EXHIBIT 99.1

 

 

LITHIA MOTORS REPORTS ADJUSTED CONTINUING OPERATIONS EPS OF $0.60 FOR FIRST QUARTER 2012; INCREASES 2012 OUTLOOK

__________________________________________________

 

Medford, Oregon, April 25, 2012 – Lithia Motors, Inc. (NYSE: LAD) today reported 2012 first quarter adjusted income from continuing operations was $15.8 million, or $0.60 per diluted share. This compares to a 2011 first quarter adjusted income from continuing operations of $8.8 million, or $0.33 per diluted share. Unadjusted net income from continuing operations for the first quarter of 2012 was $16.8 million or $0.63 per diluted share, compared to $8.4 million or $0.31 per diluted share for 2011.

 

As shown in the attached non-GAAP reconciliation table, the 2012 first quarter adjusted income from continuing operations is reduced to exclude a benefit of $0.03 per share for the gain on the disposal of assets, an adjustment to an investment and a non-core tax attribute. The 2011 first quarter adjusted results from continuing operations exclude a charge of $0.02 per share on asset impairments and a stock based compensation tax shortfall.

 

First quarter 2012 revenue from continuing operations increased $176.0 million, or 30% to $758.9 million, compared to $582.9 million in the first quarter of 2011.

 

First Quarter Year-over-Year Operating Highlights:

• New vehicle same store sales increased 25%
• Used vehicle retail same store sales increased 18%
• Service, body and parts same store sales increased 5%
• Adjusted SG&A expense as a percentage of gross profit reduced 370 basis points, to 72.2%
• Adjusted income from continuing operations increased 79%

 

“We remain focused on consistent execution of our operational strategies,” said Bryan DeBoer, President and COO. “Our first quarter results build on our momentum from 2011. Our team continues to expand market share by understanding customers and meeting their needs. Store-specific strategies that are optimized for local market conditions focus on increasing revenue while maintaining expense discipline. This unique approach for each of our stores is the foundation of our success today and in the future.”

 

Corporate Development

On March 27, 2012, Lithia completed the sale of an 80% interest in our Nissan, Volkswagen and BMW stores in Medford, Oregon, to Dick Heimann, Vice Chairman. The remaining 20% ownership interest will be accounted for as an equity investment.

 

Balance Sheet Update

Lithia ended the first quarter with $9 million in cash, $17 million in available credit on our credit facility and $76 million in unfinanced new vehicle inventory. In total, this represents approximately $102 million in available liquidity.

 

On April 18, 2012, Lithia entered into a new five-year $650 million credit facility with 10 financial institutions. The revolving facility will provide $500 million for new vehicle inventory floor plan financing, $100 million for used vehicle inventory financing and $50 million for general corporate purposes including working capital and acquisitions, and can be expanded to $800 million in total availability.

---

 

 

Chris Holzshu, SVP and Chief Financial Officer, commented, “Our partner banks and manufacturer-affiliated finance companies have made a significant vote of confidence in Lithia. In addition to increasing the liquidity we can utilize for corporate development, this facility reduces our borrowing costs and provides for a five-year commitment. Continuing to strengthen our balance sheet through more favorable debt financing has been a key focus area.”

 

CEO Succession

As previously announced, effective May 1, 2012, Bryan DeBoer, President and COO, will be promoted to Chief Executive Officer. Sid DeBoer, Founder, Chairman and CEO, will assume the role of Executive Chairman and remain Chairman of the Board.

 

Updated Outlook for 2012

Commenting on Lithia’s outlook for the future, Sid DeBoer, Chairman and CEO, stated, “The first quarter of 2012 supports our belief that a multi-year recovery in new vehicle sales is ahead of us. Consumers have proven resilient to increases in gas prices and improved safety and technology features are creating additional demand. We still remain conservative in our estimate of how quickly demand will return to normalized levels, and anticipate a new vehicle Seasonally Adjusted Annualized Rate (SAAR) of sales between 14.0 and 14.5 million for the full year 2012. ”

 

Lithia projects its 2012 second quarter earnings within a range of $0.60 to $0.62 per diluted share. Full-year 2012 earnings are projected within a range of $2.45 to $2.53 per diluted share. Both projections are based on the following annual assumptions:

 

• Total revenues in range of $2.9 to $3.1 billion
• New vehicle same store sales increasing 16.0%
• New vehicle gross margin ranging from 7.6% to 7.8%
• Used vehicle same store sales increasing 13.0%
• Used vehicle gross margin ranging from 14.4% to 14.6%
• Service body and parts same store sales increasing 2.5%
• Service body and parts gross margin ranging from 48.0% to 48.2%
• Finance and insurance gross profit of $1,000 per unit
• Tax rate of 40%
• Average diluted shares outstanding of 26.6 million
• Capital expenditures of $43 million
• Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items

 

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 Investor Relations on www.lithia.com.

 

To listen live on our website or for replay, visit Investor Relations on www.lithia.com and click on webcasts. A playback of the conference call will be available after 1:00 p.m. ET on April 25, 2012 through May 9, 2012 by calling 877-660-6853 (Conference ID: 392149, Account: 305).

 

About Lithia

Lithia Motors, Inc. is the ninth largest automotive retailer in the United States. Lithia sells 25 brands of new and all brands of used vehicles at 83 stores, which are located 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.

 

---

 

For additional information on Lithia Motors, contact John North, VP Finance and Controller at (541) 618-5748.

 

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

Source: Lithia Motors, Inc.

 

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, which management believes are a benefit to shareholders. Forward-looking statements in this press release include our guidance regarding second quarter and full year 2012 results, the impact of gas prices and consumer demand on vehicle sales levels and the sustainability of future incremental operating leverage. 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 "expects," "anticipates," "intends," "plans," "believes," "seeks" or "will." These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation, future economic conditions and others set forth from time to time in the company's filings with the SEC. We urge you to carefully consider this information. 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 certain non-GAAP financial measures as defined under SEC rules, 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. These measures exclude certain items disclosed in the attached financial tables. Cash flows from operations were 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, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding adjustments for items not related to the Company's ongoing core business operations or other non-cash adjustments, and improves the period-to-period comparability of the Company's results from its core business operations. These presentations are not intended to provide net income, cash flows from operations, operating income, or selling, general and administrative costs in accordance with GAAP and 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
		2012		2011		(Decrease)		(Decrease)
Revenues:
New vehicle retail	$	404,288	$	300,640	$	103,648		34.5	%
Used vehicle retail		195,421		156,478		38,943		24.9
Used vehicle wholesale		34,336		29,537		4,799		16.2
Finance and insurance		25,420		19,299		6,121		31.7
Service, body and parts		86,448		73,761		12,687		17.2
Fleet and other		12,981		3,142		9,839		313.1
Total revenues		758,894		582,857		176,037		30.2
Cost of sales:
New vehicle retail		373,162		278,034		95,128		34.2
Used vehicle retail		166,507		133,494		33,013		24.7
Used vehicle wholesale		33,918		29,138		4,780		16.4
Service, body and parts		44,855		38,000		6,855		18.0
Fleet and other		12,581		2,595		9,986		384.8
Total cost of sales		631,023		481,261		149,762		31.1
Gross profit		127,871		101,596		26,275		25.9
Other asset impairments		115		382		(267)		(69.9)
SG&A expense		91,590		77,134		14,456		18.7
Depreciation and amortization		4,199		4,092		107		2.6
Income from operations		31,967		19,988		11,979		59.9
Floor plan interest expense		(2,950)		(2,462)		488		19.8
Other interest expense		(2,747)		(3,292)		(545)		(16.6)
Other income, net		499		77		422		548.1
Income from continuing operations before income taxes		26,769		14,311		12,458		87.1
Income tax expense		(9,973)		(5,923)		4,050		68.4
Income tax rate		37.3%		41.4%
Income from continuing operations	$	16,796	$	8,388	$	8,408		100.2	%
Income from discontinued operations		-		317		(317)		NM
Net income	$	16,796	$	8,705	$	8,091		92.9	%
Diluted net income per share:
Continuing operations	$	0.63	$	0.31	$	0.32		103.2	%
Discontinued operations		-		0.02		(0.02)		NM
Net income per share	$	0.63	$	0.33	$	0.30		90.9	%
Diluted shares outstanding		26,478		26,694		(216)		(0.8)	%

 

NM – not meaningful

---

Lithia Motors, Inc.

Key Performance Metrics (Unaudited)

 

 

	Three Months Ended							%
	March 31,				Increase			Increase
	2012		2011		(Decrease)			(Decrease)
Gross margin
New vehicle retail	7.7	%	7.5	%	20 bps
Used vehicle retail	14.8		14.7		10 bps
Used vehicle wholesale	1.2		1.4		(20) bps
Finance and insurance	100.0		100.0		-  bps
Service, body and parts	48.1		48.5		(40) bps
Fleet and Other	3.1		17.4		(1,430) bps
Gross profit margin	16.8		17.4		(60) bps
Unit sales
New vehicle retail	12,469		9,525		2,944			30.9		%
Used vehicle retail	11,508		9,506		2,002			21.1
Used vehicle wholesale	4,593		3,742		851			22.7
Total units sold	28,570		22,773		5,797			25.5
Average selling price
New vehicle retail	$    32,423		$    31,563		$      860		2.7		%
Used vehicle retail	16,981		16,461		520			3.2
Used vehicle wholesale	7,476		7,893		(417)			(5.3)
Average gross profit per unit
New vehicle retail	$      2,496		$      2,373		$       123			5.2		%
Used vehicle retail	2,513		2,418		95			3.9
Used vehicle wholesale	91		107		(16)			(15.0)
Finance and insurance	1,060		1,014		46			4.5
Revenue mix
New vehicle retail	53.3	%	51.6	%
Used vehicle retail	25.8		26.8
Used vehicle wholesale	4.5		5.1
Finance and insurance, net	3.3		3.3
Service, body and parts	11.4		12.7
Fleet and other	1.7		0.5
Other metrics
SG&A as a % of revenue	12.1	%	13.2	%	(110) bps
SG&A as a % of gross profit	71.6		75.9		(430) bps
Operating profit as a % of revenue	4.2		3.4		80 bps
Operating profit as a % of gross profit	25.0		19.7		530 bps
Pretax margin	3.5		2.5		100 bps

 

 

 

---

 

Lithia Motors, Inc.

Same Store Operating Highlights (Unaudited)

		Three Months Ended						%
		March 31,				Increase		Increase
		2012		2011		(Decrease)		(Decrease)
Revenues
New vehicle retail	$	371,503	$	296,679	$	74,824		25.2	%
Used vehicle retail		182,135		153,907		28,228		18.3
Used vehicle wholesale		31,961		28,735		3,226		11.2
Finance and insurance		23,696		18,463		5,233		28.3
Service, body and parts		75,931		72,525		3,406		4.7
Fleet and Other		9,763		2,910		6,853		235.5
Total revenues	$	694,989	$	573,219	$	121,770		21.2
Gross profit
New vehicle retail	$	28,364	$	22,192	$	6,172		27.8	%
Used vehicle retail		27,288		22,310		4,978		22.3
Used vehicle wholesale		380		392		(12)		(3.1)
Finance and insurance		23,696		18,463		5,233		28.3
Service, body and parts		35,563		34,137		1,426		4.2
Fleet and Other		208		154		54		35.1
Total gross profit	$	115,499	$	97,648	$	17,851		18.3
Unit sales
New vehicle retail		11,631		9,391		2,240		23.9	%
Used vehicle retail		10,806		9,350		1,456		15.6
Used vehicle wholesale		4,312		3,671		641		17.5
Total units sold		26,749		22,412		4,337		19.4
Average selling price
New vehicle retail	$	31,941	$	31,592	$	349		1.1	%
Used vehicle retail		16,855		16,461		394		2.4
Used vehicle wholesale		7,412		7,828		(416)		(5.3)
Average gross profit per unit
New vehicle retail	$	2,439	$	2,363	$	76		3.2	%
Used vehicle retail		2,525		2,386		139		5.8
Used vehicle wholesale		88		107		(19)		(17.8)
Finance and insurance		1,056		985		71		7.2

 

 

---

 

Lithia Motors, Inc.

Non-GAAP Performance Metrics (Unaudited)

	Three Months Ended
	March 31,				Increase
	2012		2011		(Decrease)
Adjusted other metrics
SG&A as a % of revenue	12.2	%	13.2	%		(100) bps
SG&A as a % of gross profit	72.2		75.9			(370) bps
Operating profit as a % of revenue	4.1		3.5			60 bps
Operating profit as a % of gross profit	24.5		20.1			440 bps
Pretax margin	3.4		2.5			90 bps

 

 

 

 

 

Lithia Motors, Inc.

Other Highlights (Unaudited)

 

	As of
	March 31,		December 31,		March 31,
	2012		2011		2011
Days Supply(1)
New vehicle inventory	61		62			60
Used vehicle inventory	48		52			47

 

(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, 2012

Current ratio

Not less than 1.20 to 1

1.40 to 1

Fixed charge coverage ratio

Not less than 1.20 to 1

1.74 to 1

Liabilities to tangible net worth ratio

Not more than 4.00 to 1

2.71 to 1

Funded debt restriction

Not more than $310 million

$205.9 million

---

 

Lithia Motors, Inc.

Revenue Mix (Unaudited)

 

 

	Three Months Ended March 31,
	2012			2011
New vehicle unit sales brand mix
Chrysler	32.2	%		28.8	%
General Motors	14.3			16.4
Toyota	12.6			14.5
Subaru	7.4			6.0
BMW, Mini	6.8			4.8
Honda, Acura	6.4			8.1
Ford	5.6			5.8
Hyundai	4.8			6.1
Nissan	3.2			4.4
Mercedes	2.6			0.9
Volkswagen, Audi	2.0			2.2
Kia	1.2			1.2
Mazda	0.6			0.5
Other	0.3			0.3
	Three Months Ended March 31,
	2012			2011
Revenue geographic mix
Texas	24.4	%		24.9	%
Oregon	21.6			16.6
California	10.3			10.5
Washington	9.0			10.7
Alaska	8.6			9.0
Montana	8.4			8.3
Idaho	5.3			6.6
Nevada	4.9			4.9
Iowa	4.5			5.4
North Dakota	2.0			2.1
New Mexico	1.0			1.0
	As of April 25, 2012
Current store count mix	# of stores		% of total
Chrysler	22		26.5		%
General Motors	12		14.5
Honda, Acura	9		10.9
Toyota	8		9.6
BMW, MINI	7		8.5
Hyundai	6		7.2
Ford	5		6.0
Nissan	3		3.6
Mercedes	3		3.6
Subaru	3		3.6
Kia	2		2.4
Other	2		2.4
Volkswagen, Audi	1		1.2

 

 

 

---

 

 

Lithia Motors, Inc.

Consolidated Balance Sheets (Unaudited)

(In thousands except per share data)

 

		March 31, 2012		December 31, 2011
Cash and cash equivalents	$	8,965		$                     20,851
Trade receivables, net		111,040		99,407
Inventories, net		559,216		506,484
Deferred income taxes		4,427		4,730
Other current assets		10,618		16,719
Total current assets	$	694,266		$                   648,191
Property and equipment, net		379,351		373,779
Goodwill		18,727		18,958
Franchise value		59,095		59,095
Deferred income taxes		30,536		29,270
Other non-current assets		16,752		16,840
Total assets	$	1,198,727		1,146,133
Floor plan notes payable	$	372,717	$	343,940
Current maturities of long-term debt		22,982		8,221
Trade payables		34,934		31,712
Accrued liabilities		77,874		72,711
Total current liabilities	$	508,507		456,584
Long-term debt		262,934		278,653
Deferred revenue		26,820		25,146
Other long-term liabilities		18,787		18,629
Total liabilities	$	817,048	$	779,012
Class A common stock		278,970		279,366
Class B common stock		449		468
Additional paid-in capital		10,483		10,918
Accumulated other comprehensive loss		(4,082)		(4,508)
Retained earnings		95,859		80,877
Total liabilities & stockholders' equity	$	1,198,727	$	1,146,133

---

Lithia Motors, Inc.

Summarized Cash Flow from Operations (Unaudited)

(In thousands)

 

		Three Months Ended
		March 31,
		2012		2011
Net income	$	16,796	$	8,705
Adjustments to reconcile net income to net cash used in operating activities:
Asset impairments		115		382
Depreciation and amortization		4,199		4,092
Depreciation and amortization       within discontinued operations		-		101
Stock-based compensation		576		491
Gain on disposal of assets		(988)		105
Deferred income taxes		(870)		(394)
Excess tax benefit from share-based payment arrangements		(749)		(21)
(Increase) decrease:
Trade receivables, net		(11,633)		(4,648)
Inventories		(62,113)		(41,769)
Other current assets		5,292		(888)
Other non-current assets		2,778		(412)
Increase (decrease):
Floor plan notes payable		(3,324)		9,905
Trade payables		1,549		3,296
Accrued liabilities		5,105		9,683
Other long-term liabilities and         deferred revenue		2,280		132
Net cash used in operating activities	$	(40,987)	$	(11,240)

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		2012		2011
As reported	$	(40,987)	$	(11,240)
Floor plan notes payable, non-trade		39,401		39,262
Adjusted	$	(1,586)	$	28,022

---

Lithia Motors, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)

(In thousands, except for per share data)

 

 

		Three Months Ended March 31, 2012
		As reported		Asset impairment and disposal gain		Equity investment		Tax attribute		Adjusted
Other asset impairments	$	115	$	(115)	$	-	$	-	$	-
Selling, general and administrative		91,590		739		-		-		92,329
Income from operations		31,967		(624)		-		-		31,343
Other income, net		499		-		(244)		-		255
Income from continuing operations before    income taxes	$	26,769	$	(624)	$	(244)	$	-	$	25,901
Income tax expense		(9,973)		244		95		(494)		(10,128)
Net income from continuing operations	$	16,796	$	(380)	$	(149)	$	(494)	$	15,773
Diluted earnings per share from continuing    operations	$	0.63	$	(0.01)	$	(0.01)	$	(0.01)	$	0.60
Diluted share count		26,478

 

 

 

		Three Months Ended March 31, 2011
		As reported		Asset impairment		Stock based comp tax shortfall		Adjusted
Other asset impairments	$	382	$	(382)	$	-	$	-
Income from operations		19,988		382		-		20,370
Income from continuing operations before    income taxes	$	14,311	$	382	$	-	$	14,693
Income tax expense		(5,923)		(153)		186		(5,890)
Net income from continuing operations	$	8,388	$	229	$	186	$	8,803
Diluted earnings per share from continuing    operations	$	0.31	$	0.01	$	0.01	$	0.33
Diluted share count		26,694

 

---