UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 18, 2016 (Date of earliest event reported)
LITHIA MOTORS, INC.
(Exact name of registrant as specified in its charter)
State of Oregon |
001-14733 |
93-0572810 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
150 N. Bartlett St |
Medford, OR 97501 |
(Address of principal executive offices) |
(541) 776-6401
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On October 20, 2016 Lithia Motors, Inc. issued a press release announcing financial results for the third quarter of 2016.
A copy of the press release is attached as Exhibit 99.1.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 20, Lithia Motors, Inc. announced that it will promote Christopher Holzshu to Executive Vice President and Chief Human Resources Officer and John North to Senior Vice President and Chief Financial Officer, in each case effective January 1, 2017. In his new role, Mr. Holzshu will apply his knowledge of Lithia’s store operations to recruit and develop team members. Mr. Holzshu will continue to be responsible for performance management teams, F&I administration and office operations. Mr. North will apply his understanding of Lithia’s business model and investor community to his new responsibilities as CFO.
Christopher Holzshu (age 43) served as Senior Vice President and Chief Financial Officer of Lithia since November 2010 and Secretary since April 2012. As Chief Financial Officer, Mr. Holzshu was responsible for all aspects of accounting, finance and financial planning and analysis; was directly involved in operations; oversaw Lithia’s performance monitoring functions, including setting operational targets for store performance and improvements, and capital deployment decision making; and tracked and managed Company-wide budgets. Prior to his promotion to Chief Financial Officer, Mr. Holzshu served as Vice President, Financial Planning and Analysis since 2008, where he was actively involved in business development, budgeting, forecasting, procurement, payroll and benefits. He joined Lithia in 2003 as Director of Accounting to oversee corporate accounting, and, beginning in 2004, served as Assistant Vice President of Audit and Compliance. Before joining Lithia, Mr. Holzshu worked at KPMG LLP, where he specialized in the automotive manufacturing and retail automotive sectors. Mr. Holzshu is a licensed CPA in Oregon.
John North (age 39) served as Vice President of Finance of Lithia since 2010 and Chief Accounting Officer since 2015. Between 2010 and 2015, Mr. North served as Controller. As the principal accounting officer, Mr. North is responsible for accounting, tax, and external financial reporting; manages corporate borrowings including mortgage and credit facilities; serves as the primary investor relations contact for buy- and sell-side analysts; and oversees Lithia’s risk management functions. Prior to his promotion to Vice President of Finance, Mr. North served as Assistant Vice President, Accounting since 2008. He joined Lithia in 2002, and, beginning in 2006, served as Director of Accounting. Before joining Lithia, Mr. North worked for real estate and technology companies in the San Francisco area. Mr. North graduated from Santa Clara University with a degree in Finance. He is a licensed CPA in Oregon and a CFA charter holder.
Item 8.01. Other Events
On October 18, 2016, Lithia Motors, Inc. announced a $0.25 per share cash dividend, to be paid on November 25, 2016 to shareholders of record as of November 11, 2016.
The information furnished in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release of Lithia Motors, Inc. dated October 20, 2016
SIGNATURE
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.
|
LITHIA MOTORS, INC. |
| |
|
|
|
|
Dated: October 20, 2016 |
|
|
|
|
By: |
/s/ John F. North III |
|
|
|
John F. North III |
|
|
|
VP Finance, Chief Accounting Officer |
|
Exhibit Index | |
Exhibit No. |
Description |
99.1 |
Press Release of Lithia Motors, Inc. dated October 20, 2016 |
Exhibit 99.1
LITHIA REPORTS RECORD THIRD QUARTER RESULTS
_____________________________________________________
DECLARES DIVIDEND OF $0.25 PER SHARE FOR THIRD QUARTER
Medford, Oregon, October 20, 2016 - Lithia Motors, Inc. (NYSE: LAD) today reported the highest third quarter revenue and earnings per share in company history.
2016 third quarter unadjusted net income was $54.0 million, or $2.14 per diluted share, compared to $43.4 million, or $1.64 per diluted share, for the third quarter of 2015. Adjusted net income for the third quarter of 2016 was $52.0 million, or $2.06 per diluted share, compared to 2015 third quarter adjusted net income of $53.6 million, or $2.03 per diluted share.
As shown in the attached non-GAAP reconciliation tables, the 2016 third quarter adjusted results exclude a non-core benefit of $0.08 related to an equity investment. The 2015 third quarter adjusted results exclude a $0.39 non-core net loss related to an employee transition agreement partially offset by an equity investment.
Third quarter 2016 revenue increased $185.1 million, or 9%, to $2.3 billion from $2.1 billion for the third quarter 2015.
Third Quarter-over-Quarter Operating Highlights:
|
• |
Total same store sales increased 4% |
|
• |
New vehicle same store sales increased 1% |
|
• |
Used vehicle retail same store sales increased 11% |
|
• |
Service, body and parts same store sales increased 10% |
|
• |
Same store F&I per unit increased $98 to $1,302 |
|
• |
SG&A expense as a percentage of gross profit was 67.6% |
For the first nine months of 2016, revenues increased 8.8% to $6.4 billion, compared to $5.9 billion in the first nine months of 2015. Unadjusted net income for the first nine months of 2016 was $5.69 per diluted share, compared to $5.10 per diluted share for the similar period in 2015. Adjusted net income per diluted share for the first nine months of 2016 increased 5.5% to $5.57 from $5.28 for the first nine months of 2015.
"Though considerable opportunities remain, we delivered record results in the third quarter," said Bryan DeBoer, President and CEO. "Our store leadership increased revenue in all departments, though selling expense grew slightly. In the moderating new vehicle sales environment, sustaining sales volume and taking market share from our competitors is crucial to future incremental used vehicle and service transactions, and maintains high performance levels for our manufacturer partners to earn continued support for acquisitions. Our entrepreneurial leaders are adjusting to the dynamic marketplace and will seek continued earnings growth in the future."
Corporate Development
Through October of this year, we have completed the acquisition of 14 stores and opened one store: 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 Volkswagen store in Freehold, New Jersey, a Ford store in Casper, Wyoming and an Audi store in Calabasas, California.
Mr. DeBoer added, "As we have previously discussed, the benefit of a moderating new vehicle sales environment is the rationalization of acquisition price expectations. We have added over $1.0 billion in estimated annualized revenue so far this year, and are optimistic that a significant number of targets remain available. By seeking stores where opportunities to improve performance are plentiful, we position ourselves to purchase at attractive multiples and generate industry-leading return on investment. Additionally, our low leverage ratio should ensure borrowing capacity to remain acquisitive through the vehicle sales cycle."
Executive Officer Changes
Effective January 1, 2017, Chris Holzshu, Senior Vice President and Chief Financial Officer, will be promoted to Executive Vice President and Chief Human Resources Officer. John North, Vice President, Finance and Chief Accounting Officer, will be promoted to Senior Vice President and Chief Financial Officer.
Commenting on the changes, Mr. DeBoer stated, "Given our ambitious growth objectives, ensuring we maximize employee potential to further improve our performance-based culture is critical to our success. Chris' promotion emphasizes the importance of each and every team member and how accelerating employee development to earn customers for life is vital to our future. As Executive Vice President, Chris will lead our human resource, information technology and store administration teams. Additionally, I am pleased with the success of our leadership development as demonstrated by John's promotion to CFO. Both Chris and John exemplify our core values of continuous improvement and personal ownership. On behalf of the entire organization and our Board of Directors, congratulations."
Balance Sheet Update
We ended the third quarter with $24 million in cash and $122 million in availability under our credit facilities. Additionally, approximately $258 million of our operating real estate is currently unfinanced, which we estimate could provide $193 million in capital, for total potential liquidity of $339 million.
Dividend Payment and Share Repurchase
Our Board of Directors has approved a dividend of $0.25 per share related to third quarter 2016 financial results. We expect to pay the dividend on November 25, 2016 to shareholders of record on November 11, 2016.
In the third quarter 2016, we repurchased 44,250 shares at a weighted average price of $84.12 per share. In the first nine months of 2016, we have deployed $108 million to repurchase 5% of our outstanding float or 1.2 million shares at a weighted average price of $79.05. Approximately $197 million remains available under our existing repurchase authorization.
2016 Outlook
We project 2016 full year earnings of $7.40 to $7.45 per diluted share. This projection is based on the following annual assumptions:
|
• |
Total revenues of $8.5 to $8.6 billion |
|
• |
New vehicle same store sales increasing 2.5% |
|
• |
New vehicle gross margin of 5.7% to 5.9% |
|
• |
Used vehicle same store sales increasing 9.5% |
|
• |
Used vehicle gross margin of 11.7% to 11.9% |
|
• |
Service body and parts same store sales increasing 8.5% |
|
• |
Service body and parts gross margin of 48.2% to 48.4% |
|
• |
Finance and insurance gross profit of $1,260 to $1,280 per unit |
|
• |
Tax rate of 39.5% |
|
• |
Average diluted shares outstanding of 25.5 million |
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:
|
• |
Total revenues of $9.2 to $9.4 billion |
|
• |
New vehicle same store sales increasing 1.5% |
|
• |
New vehicle gross margin of 5.5% to 5.7% |
|
• |
Used vehicle same store sales increasing 5.5% |
|
• |
Used vehicle gross margin of 11.5% to 11.7% |
|
• |
Service body and parts same store sales increasing 5.0% |
|
• |
Service body and parts gross margin of 48.2% to 48.4% |
|
• |
Finance and insurance gross profit of $1,270 to $1,295 per unit |
|
• |
Tax rate of 39.5% |
|
• |
Average diluted shares outstanding of 25.3 million |
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.
Third Quarter Earnings Conference Call and Updated Presentation
The third quarter 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 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 152 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
Contact:
John North
VP Finance and Chief Accounting Officer
(541) 618-5748
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:
|
• |
Expected operating results, such as improved store efficiency and performance; generating 2016 full year earnings of $7.40 to $7.45 per diluted share; generating 2017 full year earnings of $8.00 to $8.30 per diluted share and all projections set forth under the headings "2016 Outlook" and "2017 Earnings Guidance"; |
|
• |
Anticipated national new car sales levels; |
|
• |
Our ability to improve store performance; |
|
• |
Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future; and our ability to achieve returns on investment; |
|
• |
Anticipated revenues from acquired stores; and |
|
• |
Anticipated availability of liquidity from our credit facility and unfinanced operating real estate. |
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 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 |
% |
|||||||||||||||
September 30, |
Increase |
Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Revenues: |
||||||||||||||||
New vehicle retail |
$ | 1,297,511 | $ | 1,227,080 | $ | 70,431 | 5.7 |
% | ||||||||
Used vehicle retail |
580,885 | 505,885 | 75,000 | 14.8 | ||||||||||||
Used vehicle wholesale |
75,271 | 69,472 | 5,799 | 8.3 | ||||||||||||
Finance and insurance |
87,709 | 76,633 | 11,076 | 14.5 | ||||||||||||
Service, body and parts |
217,148 | 189,796 | 27,352 | 14.4 | ||||||||||||
Fleet and other |
11,443 | 15,979 | (4,536 |
) |
(28.4 |
) | ||||||||||
Total revenues |
2,269,967 | 2,084,845 | 185,122 | 8.9 |
% | |||||||||||
Cost of sales: |
||||||||||||||||
New vehicle retail |
1,221,668 | 1,149,923 | 71,745 | 6.2 | ||||||||||||
Used vehicle retail |
512,076 | 443,598 | 68,478 | 15.4 | ||||||||||||
Used vehicle wholesale |
74,353 | 68,892 | 5,461 | 7.9 | ||||||||||||
Service, body and parts |
112,806 | 95,846 | 16,960 | 17.7 | ||||||||||||
Fleet and other |
11,803 | 15,399 | (3,596 |
) |
(23.4 |
) | ||||||||||
Total cost of sales |
1,932,706 | 1,773,658 | 159,048 | 9.0 | ||||||||||||
Gross profit |
337,261 | 311,187 | 26,074 | 8.4 |
% | |||||||||||
Asset impairments |
3,498 | 4,131 | (633 |
) |
NM | |||||||||||
SG&A expense |
228,134 | 223,728 | 4,406 | 2.0 | ||||||||||||
Depreciation and amortization |
12,206 | 10,531 | 1,675 | 15.9 | ||||||||||||
Income from operations |
93,423 | 72,797 | 20,626 | 28.3 |
% | |||||||||||
Floor plan interest expense |
(6,186 |
) |
(4,951 |
) |
1,235 | 24.9 | ||||||||||
Other interest expense |
(5,647 |
) |
(4,900 |
) |
747 | 15.2 | ||||||||||
Other expense, net |
(1,513 |
) |
(307 |
) |
1,206 | NM | ||||||||||
Income before income taxes |
80,077 | 62,639 | 17,438 | 27.8 |
% | |||||||||||
Income tax expense |
(26,036 |
) |
(19,248 |
) |
6,788 | 35.3 | ||||||||||
Income tax rate |
32.5 |
% |
30.7 |
% |
||||||||||||
Net income |
$ | 54,041 | $ | 43,391 | $ | 10,650 | 24.5 |
% | ||||||||
Diluted net income per share: |
||||||||||||||||
Net income per share |
$ | 2.14 | $ | 1.64 | $ | 0.50 | 30.5 |
% | ||||||||
Diluted shares outstanding |
25,290 | 26,480 | (1,190 |
) |
(4.5 |
)% |
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended |
% |
|||||||||||||||
September 30, |
Increase |
Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Gross margin |
||||||||||||||||
New vehicle retail |
5.8 |
% |
6.3 |
% |
(50 |
) |
||||||||||
Used vehicle retail |
11.8 | 12.3 | (50 |
) |
||||||||||||
Used vehicle wholesale |
1.2 | 0.8 | 40 | |||||||||||||
Finance and insurance |
100.0 | 100.0 | — | |||||||||||||
Service, body and parts |
48.1 | 49.5 | (140 |
) |
||||||||||||
Fleet and other |
(3.1 |
) |
3.6 | (670 |
) |
|||||||||||
Gross profit margin |
14.9 | 14.9 | — | |||||||||||||
Unit sales |
||||||||||||||||
New vehicle retail |
38,417 | 37,401 | 1,016 | 2.7 |
% | |||||||||||
Used vehicle retail |
29,636 | 26,206 | 3,430 | 13.1 | ||||||||||||
Total retail units sold |
68,053 | 63,607 | 4,446 | 7.0 | ||||||||||||
Used vehicle wholesale |
10,853 | 10,239 | 614 | 6.0 | ||||||||||||
Average selling price |
||||||||||||||||
New vehicle retail |
$ | 33,774 | $ | 32,809 | $ | 965 | 2.9 |
% | ||||||||
Used vehicle retail |
19,601 | 19,304 | 297 | 1.5 | ||||||||||||
Used vehicle wholesale |
6,936 | 6,785 | 151 | 2.2 | ||||||||||||
Average gross profit per unit |
||||||||||||||||
New vehicle retail |
$ | 1,974 | $ | 2,063 | $ | (89 |
) |
(4.3 |
)% | |||||||
Used vehicle retail |
2,322 | 2,377 | (55 |
) |
(2.3 |
) | ||||||||||
Used vehicle wholesale |
85 | 57 | 28 | 49.1 | ||||||||||||
Finance and insurance |
1,289 | 1,205 | 84 | 7.0 | ||||||||||||
Total vehicle(1) |
3,428 | 3,406 | 22 | 0.6 | ||||||||||||
Revenue mix |
||||||||||||||||
New vehicle retail |
57.2 |
% |
58.9 |
% |
||||||||||||
Used vehicle retail |
25.6 | 24.3 | ||||||||||||||
Used vehicle wholesale |
3.3 | 3.3 | ||||||||||||||
Finance and insurance, net |
3.9 | 3.7 | ||||||||||||||
Service, body and parts |
9.6 | 9.1 | ||||||||||||||
Fleet and other |
0.4 | 0.7 |
Adjusted |
As reported |
|||||||||||||||
Three months ended September 30, |
Three months ended September 30, |
|||||||||||||||
Other metrics |
2016 |
2015 |
2016 |
2015 |
||||||||||||
SG&A as a % of revenue |
10.1 |
% |
9.9 |
% |
10.1 |
% |
10.7 |
% | ||||||||
SG&A as a % of gross profit |
67.6 | 66.0 | 67.6 | 71.9 | ||||||||||||
Operating profit as a % of revenue |
4.3 | 4.6 | 4.1 | 3.5 | ||||||||||||
Operating profit as a % of gross profit |
28.7 | 30.6 | 27.7 | 23.4 | ||||||||||||
Pretax margin |
3.8 | 4.2 | 3.5 | 3.0 | ||||||||||||
Net profit margin |
2.3 | 2.6 | 2.4 | 2.1 |
(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, | Increase | Increase | ||||||||||||||
2016 | 2015 | (Decrease) | (Decrease) | |||||||||||||
Revenues | ||||||||||||||||
New vehicle retail |
$ | 1,239,537 | $ | 1,224,015 | $ | 15,522 | 1.3 |
% | ||||||||
Used vehicle retail |
557,302 | 503,913 | 53,389 | 10.6 | ||||||||||||
Used vehicle wholesale |
72,417 | 69,208 | 3,209 | 4.6 | ||||||||||||
Finance and insurance |
84,612 | 76,375 | 8,237 | 10.8 | ||||||||||||
Service, body and parts |
207,155 | 188,814 | 18,341 | 9.7 | ||||||||||||
Fleet and other |
10,629 | 15,982 | (5,353 |
) |
(33.5 |
) | ||||||||||
Total revenues |
$ | 2,171,652 | $ | 2,078,307 | $ | 93,345 | 4.5 | |||||||||
Gross profit |
||||||||||||||||
New vehicle retail |
$ | 72,329 | $ | 76,919 | $ | (4,590 |
) |
(6.0 |
)% | |||||||
Used vehicle retail |
66,386 | 62,100 | 4,286 | 6.9 | ||||||||||||
Used vehicle wholesale |
862 | 592 | 270 | 45.6 | ||||||||||||
Finance and insurance |
84,612 | 76,375 | 8,237 | 10.8 | ||||||||||||
Service, body and parts |
99,977 | 93,434 | 6,543 | 7.0 | ||||||||||||
Fleet and other |
(388 | ) | 582 | (970 |
) |
(166.7 |
) | |||||||||
Total gross profit |
$ | 323,778 | $ | 310,002 | $ | 13,776 | 4.4 | |||||||||
Gross margin |
||||||||||||||||
New vehicle retail |
5.8 | % | 6.3 | % | (50 |
) |
||||||||||
Used vehicle retail |
11.9 | 12.3 | (40 |
) |
||||||||||||
Used vehicle wholesale |
1.2 | 0.9 | 30 | |||||||||||||
Finance and insurance |
100.0 | 100.0 | — | |||||||||||||
Service, body and parts |
48.3 | 49.5 | (120 |
) |
||||||||||||
Fleet and other |
(3.7 | ) | 3.6 | (730 |
) |
|||||||||||
Gross profit margin |
14.9 | 14.9 | — | |||||||||||||
Unit sales |
||||||||||||||||
New vehicle retail |
36,681 | 37,326 | (645 |
) |
(1.7 |
)% | ||||||||||
Used vehicle retail |
28,322 | 26,108 | 2,214 | 8.5 | ||||||||||||
Total retail units sold |
65,003 | 63,434 | 1,569 | 2.5 | ||||||||||||
Used vehicle wholesale |
10,416 | 10,197 | 219 | 2.1 | ||||||||||||
Average selling price |
||||||||||||||||
New vehicle retail |
$ | 33,792 | $ | 32,793 | $ | 999 | 3.0 |
% | ||||||||
Used vehicle retail |
19,677 | 19,301 | 376 | 1.9 | ||||||||||||
Used vehicle wholesale |
6,952 | 6,787 | 165 | 2.4 | ||||||||||||
Average gross profit per unit |
||||||||||||||||
New vehicle retail |
$ | 1,972 | $ | 2,061 | $ | (89 |
) |
(4.3 |
)% | |||||||
Used vehicle retail |
2,344 | 2,379 | (35 |
) |
(1.5 |
) | ||||||||||
Used vehicle wholesale |
83 | 58 | 25 | 43.1 | ||||||||||||
Finance and insurance |
1,302 | 1,204 | 98 | 8.1 | ||||||||||||
Total vehicle(1) |
3,449 | 3,405 | 44 | 1.3 |
(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.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Nine months ended |
% |
|||||||||||||||
September 30, |
Increase |
Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Revenues: |
||||||||||||||||
New vehicle retail |
$ | 3,602,603 | $ | 3,384,408 | $ | 218,195 | 6.4 |
% | ||||||||
Used vehicle retail |
1,667,258 | 1,457,617 | 209,641 | 14.4 | ||||||||||||
Used vehicle wholesale |
207,131 | 198,476 | 8,655 | 4.4 | ||||||||||||
Finance and insurance |
246,390 | 213,700 | 32,690 | 15.3 | ||||||||||||
Service, body and parts |
616,088 | 545,966 | 70,122 | 12.8 | ||||||||||||
Fleet and other |
46,697 | 70,803 | (24,106 |
) |
(34.0 |
) | ||||||||||
Total revenues |
6,386,167 | 5,870,970 | 515,197 | 8.8 |
% | |||||||||||
Cost of sales: |
||||||||||||||||
New vehicle retail |
3,387,132 | 3,176,135 | 210,997 | 6.6 | ||||||||||||
Used vehicle retail |
1,466,947 | 1,273,195 | 193,752 | 15.2 | ||||||||||||
Used vehicle wholesale |
202,897 | 194,329 | 8,568 | 4.4 | ||||||||||||
Service, body and parts |
317,028 | 276,828 | 40,200 | 14.5 | ||||||||||||
Fleet and other |
45,684 | 68,272 | (22,588 |
) |
(33.1 |
) | ||||||||||
Total cost of sales |
5,419,688 | 4,988,759 | 430,929 | 8.6 | ||||||||||||
Gross profit |
966,479 | 882,211 | 84,268 | 9.6 | ||||||||||||
Asset impairments |
10,494 | 14,391 | (3,897 |
) |
NM | |||||||||||
SG&A expense |
662,766 | 610,956 | 51,810 | 8.5 | ||||||||||||
Depreciation and amortization |
36,372 | 30,544 | 5,828 | 19.1 | ||||||||||||
Income from operations |
256,847 | 226,320 | 30,527 | 13.5 | ||||||||||||
Floor plan interest expense |
(18,304 |
) |
(14,255 |
) |
4,049 | 28.4 | ||||||||||
Other interest expense |
(16,608 |
) |
(14,700 |
) |
1,908 | 13.0 | ||||||||||
Other expense, net |
(4,534 |
) |
(1,031 |
) |
3,503 | NM | ||||||||||
Income before income taxes |
217,401 | 196,334 | 21,067 | 10.7 | ||||||||||||
Income tax expense |
(71,662 |
) |
(61,067 |
) |
10,595 | 17.3 | ||||||||||
Income tax rate |
33.0 |
% |
31.1 |
% |
||||||||||||
Net income |
$ | 145,739 | $ | 135,267 | $ | 10,472 | 7.7 |
% | ||||||||
Diluted net income per share: |
||||||||||||||||
Net income per share |
$ | 5.69 | $ | 5.10 | $ | 0.59 | 11.6 |
% | ||||||||
Diluted shares outstanding |
25,598 | 26,500 | (902 |
) |
(3.4 |
)% |
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Nine months ended |
% |
|||||||||||||||
September 30, |
Increase |
Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Gross margin |
||||||||||||||||
New vehicle retail |
6.0 |
% |
6.2 |
% |
(20 |
) |
||||||||||
Used vehicle retail |
12.0 | 12.7 | (70 |
) |
||||||||||||
Used vehicle wholesale |
2.0 | 2.1 | (10 |
) |
||||||||||||
Finance and insurance |
100.0 | 100.0 | — | |||||||||||||
Service, body and parts |
48.5 | 49.3 | (80 |
) |
||||||||||||
Fleet and other |
2.2 | 3.6 | (140 |
) |
||||||||||||
Gross profit margin |
15.1 | 15.0 | 10 | |||||||||||||
Unit sales |
||||||||||||||||
New vehicle retail |
107,225 | 103,136 | 4,089 | 4.0 |
% | |||||||||||
Used vehicle retail |
84,783 | 75,099 | 9,684 | 12.9 | ||||||||||||
Total retail units sold |
192,008 | 178,235 | 13,773 | 7.7 | ||||||||||||
Used vehicle wholesale |
30,140 | 28,822 | 1,318 | 4.6 | ||||||||||||
Average selling price |
||||||||||||||||
New vehicle retail |
$ | 33,599 | $ | 32,815 | $ | 784 | 2.4 |
% | ||||||||
Used vehicle retail |
19,665 | 19,409 | 256 | 1.3 | ||||||||||||
Used vehicle wholesale |
6,872 | 6,886 | (14 |
) |
(0.2 |
) | ||||||||||
Average gross profit per unit |
||||||||||||||||
New vehicle retail |
$ | 2,010 | $ | 2,019 | $ | (9 |
) |
(0.4 |
)% | |||||||
Used vehicle retail |
2,363 | 2,456 | (93 |
) |
(3.8 |
) | ||||||||||
Used vehicle wholesale |
140 | 144 | (4 |
) |
(2.8 |
) | ||||||||||
Finance and insurance |
1,283 | 1,199 | 84 | 7.0 | ||||||||||||
Total vehicle(1) |
3,471 | 3,425 | 46 | 1.3 | ||||||||||||
Revenue mix |
||||||||||||||||
New vehicle retail |
56.4 |
% |
57.6 |
% |
||||||||||||
Used vehicle retail |
26.1 | 24.8 | ||||||||||||||
Used vehicle wholesale |
3.2 | 3.4 | ||||||||||||||
Finance and insurance, net |
3.9 | 3.6 | ||||||||||||||
Service, body and parts |
9.6 | 9.3 | ||||||||||||||
Fleet and other |
0.8 | 1.3 |
Adjusted |
As reported |
|||||||||||||||
Nine Months Ended September 30, |
Nine months ended September 30, |
|||||||||||||||
Other metrics |
2016 |
2015 |
2016 |
2015 |
||||||||||||
SG&A as a % of revenue |
10.4 |
% |
10.2 |
% |
10.4 | 10.4 |
% | |||||||||
SG&A as a % of gross profit |
68.5 | 67.8 | 68.6 | 69.3 | ||||||||||||
Operating profit as a % of revenue |
4.2 | 4.3 | 4.0 | 3.9 | ||||||||||||
Operating profit as a % of gross profit |
27.7 | 28.7 | 26.6 | 25.7 | ||||||||||||
Pretax margin |
3.7 | 3.9 | 3.4 | 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)
Nine months ended September 30, |
Increase |
% Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Revenues |
||||||||||||||||
New vehicle retail |
$ | 3,474,121 | $ | 3,370,693 | $ | 103,428 | 3.1 |
% | ||||||||
Used vehicle retail |
1,610,033 | 1,449,705 | 160,328 | 11.1 | ||||||||||||
Used vehicle wholesale |
201,122 | 197,513 | 3,609 | 1.8 | ||||||||||||
Finance and insurance |
238,611 | 212,865 | 25,746 | 12.1 | ||||||||||||
Service, body and parts |
592,287 | 542,650 | 49,637 | 9.1 | ||||||||||||
Fleet and other |
43,570 | 70,805 | (27,235 |
) |
(38.5 |
) | ||||||||||
Total revenues |
$ | 6,159,744 | $ | 5,844,231 | $ | 315,513 | 5.4 | |||||||||
Gross profit |
||||||||||||||||
New vehicle retail |
$ | 207,679 | $ | 207,375 | $ | 304 | 0.1 |
% | ||||||||
Used vehicle retail |
193,853 | 183,710 | 10,143 | 5.5 | ||||||||||||
Used vehicle wholesale |
4,069 | 4,269 | (200 |
) |
(4.7 |
) | ||||||||||
Finance and insurance |
238,611 | 212,865 | 25,746 | 12.1 | ||||||||||||
Service, body and parts |
288,263 | 267,449 | 20,814 | 7.8 | ||||||||||||
Fleet and other |
967 | 2,497 | (1,530 |
) |
(61.3 |
) | ||||||||||
Total gross profit |
$ | 933,442 | $ | 878,165 | $ | 55,277 | 6.3 | |||||||||
Gross margin |
||||||||||||||||
New vehicle retail |
6.0 | % | 6.2 | % | 20 | |||||||||||
Used vehicle retail |
12.0 | 12.7 | (70 |
) |
||||||||||||
Used vehicle wholesale |
2.0 | 2.2 | (20 |
) |
||||||||||||
Finance and insurance |
100.0 | 100.0 | — | |||||||||||||
Service, body and parts |
48.7 | 49.3 | (60 |
) |
||||||||||||
Fleet and other |
2.2 | 3.5 | (130 |
) |
||||||||||||
Total gross profit |
15.2 | 15.0 | 20 | |||||||||||||
Unit sales |
||||||||||||||||
New vehicle retail |
103,455 | 102,734 | 721 | 0.7 |
% | |||||||||||
Used vehicle retail |
81,631 | 74,648 | 6,983 | 9.4 | ||||||||||||
Total retail units sold |
185,086 | 177,382 | 7,704 | 4.3 | ||||||||||||
Used vehicle wholesale |
29,100 | 28,650 | 450 | 1.6 | ||||||||||||
Average selling price |
||||||||||||||||
New vehicle retail |
$ | 33,581 | $ | 32,810 | $ | 771 | 2.3 |
% | ||||||||
Used vehicle retail |
19,723 | 19,421 | 302 | 1.6 | ||||||||||||
Used vehicle wholesale |
6,911 | 6,894 | 17 | 0.2 | ||||||||||||
Average gross profit per unit |
||||||||||||||||
New vehicle retail |
$ | 2,007 | $ | 2,019 | $ | (12 |
) |
(0.6 |
)% | |||||||
Used vehicle retail |
2,375 | 2,461 | (86 |
) |
(3.5 |
) | ||||||||||
Used vehicle wholesale |
140 | 149 | (9 |
) |
(6.0 |
) | ||||||||||
Finance and insurance |
1,289 | 1,200 | 89 | 7.4 | ||||||||||||
Total vehicle(1) |
3,481 | 3,429 | 52 | 1.5 |
(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 |
% |
|||||||||||||||
September 30, |
Increase |
Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Revenues |
||||||||||||||||
Domestic |
$ | 888,026 | $ | 814,216 | $ | 73,810 | 9.1 |
% | ||||||||
Import |
989,077 | 894,371 | 94,706 | 10.6 | ||||||||||||
Luxury |
392,537 | 374,558 | 17,979 | 4.8 | ||||||||||||
Total segment revenues |
2,269,640 | 2,083,145 | 186,495 | 9.0 | ||||||||||||
Corporate and other |
327 | 1,700 | (1,373 |
) |
(80.8 |
) | ||||||||||
Total revenues |
$ | 2,269,967 | $ | 2,084,845 | $ | 185,122 | 8.9 | |||||||||
Segment Income(1) |
||||||||||||||||
Domestic |
$ | 32,394 | $ | 33,240 | $ | (846 |
) |
(2.5 |
)% | |||||||
Import |
32,832 | 31,453 | 1,379 | 4.4 | ||||||||||||
Luxury |
7,423 | 8,318 | (895 |
) |
(10.8 |
) | ||||||||||
Total segment income |
72,649 | 73,011 | (362 |
) |
(0.5 |
) | ||||||||||
Corporate and other |
26,794 | 5,366 | 21,428 | 399.3 | ||||||||||||
Depreciation and amortization |
(12,206 |
) |
(10,531 |
) |
1,675 | 15.9 | ||||||||||
Other interest expense |
(5,647 |
) |
(4,900 |
) |
747 | 15.2 | ||||||||||
Other expense, net |
(1,513 |
) |
(307 |
) |
1,206 | NM | ||||||||||
Income before income taxes |
$ | 80,077 | $ | 62,639 | $ | 17,438 | 27.8 |
(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 |
12,634 | 12,361 | 273 | 2.2 |
% | |||||||||||
Import |
21,568 | 20,658 | 910 | 4.4 | ||||||||||||
Luxury |
4,287 | 4,455 | (168 |
) |
(3.8 |
) | ||||||||||
Total |
38,489 | 37,474 | 1,015 | 2.7 | ||||||||||||
Allocated to management |
(72 |
) |
(73 |
) |
1 | NM | ||||||||||
Total retail new vehicle unit sales |
38,417 | 37,401 | 1,016 | 2.7 |
NM - not meaningful
Lithia Motors, Inc.
Segment Operating Highlights (Unaudited)
Nine months ended |
% |
|||||||||||||||
September 30, |
Increase |
Increase |
||||||||||||||
2016 |
2015 |
(Decrease) |
(Decrease) |
|||||||||||||
Revenues |
||||||||||||||||
Domestic |
$ | 2,483,637 | $ | 2,273,068 | $ | 210,569 | 9.3 |
% | ||||||||
Import |
2,788,838 | 2,509,756 | 279,082 | 11.1 | ||||||||||||
Luxury |
1,111,215 | 1,084,051 | 27,164 | 2.5 | ||||||||||||
Total segment revenues |
6,383,690 | 5,866,875 | 516,815 | 8.8 | ||||||||||||
Corporate and other |
2,477 | 4,095 | (1,618 |
) |
(39.5 |
) | ||||||||||
Total revenues |
$ | 6,386,167 | $ | 5,870,970 | $ | 515,197 | 8.8 | |||||||||
Segment Income(1) |
||||||||||||||||
Domestic |
$ | 84,913 | $ | 91,853 | $ | (6,940 |
) |
(7.6 |
)% | |||||||
Import |
86,385 | 76,665 | 9,720 | 12.7 | ||||||||||||
Luxury |
21,736 | 25,764 | (4,028 |
) |
(15.6 |
) | ||||||||||
Total segment income |
193,034 | 194,282 | (1,248 |
) |
(0.6 |
) | ||||||||||
Corporate and other |
81,881 | 48,327 | 33,554 | 69.4 | ||||||||||||
Depreciation and amortization |
(36,372 |
) |
(30,544 |
) |
5,828 | 19.1 | ||||||||||
Other interest expense |
(16,608 |
) |
(14,700 |
) |
1,908 | 13.0 | ||||||||||
Other expense, net |
(4,534 |
) |
(1,031 |
) |
3,503 | NM | ||||||||||
Income before income taxes |
$ | 217,401 | 196,334 | $ | 21,067 | 10.7 |
(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 |
34,917 | 33,852 | 1,065 | 3.1 |
% | |||||||||||
Import |
59,840 | 56,814 | 3,026 | 5.3 | ||||||||||||
Luxury |
12,667 | 12,650 | 17 | 0.1 | ||||||||||||
Total |
107,424 | 103,316 | 4,108 | 4.0 | ||||||||||||
Allocated to management |
(199 |
) |
(180 |
) |
(19 |
) |
NM | |||||||||
Total retail new vehicle unit sales |
107,225 | 103,136 | 4,089 | 4.0 |
NM - not meaningful
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of |
||||||||||||
September 30, |
December 31, |
September 30, |
||||||||||
2016 |
2015 |
2015 |
||||||||||
Days Supply(1) |
||||||||||||
New vehicle inventory |
65 | 67 | 64 | |||||||||
Used vehicle inventory |
57 | 55 | 54 |
(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, 2016 | ||||
Current ratio |
Not less than 1.10 to 1 |
1.22 |
to 1 | ||
Fixed charge coverage ratio |
Not less than 1.20 to 1 |
2.61 |
to 1 | ||
Leverage ratio |
Not more than 5.00 to 1 |
2.06 |
to 1 | ||
Funded debt restriction |
Not more than $900 million |
$ |
425.9 |
million |
Lithia Motors, Inc.
Other Highlights (Unaudited)
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||
New vehicle unit sales brand mix |
||||||||||||||||
Honda, Acura |
22.3 |
% |
22.5 |
% |
23.1 |
% |
22.6 |
% | ||||||||
Toyota, Lexus |
19.8 |
19.8 |
19.8 |
20.0 |
||||||||||||
Chrysler |
18.5 | 18.5 | 18.6 | 18.9 | ||||||||||||
General Motors |
9.2 | 9.5 | 8.9 | 9.3 | ||||||||||||
Subaru |
7.8 | 6.7 | 7.3 | 6.8 | ||||||||||||
BMW, Mini |
4.9 | 5.5 | 5.2 | 5.6 | ||||||||||||
Ford |
5.3 | 5.0 | 5.0 | 4.6 | ||||||||||||
Nissan |
3.8 | 4.0 | 3.8 | 3.8 | ||||||||||||
Volkswagen, Audi |
3.0 | 3.2 | 2.9 | 3.1 | ||||||||||||
Hyundai |
2.1 | 2.2 | 2.0 | 2.1 | ||||||||||||
Kia |
1.5 | 1.3 | 1.4 | 1.3 | ||||||||||||
Mercedes Benz |
1.2 | 1.4 | 1.3 | 1.5 | ||||||||||||
Other |
0.6 | 0.4 | 0.7 | 0.4 |
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2016 |
2015 |
2016 |
2015 |
|||||||||||||
Revenue geographic mix |
||||||||||||||||
California |
22.6 |
% |
21.4 |
% |
22.7 |
% |
21.4 |
% | ||||||||
Oregon |
16.9 | 16.8 | 16.8 | 16.6 | ||||||||||||
New Jersey |
13.9 | 14.4 | 14.0 | 14.4 | ||||||||||||
Texas |
12.9 | 14.9 | 13.5 | 15.4 | ||||||||||||
Montana |
6.3 | 6.3 | 6.3 | 6.0 | ||||||||||||
Washington |
5.5 | 5.1 | 5.4 | 5.1 | ||||||||||||
Alaska |
4.8 | 5.4 | 4.9 | 5.4 | ||||||||||||
New York |
3.7 | 2.9 | 3.2 | 3.0 | ||||||||||||
Nevada |
3.0 | 3.1 | 3.0 | 3.1 | ||||||||||||
Idaho |
2.9 | 2.9 | 2.8 | 2.9 | ||||||||||||
Iowa |
2.6 | 3.0 | 2.6 | 2.9 | ||||||||||||
Hawaii |
1.9 | 1.5 | 2.0 | 1.4 | ||||||||||||
North Dakota |
1.3 | 1.4 | 1.3 | 1.5 | ||||||||||||
New Mexico |
0.8 | 0.9 | 0.9 | 0.9 | ||||||||||||
Massachusetts |
0.6 | — | 0.5 | — | ||||||||||||
Vermont |
0.3 | — | 0.1 | — | ||||||||||||
Wyoming |
— | — | — | — |
October 20, 2016 |
||||||||
Current store count mix |
# of stores |
% of total |
||||||
Chrysler |
28 | 18.4 |
% | |||||
Honda, Acura |
22 | 14.5 | ||||||
Toyota, Lexus |
21 | 13.8 | ||||||
General Motors |
17 | 11.2 | ||||||
Ford |
11 | 7.2 | ||||||
BMW, Mini |
11 | 7.2 | ||||||
Volkswagen, Audi |
10 | 6.6 | ||||||
Subaru |
9 | 5.9 | ||||||
Nissan |
7 | 4.6 | ||||||
Hyundai |
5 | 3.3 | ||||||
Mercedes Benz |
4 | 2.6 | ||||||
Other |
7 | 4.7 |
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
September 30, 2016 |
December 31, 2015 |
|||||||
Cash and cash equivalents |
$ | 24,116 | $ | 45,008 | ||||
Trade receivables, net |
317,664 | 308,462 | ||||||
Inventories, net |
1,657,693 | 1,470,987 | ||||||
Other current assets |
33,225 | 54,408 | ||||||
Total current assets |
$ | 2,032,698 | $ | 1,878,865 | ||||
Property and equipment, net |
991,721 | 876,660 | ||||||
Goodwill |
219,021 | 213,220 | ||||||
Franchise value |
163,220 | 157,699 | ||||||
Other non-current assets |
156,946 | 100,855 | ||||||
Total assets |
$ | 3,563,606 | $ | 3,227,299 | ||||
Floor plan notes payable |
$ | 73,762 | $ | 48,083 | ||||
Floor plan notes payable: non trade |
1,351,940 | 1,265,872 | ||||||
Current maturities of long-term debt |
26,674 | 38,891 | ||||||
Trade payables |
78,442 | 70,871 | ||||||
Accrued liabilities |
204,361 | 167,108 | ||||||
Total current liabilities |
$ | 1,735,179 | $ | 1,590,825 | ||||
Long-term debt |
727,191 | 606,463 | ||||||
Deferred revenue |
77,577 | 66,734 | ||||||
Deferred income taxes |
58,721 | 53,129 | ||||||
Other long-term liabilities |
98,848 | 81,984 | ||||||
Total liabilities |
$ | 2,697,516 | $ | 2,399,135 | ||||
Class A common stock |
167,596 | 258,410 | ||||||
Class B common stock |
219 | 316 | ||||||
Additional paid-in capital |
39,359 | 38,822 | ||||||
Accumulated other comprehensive loss |
— | (277 |
) | |||||
Retained earnings |
658,916 | 530,893 | ||||||
Total liabilities & stockholders' equity |
$ | 3,563,606 | $ | 3,227,299 |
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Nine Months Ended September 30, |
||||||||
2016 |
2015 |
|||||||
Net income |
$ | 145,739 | $ | 135,267 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Asset impairments |
10,494 | 14,391 | ||||||
Depreciation and amortization |
36,372 | 30,544 | ||||||
Stock-based compensation |
8,665 | 8,579 | ||||||
(Gain) loss on disposal of assets |
(4,299 |
) |
27 | |||||
Gain on sale of franchise |
(1,102 |
) |
(5,919 |
) | ||||
Deferred income taxes |
9,782 | (7,955 |
) | |||||
Excess tax benefit from share-based payment arrangements |
(4,388 |
) |
(4,923 |
) | ||||
(Increase) decrease: |
||||||||
Trade receivables, net |
(5,911 |
) |
9,685 | |||||
Inventories |
(85,564 |
) |
(132,407 |
) | ||||
Other assets |
4,627 | (5,339 |
) | |||||
Increase (decrease): |
||||||||
Floor plan notes payable, net |
18,122 | 5,604 | ||||||
Trade payables |
6,153 | 7,768 | ||||||
Accrued liabilities |
32,874 | 16,949 | ||||||
Other long-term liabilities and deferred revenue |
18,227 | 34,651 | ||||||
Net cash provided by operating activities |
$ | 189,791 | $ | 106,922 |
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
Nine Months Ended September 30, |
||||||||
2016 |
2015 |
|||||||
Net cash provided by operating activities | ||||||||
As reported |
$ | 189,791 | $ | 106,922 | ||||
Floor plan notes payable, non-trade, net |
93,817 | 36,204 | ||||||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory |
(88,147 |
) |
(7,490 |
) | ||||
Adjusted |
$ | 195,461 | $ | 135,636 |
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended September 30, 2016 |
||||||||||||
As reported |
Equity investment fair value adjustment |
Adjusted |
||||||||||
Asset impairments |
$ | 3,498 | $ | (3,498 |
) |
$ | — | |||||
Income from operations |
93,423 | 3,498 | 96,921 | |||||||||
Other (expense) income, net |
(1,513 |
) |
2,066 | 553 | ||||||||
Income before income taxes |
$ | 80,077 | $ | 5,564 | $ | 85,641 | ||||||
Income tax expense |
(26,036 |
) |
(7,592 |
) |
(33,628 |
) | ||||||
Net income |
$ | 54,041 | $ | (2,028 |
) |
$ | 52,013 | |||||
Diluted earnings per share |
$ | 2.14 | $ | (0.08 |
) |
$ | 2.06 | |||||
Diluted share count |
25,290 |
Three Months Ended September 30, 2015 |
||||||||||||||||
As reported |
Transition Agreement |
Equity investment fair value adjustment |
Adjusted |
|||||||||||||
Asset impairments |
$ | 4,131 | $ | — | (4,131 |
) |
$ | — | ||||||||
Selling, general and administrative |
223,728 | (18,296 |
) |
— | 205,432 | |||||||||||
Income from operations |
72,797 | 18,296 | 4,131 | 95,224 | ||||||||||||
Other (expense) income, net |
(307 |
) |
— | 1,731 | 1,424 | |||||||||||
Income before income taxes |
$ | 62,639 | $ | 18,296 | 5,862 | $ | 86,797 | |||||||||
Income tax expense |
(19,248 |
) |
(6,507 |
) |
(7,414 |
) |
(33,169 |
) | ||||||||
Net income |
$ | 43,391 | $ | 11,789 | (1,552 |
) |
$ | 53,628 | ||||||||
Diluted earnings per share |
$ | 1.64 | $ | 0.44 | (0.05 |
) |
$ | 2.03 | ||||||||
Diluted share count |
26,480 |
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Nine Months Ended September 30, 2016 |
||||||||||||||||||||
As reported |
Disposal gain on sale of store |
Equity investment fair value adjustment |
Legal reserve adjustment |
Adjusted |
||||||||||||||||
Asset impairments |
$ | 10,494 | $ | — | $ | (10,494 |
) |
$ | — | $ | — | |||||||||
Selling, general and administrative |
662,766 | 1,087 | — | (1,906 |
) |
661,947 | ||||||||||||||
Income from operations |
256,847 | (1,087 |
) |
10,494 | 1,906 | 268,160 | ||||||||||||||
Other expense, net |
(4,534 |
) |
— | 6,197 | — | 1,663 | ||||||||||||||
Income before income taxes |
$ | 217,401 | $ | (1,087 |
) |
$ | 16,691 | $ | 1,906 | $ | 234,911 | |||||||||
Income tax expense |
(71,662 |
) |
426 | (20,374 |
) |
(747 |
) |
(92,357 |
) | |||||||||||
Net income |
$ | 145,739 | $ | (661 |
) |
$ | (3,683 |
) |
$ | 1,159 | $ | 142,554 | ||||||||
Diluted earnings per share |
$ | 5.69 | $ | (0.03 |
) |
$ | (0.14 |
) |
$ | 0.05 | $ | 5.57 | ||||||||
Diluted share count |
25,598 |
Nine Months Ended September 30, 2015 |
||||||||||||||||||||||||
As reported |
Disposal gain on sale of store |
Asset impairment |
Equity investment fair value adjustment |
Transition Agreement |
Adjusted |
|||||||||||||||||||
Asset impairments |
$ | 14,391 | $ | — | $ | (2,000 | ) | $ | (12,391 | ) | $ | — | ||||||||||||
Selling, general and administrative |
610,956 | 5,919 | — | — | (18,296 | ) | 598,579 | |||||||||||||||||
Income from operations |
226,320 | (5,919 |
) |
2,000 | 12,391 | 18,296 | 253,088 | |||||||||||||||||
Other expense, net |
(1,031 | ) | — | — | 5,196 | 4,165 | ||||||||||||||||||
Income before income taxes |
$ | 196,334 | $ | (5,919 | ) | $ | 2,000 | $ | 17,587 | $ | 18,296 | 228,298 | ||||||||||||
Income tax expense |
(61,067 | ) | 2,309 | (780 | ) | (22,316 | ) | (6,507 | ) | (88,361 | ) | |||||||||||||
Net income |
$ | 135,267 | $ | (3,610 | ) | $ | 1,220 | $ | (4,729 | ) | $ | 11,789 | 139,937 | |||||||||||
Diluted earnings per share |
$ | 5.10 | $ | (0.14 | ) | $ | 0.05 | $ | (0.18 | ) | $ | 0.45 | 5.28 | |||||||||||
Diluted share count |
26,500 |