Lithia & Driveway (LAD) Increases Share Repurchase Authorization by $750 Million and Completes Inaugural ABS Offering for Driveway Finance

Rhea-AI Summary

Lithia & Driveway (NYSE:LAD) announced a $750 million increase in its share repurchase authorization, totaling approximately $885 million available for buybacks. This decision follows strong earnings that generated higher-than-expected free cash flows. Additionally, Driveway Finance completed its first asset-backed securities offering, raising $344 million to support its auto loan portfolio growth. Driveway Finance is anticipated to grow from 5% to 15% of overall business, contributing significantly to profitability. The strategic focus remains on capital allocation for acquisitions and investments.

Positive

• Increased share repurchase authorization by $750 million, totaling $885 million available.
• Strong earnings led to greater-than-expected free cash flows.
• Successful inaugural ABS offering raised $344 million for Driveway Finance.
• Driveway Finance expected to grow from 5% to 15% of LAD's overall business, enhancing profitability.

Negative

• None.

MEDFORD, Ore., Nov. 30, 2021 /PRNewswire/ -- Lithia & Driveway (NYSE:LAD) announced today an increase of $750 million to its share repurchase authorization by its Board of Directors, bringing total funds available today for future repurchases to approximately $885 million.

"As discussed in our last earnings call, strong earnings have generated greater than expected free cash flows, which allows us to return capital to our shareholders through share repurchases, while preserving the liquidity necessary to achieve our 2025 Plan," said Bryan DeBoer, Lithia & Driveway President and CEO. "Our capital allocation remains focused on acquisitions and internal investments, such as Driveway and Driveway Finance, to generate the highest long-term return for shareholders."

Inaugural Asset-Backed Securities (ABS) Offering for Driveway Finance

Driveway Finance completed its inaugural issuance of securities backed by its originated auto loan portfolio, raising $344 million of additional capital to fund the rapid growth of its auto loan portfolio and network development.

"Driveway Finance received better than expected pricing and credit ratings, which was exciting for our first issuance," said DeBoer. "Planned future reoccurring ABS issuances, will enable us to more quickly ramp the volume of originations and accelerate the profit contributed by Driveway Finance in the coming years as we seek to derive more than $1 dollar in EPS for each billion dollars in revenue."

Driveway Finance originations now account for approximately 5% of LAD's overall business and is expected to grow to 15% in the coming years. This growing income stream further diversifies LAD's business model, expands profitability, and enhances consumer loyalty with Lithia stores, Driveway and GreenCars brands.

About Lithia & Driveway (LAD):  
LAD is a growth company powered by people and innovation with a plan to profitably consolidate the largest retail sector in North America. As the leading provider of personal transportation solutions in North America, LAD is among the fastest-growing companies in the Fortune 500 and is currently ranked #231 (#2 on 10-Year EPS Growth, #3 on 10-Year TSR and #12 on 10-year Revenue growth in 2021). By providing a wide array of products and services for the entire vehicle ownership lifecycle through various consumer channels, LAD builds magnetic brand loyalty. Operational excellence is achieved by focusing the business on convenient and transparent consumer experiences supported by proprietary data science to improve market share, consumer loyalty and profitability. LAD's omni-channel strategy will continue to pragmatically disrupt the industry by leveraging experienced teams, vast owned inventories, technology, and physical network. LAD continues to lead the industry's consolidation, and this combined with Driveway's e-commerce in-home experiences, further accelerates the massive regenerating capital engine. Together, these endeavors create a unique and compelling high-growth strategy that provides transportation solutions wherever, whenever, and however consumers desire.  

Sites:   
www.lithiainvestorrelations.com 
www.lithia.com    
www.driveway.com   
www.lithiacareers.com

Lithia & Driveway on Facebook    
https://www.facebook.com/LithiaMotors   
https://www.facebook.com/DrivewayHQ     

Lithia & Driveway on Twitter   
https://twitter.com/LithiaMotors    
https://twitter.com/DrivewayHQ     

 

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SOURCE Lithia Motors, Inc.

FAQ

What is Lithia & Driveway's latest share repurchase authorization update?

Lithia & Driveway increased its share repurchase authorization by $750 million, bringing the total available for buybacks to approximately $885 million.

How much capital was raised in Driveway Finance's inaugural ABS offering?

Driveway Finance raised $344 million through its inaugural asset-backed securities offering.

What percentage of LAD's business does Driveway Finance currently account for?

Driveway Finance currently accounts for approximately 5% of Lithia & Driveway's overall business.

What are Lithia & Driveway's plans for future ABS issuances?

Lithia & Driveway plans to continue future recurring ABS issuances to accelerate the growth of Driveway Finance's auto loan originations.

How does the share repurchase impact shareholders?

The share repurchase is intended to return capital to shareholders while maintaining liquidity for future growth initiatives.