Declares Dividend of $0.29 Per Share for Fourth Quarter
Lithia Motors, Inc. (NYSE: LAD) today reported the highest full year
revenue and earnings per share in company history.
Fourth quarter 2018 revenue increased 10% to a record $3.0 billion from
$2.7 billion in the fourth quarter of 2017.
Fourth quarter 2018 net income per diluted share was $2.54. Fourth
quarter 2017 results, which included a $1.31 per diluted share benefit
related to the adoption of the Tax Cuts and Jobs Act, was $3.56 per
diluted share. Adjusted fourth quarter 2018 net income per diluted share
was $2.57, a 20% increase compared to adjusted net income of $2.15 per
diluted share in the same period of 2017. Fourth quarter 2018 net income
was $60 million. Fourth quarter 2017 results, which included a $33
million benefit related to the adoption of the Tax Cuts and Jobs Act,
was $89 million. Adjusted fourth quarter 2018 net income was $61
million, a 12% increase compared to adjusted net income of $54 million
for the same period of 2017.
As shown in the attached non-GAAP reconciliation tables, the 2018 fourth
quarter adjusted results exclude a cumulative net non-core charge of
$0.03 related to an asset impairment and the sale of a store, partially
offset by tax attributes. The 2017 fourth quarter adjusted results
exclude a cumulative net non-core benefit of $1.41 related to adoption
of the Tax Cuts and Jobs Act and the sale of stores.
Fourth Quarter-over-Quarter Operating Highlights: -
Total revenues increased 10%
-
Adjusted EPS increased 20%
-
Total same store used vehicle retail sales increased 10%
-
Same store F&I per unit increased 5% to $1,400
"We grew both revenue and gross profit over 10%, and adjusted EPS by 20%
as our acquisitions season and we continue our progress towards the over
$250 million in incremental earnings potential," said Bryan DeBoer,
President and CEO. "We continue to drive operational excellence while
accelerating our omni-channel capabilities to offer consumers personal
transportation solutions wherever, whenever, and however they desire."
Full year 2018 revenue increased 17% to a record $11.8 billion from
$10.1 billion in 2017.
Full year 2018 net income per diluted share increased 11% to $10.86 from
$9.75 for 2017. Adjusted net income per diluted share increased 19% to
$9.98 from $8.39 for 2017. Full year 2018 net income increased 8% to
$266 million from $245 million for 2017. Adjusted net income increased
16% to $244 million for 2018 from $211 million for 2017.
As shown in the attached non-GAAP reconciliation tables, the 2018
adjusted results exclude a cumulative net non-core benefit of $0.88
related to a gain on the sale of stores and certain tax attributes
partially offset by a charge for an asset impairment, insurance reserves
and acquisition expenses. The 2017 adjusted results exclude a cumulative
net non-core benefit of $1.36 from the adoption of the Tax Cuts and Jobs
Act, an OEM Settlement, and the gain on sale of stores and real estate
assets partially offset by charges for insurance reserves and
acquisition-related expenses.
Full Year-over-Year Operating Highlights: -
Record full year revenues of $11.8 billion
-
Used vehicle retail same store sales increased 7%
-
Service, body and parts same store sales increased 4%
-
Same store F&I per unit increased 5% to $1,373
Corporate Development
As previously disclosed, 2018 acquisition and divestiture activity added
a net $1.2 billion in estimated annualized revenue. We acquired two
large platforms in the Northeast, two smaller complementary
acquisitions, added an open point in Texas and separated two locations
into standalone stores. We also divested eight small or underperforming
locations generating a $15 million gain, which has been excluded from
adjusted operating results.
"Acquisition activity is heating up. We anticipate further expansion of
our nationwide footprint in 2019 through our proven strategy of
targeting high quality assets that are underperforming their potential,"
said DeBoer.
Innovation and Technology Partnerships
We are accelerating both internal and external innovation to advance our
position as a leading provider of personal transportation solutions.
As previously announced in 2018, we recently partnered with Shift
Technologies, a San Francisco-based digital retailer, investing $54
million to become their largest shareholder. Shift is an innovative
platform that provides consumers a digital purchase and selling
experience, providing vehicle pickup and delivery at a customer's
location and currently operates in California.
Since our initial investment, we announced that Shift secured a floor
plan line to acquire used vehicle inventory with the capacity to reach
$1 billion in revenue and partnered in a facility lease with Lithia to
utilize our existing infrastructure to expand to new markets. These
milestones represent further operational collaboration and each resulted
in Lithia receiving additional equity ownership in Shift.
"Whether accelerating innovation in our existing network of service and
delivery centers or through partnering with technology firms, we are
positioning ourselves for a stronger future," said DeBoer.
Balance Sheet Update
We ended the fourth quarter with $32 million in cash and $180 million in
availability under our credit facility. Additionally, approximately $330
million of our operating real estate is currently unfinanced, which we
estimate could provide $248 million in capital, for total potential
liquidity of approximately $460 million.
Dividend Payment and Share Repurchases
Our Board of Directors approved a dividend of $0.29 per share related to
fourth quarter 2018 financial results. We expect to pay the dividend on
March 22, 2019 to shareholders of record on March 8, 2019.
For the period from our last earnings announcement on October 24th, 2018
through December 31st, 2018, we repurchased approximately 489,000
shares, or 2.0% of shares outstanding, at a weighted average price of
$70.96 per share. For the year ended December 31, 2018, we repurchased
approximately 2.1 million shares, or 8.5% of shares outstanding, at a
weighted average price of $84.72 per share. Under our current share
repurchase authorization, approximately $234 million remains available.
CFO Transition
John North has provided notice of his intention to resign from the
position of Senior Vice President and Chief Financial Officer effective
March 1, 2019, following the filing of our 2018 Annual Report on Form
10-K. Tina Miller, Vice President and Corporate Controller, will be
appointed interim Principal Financial Officer effective March 1, 2019
while we conduct a search for a new Chief Financial Officer.
Fourth Quarter Earnings Conference Call and Updated Presentation
The fourth quarter and full year 2018 conference call may be accessed at
10:00 a.m. ET today by telephone at 877-407-8029. An updated
presentation highlighting the fourth quarter and full year 2018 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 providers of personal
transportation solutions in the United States and is among the fastest
growing companies in the Fortune 500 (#294-2018). Consumers can buy,
sell and service vehicles digitally or through our 181 nationwide
locations. Our mission, Growth Powered by People drives us to grow and
serve our customers wherever, whenever, and however they choose.
Sites www.lithia.com www.shift.com www.lithiainvestorrelations.com www.lithiacareers.com Lithia Motors on Facebook https://www.facebook.com/LithiaMotors Lithia Motors on Twitter https://twitter.com/lithiamotors Forward-Looking Statements
This press release includes "forward-looking statements" within the
meaning of the "Safe-Harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Forward looking statements include
statements regarding our goals, plans, projections and guidance
regarding our financial position, results of operations, market
position, pending and potential future acquisitions and business
strategy, and often contain words such as "project," "outlook,"
"expect," "anticipate," "intend," "plan," "believe," "estimate," "may,"
"seek," "would," "should," "likely," "goal," "strategy," "future,"
"maintain," "continue," "remain," "target" or "will" and similar
references to future periods. Examples of forward-looking statements in
this press release include, among others, statements regarding:
-
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 operational synergies related to our investment in Shift
Technologies;
-
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), acts of God or
other incidents which may adversely impact our operations and financial
performance, 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 millions except per share data)
|
| |
| Three months ended December 31, |
| % | Twelve months ended December 31, |
| % | | | | Increase | | | Increase | | | 2018 |
|
| 2017 |
| | (Decrease) | | 2018 |
|
| 2017 |
| | (Decrease) | Revenues: | | | | | | | | | | | | |
New vehicle retail
| |
$
|
1,688.3
| | |
$
|
1,615.7
| | |
4.5
|
%
| |
$
|
6,602.8
| | |
$
|
5,763.6
| | |
14.6
|
%
|
Used vehicle retail
| |
753.4
| | |
629.3
| | |
19.7
| | |
3,079.0
| | |
2,544.4
| | |
21.0
| |
Used vehicle wholesale
| |
78.1
| | |
71.1
| | |
9.8
| | |
331.3
| | |
277.8
| | |
19.3
| |
Finance and insurance
| |
112.8
| | |
103.2
| | |
9.3
| | |
454.8
| | |
385.9
| | |
17.9
| |
Service, body and parts
| |
313.9
| | |
271.5
| | |
15.6
| | |
1,222.3
| | |
1,015.8
| | |
20.3
| |
Fleet and other
| |
26.7
|
| |
12.2
|
| |
118.9
|
| |
131.2
|
| |
99.0
|
| |
32.5
|
| Total revenues | | 2,973.2 | | | 2,703.0 | | | 10.0 | % | | 11,821.4 | | | 10,086.5 | | | 17.2 | % | Cost of sales: | | | | | | | | | | | | |
New vehicle retail
| |
1,592.5
| | |
1,514.6
| | |
5.1
| | |
6,217.7
| | |
5,423.8
| | |
14.6
| |
Used vehicle retail
| |
677.6
| | |
564.5
| | |
20.0
| | |
2,756.1
| | |
2,257.6
| | |
22.1
| |
Used vehicle wholesale
| |
76.8
| | |
70.7
| | |
8.6
| | |
325.8
| | |
273.0
| | |
19.3
| |
Service, body and parts
| |
159.8
| | |
146.6
| | |
9.0
| | |
621.6
| | |
522.7
| | |
18.9
| |
Fleet and other
| |
24.6
|
| |
10.5
|
| |
134.3
|
| |
123.2
|
| |
93.3
|
| |
32.0
|
| Total cost of sales | |
2,531.3
|
| |
2,306.9
|
| |
9.7
|
| |
10,044.4
|
| |
8,570.4
|
| |
17.2
|
| Gross profit | | 441.9 | | | 396.1 | | | 11.6 | % | | 1,777.0 | | | 1,516.1 | | | 17.2 | % |
Asset impairments
| |
1.3
| | |
-
| | |
NM
| | |
1.3
| | |
-
| | |
NM
| |
SG&A expense
| |
313.4
| | |
267.1
| | |
17.3
| | |
1,253.3
| | |
1,049.4
| | |
19.4
| |
Depreciation and amortization
| |
20.1
|
| |
16.1
|
| |
24.8
|
| |
75.4
|
| |
57.7
|
| |
30.7
|
| Income from operations | | 107.1 | | | 112.9 | | | (5.1 | )% | | 447.0 | | | 409.0 | | | 9.3 | % |
Floor plan interest expense
| |
(17.2
|
)
| |
(11.3
|
)
| |
52.2
| | |
(62.3
|
)
| |
(39.3
|
)
| |
58.5
| |
Other interest expense
| |
(15.4
|
)
| |
(11.0
|
)
| |
40.0
| | |
(56.0
|
)
| |
(34.8
|
)
| |
60.9
| |
Other income, net
| |
3.5
|
| |
0.8
|
| |
NM
|
| |
8.8
|
| |
12.2
|
| |
NM
|
| Income before income taxes | | 78.0 | | | 91.4 | | | (14.7 | ) % | | 337.5 | | | 347.1 | | | (2.8 | )% |
Income tax expense
| |
(18.1
|
)
| |
(2.0
|
)
| |
805.0
| | |
(71.8
|
)
| |
(101.9
|
)
| |
(29.5
|
)
|
Income tax rate
| |
23.2
|
%
| |
2.2
|
%
| |
| |
21.3
|
%
| |
29.4
|
%
| |
| Net income | | $ | 59.9 |
| | $ | 89.4 |
| | (33.0 | )% | | $ | 265.7 |
| | $ | 245.2 |
| | 8.4 | % | | | | | | | | | | | | |
| Diluted net income per share: | | | | | | | | | | | | |
Net income per share
| |
$
|
2.54
| | |
$
|
3.56
| | |
(28.7
|
) %
| |
$
|
10.86
| | |
$
|
9.75
| | |
11.4
|
%
| | | | | | | | | | | | |
|
Diluted shares outstanding
| |
23.6
| | |
25.1
| | |
(6.0
|
) %
| |
24.5
| | |
25.1
| | |
(2.4
|
)%
|
NM - not meaningful
| | | | | | | | | | | | | | | | | | |
|
Lithia Motors, Inc. | Key Performance Metrics (Unaudited)
|
| |
| Three months ended December 31, |
| % |
| Twelve months ended December 31, |
| % | | | | Increase | | | Increase | | | 2018 |
|
| 2017 |
| | (Decrease) | | 2018 |
|
| 2017 |
| | (Decrease) | Gross margin | | | | | | | | | | | | |
New vehicle retail
| |
5.7
|
%
| |
6.3
|
%
| |
(60)bps
| |
5.8
|
%
| |
5.9
|
%
| |
(10)bps
|
Used vehicle retail
| |
10.1
| | |
10.3
| | |
(20
|
)
| |
10.5
| | |
11.3
| | |
(80
|
)
|
Finance and insurance
| |
100.0
| | |
100.0
| | |
-
| | |
100.0
| | |
100.0
| | |
-
| |
Service, body and parts
| |
49.1
| | |
46.0
| | |
310
| | |
49.1
| | |
48.5
| | |
60
| |
Gross profit margin
| |
14.9
| | |
14.7
| | |
20
| | |
15.0
| | |
15.0
| | |
-
| | | | | | | | | | | | | |
| Unit sales | | | | | | | | | | | | |
New vehicle retail
| |
45,287
| | |
45,202
| | |
0.2
|
%
| |
184,601
| | |
167,146
| | |
10.4
|
%
|
Used vehicle retail
| |
36,273
| | |
32,242
| | |
12.5
| | |
151,234
| | |
129,913
| | |
16.4
| |
Total retail units sold
| |
81,560
| | |
77,444
| | |
5.3
| | |
335,835
| | |
297,059
| | |
13.1
| | | | | | | | | | | | | |
| Average selling price | | | | | | | | | | | | |
New vehicle retail
| |
$
|
37,281
| | |
$
|
35,744
| | |
4.3
|
%
| |
$
|
35,768
| | |
$
|
34,482
| | |
3.7
|
%
|
Used vehicle retail
| |
20,771
| | |
19,519
| | |
6.4
| | |
20,359
| | |
19,585
| | |
4.0
| | | | | | | | | | | | | |
| Average gross profit per
unit | | | | | | | | | | | | |
New vehicle retail
| |
$
|
2,116
| | |
$
|
2,238
| | |
(5.5
|
)%
| |
$
|
2,086
| | |
$
|
2,033
| | |
2.6
|
%
|
Used vehicle retail
| |
2,092
| | |
2,013
| | |
3.9
| | |
2,135
| | |
2,208
| | |
(3.3
|
)
|
Finance and insurance
| |
1,383
| | |
1,332
| | |
3.8
| | |
1,354
| | |
1,299
| | |
4.2
| |
Total vehicle(1) | |
3,503
| | |
3,481
| | |
0.6
| | |
3,479
| | |
3,425
| | |
1.6
| | | | | | | | | | | | | |
| Revenue mix | | | | | | | | | | | | |
New vehicle retail
| |
56.8
|
%
| |
59.8
|
%
| | | |
55.9
|
%
| |
57.1
|
%
| | |
Used vehicle retail
| |
25.3
| | |
23.3
| | | | |
26.0
| | |
25.2
| | | |
Used vehicle wholesale
| |
2.6
| | |
2.6
| | | | |
2.8
| | |
2.8
| | | |
Finance and insurance, net
| |
3.8
| | |
3.8
| | | | |
3.8
| | |
3.8
| | | |
Service, body and parts
| |
10.6
| | |
10.0
| | | | |
10.3
| | |
10.1
| | | |
Fleet and other
| |
0.9
| | |
0.5
| | | | |
1.2
| | |
1.0
| | | | | | | | | | | | | | | | | | | |
|
|
| Adjusted |
| As reported |
| Adjusted |
| As reported | | | Three months ended December 31, | | Three months ended December 31, | | Twelve months ended December 31, | | Twelve months ended December 31, | Other metrics | | 2018 |
|
| 2017 |
| | 2018 |
|
| 2017 |
| | 2018 |
|
| 2017 |
| | 2018 |
|
| 2017 |
|
SG&A as a % of revenue
| |
10.5
|
%
| |
10.1
|
%
| |
10.5
|
%
| |
9.9
|
%
| |
10.7
|
%
| |
10.3
|
%
| |
10.6
|
%
| |
10.4
|
%
|
SG&A as a % of gross profit
| |
70.9
| | |
68.7
| | |
70.9
| | |
67.4
| | |
71.1
| | |
68.8
| | |
70.5
| | |
69.2
| |
Operating profit as a % of revenue
| |
3.7
| | |
4.0
| | |
3.6
| | |
4.2
| | |
3.7
| | |
4.1
| | |
3.8
| | |
4.1
| |
Operating profit as a % of gross profit
| |
24.6
| | |
27.2
| | |
24.2
| | |
28.5
| | |
24.6
| | |
27.4
| | |
25.2
| | |
27.0
| |
Pretax margin
| |
2.7
| | |
3.2
| | |
2.6
| | |
3.4
| | |
2.8
| | |
3.4
| | |
2.9
| | |
3.4
| |
Net profit margin
| |
2.0
| | |
2.0
| | |
2.0
| | |
3.3
| | |
2.1
| | |
2.1
| | |
2.2
| | |
2.4
| |
(1) |
|
Includes the sales and gross profit related to new, used retail,
used wholesale and finance and insurance and unit sales for new and
used retail
| | |
|
Lithia Motors, Inc. | Same Store Operating Highlights (Unaudited)
|
| |
| Three months ended December 31, |
| % |
| Twelve months ended December 31, |
| % | | | | Increase | | | Increase | | | 2018 |
|
| 2017 |
| | (Decrease) | | 2018 |
|
| 2017 |
| | (Decrease) | Revenues | | | | | | | | | | | | |
New vehicle retail
| |
$
|
1,508.6
| | |
$
|
1,570.7
| | |
(4.0
|
)%
| |
$
|
5,463.5
| | |
$
|
5,569.4
| | |
(1.9
|
)%
|
Used vehicle retail
| |
678.9
| | |
615.5
| | |
10.3
| | |
2,639.0
| | |
2,470.7
| | |
6.8
| |
Finance and insurance
| |
103.5
| | |
100.4
| | |
3.1
| | |
390.7
| | |
373.6
| | |
4.6
| |
Service, body and parts
| |
280.4
| | |
265.7
| | |
5.5
| | |
1,021.1
| | |
985.6
| | |
3.6
| |
Total revenues
| |
2,658.6
| | |
2,633.4
| | |
1.0
| | |
9,888.7
| | |
9,768.2
| | |
1.2
| | | | | | | | | | | | | |
| Gross profit | | | | | | | | | | | | |
New vehicle retail
| |
$
|
84.4
| | |
$
|
98.2
| | |
(14.1
|
)%
| |
$
|
310.9
| | |
$
|
326.8
| | |
(4.9
|
)%
|
Used vehicle retail
| |
71.2
| | |
63.7
| | |
11.8
| | |
289.2
| | |
280.9
| | |
3.0
| |
Finance and insurance
| |
103.5
| | |
100.4
| | |
3.1
| | |
390.7
| | |
373.6
| | |
4.6
| |
Service, body and parts
| |
137.7
| | |
122.4
| | |
12.5
| | |
504.6
| | |
478.4
| | |
5.5
| |
Total gross profit
| |
399.7
| | |
386.6
| | |
3.4
| | |
1,507.0
| | |
1,469.9
| | |
2.5
| | | | | | | | | | | | | |
| Gross margin | | | | | | | | | | | | |
New vehicle retail
| |
5.6
|
%
| |
6.2
|
%
| |
(60)bps
| |
5.7
|
%
| |
5.9
|
%
| |
(20)bps
|
Used vehicle retail
| |
10.5
| | |
10.3
| | |
20
| | |
11.0
| | |
11.4
| | |
(40
|
)
|
Finance and insurance
| |
100.0
| | |
100.0
| | |
-
| | |
100.0
| | |
100.0
| | |
-
| |
Service, body and parts
| |
49.1
| | |
46.1
| | |
300
| | |
49.4
| | |
48.5
| | |
90
| |
Gross profit margin
| |
15.0
| | |
14.7
| | |
30
| | |
15.2
| | |
15.0
| | |
20
| | | | | | | | | | | | | |
| Unit sales | | | | | | | | | | | | |
New vehicle retail
| |
40,940
| | |
43,660
| | |
(6.2
|
)%
| |
153,600
| | |
160,746
| | |
(4.4
|
)%
|
Used vehicle retail
| |
33,003
| | |
31,451
| | |
4.9
| | |
130,965
| | |
125,789
| | |
4.1
| | | | | | | | | | | | | |
| Average selling price | | | | | | | | | | | | |
New vehicle retail
| |
$
|
36,848
| | |
$
|
35,976
| | |
2.4
|
%
| |
$
|
35,570
| | |
$
|
34,647
| | |
2.7
|
%
|
Used vehicle retail
| |
20,570
| | |
19,570
| | |
5.1
| | |
20,150
| | |
19,642
| | |
2.6
| | | | | | | | | | | | | |
| Average gross profit per unit | | | | | | | | | | | | |
New vehicle retail
| |
$
|
2,061
| | |
$
|
2,248
| | |
(8.3
|
)%
| |
$
|
2,024
| | |
$
|
2,033
| | |
(0.4
|
)%
|
Used vehicle retail
| |
2,158
| | |
2,025
| | |
6.6
| | |
2,208
| | |
2,233
| | |
(1.1
|
)
|
Finance and insurance
| |
1,400
| | |
1,337
| | |
4.7
| | |
1,373
| | |
1,304
| | |
5.3
| |
Total vehicle(1) | |
3,517
| | |
3,497
| | |
0.6
| | |
3,497
| | |
3,441
| | |
1.6
| |
(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. | Other Highlights (Unaudited)
|
| |
| As of | | | December 31, |
| December 31, |
| December 31, | | | 2018 | | 2017 | | 2016 | Days Supply(1) | | | | | | |
New vehicle inventory
| |
71
| |
69
| |
68
|
Used vehicle inventory
| |
66
| |
67
| |
56
|
(1) |
|
Days supply calculated based on current inventory levels, excluding
in-transit vehicles, and a 30-day historical cost of sales level.
| | |
|
Financial covenants | |
| Requirement |
| As of December 31, 2018 |
Current ratio
| |
Not less than 1.10 to 1
| |
1.27 to 1
|
Fixed charge coverage ratio
| |
Not less than 1.20 to 1
| |
1.91 to 1
|
Leverage ratio
| |
Not more than 5.00 to 1
| |
2.86 to 1
| | | | |
|
Lithia Motors, Inc. | Condensed Consolidated Balance Sheets (Unaudited)
|
(In millions)
|
| |
| December 31, 2018 |
| December 31, 2017 |
Cash and cash equivalents
| |
$
|
31.6
| | |
$
|
57.3
|
Trade receivables, net
| |
529.4
| | |
521.9
|
Inventories, net
| |
2,365.3
| | |
2,132.7
|
Other current assets
| |
65.1
|
| |
70.9
| Total current assets | | $ | 2,991.4 | | | $ | 2,782.8 | | | | |
|
Property and equipment, net
| |
1,448.0
| | |
1,185.2
|
Intangibles
| |
723.6
| | |
443.3
|
Other non-current assets
| |
221.0
|
| |
271.8
| Total assets | | $ | 5,384.0 |
| | $ | 4,683.1 | | | | |
|
Floor plan notes payable
| |
2,057.7
| | |
1,919.0
|
Other current liabilities
| |
435.8
|
| |
382.0
| Total current liabilities | | $ | 2,493.5 | | | $ | 2,301.0 | | | | |
|
Long-term debt
| |
1,358.2
| | |
1,028.5
|
Other long-term liabilities and deferred revenue
| |
335.1
|
| |
270.4
| Total liabilities | | $ | 4,186.8 |
| | $ | 3,599.9 | | | | |
|
Stockholder's Equity
| |
1,197.2
|
| |
1,083.2
| Total liabilities & stockholders' equity | | $ | 5,384.0 |
| | $ | 4,683.1 | | | | | | | |
|
Lithia Motors, Inc. | Summarized Cash Flow from Operations (Unaudited)
|
(In millions)
|
| |
| Twelve months ended December 31, | | | 2018 |
| 2017 |
Net income
| |
$
|
265.7
| | |
$
|
245.2
| | Adjustments to reconcile net income to net cash provided by
operating activities: | | | | |
Asset impairments
| |
1.3
| | |
-
| |
Depreciation and amortization
| |
75.4
| | |
57.7
| |
Stock-based compensation
| |
13.3
| | |
11.3
| |
(Gain) loss on disposal of assets
| |
0.2
| | |
(0.4
|
)
|
(Gain) on sale of franchises
| |
(15.1
|
)
| |
(5.1
|
)
|
Deferred income taxes
| |
33.0
| | |
(2.8
|
)
| (Increase) decrease: | | | | |
Trade receivables, net
| |
4.7
| | |
(57.4
|
)
|
Inventories
| |
(108.9
|
)
| |
(193.1
|
)
|
Other assets
| |
(16.0
|
)
| |
(3.1
|
)
| Increase (decrease): | | | | |
Floor plan notes payable, net
| |
196.9
| | |
20.3
| |
Trade payables
| |
15.1
| | |
20.0
| |
Accrued liabilities
| |
28.9
| | |
37.2
| |
Other long-term liabilities and deferred revenue
| |
25.2
|
| |
19.1
|
| Net cash provided by operating activities | | $ | 519.7 |
| | $ | 148.9 |
| | | | | | | | |
|
Lithia Motors, Inc. | Reconciliation of Non-GAAP Cash Flow from Operations
(Unaudited) |
(In millions)
|
| |
| Twelve months ended December 31, | Net cash provided by operating activities | | 2018 |
| 2017 |
As reported
| |
$
|
519.7
| | |
$
|
148.9
| |
Floor plan notes payable, non-trade, net
| |
(21.9
|
)
| |
241.5
| |
Less: Borrowings on floor plan notes payable, non-trade associated
with acquired new vehicle inventory
| |
(120.0
|
)
| |
(111.0
|
)
| Adjusted | | $ | 377.8 |
| | $ | 279.4 |
| | | | | | | | |
|
Lithia Motors, Inc. | Reconciliation of Certain Non-GAAP Financial Measures
(Unaudited)
|
(In millions, except for per share data)
|
| |
| Three Months Ended December 31, 2018 | | | As reported |
| Disposal loss on sale of store |
| Asset Impairment |
| Tax attributes |
| Adjusted |
Asset impairments
| |
$
|
1.3
| | |
$
|
-
| | |
$
|
(1.3
|
)
| |
$
|
-
| | |
$
|
-
| | | | | | | | | | | |
|
Selling, general and administrative
| |
313.4
| | |
(0.3
|
)
| |
-
| | |
-
| | |
313.1
| | | | | | | | | | | |
|
Income from operations
| |
107.1
| | |
0.3
| | |
1.3
| | |
-
| | |
108.7
| | | | | | | | | | | |
|
Income before income taxes
| |
$
|
78.0
| | |
$
|
0.3
| | |
$
|
1.3
| | |
$
|
-
| | |
$
|
79.6
| |
Income tax benefit (expense)
| |
(18.1
|
)
| |
(0.1
|
)
| |
(0.3
|
)
| |
(0.5
|
)
| |
(19.0
|
)
|
Net income
| |
$
|
59.9
|
| |
$
|
0.2
|
| |
$
|
1.0
|
| |
$
|
(0.5
|
)
| |
$
|
60.6
|
| | | | | | | | | | |
|
Diluted earnings per share
| |
$
|
2.54
| | |
$
|
0.01
| | |
$
|
0.04
| | |
$
|
(0.02
|
)
| |
$
|
2.57
| |
Diluted share count
| |
23.6
| | | | | | | | | | | | | | | | | | | | |
|
|
| Three Months Ended December 31, 2017 | | | As reported |
| Disposal gain on sale of stores |
| Tax attribute |
| Adjusted |
Selling, general and administrative
| |
$
|
267.1
| | |
$
|
5.1
| | |
$
|
-
| |
|
$
|
272.2
| | | | | | | | | |
|
Income from operations
| |
112.9
| | |
(5.1
|
)
| |
-
| | |
107.8
| | | | | | | | | |
|
Income before income taxes
| |
$
|
91.4
| | |
$
|
(5.1
|
)
| |
$
|
-
| | |
$
|
86.3
| |
Income tax expense
| |
(2.0
|
)
| |
2.5
|
| |
(32.9
|
)
|
|
(32.4
|
)
|
Net income
| |
$
|
89.4
|
| |
$
|
(2.6
|
)
| |
$
|
(32.9
|
)
|
|
$
|
53.9
|
| | | | | | | | |
|
Diluted earnings per share
| |
$
|
3.56
| | |
$
|
(0.10
|
)
| |
$
|
(1.31
|
)
| |
$
|
2.15
| |
Diluted share count
| |
25.1
| | | | | | | | | | | | | | | | |
|
Lithia Motors, Inc. | Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
|
(In millions, except for per share data)
|
| |
| Twelve Months Ended December 31, 2018 | | | As reported |
| Disposal gain on sale of store |
| Asset Impairment |
| Insurance reserves |
| Acquisition expenses |
| Tax attributes |
| Adjusted |
Asset impairments
| |
$
|
1.3
| | |
$
|
-
| | |
$
|
(1.3
|
)
| |
$
|
-
| | |
$
|
-
| | |
$
|
-
| | |
$
|
-
| | | | | | | | | | | | | | | |
|
Selling, general and administrative
| |
1,253.3
| | |
15.4
| | |
-
| | |
(1.5
|
)
| |
(3.3
|
)
| |
-
| | |
1,263.9
| | | | | | | | | | | | | | | |
|
Income from operations
| |
447.0
| | |
(15.4
|
)
| |
1.3
| | |
1.5
| | |
3.3
| | |
-
| | |
437.7
| | | | | | | | | | | | | | | |
|
Income before income taxes
| |
$
|
337.5
| | |
$
|
(15.4
|
)
| |
$
|
1.3
| | |
$
|
1.5
| | |
$
|
3.3
| | |
$
|
-
| | |
$
|
328.2
| |
Income tax benefit (expense)
| |
(71.8
|
)
| |
4.0
|
| |
(0.3
|
)
| |
(0.4
|
)
| |
(0.9
|
)
| |
(14.8
|
)
| |
(84.2
|
)
|
Net income
| |
$
|
265.7
|
| |
$
|
(11.4
|
)
| |
$
|
1.0
|
| |
$
|
1.1
|
| |
$
|
2.4
|
| |
$
|
(14.8
|
)
| |
$
|
244.0
|
| | | | | | | | | | | | | | |
|
Diluted earnings per share
| |
$
|
10.86
| | |
$
|
(0.47
|
)
| |
$
|
0.04
| | |
0.05
| | |
$
|
0.10
| | |
$
|
(0.60
|
)
| |
$
|
9.98
| |
Diluted share count
| |
24.5
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| Twelve Months Ended December 31, 2017 | | | As reported |
| Disposal gain on sale of store |
| Insurance reserves |
| Acquisition expenses |
| OEM settlement |
| Tax Reform |
| Adjusted |
Selling, general and administrative
| |
$
|
1,049.4
| | |
$
|
5.1
| | |
$
|
(5.6
|
)
| |
$
|
(5.7
|
)
| |
$
|
-
| | |
$
|
-
| |
|
$
|
1,043.2
| | | | | | | | | | | | | | | |
|
Income from operations
| |
409.0
| | |
(5.1
|
)
| |
5.6
| | |
5.7
| | |
-
| | |
-
| | |
415.2
| | | | | | | | | | | | | | | |
|
Other income (expense), net
| |
12.2
| | |
-
| | |
-
| | |
-
| | |
(9.1
|
)
| |
-
| | |
3.1
| | | | | | | | | | | | | | | |
|
Income before income taxes
| |
$
|
347.1
| | |
$
|
(5.1
|
)
| |
$
|
5.6
| | |
$
|
5.7
| | |
$
|
(9.1
|
)
| |
$
|
-
| | |
$
|
344.2
| |
Income tax benefit (expense)
| |
(101.9
|
)
| |
2.5
|
| |
(2.2
|
)
| |
(2.2
|
)
| |
3.4
|
| |
(32.9
|
)
|
|
(133.3
|
)
|
Net income
| |
$
|
245.2
|
| |
$
|
(2.6
|
)
| |
$
|
3.4
|
| |
$
|
3.5
|
| |
$
|
(5.7
|
)
| |
$
|
(32.9
|
)
|
|
$
|
210.9
|
| | | | | | | | | | | | | | |
|
Diluted earnings per share
| |
$
|
9.75
| | |
$
|
(0.10
|
)
| |
$
|
0.14
| | |
$
|
0.14
| | |
$
|
(0.23
|
)
| |
$
|
(1.31
|
)
| |
$
|
8.39
| |
Diluted share count
| |
25.1
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Lithia Motors, Inc. | Adjusted EBITDA and Leveraged Free Cash Flow (Unaudited)
|
(In millions)
|
| |
| Three months ended December 31, |
| % | |
| Twelve months ended December 31, |
| % | | | | | Increase | | | Increase | | | 2018 |
|
| 2017 |
| | (Decrease) | | 2018 |
|
| 2017 |
| | (Decrease) | EBITDA and Adjusted EBITDA | | | | | | | | | | | | |
Net income
| |
$
|
59.9
| | |
$
|
89.4
| | |
(33.0
|
) %
| |
$
|
265.7
| | |
$
|
245.2
| | |
8.4
|
%
|
Other interest expense
| |
15.4
| | |
11.0
| | |
40.0
| | |
56.0
| | |
34.8
| | |
60.9
| |
Income tax expense
| |
18.1
| | |
2.0
| | |
805.0
| | |
71.8
| | |
101.9
| | |
(29.5
|
)
|
Depreciation and amortization
| |
20.1
|
| |
16.1
|
| |
24.8
| | |
75.4
|
| |
57.7
|
| |
30.7
| |
EBITDA
| |
$
|
113.5
|
| |
$
|
118.5
|
| |
(4.2
|
) %
| |
$
|
468.9
|
| |
$
|
439.6
|
| |
6.7
|
%
| | | | | | | | | | | | |
|
Other adjustments:
| | | | | | | | | | | | |
Less: used vehicle line of credit interest
| |
$
|
(1.9
|
)
| |
$
|
(0.2
|
)
| |
850.0
| | |
$
|
(2.9
|
)
| |
$
|
(2.7
|
)
| |
7.4
| |
Less: (gain) loss on divestitures
| |
0.3
| | |
(5.1
|
)
| |
-
| | |
(15.4
|
)
| |
(5.1
|
)
| |
-
| |
Add: asset impairment
| |
1.3
| | |
-
| | |
NM
| | |
1.3
| | |
-
| | |
NM
| |
Add: insurance reserve
| |
-
| | |
-
| | |
NM
| | |
1.5
| | |
5.6
| | |
(73.2
|
)
|
Add: acquisition expenses
| |
-
| | |
-
| | |
NM
| | |
3.3
| | |
5.7
| | |
(42.1
|
)
|
Less: OEM legal settlements
| |
-
|
| |
-
|
| |
NM
| | |
-
|
| |
(9.1
|
)
| |
NM
| |
Adjusted EBITDA
| |
$
|
113.2
|
| |
$
|
113.2
|
| |
-
|
%
| |
$
|
456.7
|
| |
$
|
434.0
|
| |
5.2
|
%
| | | | | | | | | | | | |
| Leveraged EBITDA | | | | | | | | | | | | |
Adjusted EBITDA
| |
$
|
113.2
| | |
$
|
113.2
| | |
-
|
%
| |
$
|
456.7
| | |
$
|
434.0
| | |
5.2
|
%
|
Less: Capital expenditures
| |
(44.6
|
)
| |
(33.2
|
)
| |
34.3
| | |
(158.0
|
)
| |
(105.4
|
)
| |
49.9
| |
Leveraged EBITDA
| |
$
|
68.6
|
| |
$
|
80.0
|
| |
(14.3
|
) %
| |
$
|
298.7
|
| |
$
|
328.6
|
| |
(9.1
|
) %
|
NM - not meaningful
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190213005219/en/
John North Senior Vice President and Chief Financial Officer (541)
618-5748
|