78 76.5
Finance and insurance 1,102 1,041 61 5.9
NM - not meaningful
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of
March 31, December 31, March 31,
------------ ------------ ------------
2013 2012 2012
------------ ------------ ------------
Days Supply(1)
New vehicle inventory 71 76 61
Used vehicle inventory 46 56 48
(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 March 31, 2013
--------------------------- --------------------
Current ratio Not less than 1.20 to 1 1.42 to 1
Fixed charge coverage ratio Not less than 1.20 to 1 2.57 to 1
Leverage ratio Not more than 5.00 to 1 1.70 to 1
Funded debt restriction Not more than $375 million $168.7 million
Lithia Motors, Inc.
Other Highlights (Unaudited)
Three months ended
March 31,
------------------------
2013 2012
----------- -----------
New vehicle unit sales brand mix
Chrysler 31.3% 31.9%
General Motors 15.9 14.6
Toyota 14.9 12.9
Subaru 7.7 7.6
BMW, MINI 6.3 7.0
Honda, Acura 6.8 6.6
Ford 5.9 5.7
Hyundai 2.9 4.1
Nissan 2.7 3.3
Mercedes 2.2 2.0
Volkswagen, Audi 1.8 2.1
Kia 0.6 1.2
Mazda 0.5 0.6
Other 0.5 0.4
Three months ended
March 31,
------------------------
2013 2012
----------- -----------
Revenue geographic mix
Texas 25.7% 25.0%
Oregon 20.8 21.1
California 10.7 10.6
Montana 9.0 8.6
Washington 8.2 7.6
Alaska 7.1 8.8
Idaho 5.2 5.5
Nevada 4.7 5.0
Iowa 4.5 4.8
North Dakota 2.4 2.0
New Mexico 1.7 1.0
As of April 24, 2013
------------------------
Current store count mix # of stores % of total
----------- -----------
Chrysler 23 26.2%
General Motors 13 14.8
Honda, Acura 9 10.2
Toyota 9 10.2
BMW, MINI 8 9.1
Hyundai 5 5.7
Ford 5 5.7
Mercedes 4 4.5
Subaru 4 4.5
Nissan 3 3.4
Volkswagen, Audi 2 2.3
Other 3 3.4
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
March 31, December 31,
2013 2012
------------- -------------
Cash and cash equivalents $ 15,006 $ 42,839
Trade receivables, net 134,109 133,149
Inventories, net 714,121 723,326
Deferred income taxes 3,079 3,832
Other current assets 11,729 17,484
Assets held for sale 12,996 12,579
------------- -------------
Total current assets $ 891,040 $ 933,209
Property and equipment, net 427,935 425,086
Goodwill 32,047 32,047
Franchise value 62,429 62,429
Deferred income taxes 20,704 17,123
Other non-current assets 25,548 22,808
------------- -------------
Total assets $ 1,459,703 $ 1,492,702
============= =============
Floor plan notes payable $ 15,545 $ 13,454
Floor plan notes payable: non trade 567,981 568,130
Current maturities of long-term debt 7,483 8,182
Trade payables 41,339 41,589
Accrued liabilities 87,787 81,602
Liabilities related to assets held for sale 8,662 8,347
------------- -------------
Total current liabilities $ 728,797 $ 721,304
Long-term debt 222,249 286,876
Deferred revenue 35,252 33,589
Other long-term liabilities 25,602 22,832
------------- -------------
Total liabilities $ 1,011,900 $ 1,064,601
------------- -------------
Class A common stock 263,253 268,801
Class B common stock 335 343
Additional paid-in capital 15,096 12,399
Accumulated other comprehensive loss (2,109) (2,615)
Retained earnings 171,228 149,173
------------- -------------
Total liabilities & stockholders' equity $ 1,459,703 $ 1,492,702
============= =============
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Three months ended
March 31,
----------------------------
2013 2012
------------- -------------
Net income $ 22,055 $ 16,796
Adjustments to reconcile net income to net
cash used in operating activities:
Asset impairments - 115
Depreciation and amortization 4,721 4,138
Depreciation and amortization within
discontinued operations - 61
Stock-based compensation 1,140 576
Gain on disposal of assets (19) (988)
Deferred income taxes (206) (870)
Excess tax benefit from share-based payment
arrangements (2,937) (749)
(Increase) decrease:
Trade receivables, net (960) (11,633)
Inventories 7,890 (62,113)
Other current assets 5,757 5,292
Other non-current assets (424) 2,778
Increase (decrease):
Floor plan notes payable 2,257 (3,324)
Trade payables (410) 1,549
Accrued liabilities 6,188 5,105
Other long-term liabilities and deferred
revenue 4,705 2,280
------------- -------------
Net cash provided by (used in) operating
activities $ 49,757 $ (40,987)
============= =============
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
Three months ended
March 31,
---------------------------
Net cash provided by (used in) operating
activities 2013 2012
------------- -------------
As reported $ 49,757 $ (40,987)
Floor plan notes payable, non-trade 953 39,401
------------- -------------
Adjusted $ 50,710 $ (1,586)
============= =============
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended March 31, 2012
------------------------------------------------------
Asset
impairment
and
As disposal Equity Tax
reported gain investment attribute Adjusted
-------- ----------- ---------- --------- --------
Other asset
impairments $ 115 $ (115) $ - $ - $ -
Selling, general and
administrative 88,439 739 - - 89,178
Income from
operations 31,642 (624) - - 31,018
Other income, net 498 - (244) - 254
Income from
continuing
operations before
income taxes $ 26,511 $ (624) $ (244) $ - $ 25,643
Income tax expense (9,877) 244 95 (493) (10,031)
-------- ----------- ---------- --------- --------
Net income from
continuing
operations $ 16,634 $ (380) $ (149) $ (493) $ 15,612
======== =========== ========== ========= ========
Diluted earnings per
share from
continuing
operations $ 0.63 $ (0.01) $ (0.01) $ (0.02) $ 0.59
Diluted share count 26,478
Contact: John North VP Finance and Controller (541) 618-5748