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: February 15, 2017
(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 February 15, 2017 Lithia Motors, Inc., an Oregon corporation, issued a press release announcing financial results for the fourth quarter of 2016. A copy of the press release is attached as Exhibit 99.1.
Item 8.01. Other Events
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: February 15, 2017 |
LITHIA MOTORS, INC.
By: /s/ John F. North III |
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| Exhibit No. | Description |
| 99.1 | Press Release of Lithia Motors, Inc. dated February 15, 2017 |
Declares Dividend of $0.25 per Share for Fourth Quarter
MEDFORD, OR -- (Marketwired - February 15, 2017) - Lithia Motors, Inc. (NYSE: LAD) today reported the highest fourth quarter and full year revenue and earnings per share in company history.
Fourth quarter 2016 net income per diluted share increased 13% to $2.03 from $1.80 for 2015. Adjusted net income per diluted share increased 7% to $1.86 from $1.74 for 2015. Fourth quarter 2016 net income increased 8% to $51.3 million from $47.7 million for 2015. Adjusted net income increased 2% to $46.9 million from $46.1 million for 2015.
As shown in the attached non-GAAP reconciliation tables, the fourth quarter 2016 adjusted results exclude a $0.17 non-core benefit related to an equity investment, an indemnified legal reserve and a tax attribute. The fourth quarter 2015 adjusted results exclude a $0.06 net non-core benefit related to an equity investment offset by an asset impairment.
Fourth quarter 2016 revenue increased 15% to $2.3 billion from $2.0 billion in 2015.
Fourth Quarter-over-Quarter Operating Highlights:
2016 net income per diluted share increased 12% to $7.72 from $6.91 for 2015. Adjusted net income per diluted share increased 6% to $7.42 from $7.02 for 2015. 2016 net income increased 8% to $197.1 million from $183.0 million for 2015. 2016 adjusted net income increased 2% to $189.5 million from $186.0 million for 2015.
As shown in the attached non-GAAP reconciliation tables, the 2016 adjusted results exclude a $0.30 net non-core benefit related to an equity investment, a disposal gain and a tax attribute offset by an indemnified legal reserve. The 2015 adjusted results exclude a $0.11 net non-core charge from an asset impairment and a transition agreement offset by an equity investment and a disposal gain.
Full year 2016 revenue increased 10% to $8.7 billion from $7.9 billion in 2015.
Full Year-over-Year Operating Highlights:
Bryan DeBoer, President and CEO, said, "We increased same store sales in all core business lines, including double digit growth in used vehicle sales and record performance in F&I. Our store leaders remain focused on capturing incremental used vehicle sales and driving additional service work. 60 locations attained record profitability in 2016, while significant opportunities remain in the roughly 90 stores that did not achieve record performance this year. We will continue to target gaining market share and controlling costs to improve store performance in 2017 and beyond."
Corporate Development
In 2016, we completed the acquisition of 15 stores: a Ford store in Honolulu, Hawaii; the Carbone Auto Group, a nine store platform based in New York and Vermont; a Subaru store in Riverside, California; a Toyota store in Milford, Massachusetts; a Ford store in Thousand Oaks, California; a Ford store in Casper, Wyoming and an Audi store in Calabasas, California. We also opened a Volkswagen store in Freehold, New Jersey. These stores are expected to add over $1.1 billion in annual revenues.
Commenting on the acquired stores, Bryan DeBoer said, "Our entrepreneurial culture allows our team to rapidly grow our store base through accretive acquisitions. Since 2010, when we completed our first acquisitions after the great recession, we have increased our store count from 85 locations to 154, and grown our revenue nearly four hundred percent, from $1.8 billion to $8.7 billion. During this time, we have diversified our brand mix, added metropolitan locations from coast to coast, and maintained our sector low leverage ratio. We remain optimistic that significant acquisition opportunities remain across the United States, and will continue to seek accretive purchases."
Balance Sheet Update
We ended the fourth quarter with approximately $50 million in cash and $138 million in availability under our credit facilities. Additionally, approximately $225 million of our operating real estate is currently unfinanced, which we estimate could provide $168 million in capital, for total potential liquidity of $356 million.
Dividend Payment and Share Repurchase
Our Board of Directors has approved a dividend of $0.25 per share related to fourth quarter 2016 financial results. We expect to pay the dividend on March 24, 2017 to shareholders of record on March 10, 2017.
In the fourth quarter 2016, we repurchased 47,250 shares at a weighted average price of $91.68 per share. In 2016, we deployed $113 million to repurchase 6% of our outstanding float or 1.4 million shares at a weighted average price of $80.24. Approximately $193 million remains available under our existing repurchase authorization.
2017 Earnings Guidance
We project 2017 full year earnings of $8.00 to $8.30 per diluted share. This projection is based on the following annual assumptions:
These projections exclude the impact of future acquisitions, dispositions and non-core items. Actual results may be affected by items described under Forward-Looking Statements below.
Fourth Quarter Earnings Conference Call and Updated Presentation
The fourth quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the fourth quarter 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 automotive retailers in the United States and is among the fastest growing companies in the Fortune 500. Lithia sells 30 brands of new vehicles and all brands of used vehicles at 154 stores in 17 states. Lithia also arranges finance, warranty, and credit insurance contracts. In addition, Lithia provides vehicle parts, maintenance and repair services at all of its locations.
Sites
www.lithiamotors.com
www.lithiainvestorrelations.com
www.lithiacareers.com
Lithia Motors on Facebook
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," "goal," "strategy," "future," "maintain," "continue," "remain," "target" or "will" and similar references to future periods. Examples of forward-looking statements in this press release include, among others, statements regarding:
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 industry 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 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. 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, adjusted SG&A as a percentage of revenue 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 %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues:
New vehicle retail $1,335,833 $1,167,893 $ 167,940 14.4%
Used vehicle retail 559,693 469,399 90,294 19.2
Used vehicle wholesale 69,485 63,054 6,431 10.2
Finance and insurance 84,532 69,318 15,214 21.9
Service, body and parts 228,417 193,024 35,393 18.3
Fleet and other 14,030 30,594 (16,564) (54.1)
---------- ---------- ---------- ----------
Total revenues 2,291,990 1,993,282 298,708 15.0%
Cost of sales:
New vehicle retail 1,261,892 1,095,796 166,096 15.2
Used vehicle retail 496,320 412,572 83,748 20.3
Used vehicle wholesale 69,406 62,744 6,662 10.6
Service, body and parts 117,194 98,241 18,953 19.3
Fleet and other 12,342 30,506 (18,164) (59.5)
---------- ---------- ---------- ----------
Total cost of sales 1,957,154 1,699,859 257,295 15.1
---------- ---------- ---------- ----------
Gross profit 334,836 293,423 41,413 14.1%
Asset impairments 3,498 5,733 (2,235) (39.0)
SG&A expense 236,824 200,219 36,605 18.3
Depreciation and
amortization 12,997 11,056 1,941 17.6
---------- ---------- ---------- ----------
Income from operations 81,517 76,415 5,102 6.7%
Floor plan interest expense (7,227) (5,279) 1,948 36.9
Other interest expense (6,599) (4,791) 1,808 37.7
Other (expense) income, net (1,569) 25 1,594 NM
---------- ---------- ---------- ----------
Income before income taxes 66,122 66,370 (248) (0.4)%
Income tax expense (14,803) (18,638) (3,835) (20.6)
Income tax rate 22.4% 28.1%
---------- ---------- ---------- ----------
Net income $ 51,319 $ 47,732 $ 3,587 7.5%
========== ========== ========== ==========
Diluted net income per
share:
Net income per share $ 2.03 $ 1.80 $ 0.23 12.8%
Diluted shares outstanding 25,294 26,462 (1,168) (4.4)%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Gross margin
New vehicle retail 5.5% 6.2% (70)bps
Used vehicle retail 11.3 12.1 (80)
Used vehicle wholesale 0.1 0.5 (40)
Finance and insurance 100.0 100.0 -
Service, body and parts 48.7 49.1 (40)
Fleet and other 12.0 0.3 1,170
Gross profit margin 14.6 14.7 (10)
Unit sales
New vehicle retail 38,547 34,350 4,197 12.2%
Used vehicle retail 28,715 24,010 4,705 19.6
Total retail units sold 67,262 58,360 8,902 15.3
Used vehicle wholesale 10,475 9,345 1,130 12.1
Average selling price
New vehicle retail $ 34,655 $ 34,000 $ 655 1.9%
Used vehicle retail 19,491 19,550 (59) (0.3)
Used vehicle wholesale 6,633 6,747 (114) (1.7)
Average gross profit per
unit
New vehicle retail $ 1,918 $ 2,099 $ (181) (8.6)%
Used vehicle retail 2,207 2,367 (160) (6.8)
Used vehicle wholesale 8 33 (25) (75.8)
Finance and insurance 1,257 1,188 69 5.8
Total vehicle(1) 3,299 3,402 (103) (3.0)
Revenue mix
New vehicle retail 58.3% 58.6%
Used vehicle retail 24.4 23.5
Used vehicle wholesale 3.0 3.2
Finance and insurance,
net 3.7 3.5
Service, body and parts 10.0 9.7
Fleet and other 0.6 1.5
Adjusted As reported
-------------------- --------------------
Three months ended Three months ended
December 31, December 31,
-------------------- --------------------
Other metrics 2016 2015 2016 2015
--------- --------- --------- ---------
SG&A as a % of revenue 10.2% 10.0% 10.3% 10.0%
SG&A as a % of gross profit 70.1 68.2 70.7 68.2
Operating profit as a % of
revenue 3.8 4.1 3.6 3.8
Operating profit as a % of gross
profit 26.0 28.0 24.3 26.0
Pretax margin 3.2 3.7 2.9 3.3
Net profit margin 2.0 2.3 2.2 2.4
(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 %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
New vehicle retail $1,212,572 $1,164,172 $ 48,400 4.2%
Used vehicle retail 519,369 466,604 52,765 11.3
Used vehicle wholesale 60,835 62,828 (1,993) (3.2)
Finance and insurance 79,169 69,033 10,136 14.7
Service, body and parts 205,110 191,858 13,252 6.9
Fleet and other 9,422 30,591 (21,169) (69.2)
---------- ---------- ----------
Total revenues $2,086,477 $1,985,086 $ 101,391 5.1
Gross profit
New vehicle retail $ 67,093 $ 71,826 $ (4,733) (6.6)%
Used vehicle retail 58,701 56,589 2,112 3.7
Used vehicle wholesale 115 339 (224) (66.1)
Finance and insurance 79,169 69,033 10,136 14.7
Service, body and parts 101,294 94,243 7,051 7.5
Fleet and other 1,626 86 1,540 1,790.7
---------- ---------- ----------
Total gross profit $ 307,998 $ 292,116 $ 15,882 5.4
Gross margin
New vehicle retail 5.5% 6.2% (70)bps
Used vehicle retail 11.3 12.1 (80)
Used vehicle wholesale 0.2 0.5 (30)
Finance and insurance 100.0 100.0 -
Service, body and parts 49.4 49.1 30
Fleet and other 17.3 0.3 1,700
Gross profit margin 14.8 14.7 10
Unit sales
New vehicle retail 34,855 34,259 596 1.7%
Used vehicle retail 26,288 23,883 2,405 10.1
Total retail units sold 61,143 58,142 3,001 5.2
Used vehicle wholesale 9,134 9,316 (182) (2.0)
Average selling price
New vehicle retail $ 34,789 $ 33,981 $ 808 2.4%
Used vehicle retail 19,757 19,537 220 1.1
Used vehicle wholesale 6,660 6,744 (84) (1.2)
Average gross profit per
unit
New vehicle retail $ 1,925 $ 2,097 $ (172) (8.2)%
Used vehicle retail 2,233 2,369 (136) (5.7)
Used vehicle wholesale 13 36 (23) (63.9)
Finance and insurance 1,295 1,187 108 9.1
Total vehicle(1) 3,354 3,402 (48) (1.4)
(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.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Twelve months ended %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues:
New vehicle retail $4,938,436 $4,552,301 $ 386,135 8.5%
Used vehicle retail 2,226,951 1,927,016 299,935 15.6
Used vehicle wholesale 276,616 261,530 15,086 5.8
Finance and insurance 330,922 283,018 47,904 16.9
Service, body and parts 844,505 738,990 105,515 14.3
Fleet and other 60,727 101,397 (40,670) (40.1)
---------- ---------- ---------- ----------
Total revenues 8,678,157 7,864,252 813,905 10.3%
Cost of sales:
New vehicle retail 4,649,024 4,271,931 377,093 8.8
Used vehicle retail 1,963,267 1,685,767 277,500 16.5
Used vehicle wholesale 272,303 257,073 15,230 5.9
Service, body and parts 434,222 375,069 59,153 15.8
Fleet and other 58,026 98,778 (40,752) (41.3)
---------- ---------- ---------- ----------
Total cost of sales 7,376,842 6,688,618 688,224 10.3
---------- ---------- ---------- ----------
Gross profit 1,301,315 1,175,634 125,681 10.7
Asset impairments 13,992 20,124 (6,132) (30.5)
SG&A expense 899,590 811,175 88,415 10.9
Depreciation and
amortization 49,369 41,600 7,769 18.7
---------- ---------- ---------- ----------
Income from operations 338,364 302,735 35,629 11.8
Floor plan interest expense (25,531) (19,534) 5,997 30.7
Other interest expense (23,207) (19,491) 3,716 19.1
Other expense, net (6,103) (1,006) 5,097 NM
---------- ---------- ---------- ----------
Income before income taxes 283,523 262,704 20,819 7.9
Income tax expense (86,465) (79,705) 6,760 8.5
Income tax rate 30.5% 30.3%
---------- ---------- ---------- ----------
Net income $ 197,058 $ 182,999 $ 14,059 7.7%
========== ========== ========== ==========
Diluted net income per
share:
Net income per share $ 7.72 $ 6.91 $ 0.81 11.7%
Diluted shares outstanding 25,521 26,490 (969) (3.7)%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Twelve months ended %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Gross margin
New vehicle retail 5.9% 6.2% (30)bps
Used vehicle retail 11.8 12.5 (70)
Used vehicle wholesale 1.6 1.7 (10)
Finance and insurance 100.0 100.0 -
Service, body and parts 48.6 49.2 (60)
Fleet and other 4.4 2.6 180
Gross profit margin 15.0 14.9 10
Unit sales
New vehicle retail 145,772 137,486 8,286 6.0%
Used vehicle retail 113,498 99,109 14,389 14.5
Total retail units sold 259,270 236,595 22,675 9.6
Used vehicle wholesale 40,615 38,167 2,448 6.4
Average selling price
New vehicle retail $ 33,878 $ 33,111 $ 767 2.3%
Used vehicle retail 19,621 19,443 178 0.9
Used vehicle wholesale 6,811 6,852 (41) (0.6)
Average gross profit per
unit
New vehicle retail $ 1,985 $ 2,039 $ (54) (2.6)%
Used vehicle retail 2,323 2,434 (111) (4.6)
Used vehicle wholesale 106 117 (11) (9.4)
Finance and insurance 1,276 1,196 80 6.7
Total vehicle(1) 3,426 3,420 6 0.2
Revenue mix
New vehicle retail 56.9% 57.9%
Used vehicle retail 25.7 24.5
Used vehicle wholesale 3.2 3.3
Finance and insurance,
net 3.8 3.6
Service, body and parts 9.7 9.4
Fleet and other 0.7 1.3
Adjusted As reported
-------------------- --------------------
Twelve Months Ended Twelve months ended
December 31, December 31,
-------------------- --------------------
Other metrics 2016 2015 2016 2015
--------- --------- --------- ---------
SG&A as a % of revenue 10.3% 10.2% 10.4% 10.3%
SG&A as a % of gross profit 68.9 67.9 69.1 69.0
Operating profit as a % of
revenue 4.1 4.3 3.9 3.8
Operating profit as a % of gross
profit 27.3 28.5 26.0 25.8
Pretax margin 3.6 3.8 3.3 3.3
Net profit margin 2.2 2.4 2.3 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)
Twelve months ended %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
New vehicle retail $4,686,693 $4,534,865 $ 151,828 3.3%
Used vehicle retail 2,129,402 1,916,309 213,093 11.1
Used vehicle wholesale 261,957 260,341 1,616 0.6
Finance and insurance 317,780 281,898 35,882 12.7
Service, body and parts 797,397 734,508 62,889 8.6
Fleet and other 52,992 101,396 (48,404) (47.7)
---------- ---------- ----------
Total revenues $8,246,221 $7,829,317 $ 416,904 5.3
Gross profit
New vehicle retail $ 274,772 $ 279,201 $ (4,429) (1.6)%
Used vehicle retail 252,554 240,299 12,255 5.1
Used vehicle wholesale 4,184 4,608 (424) (9.2)
Finance and insurance 317,780 281,898 35,882 12.7
Service, body and parts 389,557 361,692 27,865 7.7
Fleet and other 2,593 2,583 10 0.4
---------- ---------- ----------
Total gross profit $1,241,440 $1,170,281 $ 71,159 6.1
Gross margin
New vehicle retail 5.9% 6.2% (30)bps
Used vehicle retail 11.9 12.5 (60)
Used vehicle wholesale 1.6 1.8 (20)
Finance and insurance 100.0 100.0 -
Service, body and parts 48.9 49.2 (30)
Fleet and other 4.9 2.5 240
Total gross profit 15.1 14.9 20
Unit sales
New vehicle retail 138,310 136,993 1,317 1.0%
Used vehicle retail 107,919 98,531 9,388 9.5
Total retail units sold 246,229 235,524 10,705 4.5
Used vehicle wholesale 38,234 37,966 268 0.7
Average selling price
New vehicle retail $ 33,885 $ 33,103 $ 782 2.4%
Used vehicle retail 19,731 19,449 282 1.4
Used vehicle wholesale 6,851 6,857 (6) (0.1)
Average gross profit per
unit
New vehicle retail $ 1,987 $ 2,038 $ (51) (2.5)%
Used vehicle retail 2,340 2,439 (99) (4.1)
Used vehicle wholesale 109 121 (12) (9.9)
Finance and insurance 1,291 1,197 94 7.9
Total vehicle(1) 3,449 3,422 27 0.8
(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.
Segment Operating Highlights (Unaudited)
Three months ended %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
Domestic $ 886,247 $ 763,289 $ 122,958 16.1%
Import 987,248 823,718 163,530 19.9
Luxury 417,544 406,581 10,963 2.7
---------- ---------- ----------
Total segment revenues 2,291,039 1,993,588 297,451 14.9
Corporate and other 951 (306) 1,257 (410.8)
---------- ---------- ----------
Total revenues $2,291,990 $1,993,282 $ 298,708 15.0
Segment Income(1)
Domestic $ 21,790 $ 23,532 $ (1,742) (7.4)%
Import 23,326 21,846 1,480 6.8
Luxury 9,731 10,627 (896) (8.4)
---------- ---------- ----------
Total segment income 54,847 56,005 (1,158) (2.1)
Corporate and other 32,440 26,187 6,253 23.9
Depreciation and
amortization (12,997) (11,056) 1,941 17.6
Other interest expense (6,599) (4,791) 1,808 37.7
Other (expense) income, net (1,569) 25 1,594 NM
---------- ---------- ----------
Income before income taxes $ 66,122 $ 66,370 $ (248) (0.4)
(1) Segment income for each of the segments is defined as Income before
income taxes, less Depreciation and amortization, Other interest expense and
Other income, net.
Retail New Vehicle Unit Sales
Domestic 12,531 11,124 1,407 12.6%
Import 21,188 18,381 2,807 15.3
Luxury 4,924 4,906 18 0.4
--------- --------- ---------
Total 38,643 34,411 4,232 12.3
Allocated to management (96) (61) (35) NM
--------- --------- ---------
Total retail new vehicle unit
sales 38,547 34,350 4,197 12.2
NM - not meaningful
Lithia Motors, Inc.
Segment Operating Highlights (Unaudited)
Twelve months ended %
December 31, Increase Increase
----------------------
2016 2015 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Revenues
Domestic $3,381,715 $3,038,882 $ 342,833 11.3%
Import 3,764,255 3,330,949 433,306 13.0
Luxury 1,528,760 1,490,632 38,128 2.6
---------- ---------- ----------
Total segment revenues 8,674,730 7,860,463 814,267 10.4
Corporate and other 3,427 3,789 (362) (9.6)
---------- ---------- ----------
Total revenues $8,678,157 $7,864,252 $ 813,905 10.3
Segment Income(1)
Domestic $ 106,210 $ 115,145 $ (8,935) (7.8)%
Import 110,204 98,751 11,453 11.6
Luxury 31,467 36,391 (4,924) (13.5)
---------- ---------- ----------
Total segment income 247,881 250,287 (2,406) (1.0)
Corporate and other 114,321 74,514 39,807 53.4
Depreciation and
amortization (49,369) (41,600) 7,769 18.7
Other interest expense (23,207) (19,491) 3,716 19.1
Other expense, net (6,103) (1,006) 5,097 NM
---------- ---------- ----------
Income before income taxes $ 283,523 262,704 $ 20,819 7.9
(1) Segment income for each of the segments is defined as Income before
income taxes, less Depreciation and amortization, Other interest expense and
Other expense, net.
Retail New Vehicle Unit Sales
Domestic 47,707 45,080 2,627 5.8%
Import 80,769 75,091 5,678 7.6
Luxury 17,591 17,556 35 0.2
--------- --------- ---------
Total 146,067 137,727 8,340 6.1
Allocated to management (295) (241) (54) NM
--------- --------- ---------
Total retail new vehicle unit
sales 145,772 137,486 8,286 6.0
NM - not meaningful
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of
--------------------------------------
December 31, December 31, December 31,
2016 2015 2014
------------ ------------ ------------
Days Supply(1)
New vehicle inventory 68 67 62
Used vehicle inventory 56 55 53
(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 December 31, 2016
-------------------------- -----------------------
Current ratio Not less than 1.10 to 1 1.26 to 1
Fixed charge coverage
ratio Not less than 1.20 to 1 2.63 to 1
Leverage ratio Not more than 5.00 to 1 2.18 to 1
Funded debt restriction Not more than $900 million $ 485.2 million
Lithia Motors, Inc.
Other Highlights (Unaudited)
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2016 2015 2016 2015
---------- ---------- ---------- ----------
New vehicle unit sales brand
mix
Honda, Acura 21.5% 22.1% 22.7% 22.4%
Toyota, Lexus 19.0 19.6 19.5 19.9
Chrysler, Fiat 16.9 18.6 18.4 18.9
General Motors 9.3 9.0 9.0 9.2
Subaru 8.5 7.4 7.6 6.9
Ford 6.3 4.9 5.4 4.7
BMW, Mini 5.5 6.9 5.3 5.9
Nissan 4.3 3.5 3.9 3.7
Volkswagen, Audi 4.0 2.9 3.2 3.1
Hyundai 2.1 1.9 2.0 2.1
Mercedes Benz 1.3 1.6 1.3 1.5
Kia 1.1 1.2 1.3 1.3
Other 0.2 0.4 0.4 0.4
Three months ended Twelve months ended
December 31, December 31,
---------------------- ----------------------
2016 2015 2016 2015
---------- ---------- ---------- ----------
Revenue geographic mix
California 22.2% 22.1% 22.5% 21.6%
Oregon 16.6 16.8 16.7 16.7
New Jersey 13.8 15.1 14.0 14.6
Texas 11.9 13.6 13.1 15.0
Montana 5.4 6.2 6.1 6.0
Washington 5.2 5.5 5.3 5.2
Alaska 4.4 5.4 4.8 5.4
New York 6.7 2.8 4.2 2.9
Nevada 2.8 3.0 3.0 3.0
Idaho 2.5 2.8 2.7 2.9
Iowa 2.4 2.7 2.6 2.8
Hawaii 2.1 1.8 2.0 1.5
North Dakota 1.2 1.4 1.3 1.5
New Mexico 0.7 0.8 0.8 0.9
Massachusetts 0.7 - 0.5 -
Vermont 0.9 - 0.3 -
Wyoming 0.5 - 0.1 -
As of February 15, 2017
-------------------------
Current store count mix # of stores % of total
------------ ------------
Chrysler, Fiat 30 19.5%
Honda, Acura 22 14.3
Toyota, Lexus 21 13.6
General Motors 18 11.7
Ford 12 7.8
BMW, Mini 11 7.1
Volkswagen, Audi 10 6.5
Subaru 9 5.8
Nissan 7 4.5
Hyundai 5 3.2
Mercedes Benz 4 2.6
Kia 3 1.9
Other 2 1.5
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
December 31, December 31,
2016 2015
-------------- --------------
Cash and cash equivalents $ 50,282 $ 45,008
Trade receivables, net 417,714 308,462
Inventories, net 1,772,587 1,470,987
Other current assets 46,611 54,022
-------------- --------------
Total current assets $ 2,287,194 $ 1,878,479
Property and equipment, net 1,006,130 876,660
Goodwill 259,399 213,220
Franchise value 184,268 157,699
Other non-current assets 107,159 99,072
-------------- --------------
Total assets $ 3,844,150 $ 3,225,130
============== ==============
Floor plan notes payable $ 94,602 $ 48,083
Floor plan notes payable: non trade 1,506,895 1,265,872
Current maturities of long-term debt 20,965 38,506
Trade payables 88,423 70,871
Accrued liabilities 211,109 167,107
-------------- --------------
Total current liabilities $ 1,921,994 $ 1,590,439
Long-term debt 769,916 604,680
Deferred revenue 81,929 66,734
Deferred income taxes 59,075 53,129
Other long-term liabilities 100,460 81,984
-------------- --------------
Total liabilities $ 2,933,374 $ 2,396,966
-------------- --------------
Class A common stock 165,512 258,410
Class B common stock 219 316
Additional paid-in capital 41,225 38,822
Accumulated other comprehensive loss - (277)
Retained earnings 703,820 530,893
-------------- --------------
Total liabilities & stockholders' equity $ 3,844,150 $ 3,225,130
============== ==============
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Twelve Months Ended
December 31,
2016 2015
------------- -------------
Net income $ 197,058 $ 182,999
Adjustments to reconcile net income to net cash
provided by operating activities:
Asset impairments 13,992 20,124
Depreciation and amortization 49,369 41,600
Stock-based compensation 11,047 11,871
(Gain) loss on disposal of assets (4,343) 203
Gain on sale of franchise (1,102) (5,919)
Deferred income taxes 10,138 12,341
Excess tax benefit from share-based payment
arrangements (4,389) (5,012)
(Increase) decrease:
Trade receivables, net (105,961) (13,047)
Inventories (168,847) (197,079)
Other assets (13,305) (31,290)
Increase (decrease):
Floor plan notes payable, net 16,385 7,035
Trade payables 16,449 674
Accrued liabilities 42,853 16,273
Other long-term liabilities and deferred
revenue 27,173 33,766
------------- -------------
Net cash provided by operating activities $ 86,517 $ 74,539
============= =============
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
Twelve Months Ended December
31,
Net cash provided by operating activities 2016 2015
------------- -------------
As reported $ 86,517 $ 74,539
Floor plan notes payable, non-trade, net 252,893 136,201
Less: Borrowings on floor plan notes
payable, non-trade associated with acquired
new vehicle inventory (94,550) (25,642)
------------- -------------
Adjusted $ 244,860 $ 185,098
============= =============
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended December 31, 2016
----------------------------------------------------
Equity
investment
As fair value Legal Tax
reported adjustment Reserve Attribute Adjusted
-------- ------------ ------- --------- --------
Asset impairments $ 3,498 $ (3,498) $ - $ - $ -
Selling, general and
administrative 236,824 - (2,030) - 234,794
Income from operations 81,517 3,498 2,030 - 87,045
Other (expense)
income, net (1,569) 2,065 - - 497
Income before income
taxes $ 66,122 $ 5,563 $ 2,030 $ - $ 73,715
Income tax expense (14,803) (8,156) (2,503) (1,320) (26,782)
-------- ------------ ------- --------- --------
Net income $ 51,319 $ (2,593) $ (473) $ (1,320) $ 46,933
======== ============ ======= ========= ========
Diluted earnings per
share $ 2.03 $ (0.10) $ (0.02) $ (0.05) $ 1.86
Diluted share count 25,294
Three Months Ended December 31, 2015
--------------------------------------------
Equity
investment
As Asset fair value
reported impairment adjustment Adjusted
-------- ---------- ------------ --------
Asset impairments $ 5,733 $ (1,603) $ (4,130) $ -
Income from operations 76,415 1,603 4,130 82,148
Other (expense) income, net 25 - 1,733 1,758
Income before income taxes $ 66,370 $ 1,603 $ 5,864 $ 73,837
Income tax expense (18,638) (605) (8,516) (27,759)
-------- ---------- ------------ --------
Net income $ 47,732 $ 998 $ (2,652) $ 46,078
======== ========== ============ ========
Diluted earnings per share $ 1.80 $ 0.04 $ (0.10) $ 1.74
Diluted share count 26,462
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Twelve Months Ended December 31, 2016
----------------------------------------------------------
Disposal Equity
gain on investment
As sale of fair value Legal Tax
reported store adjustment Reserve Attribute Adjusted
-------- -------- ----------- ------- --------- ---------
Asset
impairments $ 13,992 $ - $ (13,992) - $ - $ -
Selling, general
and
administrative 899,590 1,087 - (3,936) - 896,741
Income from
operations 338,364 (1,087) 13,992 3,936 - 355,205
Other (expense)
income, net (6,103) - 8,262 - - 2,159
Income before
income taxes $283,523 $(1,087) $ 22,254 3,936 $ - $ 308,626
Income tax
expense (86,465) 426 (28,530) (3,250) (1,320) (119,139)
-------- ------- ---------- ------ -------- ---------
Net income $197,058 $ (661) $ (6,276) 686 $ (1,320) $ 189,487
======== ======= ========== ====== ======== =========
Diluted earnings
per share $ 7.72 $ (0.03) $ (0.25) 0.03 $ (0.05) $ 7.42
Diluted share
count 25,521
Twelve Months Ended December 31, 2015
-------------------------------------------------------------
Disposal Equity
gain on investment
As sale of Asset fair value Transition
reported store impairment adjustment Agreement Adjusted
-------- -------- ---------- ---------- ---------- ---------
Asset
impairments $ 20,124 $ - $ (3,603) $ (16,521) $ -
Selling,
general and
administrat-
ive 811,175 5,919 - - (18,296) 798,798
Income from
operations 302,735 (5,919) 3,603 16,521 18,296 335,236
Other
(expense)
income, net (1,006) - - 6,930 5,924
Income before
income taxes $262,704 $(5,919) $ 3,603 $ 23,451 $ 18,296 $ 302,135
Income tax
expense (79,705) 2,309 (1,385) (30,832) (6,507) (116,120)
-------- ------- --------- --------- --------- ---------
Net income $182,999 $(3,610) $ 2,218 $ (7,381) $ 11,789 $ 186,015
======== ======= ========= ========= ========= =========
Diluted
earnings per
share $ 6.91 $ (0.14) $ 0.08 $ (0.28) $ 0.45 $ 7.02
Diluted share
count 26,490
Contact: John North Chief Financial Officer (541) 618-5748