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| 8-K - FORM 8-K - LITHIA MOTORS INC | lad20170728_8k.htm |
LITHIA REPORTS RECORD SECOND QUARTER 2017 RESULTS
_____________________________________________________
DECLARES DIVIDEND OF $0.27 PER SHARE FOR SECOND QUARTER
Medford, Oregon, July 28, 2017 - Lithia Motors, Inc. (NYSE: LAD) today reported the highest second quarter revenue and earnings per share in company history, the 27th consecutive quarter of record results.
Second quarter 2017 net income per diluted share increased 5% to $2.12 from $2.01 for the second quarter of 2016. Adjusted net income per diluted share increased 16% to $2.28 from $1.96 for the same period in 2016. Second quarter 2017 net income increased 3% to $53.2 million from $51.4 million for the second quarter of 2016. Adjusted net income increased 14% to $57.2 million compared to second quarter 2016 adjusted net income of $50.2 million.
As shown in the attached non-GAAP reconciliation tables, the 2017 second quarter adjusted results exclude $0.16 per share in non-core charges related to acquisition expenses and a hail storm insurance reserve. The 2016 second quarter non-core adjustments exclude a $0.05 benefit associated with an equity investment.
Second quarter 2017 revenue increased 16% to $2.5 billion from $2.1 billion in the second quarter of 2016.
Second Quarter-over-Quarter Operating Highlights:
• | Total same store sales increased 3% |
• | New vehicle same store sales increased 1% |
• | Used vehicle retail same store sales increased 4% |
• | Service, body and parts same store sales increased 7% |
• | Same store F&I per unit increased $81 to $1,352 |
• | Adjusted SG&A expense as a percentage of gross profit was 67.0% |
For the first six months of 2017, revenues increased 14% to $4.7 billion, compared to $4.1 billion in the first six months of 2016. Net income for the first six months of 2017 was $4.13 per diluted share, compared to $3.56 per diluted share for the similar period in 2016. Adjusted net income per diluted share for the first six months of 2017 increased 15% to $4.06 from $3.52 for the first six months of 2016.
"We continue to execute our strategy of acquiring strong franchises that underperform their potential and improving earnings as they season," said Bryan DeBoer, President and CEO. "We increased quarterly revenues 16% and adjusted earnings 14% over last year, driven by our significant acquisition cadence. On a same-store basis, we grew new vehicle sales slightly, increased used vehicle sales over 4%, and grew service and parts over 7%. We recently raised $300 million in senior notes and anticipate deploying the capital for acquisition growth in the future. As we integrate acquisitions and seek to improve their earnings, we increase future cash flow and produce greenfield-like returns."
Corporate Development
As previously announced in May 2017, we completed the acquisition of the Baierl Auto Group in Pittsburgh, Pennsylvania, comprised of Toyota, Honda, Subaru, Ford, Chevrolet, Acura, Kia and Cadillac locations. On an annualized basis, the Baierl Auto Group is estimated to generate $500 million in revenue and $0.15 in earnings per share. In May, we also opened Portland Chrysler Jeep Dodge Ram, an open point awarded by Fiat Chrysler Automobiles, which is expected to generate $80 million in annualized revenue.
Balance Sheet Update
We ended the second quarter with $31 million in cash and $185 million in availability under our credit facility. Additionally, approximately $256 million of our operating real estate is currently unfinanced, which we estimate could provide $192 million in capital, for total potential liquidity of $408 million.
After the end of the second quarter, we completed a $300 million aggregate principal amount offering of 5.25% senior notes due 2025 in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended. We intend to use the net proceeds for general corporate purposes, which may include funding acquisitions, capital expenditures and debt repayment. Pending final application, all or a portion of the $295 million in net proceeds will be applied to reduce indebtedness.
Dividend Payment
Our Board of Directors has approved a dividend of $0.27 per share related to second quarter 2017 financial results. We expect to pay the dividend on August 25, 2017 to shareholders of record on August 11, 2017.
2017 Earnings Guidance
We project 2017 full year earnings of $8.35 to $8.50 per diluted share. This projection is based on the following annual assumptions:
• | Total revenue of $9.6 to $9.9 billion |
• | New vehicle same store sales increasing 1.0% |
• | New vehicle gross margin of 5.6% to 5.8% |
• | Used vehicle same store sales increasing 5.0% |
• | Used vehicle gross margin of 11.5% to 11.7% |
• | Service body and parts same store sales increasing 7.0% |
• | Service body and parts gross margin of 48.5% to 49.0% |
• | Finance and insurance same store gross profit of $1,325 to $1,350 per unit |
• | Tax rate of 39.5% |
• | Average diluted shares outstanding of 25.1 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.
Second Quarter Earnings Conference Call and Updated Presentation
The second quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the second 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 with 160 stores in 18 states. We offer 30 brands of new vehicles and all brands of used vehicles in our stores and online at over 200 websites. We sell new and used vehicles and replacement parts, provide vehicle maintenance, warranty, paint and repair services, arrange related financing, and sell service contracts, vehicle protection products and credit insurance.
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
Senior Vice President and Chief Financial 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 2017 full year earnings of $8.35 to $8.50 per diluted share and all projections set forth under the headings "2017 Earnings Guidance"; |
• | Our ability to improve store performance; |
• | Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future, and our ability to improve earnings and achieve returns on investments; |
• | Anticipated revenues from acquired and open point 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 revenue and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, adjusted pre-tax margin, EBITDA, adjusted EBITDA, leveraged cash flow and adjusted total debt. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures.
Lithia Motors, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Three months ended | % | |||||||||||
June 30, | Increase | Increase | ||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||
Revenues: | ||||||||||||
New vehicle retail | $ | 1,384,055 | $ | 1,209,037 | $ | 175,018 | 14.5 | % | ||||
Used vehicle retail | 633,635 | 553,647 | 79,988 | 14.4 | ||||||||
Used vehicle wholesale | 69,512 | 66,714 | 2,798 | 4.2 | ||||||||
Finance and insurance | 94,851 | 81,043 | 13,808 | 17.0 | ||||||||
Service, body and parts | 246,005 | 202,265 | 43,740 | 21.6 | ||||||||
Fleet and other | 38,978 | 20,633 | 18,345 | 88.9 | ||||||||
Total revenues | 2,467,036 | 2,133,339 | 333,697 | 15.6 | % | |||||||
Cost of sales: | ||||||||||||
New vehicle retail | 1,303,516 | 1,136,175 | 167,341 | 14.7 | ||||||||
Used vehicle retail | 559,129 | 486,422 | 72,707 | 14.9 | ||||||||
Used vehicle wholesale | 67,800 | 65,228 | 2,572 | 3.9 | ||||||||
Service, body and parts | 123,525 | 103,666 | 19,859 | 19.2 | ||||||||
Fleet and other | 37,795 | 19,812 | 17,983 | 90.8 | ||||||||
Total cost of sales | 2,091,765 | 1,811,303 | 280,462 | 15.5 | ||||||||
Gross profit | 375,271 | 322,036 | 53,235 | 16.5 | % | |||||||
Asset impairments | — | 3,498 | (3,498 | ) | (100.0 | ) | ||||||
SG&A expense | 257,290 | 215,526 | 41,764 | 19.4 | ||||||||
Depreciation and amortization | 14,031 | 12,503 | 1,528 | 12.2 | ||||||||
Income from operations | 103,950 | 90,509 | 13,441 | 14.9 | % | |||||||
Floor plan interest expense | (9,332 | ) | (6,209 | ) | 3,123 | 50.3 | ||||||
Other interest expense | (7,169 | ) | (5,502 | ) | 1,667 | 30.3 | ||||||
Other (expense) income, net | 387 | (1,495 | ) | (1,882 | ) | NM | ||||||
Income before income taxes | 87,836 | 77,303 | 10,533 | 13.6 | % | |||||||
Income tax expense | (34,636 | ) | (25,875 | ) | 8,761 | 33.9 | ||||||
Income tax rate | 39.4 | % | 33.5 | % | ||||||||
Net income | $ | 53,200 | $ | 51,428 | $ | 1,772 | 3.4 | % | ||||
Diluted net income per share: | ||||||||||||
Net income per share | $ | 2.12 | $ | 2.01 | $ | 0.11 | 5.5 | % | ||||
Diluted shares outstanding | 25,106 | 25,534 | (428 | ) | (1.7 | )% | ||||||
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Three months ended | % | |||||||||||||
June 30, | Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||||
Gross margin | ||||||||||||||
New vehicle retail | 5.8 | % | 6.0 | % | (20 | )bps | ||||||||
Used vehicle retail | 11.8 | 12.1 | (30 | ) | ||||||||||
Used vehicle wholesale | 2.5 | 2.2 | 30 | |||||||||||
Finance and insurance | 100.0 | 100.0 | — | |||||||||||
Service, body and parts | 49.8 | 48.7 | 110 | |||||||||||
Fleet and other | 3.0 | 4.0 | (100 | ) | ||||||||||
Gross profit margin | 15.2 | 15.1 | 10 | |||||||||||
Unit sales | ||||||||||||||
New vehicle retail | 40,876 | 36,059 | 4,817 | 13.4 | % | |||||||||
Used vehicle retail | 32,171 | 27,716 | 4,455 | 16.1 | ||||||||||
Total retail units sold | 73,047 | 63,775 | 9,272 | 14.5 | ||||||||||
Used vehicle wholesale | 10,906 | 9,774 | 1,132 | 11.6 | ||||||||||
Average selling price | ||||||||||||||
New vehicle retail | $ | 33,860 | $ | 33,529 | $ | 331 | 1.0 | % | ||||||
Used vehicle retail | 19,696 | 19,976 | (280 | ) | (1.4 | ) | ||||||||
Used vehicle wholesale | 6,374 | 6,826 | (452 | ) | (6.6 | ) | ||||||||
Average gross profit per unit | ||||||||||||||
New vehicle retail | $ | 1,970 | $ | 2,021 | $ | (51 | ) | (2.5 | )% | |||||
Used vehicle retail | 2,316 | 2,425 | (109 | ) | (4.5 | ) | ||||||||
Used vehicle wholesale | 157 | 152 | 5 | 3.3 | ||||||||||
Finance and insurance | 1,298 | 1,271 | 27 | 2.1 | ||||||||||
Total vehicle(1) | 3,444 | 3,491 | (47 | ) | (1.3 | ) | ||||||||
Revenue mix | ||||||||||||||
New vehicle retail | 56.1 | % | 56.7 | % | ||||||||||
Used vehicle retail | 25.7 | 26.0 | ||||||||||||
Used vehicle wholesale | 2.8 | 3.1 | ||||||||||||
Finance and insurance, net | 3.8 | 3.8 | ||||||||||||
Service, body and parts | 10.0 | 9.5 | ||||||||||||
Fleet and other | 1.6 | 0.9 | ||||||||||||
Adjusted | As reported | |||||||||||
Three months ended June 30, | Three months ended June 30, | |||||||||||
Other metrics | 2017 | 2016 | 2017 | 2016 | ||||||||
SG&A as a % of revenue | 10.2 | % | 10.1 | % | 10.4 | % | 10.1 | % | ||||
SG&A as a % of gross profit | 67.0 | 66.9 | 68.6 | 66.9 | ||||||||
Operating profit as a % of revenue | 4.5 | 4.4 | 4.2 | 4.2 | ||||||||
Operating profit as a % of gross profit | 29.3 | 29.2 | 27.7 | 28.1 | ||||||||
Pretax margin | 3.8 | 3.9 | 3.6 | 3.6 | ||||||||
Net profit margin | 2.3 | 2.4 | 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 June 30, | % | |||||||||||
Increase | Increase | |||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||
Revenues | ||||||||||||
New vehicle retail | $ | 1,217,563 | $ | 1,208,561 | $ | 9,002 | 0.7 | % | ||||
Used vehicle retail | 575,410 | 552,634 | 22,776 | 4.1 | ||||||||
Used vehicle wholesale | 57,789 | 66,583 | (8,794 | ) | (13.2 | ) | ||||||
Finance and insurance | 87,653 | 80,988 | 6,665 | 8.2 | ||||||||
Service, body and parts | 216,112 | 201,863 | 14,249 | 7.1 | ||||||||
Fleet and other | 32,818 | 20,633 | 12,185 | 59.1 | ||||||||
Total revenues | $ | 2,187,345 | $ | 2,131,262 | $ | 56,083 | 2.6 | |||||
Gross profit | ||||||||||||
New vehicle retail | $ | 71,492 | $ | 72,759 | $ | (1,267 | ) | (1.7 | )% | |||
Used vehicle retail | 69,273 | 67,121 | 2,152 | 3.2 | ||||||||
Used vehicle wholesale | 1,377 | 1,528 | (151 | ) | (9.9 | ) | ||||||
Finance and insurance | 87,653 | 80,988 | 6,665 | 8.2 | ||||||||
Service, body and parts | 107,604 | 98,437 | 9,167 | 9.3 | ||||||||
Fleet and other | 951 | 822 | 129 | 15.7 | ||||||||
Total gross profit | $ | 338,350 | $ | 321,655 | $ | 16,695 | 5.2 | |||||
Gross margin | ||||||||||||
New vehicle retail | 5.9 | % | 6.0 | % | (10 | )bps | ||||||
Used vehicle retail | 12.0 | 12.1 | (10 | ) | ||||||||
Used vehicle wholesale | 2.4 | 2.3 | 10 | |||||||||
Finance and insurance | 100.0 | 100.0 | — | |||||||||
Service, body and parts | 49.8 | 48.8 | 100 | |||||||||
Fleet and other | 2.9 | 4.0 | (110 | ) | ||||||||
Gross profit margin | 15.5 | 15.1 | 40 | |||||||||
Unit sales | ||||||||||||
New vehicle retail | 35,893 | 36,042 | (149 | ) | (0.4 | )% | ||||||
Used vehicle retail | 28,937 | 27,657 | 1,280 | 4.6 | ||||||||
Total retail units sold | 64,830 | 63,699 | 1,131 | 1.8 | ||||||||
Used vehicle wholesale | 8,912 | 9,754 | (842 | ) | (8.6 | ) | ||||||
Average selling price | ||||||||||||
New vehicle retail | $ | 33,922 | $ | 33,532 | $ | 390 | 1.2 | % | ||||
Used vehicle retail | 19,885 | 19,982 | (97 | ) | (0.5 | ) | ||||||
Used vehicle wholesale | 6,484 | 6,826 | (342 | ) | (5.0 | ) | ||||||
Average gross profit per unit | ||||||||||||
New vehicle retail | $ | 1,992 | $ | 2,019 | $ | (27 | ) | (1.3 | )% | |||
Used vehicle retail | 2,394 | 2,427 | (33 | ) | (1.4 | ) | ||||||
Used vehicle wholesale | 155 | 157 | (2 | ) | (1.3 | ) | ||||||
Finance and insurance | 1,352 | 1,271 | 81 | 6.4 | ||||||||
Total vehicle(1) | 3,545 | 3,491 | 54 | 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.
Consolidated Statements of Operations (Unaudited)
(In thousands except per share data)
Six months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
Revenues: | |||||||||||||
New vehicle retail | $ | 2,594,359 | $ | 2,305,092 | $ | 289,267 | 12.5 | % | |||||
Used vehicle retail | 1,235,858 | 1,086,373 | 149,485 | 13.8 | |||||||||
Used vehicle wholesale | 141,015 | 131,860 | 9,155 | 6.9 | |||||||||
Finance and insurance | 181,628 | 158,681 | 22,947 | 14.5 | |||||||||
Service, body and parts | 478,579 | 398,940 | 79,639 | 20.0 | |||||||||
Fleet and other | 71,698 | 35,254 | 36,444 | 103.4 | |||||||||
Total revenues | 4,703,137 | 4,116,200 | 586,937 | 14.3 | % | ||||||||
Cost of sales: | |||||||||||||
New vehicle retail | 2,443,702 | 2,165,464 | 278,238 | 12.8 | |||||||||
Used vehicle retail | 1,092,569 | 954,871 | 137,698 | 14.4 | |||||||||
Used vehicle wholesale | 137,786 | 128,544 | 9,242 | 7.2 | |||||||||
Service, body and parts | 242,905 | 204,222 | 38,683 | 18.9 | |||||||||
Fleet and other | 69,252 | 33,881 | 35,371 | 104.4 | |||||||||
Total cost of sales | 3,986,214 | 3,486,982 | 499,232 | 14.3 | |||||||||
Gross profit | 716,923 | 629,218 | 87,705 | 13.9 | |||||||||
Asset impairments | — | 6,996 | (6,996 | ) | (100.0 | ) | |||||||
SG&A expense | 500,062 | 434,632 | 65,430 | 15.1 | |||||||||
Depreciation and amortization | 26,770 | 24,166 | 2,604 | 10.8 | |||||||||
Income from operations | 190,091 | 163,424 | 26,667 | 16.3 | |||||||||
Floor plan interest expense | (17,384 | ) | (12,118 | ) | 5,266 | 43.5 | |||||||
Other interest expense | (13,840 | ) | (10,961 | ) | 2,879 | 26.3 | |||||||
Other income (expense), net | 10,232 | (3,021 | ) | (13,253 | ) | NM | |||||||
Income before income taxes | 169,099 | 137,324 | 31,775 | 23.1 | |||||||||
Income tax expense | (65,172 | ) | (45,626 | ) | 19,546 | 42.8 | |||||||
Income tax rate | 38.5 | % | 33.2 | % | |||||||||
Net income | $ | 103,927 | $ | 91,698 | $ | 12,229 | 13.3 | % | |||||
Diluted net income per share: | |||||||||||||
Net income per share | $ | 4.13 | $ | 3.56 | $ | 0.57 | 16.0 | % | |||||
Diluted shares outstanding | 25,177 | 25,754 | (577 | ) | (2.2 | )% | |||||||
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics (Unaudited)
Six months ended June 30, | % | ||||||||||||||
Increase | Increase | ||||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||||
Gross margin | |||||||||||||||
New vehicle retail | 5.8 | % | 6.1 | % | (30 | )bps | |||||||||
Used vehicle retail | 11.6 | 12.1 | (50 | ) | |||||||||||
Used vehicle wholesale | 2.3 | 2.5 | (20 | ) | |||||||||||
Finance and insurance | 100.0 | 100.0 | — | ||||||||||||
Service, body and parts | 49.2 | 48.8 | 40 | ||||||||||||
Fleet and other | 3.4 | 3.9 | (50 | ) | |||||||||||
Gross profit margin | 15.2 | 15.3 | (10 | ) | |||||||||||
Unit sales | |||||||||||||||
New vehicle retail | 76,492 | 68,808 | 7,684 | 11.2 | % | ||||||||||
Used vehicle retail | 62,954 | 55,147 | 7,807 | 14.2 | |||||||||||
Total retail units sold | 139,446 | 123,955 | 15,491 | 12.5 | |||||||||||
Used vehicle wholesale | 21,746 | 19,287 | 2,459 | 12.7 | |||||||||||
Average selling price | |||||||||||||||
New vehicle retail | $ | 33,917 | $ | 33,500 | $ | 417 | 1.2 | % | |||||||
Used vehicle retail | 19,631 | 19,700 | (69 | ) | (0.4 | ) | |||||||||
Used vehicle wholesale | 6,485 | 6,837 | (352 | ) | (5.1 | ) | |||||||||
Average gross profit per unit | |||||||||||||||
New vehicle retail | $ | 1,970 | $ | 2,029 | $ | (59 | ) | (2.9 | )% | ||||||
Used vehicle retail | 2,276 | 2,385 | (109 | ) | (4.6 | ) | |||||||||
Used vehicle wholesale | 148 | 172 | (24 | ) | (14.0 | ) | |||||||||
Finance and insurance | 1,302 | 1,280 | 22 | 1.7 | |||||||||||
Total vehicle(1) | 3,434 | 3,494 | (60 | ) | (1.7 | ) | |||||||||
Revenue mix | |||||||||||||||
New vehicle retail | 55.2 | % | 56.0 | % | |||||||||||
Used vehicle retail | 26.3 | 26.4 | |||||||||||||
Used vehicle wholesale | 3.0 | 3.2 | |||||||||||||
Finance and insurance, net | 3.9 | 3.9 | |||||||||||||
Service, body and parts | 10.2 | 9.7 | |||||||||||||
Fleet and other | 1.4 | 0.8 | |||||||||||||
Adjusted | As reported | |||||||||||
Six Months Ended June 30, | Six months ended June 30, | |||||||||||
Other metrics | 2017 | 2016 | 2017 | 2016 | ||||||||
SG&A as a % of revenue | 10.5 | % | 10.5 | % | 10.6 | % | 10.6 | % | ||||
SG&A as a % of gross profit | 68.9 | 68.9 | 69.8 | 69.1 | ||||||||
Operating profit as a % of revenue | 4.2 | 4.2 | 4.0 | 4.0 | ||||||||
Operating profit as a % of gross profit | 27.4 | 27.2 | 26.5 | 26.0 | ||||||||
Pretax margin | 3.5 | 3.6 | 3.6 | 3.3 | ||||||||
Net profit margin | 2.2 | 2.2 | 2.2 | 2.2 | ||||||||
(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)
Six months ended June 30, | % | |||||||||||||||
Increase | Increase | |||||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | |||||||||||||
Revenues | ||||||||||||||||
New vehicle retail | $ | 2,314,266 | $ | 2,302,695 | $ | 11,571 | 0.5 | % | ||||||||
Used vehicle retail | 1,137,210 | 1,083,257 | 53,953 | 5.0 | ||||||||||||
Used vehicle wholesale | 120,921 | 131,596 | (10,675 | ) | (8.1 | ) | ||||||||||
Finance and insurance | 169,784 | 158,446 | 11,338 | 7.2 | ||||||||||||
Service, body and parts | 426,953 | 397,751 | 29,202 | 7.3 | ||||||||||||
Fleet and other | 61,565 | 35,253 | 26,312 | 74.6 | ||||||||||||
Total revenues | $ | 4,230,699 | $ | 4,108,998 | $ | 121,701 | 3.0 | |||||||||
Gross profit | ||||||||||||||||
New vehicle retail | $ | 135,303 | $ | 139,512 | $ | (4,209 | ) | (3.0 | )% | |||||||
Used vehicle retail | 134,190 | 131,217 | 2,973 | 2.3 | ||||||||||||
Used vehicle wholesale | 2,803 | 3,380 | (577 | ) | (17.1 | ) | ||||||||||
Finance and insurance | 169,784 | 158,446 | 11,338 | 7.2 | ||||||||||||
Service, body and parts | 210,754 | 194,160 | 16,594 | 8.5 | ||||||||||||
Fleet and other | 2,056 | 1,371 | 685 | 50.0 | ||||||||||||
Total gross profit | $ | 654,890 | $ | 628,086 | $ | 26,804 | 4.3 | |||||||||
Gross margin | ||||||||||||||||
New vehicle retail | 5.8 | % | 6.1 | % | (30 | )bps | ||||||||||
Used vehicle retail | 11.8 | 12.1 | (30 | ) | ||||||||||||
Used vehicle wholesale | 2.3 | 2.6 | (30 | ) | ||||||||||||
Finance and insurance | 100.0 | 100.0 | — | |||||||||||||
Service, body and parts | 49.4 | 48.8 | 60 | |||||||||||||
Fleet and other | 3.3 | 3.9 | (60 | ) | ||||||||||||
Total gross profit | 15.5 | 15.3 | 20 | |||||||||||||
Unit sales | ||||||||||||||||
New vehicle retail | 68,108 | 68,729 | (621 | ) | (0.9 | )% | ||||||||||
Used vehicle retail | 57,438 | 54,977 | 2,461 | 4.5 | ||||||||||||
Total retail units sold | 125,546 | 123,706 | 1,840 | 1.5 | ||||||||||||
Used vehicle wholesale | 18,506 | 19,242 | (736 | ) | (3.8 | ) | ||||||||||
Average selling price | ||||||||||||||||
New vehicle retail | $ | 33,979 | $ | 33,504 | $ | 475 | 1.4 | % | ||||||||
Used vehicle retail | 19,799 | 19,704 | 95 | 0.5 | ||||||||||||
Used vehicle wholesale | 6,534 | 6,839 | (305 | ) | (4.5 | ) | ||||||||||
Average gross profit per unit | ||||||||||||||||
New vehicle retail | $ | 1,987 | $ | 2,030 | $ | (43 | ) | (2.1 | )% | |||||||
Used vehicle retail | 2,336 | 2,387 | (51 | ) | (2.1 | ) | ||||||||||
Used vehicle wholesale | 151 | 176 | (25 | ) | (14.2 | ) | ||||||||||
Finance and insurance | 1,352 | 1,281 | 71 | 5.5 | ||||||||||||
Total vehicle(1) | 3,521 | 3,497 | 24 | 0.7 | ||||||||||||
(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 June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
Revenues | |||||||||||||
Domestic | $ | 954,949 | $ | 830,410 | $ | 124,539 | 15.0 | % | |||||
Import | 1,101,314 | 930,317 | 170,997 | 18.4 | |||||||||
Luxury | 413,088 | 371,866 | 41,222 | 11.1 | |||||||||
Total segment revenues | 2,469,351 | 2,132,593 | 336,758 | 15.8 | |||||||||
Corporate and other | (2,315 | ) | 746 | (3,061 | ) | NM | |||||||
Total revenues | $ | 2,467,036 | $ | 2,133,339 | $ | 333,697 | 15.6 | ||||||
Segment Income(1) | |||||||||||||
Domestic | $ | 27,857 | $ | 28,999 | $ | (1,142 | ) | (3.9 | )% | ||||
Import | 32,465 | 29,680 | 2,785 | 9.4 | |||||||||
Luxury | 10,088 | 9,730 | 358 | 3.7 | |||||||||
Total segment income | 70,410 | 68,409 | 2,001 | 2.9 | |||||||||
Corporate and other | 38,239 | 28,394 | 9,845 | 34.7 | |||||||||
Depreciation and amortization | (14,031 | ) | (12,503 | ) | 1,528 | 12.2 | |||||||
Other interest expense | (7,169 | ) | (5,502 | ) | 1,667 | 30.3 | |||||||
Other (expense) income, net | 387 | (1,495 | ) | (1,882 | ) | NM | |||||||
Income before income taxes | $ | 87,836 | $ | 77,303 | $ | 10,533 | 13.6 | ||||||
(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 | 13,256 | 11,712 | 1,544 | 13.2 | % | ||||||||
Import | 23,287 | 20,080 | 3,207 | 16.0 | |||||||||
Luxury | 4,423 | 4,317 | 106 | 2.5 | |||||||||
Total | 40,966 | 36,109 | 4,857 | 13.5 | |||||||||
Allocated to management | (90 | ) | (50 | ) | (40 | ) | NM | ||||||
Total retail new vehicle unit sales | 40,876 | 36,059 | 4,817 | 13.4 | |||||||||
NM - not meaningful
Lithia Motors, Inc.
Segment Operating Highlights (Unaudited)
Six months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
Revenues | |||||||||||||
Domestic | $ | 1,854,707 | $ | 1,602,312 | $ | 252,395 | 15.8 | % | |||||
Import | 2,072,787 | 1,793,060 | 279,727 | 15.6 | |||||||||
Luxury | 776,891 | 718,679 | 58,212 | 8.1 | |||||||||
Total segment revenues | 4,704,385 | 4,114,051 | 590,334 | 14.3 | |||||||||
Corporate and other | (1,248 | ) | 2,149 | (3,397 | ) | NM | |||||||
Total revenues | $ | 4,703,137 | $ | 4,116,200 | $ | 586,937 | 14.3 | ||||||
Segment Income(1) | |||||||||||||
Domestic | $ | 53,299 | $ | 52,129 | $ | 1,170 | 2.2 | % | |||||
Import | 54,637 | 53,943 | 694 | 1.3 | |||||||||
Luxury | 14,801 | 14,312 | 489 | 3.4 | |||||||||
Total segment income | 122,737 | 120,384 | 2,353 | 2.0 | |||||||||
Corporate and other | 76,740 | 55,088 | 21,652 | 39.3 | |||||||||
Depreciation and amortization | (26,770 | ) | (24,166 | ) | 2,604 | 10.8 | |||||||
Other interest expense | (13,840 | ) | (10,961 | ) | 2,879 | 26.3 | |||||||
Other income (expense), net | 10,232 | (3,021 | ) | (13,253 | ) | NM | |||||||
Income before income taxes | $ | 169,099 | 137,324 | $ | 31,775 | 23.1 | |||||||
(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 (expense), net.
Retail New Vehicle Unit Sales | |||||||||||||
Domestic | 25,496 | 22,441 | 3,055 | 13.6 | % | ||||||||
Import | 43,122 | 38,114 | 5,008 | 13.1 | |||||||||
Luxury | 8,039 | 8,380 | (341 | ) | (4.1 | ) | |||||||
Total | 76,657 | 68,935 | 7,722 | 11.2 | |||||||||
Allocated to management | (165 | ) | (127 | ) | (38 | ) | NM | ||||||
Total retail new vehicle unit sales | 76,492 | 68,808 | 7,684 | 11.2 | |||||||||
NM - not meaningful
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of | |||||
June 30, | December 31, | June 30, | |||
2017 | 2016 | 2016 | |||
Days Supply(1) | |||||
New vehicle inventory | 75 | 68 | 77 | ||
Used vehicle inventory | 60 | 56 | 57 | ||
(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 June 30, 2017 | |||
Current ratio | Not less than 1.10 to 1 | 1.28 | to 1 | |
Fixed charge coverage ratio | Not less than 1.20 to 1 | 2.96 | to 1 | |
Leverage ratio | Not more than 5.00 to 1 | 2.02 | to 1 | |
Funded debt restriction | Not more than $900 million | $518.8 million | ||
Lithia Motors, Inc.
Other Highlights (Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
New vehicle unit sales brand mix | ||||||||||||
Honda, Acura | 23.3 | % | 23.8 | % | 23.1 | % | 23.5 | % | ||||
Toyota, Lexus | 19.1 | 19.8 | 18.4 | 19.7 | ||||||||
Chrysler, Fiat | 17.3 | 19.1 | 17.8 | 19.0 | ||||||||
General Motors | 8.3 | 8.7 | 8.6 | 8.8 | ||||||||
Subaru | 8.2 | 6.8 | 8.4 | 7.0 | ||||||||
Ford | 6.8 | 4.6 | 7.0 | 4.9 | ||||||||
Nissan | 3.9 | 3.8 | 4.1 | 3.8 | ||||||||
BMW, Mini | 4.1 | 5.3 | 4.0 | 5.4 | ||||||||
Volkswagen, Audi | 3.7 | 2.9 | 3.6 | 2.8 | ||||||||
Hyundai | 2.3 | 2.1 | 2.2 | 2.0 | ||||||||
Kia | 1.7 | 1.3 | 1.5 | 1.3 | ||||||||
Mercedes Benz | 1.1 | 1.3 | 1.0 | 1.3 | ||||||||
Other | 0.2 | 0.5 | 0.3 | 0.5 | ||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Revenue geographic mix | ||||||||||||
California | 21.7 | % | 22.5 | % | 22.3 | % | 22.7 | % | ||||
Oregon | 14.8 | 16.7 | 15.3 | 16.7 | ||||||||
New Jersey | 13.6 | 14.4 | 13.0 | 14.2 | ||||||||
Texas | 11.1 | 13.7 | 11.5 | 13.8 | ||||||||
New York | 7.3 | 3.0 | 7.4 | 3.0 | ||||||||
Montana | 5.6 | 6.4 | 5.7 | 6.4 | ||||||||
Washington | 4.6 | 5.2 | 4.7 | 5.3 | ||||||||
Alaska | 4.3 | 5.1 | 4.2 | 4.9 | ||||||||
Nevada | 2.7 | 2.9 | 2.8 | 3.1 | ||||||||
Idaho | 2.7 | 2.7 | 2.7 | 2.7 | ||||||||
Hawaii | 2.4 | 2.0 | 2.6 | 2.0 | ||||||||
Iowa | 2.4 | 2.7 | 2.3 | 2.6 | ||||||||
Pennsylvania | 2.8 | — | 1.5 | — | ||||||||
North Dakota | 1.2 | 1.4 | 1.2 | 1.3 | ||||||||
Vermont | 0.9 | — | 0.9 | — | ||||||||
New Mexico | 0.7 | 0.8 | 0.8 | 0.9 | ||||||||
Massachusetts | 0.7 | 0.5 | 0.6 | 0.4 | ||||||||
Wyoming | 0.5 | — | 0.5 | — | ||||||||
As of July 28, 2017 | ||||||
Current store count mix | # of stores | % of total | ||||
Chrysler, Fiat | 29 | 18.1 | % | |||
Honda, Acura | 24 | 15.0 | ||||
Toyota, Lexus | 22 | 13.8 | ||||
General Motors | 19 | 11.9 | ||||
Ford | 13 | 8.1 | ||||
BMW, Mini | 11 | 6.9 | ||||
Volkswagen, Audi | 10 | 6.3 | ||||
Subaru | 10 | 6.3 | ||||
Nissan | 7 | 4.4 | ||||
Hyundai | 5 | 3.1 | ||||
Kia | 4 | 2.5 | ||||
Mercedes Benz | 4 | 2.5 | ||||
Other | 2 | 1.1 | ||||
Lithia Motors, Inc.
Consolidated Balance Sheets (Unaudited)
(In thousands)
June 30, 2017 | December 31, 2016 | |||||
Cash and cash equivalents | $ | 31,177 | $ | 50,282 | ||
Trade receivables, net | 359,010 | 417,714 | ||||
Inventories, net | 1,878,780 | 1,772,587 | ||||
Other current assets | 54,801 | 46,611 | ||||
Total current assets | $ | 2,323,768 | $ | 2,287,194 | ||
Property and equipment, net | 1,067,104 | 1,006,130 | ||||
Goodwill | 259,399 | 259,399 | ||||
Franchise value | 184,763 | 184,268 | ||||
Other non-current assets | 141,461 | 107,159 | ||||
Total assets | $ | 3,976,495 | $ | 3,844,150 | ||
Floor plan notes payable | $ | 99,932 | $ | 94,602 | ||
Floor plan notes payable: non trade | 1,534,715 | 1,506,895 | ||||
Current maturities of long-term debt | 20,901 | 20,965 | ||||
Trade payables | 89,795 | 88,423 | ||||
Accrued liabilities | 212,309 | 211,109 | ||||
Total current liabilities | $ | 1,957,652 | $ | 1,921,994 | ||
Long-term debt | 777,814 | 769,916 | ||||
Deferred revenue | 92,335 | 81,929 | ||||
Deferred income taxes | 57,919 | 59,075 | ||||
Other long-term liabilities | 102,948 | 100,460 | ||||
Total liabilities | $ | 2,988,668 | $ | 2,933,374 | ||
Class A common stock | 158,527 | 165,512 | ||||
Class B common stock | 157 | 219 | ||||
Additional paid-in capital | 34,280 | 41,225 | ||||
Retained earnings | 794,863 | 703,820 | ||||
Total liabilities & stockholders' equity | $ | 3,976,495 | $ | 3,844,150 | ||
Lithia Motors, Inc.
Summarized Cash Flow from Operations (Unaudited)
(In thousands)
Six Months Ended June 30, | ||||||
2017 | 2016 | |||||
Net income | $ | 103,927 | $ | 91,698 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Asset impairments | — | 6,996 | ||||
Depreciation and amortization | 26,770 | 24,166 | ||||
Stock-based compensation | 5,432 | 6,018 | ||||
(Gain) loss on disposal of assets | 256 | (4,512 | ) | |||
Gain on sale of franchise | — | (1,102 | ) | |||
Deferred income taxes | (1,156 | ) | 5,704 | |||
(Increase) decrease: | ||||||
Trade receivables, net | 70,908 | 6,564 | ||||
Inventories | (36,078 | ) | (114,052 | ) | ||
Other assets | 479 | 5,652 | ||||
Increase (decrease): | ||||||
Floor plan notes payable, net | 1,330 | 8,685 | ||||
Trade payables | 414 | 6,678 | ||||
Accrued liabilities | (3,684 | ) | 17,595 | |||
Other long-term liabilities and deferred revenue | 9,957 | 10,668 | ||||
Net cash provided by operating activities | $ | 178,555 | $ | 70,758 | ||
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In thousands)
Six Months Ended June 30, | ||||||
Net cash provided by operating activities | 2017 | 2016 | ||||
As reported | $ | 178,555 | $ | 70,758 | ||
Floor plan notes payable, non-trade, net | (32,124 | ) | 58,622 | |||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory | — | (4,854 | ) | |||
Adjusted | $ | 146,431 | $ | 124,526 | ||
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Three Months Ended June 30, 2017 | ||||||||||||||||
As reported | Reserve adjustments | Acquisition expenses | Adjusted | |||||||||||||
Selling, general and administrative | $ | 257,290 | $ | (3,878 | ) | $ | (2,137 | ) | $ | 251,275 | ||||||
Income from operations | 103,950 | 3,878 | 2,137 | 109,965 | ||||||||||||
Other (expense) income, net | 387 | — | — | 387 | ||||||||||||
Income before income taxes | $ | 87,836 | $ | 3,878 | $ | 2,137 | $ | 93,851 | ||||||||
Income tax expense | (34,636 | ) | (1,231 | ) | (821 | ) | (36,688 | ) | ||||||||
Net income | $ | 53,200 | $ | 2,647 | $ | 1,316 | $ | 57,163 | ||||||||
Diluted earnings per share | $ | 2.12 | $ | 0.11 | $ | 0.05 | $ | 2.28 | ||||||||
Diluted share count | 25,106 | |||||||||||||||
Three Months Ended June 30, 2016 | ||||||||||||
As reported | Equity investment fair value adjustment | Adjusted | ||||||||||
Asset impairments | $ | 3,498 | $ | (3,498 | ) | $ | — | |||||
Selling, general and administrative | 215,526 | — | 215,526 | |||||||||
Income from operations | 90,509 | 3,498 | 94,007 | |||||||||
Other (expense) income, net | (1,495 | ) | 2,065 | 570 | ||||||||
Income before income taxes | $ | 77,303 | $ | 5,563 | $ | 82,866 | ||||||
Income tax expense | (25,875 | ) | (6,837 | ) | (32,712 | ) | ||||||
Net income | $ | 51,428 | $ | (1,274 | ) | $ | 50,154 | |||||
Diluted earnings per share | $ | 2.01 | $ | (0.05 | ) | $ | 1.96 | |||||
Diluted share count | 25,534 | |||||||||||
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In thousands, except for per share data)
Six Months Ended June 30, 2017 | ||||||||||||||||||||
As reported | Reserve adjustments | Acquisition expenses | OEM settlement | Adjusted | ||||||||||||||||
Selling, general and administrative | $ | 500,062 | $ | (3,878 | ) | $ | (2,137 | ) | $ | — | $ | 494,047 | ||||||||
Income from operations | 190,091 | 3,878 | 2,137 | — | 196,106 | |||||||||||||||
Other income (expense), net | 10,232 | — | — | (9,111 | ) | 1,121 | ||||||||||||||
Income before income taxes | $ | 169,099 | 3,878 | $ | 2,137 | $ | (9,111 | ) | $ | 166,003 | ||||||||||
Income tax expense | (65,172 | ) | (1,231 | ) | (821 | ) | 3,423 | (63,801 | ) | |||||||||||
Net income | $ | 103,927 | 2,647 | $ | 1,316 | $ | (5,688 | ) | $ | 102,202 | ||||||||||
Diluted earnings per share | $ | 4.13 | 0.11 | $ | 0.05 | $ | (0.23 | ) | $ | 4.06 | ||||||||||
Diluted share count | 25,177 | |||||||||||||||||||
Six Months Ended June 30, 2016 | ||||||||||||||||||||
As reported | Disposal gain on sale of store | Equity investment fair value adjustment | Legal reserve | Adjusted | ||||||||||||||||
Asset impairments | $ | 6,996 | $ | — | $ | (6,996 | ) | $ | — | $ | — | |||||||||
Selling, general and administrative | 434,632 | 1,087 | — | (1,906 | ) | 433,813 | ||||||||||||||
Income from operations | 163,424 | (1,087 | ) | 6,996 | 1,906 | 171,239 | ||||||||||||||
Other income (expense), net | (3,021 | ) | — | 4,131 | — | 1,110 | ||||||||||||||
Income before income taxes | $ | 137,324 | $ | (1,087 | ) | $ | 11,127 | $ | 1,906 | $ | 149,270 | |||||||||
Income tax expense | (45,626 | ) | 426 | (12,782 | ) | (747 | ) | (58,729 | ) | |||||||||||
Net income | $ | 91,698 | $ | (661 | ) | $ | (1,655 | ) | $ | 1,159 | $ | 90,541 | ||||||||
Diluted earnings per share | $ | 3.56 | $ | (0.03 | ) | $ | (0.06 | ) | $ | 0.05 | $ | 3.52 | ||||||||
Diluted share count | 25,754 | |||||||||||||||||||
Lithia Motors, Inc.
Adjusted EBITDA and Leveraged Free Cash Flow (Unaudited)
Three months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
EBITDA and Adjusted EBITDA | |||||||||||||
Net income | $ | 53,200 | $ | 51,428 | $ | 1,772 | 3.4 | % | |||||
Other interest expense | 7,169 | 5,502 | 1,667 | 30.3 | |||||||||
Income tax expense | 34,636 | 25,875 | 8,761 | 33.9 | |||||||||
Depreciation and amortization | 14,031 | 12,503 | 1,528 | 12.2 | |||||||||
EBITDA | $ | 109,036 | $ | 95,308 | $ | 13,728 | 14.4 | % | |||||
Other adjustments: | |||||||||||||
Less: used vehicle line of credit interest expense | (1,131 | ) | (873 | ) | (258 | ) | 29.6 | ||||||
Add: equity investment fair value adjustment | — | 5,563 | (5,563 | ) | (100.0 | ) | |||||||
Add: acquisition expenses | 2,137 | — | 2,137 | NM | |||||||||
Add: insurance reserve | 3,878 | — | 3,878 | NM | |||||||||
Adjusted EBITDA | $ | 113,920 | $ | 99,998 | $ | 13,922 | 13.9 | % | |||||
Leveraged Free Cash Flow | |||||||||||||
Adjusted EBITDA | $ | 113,920 | $ | 99,998 | $ | 13,922 | 13.9 | % | |||||
Less: Capital expenditures | (16,227 | ) | (27,347 | ) | 11,120 | (40.7 | ) | ||||||
Leveraged free cash flow | $ | 97,693 | $ | 72,651 | $ | 25,042 | 34.5 | % | |||||
Lithia Motors, Inc.
Adjusted EBITDA and Leveraged Free Cash Flow (Unaudited)
Six months ended June 30, | % | ||||||||||||
Increase | Increase | ||||||||||||
2017 | 2016 | (Decrease) | (Decrease) | ||||||||||
EBITDA and Adjusted EBITDA | |||||||||||||
Net income | $ | 103,927 | $ | 91,698 | $ | 12,229 | 13.3 | % | |||||
Other interest expense | 13,840 | 10,961 | 2,879 | 26.3 | |||||||||
Income tax expense | 65,172 | 45,626 | 19,546 | 42.8 | |||||||||
Depreciation and amortization | 26,770 | 24,166 | 2,604 | 10.8 | |||||||||
EBITDA | $ | 209,709 | $ | 172,451 | $ | 37,258 | 21.6 | % | |||||
Other adjustments: | |||||||||||||
Less: used vehicle line of credit interest expense | (2,157 | ) | (1,690 | ) | (467 | ) | 27.6 | ||||||
Add: equity investment fair value adjustment | — | 11,127 | (11,127 | ) | (100.0 | ) | |||||||
Less: OEM settlement | (9,111 | ) | — | (9,111 | ) | NM | |||||||
Add: acquisition expenses | 2,137 | — | 2,137 | NM | |||||||||
Add: insurance reserve | 3,878 | — | 3,878 | NM | |||||||||
Adjusted EBITDA | $ | 204,456 | $ | 181,888 | $ | 22,568 | 12.4 | % | |||||
Leveraged Free Cash Flow | |||||||||||||
Adjusted EBITDA | $ | 204,456 | $ | 181,888 | $ | 22,568 | 12.4 | % | |||||
Less: capital expenditures | (32,266 | ) | (43,247 | ) | 10,981 | (25.4 | ) | ||||||
Leveraged free cash flow | $ | 172,190 | $ | 138,641 | $ | 33,549 | 24.2 | % | |||||
Lithia Motors, Inc.
Ratio of Adjusted Total Debt to Adjusted EBITDA(Unaudited)
As of | |||||||
June 30, 2017 | June 30, 2016 | ||||||
Total Debt | $ | 2,433,362 | $ | 2,025,978 | |||
Less: floor plan notes payable | (99,932 | ) | (56,767 | ) | |||
Less: floor plan notes payable: non-trade | (1,534,715 | ) | (1,316,747 | ) | |||
Less: used vehicle line of credit | (213,093 | ) | (190,313 | ) | |||
Adjusted total debt | $ | 585,622 | $ | 462,151 | |||
Annualized adjusted EBITDA | $ | 408,912 | $ | 363,776 | |||
Ratio of adjusted total debt to adjusted EBITDA | 1.43 | 1.27 | |||||