Lithia Reports Highest Quarterly Net Income in Company History
Lithia Motors, Inc. (NYSE: LAD) reported record third quarter results, achieving $3.6 billion in revenue, a 9% increase from last year. Net income per diluted share rose 88% to $6.86, while adjusted net income per diluted share surged 103% to $6.89. The company reported a total of $159 million in net income, an 86% increase. Key acquisitions are expected to generate $1.46 billion in annualized steady state revenues. The company ended the quarter with over $694 million in cash and raised $805 million from stock sales. A dividend of $0.31 per share was approved for payment on November 27, 2020.
- Record third quarter revenue of $3.6 billion, up 9% year-over-year.
- Net income per diluted share increased 88% to $6.86.
- Adjusted net income per diluted share rose 103% to $6.89.
- Total net income was $159 million, representing an 86% increase.
- Acquisitions expected to generate $1.46 billion in annualized revenues.
- Significant cash reserves of over $694 million and overall liquidity exceeding $2 billion.
- Dividend of $0.31 per share declared for third quarter 2020.
- Overall revenue for the first nine months decreased 2% to $9.2 billion from $9.4 billion.
- -
MEDFORD, Ore.--(BUSINESS WIRE)--Lithia Motors, Inc. (NYSE: LAD) today reported the highest third quarter revenue and earnings per share in company history.
Third quarter 2020 revenue increased
Third quarter 2020 net income per diluted share was
Third quarter 2020 net income was
As shown in the attached non-GAAP reconciliation tables, the 2020 third quarter adjusted results exclude a
Third Quarter-over-Quarter Operating Highlights:
-
Total company revenues increased
8.6% -
Same store used vehicle retail sales increased
11.2% -
Same store F&I per unit increased
9.8% to$1,617 -
Same store total vehicle gross profit per unit increased
28.0% to$4,690 -
Adjusted SG&A as a percentage of gross profit improved by 920 basis points to
59.6%
"Our strong used vehicle performance and sequential improvements in service, body and parts throughout the quarter, coupled with our strategic cost saving measures taken earlier in the year, led us to the highest quarterly earnings per share in our company's history, more than doubling our adjusted earnings per share compared to the third quarter of last year," said Bryan DeBoer, President and CEO. "This record performance and profitability demonstrate the high performance being achieved at our existing stores and only the very beginning of the benefits to be realized through the activation of Driveway, our ecommerce digital home solution."
For the first nine months of 2020 revenues decreased
Net income for the first nine months of 2020 was
Corporate Development
During the quarter, we announced the acquisitions of San Francisco BMW, the John Eagle Auto Group in Texas and a Chrysler Jeep Dodge Ram store in Knoxville, Tennessee. In addition, earlier this month we completed the acquisition of Latham Ford in the Albany, New York area. These acquisitions are anticipated to generate
Balance Sheet Update
We ended the third quarter with over
Earlier this month, we raised
Together, this brings our current total cash and available credit to over
"With the significant amount of capital raised in October, we continue to accelerate the build out of our coast-to-coast network, expanding our ability to provide consumers with convenient, affordable solutions throughout their vehicle ownership lifecycle," said DeBoer. "Together, with our Driveway digital home channel, we are providing the most transparent and comprehensive offerings wherever, whenever and however consumers desire."
Dividend Payment
Our Board of Directors approved a dividend of
Third Quarter Earnings Conference Call and Updated Presentation
The third quarter 2020 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the third quarter 2020 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 a growth company powered by people and innovation with a 5-year plan to profitably consolidate the largest retail sector in the country. They are a leading provider of personal transportation solutions in the United States and are among the fastest-growing companies in the Fortune 500 (#6 on 10-Year EPS Growth, #4 10-Year TSR in 2020). By providing a wide array of products throughout the entire lifecycle of the consumer's vehicle ownership experience, they build magnetic brand loyalty. Operational excellence is achieved by focusing the business on convenient and transparent consumer experiences supported by proprietary data science to increase market share, consumer loyalty and team performance. Lithia's omni-channel strategy will continue to pragmatically disrupt the industry by leveraging experienced teams, vast owned inventories, technology, and its physical network. By purchasing strong businesses, they further strengthen this network, leveraging their national digital home channel Driveway and building upon their 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.lithia.com
www.lithiainvestorrelations.com
www.lithiacareers.com
www.driveway.com
Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors
Lithia Motors on Twitter
http://twitter.com/lithiamotors
Forward-Looking Statements
Certain statements in this presentation, and at times made by our officers and representatives, constitute forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as "project", "outlook", "target", "may", "will", "would", "should", "seek", "expect", "plan", "intend", "forecast", "anticipate", "believe", "estimate", "predict", "potential", "likely", "goal", "strategy", "future", "maintain", and "continue" or the negative of these terms or other comparable terms. Examples of forward-looking statements in this presentation include, among others, statements regarding:
- Future market conditions, including anticipated car sales levels;
- Anticipated impacts on consumer demand or governmental restrictions related to the COVID-19 pandemic or otherwise;
- Expected level of business interruption due to shelter in place policies or lifting of those restrictions, and when volumes and consumer demand will return;
- Continuation of our sales and services, including in-store appointments and home deliveries;
- Expected growth from our ecommerce home solutions and digital strategies;
- Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses ("SG&A") as a percentage of gross profit and all projections;
- Anticipated integration, success and growth of acquired stores;
- Anticipated ability to capture additional market share;
- Anticipated ability to find accretive acquisitions;
- Expected revenues from acquired stores;
- Anticipated synergies, ability to monetize our investment in digital innovation;
- Anticipated additions of dealership locations to our portfolio in the future;
- Anticipated financial condition and liquidity, including from our cash, availability on our credit facility and unfinanced real estate;
- Anticipated use of proceeds from our financings;
- Anticipated allocations, uses and levels of capital expenditures in the future;
- Expectations regarding compliance with financial and restrictive covenants in our credit facility and other debt agreements;
- Statements regarding furloughed employees and cost reductions; and
- Our strategies for customer retention, growth, market position, financial results and risk management.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. 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 presentation. Therefore, you should not rely on any of these forward-looking statements. 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), including as a result of the COVID-19 pandemic;
- 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);
- The adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level;
- Disruptions to our technology network including computer systems and software, as well as natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of our operating systems, structures, facilities or equipment; and
- Government regulations and legislation, and other risks 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 in "Part II, Item 1A. Risk Factors" of our Quarterly Reports on Form 10-Q, and from time to time in our other filings with the SEC.
Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Non-GAAP Financial Measures
This presentation contains 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 revenue and gross profit, adjusted pre-tax margin and net profit margin, EBITDA, adjusted EBITDA, leveraged EBITDA 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 September 30, |
|
% |
|
Nine months ended September 30, |
|
% |
||||||||||||||
|
|
|
Increase |
|
|
Increase |
||||||||||||||||
|
|
2020 |
|
2019 |
|
(Decrease) |
|
2020 |
|
2019 |
|
(Decrease) |
||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
1,883.3 |
|
|
$ |
1,824.8 |
|
|
3.2 |
% |
|
$ |
4,624.6 |
|
|
$ |
4,993.3 |
|
|
(7.4 |
)% |
Used vehicle retail |
|
1,093.2 |
|
|
916.3 |
|
|
19.3 |
|
|
2,889.7 |
|
|
2,632.4 |
|
|
9.8 |
|
||||
Used vehicle wholesale |
|
98.8 |
|
|
74.4 |
|
|
32.8 |
|
|
216.8 |
|
|
233.5 |
|
|
(7.2 |
) |
||||
Finance and insurance |
|
160.5 |
|
|
136.3 |
|
|
17.8 |
|
|
407.2 |
|
|
382.7 |
|
|
6.4 |
|
||||
Service, body and parts |
|
359.5 |
|
|
340.5 |
|
|
5.6 |
|
|
964.9 |
|
|
993.3 |
|
|
(2.9 |
) |
||||
Fleet and other |
|
24.9 |
|
|
40.1 |
|
|
(37.9 |
) |
|
79.3 |
|
|
168.6 |
|
|
(53.0 |
) |
||||
Total revenues |
|
3,620.2 |
|
|
3,332.4 |
|
|
8.6 |
% |
|
9,182.5 |
|
|
9,403.8 |
|
|
(2.4 |
)% |
||||
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
1,743.2 |
|
|
1,724.8 |
|
|
1.1 |
|
|
4,314.2 |
|
|
4,711.9 |
|
|
(8.4 |
) |
||||
Used vehicle retail |
|
948.4 |
|
|
816.6 |
|
|
16.1 |
|
|
2,556.8 |
|
|
2,355.0 |
|
|
8.6 |
|
||||
Used vehicle wholesale |
|
91.2 |
|
|
73.3 |
|
|
24.4 |
|
|
206.5 |
|
|
229.7 |
|
|
(10.1 |
) |
||||
Service, body and parts |
|
163.6 |
|
|
169.0 |
|
|
(3.2 |
) |
|
456.5 |
|
|
492.2 |
|
|
(7.3 |
) |
||||
Fleet and other |
|
22.2 |
|
|
37.8 |
|
|
(41.3 |
) |
|
71.6 |
|
|
159.8 |
|
|
(55.2 |
) |
||||
Total cost of sales |
|
2,968.6 |
|
|
2,821.5 |
|
|
5.2 |
|
|
7,605.6 |
|
|
7,948.6 |
|
|
(4.3 |
) |
||||
Gross profit |
|
651.6 |
|
|
510.9 |
|
|
27.5 |
% |
|
1,576.9 |
|
|
1,455.2 |
|
|
8.4 |
% |
||||
Asset impairments |
|
— |
|
|
— |
|
|
NM |
|
7.9 |
|
|
0.5 |
|
|
NM |
||||||
SG&A expense |
|
389.1 |
|
|
343.2 |
|
|
13.4 |
|
|
1,039.6 |
|
|
1,021.5 |
|
|
1.8 |
|
||||
Depreciation and amortization |
|
22.9 |
|
|
20.9 |
|
|
9.6 |
|
|
67.3 |
|
|
60.9 |
|
|
10.5 |
|
||||
Income from operations |
|
239.6 |
|
|
146.8 |
|
|
63.2 |
% |
|
462.1 |
|
|
372.3 |
|
|
24.1 |
% |
||||
Floor plan interest expense |
|
(6.1 |
) |
|
(17.9 |
) |
|
(65.9 |
) |
|
(28.3 |
) |
|
(55.5 |
) |
|
(49.0 |
) |
||||
Other interest expense |
|
(16.6 |
) |
|
(14.8 |
) |
|
12.2 |
|
|
(50.4 |
) |
|
(45.0 |
) |
|
12.0 |
|
||||
Other income, net |
|
2.2 |
|
|
3.3 |
|
|
NM |
|
8.2 |
|
|
8.9 |
|
|
NM |
||||||
Income before income taxes |
|
219.1 |
|
|
117.4 |
|
|
86.6 |
% |
|
391.6 |
|
|
280.7 |
|
|
39.5 |
% |
||||
Income tax expense |
|
(60.3 |
) |
|
(32.2 |
) |
|
87.3 |
|
|
(108.9 |
) |
|
(77.2 |
) |
|
41.1 |
|
||||
Income tax rate |
|
27.5 |
% |
|
27.4 |
% |
|
|
|
27.8 |
% |
|
27.5 |
% |
|
|
||||||
Net income |
|
$ |
158.8 |
|
|
$ |
85.2 |
|
|
86.4 |
% |
|
$ |
282.7 |
|
|
$ |
203.5 |
|
|
38.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per share |
|
$ |
6.86 |
|
|
$ |
3.64 |
|
|
88.5 |
% |
|
$ |
12.18 |
|
|
$ |
8.72 |
|
|
39.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted shares outstanding |
|
23.1 |
|
23.4 |
|
(1.3 |
)% |
|
23.2 |
|
23.3 |
|
(0.4 |
)% |
||||||||
NM - not meaningful |
||||||||||||||||||||||
Lithia Motors, Inc. Key Performance Metrics (Unaudited) |
||||||||||||||||||||||
|
|
Three months ended September 30, |
|
% |
|
Nine months ended September 30, |
|
% |
||||||||||||||
|
|
|
Increase |
|
|
Increase |
||||||||||||||||
|
|
2020 |
|
2019 |
|
(Decrease) |
|
2020 |
|
2019 |
|
(Decrease) |
||||||||||
Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
7.4 |
% |
|
5.5 |
% |
|
190 |
bps |
|
6.7 |
% |
|
5.6 |
% |
|
110 |
bps |
||||
Used vehicle retail |
|
13.2 |
|
|
10.9 |
|
|
230 |
|
|
11.5 |
|
|
10.5 |
|
|
100 |
|
||||
Finance and insurance |
|
100.0 |
|
|
100.0 |
|
|
— |
|
|
100.0 |
|
|
100.0 |
|
|
— |
|
||||
Service, body and parts |
|
54.5 |
|
|
50.5 |
|
|
400 |
|
|
52.7 |
|
|
50.4 |
|
|
230 |
|
||||
Gross profit margin |
|
18.0 |
|
|
15.3 |
|
|
270 |
|
|
17.2 |
|
|
15.5 |
|
|
170 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unit sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
47,923 |
|
|
48,508 |
|
|
(1.2 |
)% |
|
118,699 |
|
|
134,090 |
|
|
(11.5 |
)% |
||||
Used vehicle retail |
|
49,363 |
|
|
44,143 |
|
|
11.8 |
|
|
135,499 |
|
|
127,683 |
|
|
6.1 |
|
||||
Total retail units sold |
|
97,286 |
|
|
92,651 |
|
|
5.0 |
|
|
254,198 |
|
|
261,773 |
|
|
(2.9 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average selling price |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
39,298 |
|
|
$ |
37,618 |
|
|
4.5 |
% |
|
$ |
38,960 |
|
|
$ |
37,238 |
|
|
4.6 |
% |
Used vehicle retail |
|
22,145 |
|
|
20,756 |
|
|
6.7 |
|
|
21,326 |
|
|
20,617 |
|
|
3.4 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average gross profit per unit |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
2,922 |
|
|
$ |
2,061 |
|
|
41.8 |
% |
|
$ |
2,615 |
|
|
$ |
2,098 |
|
|
24.6 |
% |
Used vehicle retail |
|
2,932 |
|
|
2,258 |
|
|
29.8 |
|
|
2,457 |
|
|
2,173 |
|
|
13.1 |
|
||||
Finance and insurance |
|
1,649 |
|
|
1,471 |
|
|
12.1 |
|
|
1,602 |
|
|
1,462 |
|
|
9.6 |
|
||||
Total vehicle(1) |
|
4,655 |
|
|
3,638 |
|
|
28.0 |
|
|
4,173 |
|
|
3,611 |
|
|
15.6 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue mix |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
52.0 |
% |
|
54.8 |
% |
|
|
|
50.4 |
% |
|
53.1 |
% |
|
|
||||||
Used vehicle retail |
|
30.2 |
|
|
27.5 |
|
|
|
|
31.5 |
|
|
28.0 |
|
|
|
||||||
Used vehicle wholesale |
|
2.7 |
|
|
2.2 |
|
|
|
|
2.4 |
|
|
2.5 |
|
|
|
||||||
Finance and insurance, net |
|
4.4 |
|
|
4.1 |
|
|
|
|
4.4 |
|
|
4.1 |
|
|
|
||||||
Service, body and parts |
|
9.9 |
|
|
10.2 |
|
|
|
|
10.5 |
|
|
10.6 |
|
|
|
||||||
Fleet and other |
|
0.8 |
|
|
1.2 |
|
|
|
|
0.8 |
|
|
1.7 |
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross Profit Mix |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
21.5 |
% |
|
19.6 |
% |
|
|
|
19.7 |
% |
|
19.3 |
% |
|
|
||||||
Used vehicle retail |
|
22.2 |
|
|
19.5 |
|
|
|
|
21.1 |
|
|
19.1 |
|
|
|
||||||
Used vehicle wholesale |
|
1.2 |
|
|
0.2 |
|
|
|
|
0.7 |
|
|
0.3 |
|
|
|
||||||
Finance and insurance, net |
|
24.6 |
|
|
26.7 |
|
|
|
|
25.8 |
|
|
26.3 |
|
|
|
||||||
Service, body and parts |
|
30.1 |
|
|
33.5 |
|
|
|
|
32.2 |
|
|
34.4 |
|
|
|
||||||
Fleet and other |
|
0.4 |
|
|
0.5 |
|
|
|
|
0.5 |
|
|
0.6 |
|
|
|
||||||
|
|
Adjusted |
|
As reported |
|
Adjusted |
|
As reported |
||||||||||||||||
|
|
Three months ended September 30, |
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
Nine months ended September 30, |
||||||||||||||||
Other metrics |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
SG&A as a % of revenue |
|
10.7 |
% |
|
10.5 |
% |
|
10.7 |
% |
|
10.3 |
% |
|
11.3 |
% |
|
10.8 |
% |
|
11.3 |
% |
|
10.9 |
% |
SG&A as a % of gross profit |
|
59.6 |
|
|
68.8 |
|
|
59.7 |
|
|
67.2 |
|
|
65.5 |
|
|
70.0 |
|
|
65.9 |
|
|
70.2 |
|
Operating profit as a % of revenue |
|
6.6 |
|
|
4.2 |
|
|
6.6 |
|
|
4.4 |
|
|
5.2 |
|
|
4.0 |
|
|
5.0 |
|
|
4.0 |
|
Operating profit as a % of gross profit |
|
36.9 |
|
|
27.1 |
|
|
36.8 |
|
|
28.7 |
|
|
30.2 |
|
|
25.8 |
|
|
29.3 |
|
|
25.6 |
|
Pretax margin |
|
6.1 |
|
|
3.3 |
|
|
6.1 |
|
|
3.5 |
|
|
4.4 |
|
|
3.0 |
|
|
4.3 |
|
|
3.0 |
|
Net profit margin |
|
4.4 |
|
|
2.4 |
|
|
4.4 |
|
|
2.6 |
|
|
3.2 |
|
|
2.2 |
|
|
3.1 |
|
|
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) |
||||||||||||||||||||||
|
|
Three months ended September 30, |
|
% |
|
Nine months ended September 30, |
|
% |
||||||||||||||
|
|
|
Increase |
|
|
Increase |
||||||||||||||||
|
|
2020 |
|
2019 |
|
(Decrease) |
|
2020 |
|
2019 |
|
(Decrease) |
||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
1,714.1 |
|
|
$ |
1,793.7 |
|
|
(4.4 |
)% |
|
$ |
4,265.0 |
|
|
$ |
4,886.6 |
|
|
(12.7 |
)% |
Used vehicle retail |
|
998.3 |
|
|
897.9 |
|
|
11.2 |
|
|
2,693.9 |
|
|
2,566.4 |
|
|
5.0 |
|
||||
Finance and insurance |
|
142.5 |
|
|
133.7 |
|
|
6.6 |
|
|
372.9 |
|
|
373.7 |
|
|
(0.2 |
) |
||||
Service, body and parts |
|
324.3 |
|
|
334.1 |
|
|
(2.9 |
) |
|
891.5 |
|
|
966.4 |
|
|
(7.8 |
) |
||||
Total revenues |
|
3,294.7 |
|
|
3,272.7 |
|
|
0.7 |
|
|
8,501.1 |
|
|
9,185.4 |
|
|
(7.4 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
130.0 |
|
|
$ |
98.9 |
|
|
31.4 |
% |
|
$ |
287.8 |
|
|
$ |
276.5 |
|
|
4.1 |
% |
Used vehicle retail |
|
133.9 |
|
|
98.7 |
|
|
35.7 |
|
|
309.6 |
|
|
273.0 |
|
|
13.4 |
|
||||
Finance and insurance |
|
142.5 |
|
|
133.7 |
|
|
6.6 |
|
|
372.9 |
|
|
373.7 |
|
|
(0.2 |
) |
||||
Service, body and parts |
|
174.9 |
|
|
168.3 |
|
|
3.9 |
|
|
467.7 |
|
|
488.4 |
|
|
(4.2 |
) |
||||
Total gross profit |
|
591.0 |
|
|
503.1 |
|
|
17.5 |
|
|
1,455.4 |
|
|
1,424.2 |
|
|
2.2 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
7.6 |
% |
|
5.5 |
% |
|
210 |
bps |
|
6.7 |
% |
|
5.7 |
% |
|
100 |
bps |
||||
Used vehicle retail |
|
13.4 |
|
|
11.0 |
|
|
240 |
|
|
11.5 |
|
|
10.6 |
|
|
90 |
|
||||
Finance and insurance |
|
100.0 |
|
|
100.0 |
|
|
— |
|
|
100.0 |
|
|
100.0 |
|
|
— |
|
||||
Service, body and parts |
|
53.9 |
|
|
50.4 |
|
|
350 |
|
|
52.5 |
|
|
50.5 |
|
|
200 |
|
||||
Gross profit margin |
|
17.9 |
|
|
15.4 |
|
|
250 |
|
|
17.1 |
|
|
15.5 |
|
|
160 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unit sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
43,029 |
|
|
47,548 |
|
|
(9.5 |
)% |
|
108,370 |
|
|
130,721 |
|
|
(17.1 |
)% |
||||
Used vehicle retail |
|
45,066 |
|
|
43,180 |
|
|
4.4 |
|
|
126,160 |
|
|
124,147 |
|
|
1.6 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average selling price |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
39,836 |
|
|
$ |
37,725 |
|
|
5.6 |
% |
|
$ |
39,356 |
|
|
$ |
37,382 |
|
|
5.3 |
% |
Used vehicle retail |
|
22,151 |
|
|
20,794 |
|
|
6.5 |
|
|
21,353 |
|
|
20,672 |
|
|
3.3 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average gross profit per unit |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle retail |
|
$ |
3,022 |
|
|
$ |
2,079 |
|
|
45.4 |
% |
|
$ |
2,656 |
|
|
$ |
2,115 |
|
|
25.6 |
% |
Used vehicle retail |
|
2,971 |
|
|
2,286 |
|
|
30.0 |
|
|
2,454 |
|
|
2,199 |
|
|
11.6 |
|
||||
Finance and insurance |
|
1,617 |
|
|
1,473 |
|
|
9.8 |
|
|
1,590 |
|
|
1,466 |
|
|
8.5 |
|
||||
Total vehicle(1) |
|
4,690 |
|
|
3,663 |
|
|
28.0 |
|
|
4,178 |
|
|
3,637 |
|
|
14.9 |
|
||||
(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 |
||||
|
September 30, |
|
December 31, |
|
September 30, |
|
2020 |
|
2019 |
|
2019 |
Days Supply(1) |
|
|
|
|
|
New vehicle inventory |
50 |
|
71 |
|
77 |
Used vehicle inventory |
64 |
|
65 |
|
67 |
(1) Days supply calculated based on current inventory levels, excluding in-transit vehicles, and a 30-day historical cost of sales level. |
|||||
Financial covenants |
|
|
|
|
Requirement |
|
As of September 30, 2020 |
Current ratio |
Not less than 1.10 to 1 |
|
1.38 to 1 |
Fixed charge coverage ratio |
Not less than 1.20 to 1 |
|
3.33 to 1 |
Leverage ratio |
Not more than 5.75 to 1 |
|
2.33 to 1 |
Lithia Motors, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In millions) |
||||||||
|
|
September 30, 2020 |
|
December 31, 2019 |
||||
Cash and cash equivalents |
|
$ |
57.1 |
|
|
$ |
84.0 |
|
Trade receivables, net |
|
511.7 |
|
|
505.0 |
|
||
Inventories, net |
|
2,128.7 |
|
|
2,433.7 |
|
||
Other current assets |
|
52.9 |
|
|
47.8 |
|
||
Total current assets |
|
$ |
2,750.4 |
|
|
$ |
3,070.5 |
|
|
|
|
|
|
||||
Property and equipment, net |
|
1,798.3 |
|
|
1,611.7 |
|
||
Intangibles |
|
947.7 |
|
|
761.3 |
|
||
Other non-current assets |
|
899.3 |
|
|
640.4 |
|
||
Total assets |
|
$ |
6,395.7 |
|
|
$ |
6,083.9 |
|
|
|
|
|
|
||||
Floor plan notes payable |
|
1,603.5 |
|
|
2,067.6 |
|
||
Other current liabilities |
|
608.9 |
|
|
501.5 |
|
||
Total current liabilities |
|
$ |
2,212.4 |
|
|
$ |
2,569.1 |
|
|
|
|
|
|
||||
Long-term debt |
|
1,799.0 |
|
|
1,430.6 |
|
||
Other long-term liabilities and deferred revenue |
|
689.9 |
|
|
616.5 |
|
||
Total liabilities |
|
$ |
4,701.3 |
|
|
$ |
4,616.2 |
|
|
|
|
|
|
||||
Stockholder's Equity |
|
1,694.4 |
|
|
1,467.7 |
|
||
Total liabilities & stockholders' equity |
|
$ |
6,395.7 |
|
|
$ |
6,083.9 |
|
Lithia Motors, Inc. Summarized Cash Flow from Operations (Unaudited) (In millions) |
||||||||
|
|
Nine months ended September 30, |
||||||
|
|
2020 |
|
2019 |
||||
Net income |
|
$ |
282.7 |
|
|
$ |
203.5 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
||||
Asset impairments |
|
7.9 |
|
|
0.5 |
|
||
Depreciation and amortization |
|
67.3 |
|
|
60.9 |
|
||
Stock-based compensation |
|
17.2 |
|
|
11.8 |
|
||
Gain on disposal of assets |
|
(0.5 |
) |
|
— |
|
||
Gain on sale of franchises |
|
(1.4 |
) |
|
(9.1 |
) |
||
Deferred income taxes |
|
6.8 |
|
|
39.5 |
|
||
(Increase) decrease: |
|
|
|
|
||||
Trade receivables, net |
|
(11.3 |
) |
|
69.7 |
|
||
Inventories |
|
457.0 |
|
|
(4.1 |
) |
||
Other assets |
|
7.8 |
|
|
22.3 |
|
||
Increase (decrease): |
|
|
|
|
||||
Floor plan notes payable, net |
|
(128.0 |
) |
|
83.1 |
|
||
Trade payables |
|
25.0 |
|
|
0.1 |
|
||
Accrued liabilities |
|
23.6 |
|
|
(36.5 |
) |
||
Other long-term liabilities and deferred revenue |
|
46.5 |
|
|
11.8 |
|
||
Net cash provided by operating activities |
|
$ |
800.6 |
|
|
$ |
453.5 |
|
Lithia Motors, Inc. Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited) (In millions) |
||||||||
|
|
Nine months ended September 30, |
||||||
Net cash provided by operating activities |
|
2020 |
|
2019 |
||||
As reported |
|
$ |
800.6 |
|
|
$ |
453.5 |
|
Floor plan notes payable, non-trade, net |
|
(317.8 |
) |
|
(114.0 |
) |
||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory |
|
(133.6 |
) |
|
(46.0 |
) |
||
Adjusted |
|
$ |
349.2 |
|
|
$ |
293.5 |
|
Lithia Motors, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (In millions, except for per share data) |
||||||||||||||||
|
|
Three Months Ended September 30, 2020 |
||||||||||||||
|
|
As reported |
|
Insurance reserves |
|
Acquisition expenses |
|
Adjusted |
||||||||
Selling, general and administrative |
|
$ |
389.1 |
|
|
$ |
(0.3 |
) |
|
$ |
(0.6 |
) |
|
$ |
388.2 |
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income |
|
239.6 |
|
|
0.3 |
|
|
0.6 |
|
|
240.5 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes |
|
219.1 |
|
|
0.3 |
|
|
0.6 |
|
|
220.0 |
|
||||
Income tax (provision) benefit |
|
(60.3 |
) |
|
— |
|
|
(0.1 |
) |
|
(60.4 |
) |
||||
Net income |
|
$ |
158.8 |
|
|
$ |
0.3 |
|
|
$ |
0.5 |
|
|
$ |
159.6 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share |
|
$ |
6.86 |
|
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
6.89 |
|
Diluted share count |
|
23.1 |
|
|
|
|
|
|
|
|||||||
|
|
Three Months Ended September 30, 2019 |
||||||||||||||||||
|
|
As reported |
|
Disposal gain on sale of stores |
|
Insurance reserves |
|
Acquisition expenses |
|
Adjusted |
||||||||||
Selling, general and administrative |
|
$ |
343.2 |
|
|
$ |
9.4 |
|
|
$ |
(1.1 |
) |
|
$ |
(0.2 |
) |
|
$ |
351.3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income |
|
146.8 |
|
|
(9.4 |
) |
|
1.1 |
|
|
0.2 |
|
|
138.7 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes |
|
117.4 |
|
|
(9.4 |
) |
|
1.1 |
|
|
0.2 |
|
|
109.3 |
|
|||||
Income tax (provision) benefit |
|
(32.2 |
) |
|
2.7 |
|
|
(0.3 |
) |
|
(0.1 |
) |
|
(29.9 |
) |
|||||
Net income |
|
$ |
85.2 |
|
|
$ |
(6.7 |
) |
|
$ |
0.8 |
|
|
$ |
0.1 |
|
|
$ |
79.4 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted earnings per share |
|
$ |
3.64 |
|
|
$ |
(0.28 |
) |
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
3.39 |
|
Diluted share count |
|
23.4 |
|
|
|
|
|
|
|
|
|
|||||||||
Lithia Motors, Inc. Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (In millions, except for per share data) |
||||||||||||||||||||||||||||
|
|
Nine Months Ended September 30, 2020 |
||||||||||||||||||||||||||
|
|
As reported |
|
Disposal gain on sale of stores |
|
Asset impairment |
|
Insurance reserves |
|
Acquisition expenses |
|
Tax attribute |
|
Adjusted |
||||||||||||||
Asset impairments |
|
$ |
7.9 |
|
|
$ |
— |
|
|
$ |
(7.9 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Selling, general and administrative |
|
1,039.6 |
|
|
1.4 |
|
|
— |
|
|
(6.1 |
) |
|
(1.6 |
) |
|
— |
|
|
1,033.3 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income |
|
462.1 |
|
|
(1.4 |
) |
|
7.9 |
|
|
6.1 |
|
|
1.6 |
|
|
— |
|
|
476.3 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Income before income taxes |
|
391.6 |
|
|
(1.4 |
) |
|
7.9 |
|
|
6.1 |
|
|
1.6 |
|
|
— |
|
|
405.8 |
|
|||||||
Income tax (provision) benefit |
|
(108.9 |
) |
|
0.4 |
|
|
(2.3 |
) |
|
(1.6 |
) |
|
(0.4 |
) |
|
(0.8 |
) |
|
(113.6 |
) |
|||||||
Net income |
|
$ |
282.7 |
|
|
$ |
(1.0 |
) |
|
$ |
5.6 |
|
|
$ |
4.5 |
|
|
$ |
1.2 |
|
|
$ |
(0.8 |
) |
|
$ |
292.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Diluted earnings per share |
|
$ |
12.18 |
|
|
$ |
(0.04 |
) |
|
$ |
0.24 |
|
|
$ |
0.19 |
|
|
$ |
0.05 |
|
|
$ |
(0.03 |
) |
|
$ |
12.59 |
|
Diluted share count |
|
23.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Nine Months Ended September 30, 2019 |
||||||||||||||||||||||
|
|
As reported |
|
Disposal gain on sale of stores |
|
Asset impairment |
|
Insurance reserves |
|
Acquisition expenses |
|
Adjusted |
||||||||||||
Asset impairments |
|
$ |
0.5 |
|
|
$ |
— |
|
|
$ |
(0.5 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative |
|
1,021.5 |
|
|
9.1 |
|
|
— |
|
|
(9.5 |
) |
|
(1.9 |
) |
|
1,019.2 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating income |
|
372.3 |
|
|
(9.1 |
) |
|
0.5 |
|
|
9.5 |
|
|
1.9 |
|
|
375.1 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income before income taxes |
|
280.7 |
|
|
(9.1 |
) |
|
0.5 |
|
|
9.5 |
|
|
1.9 |
|
|
283.5 |
|
||||||
Income tax (provision) benefit |
|
(77.2 |
) |
|
2.6 |
|
|
(0.1 |
) |
|
(2.6 |
) |
|
(0.5 |
) |
|
(77.8 |
) |
||||||
Net income |
|
$ |
203.5 |
|
|
$ |
(6.5 |
) |
|
$ |
0.4 |
|
|
$ |
6.9 |
|
|
$ |
1.4 |
|
|
$ |
205.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted earnings per share |
|
$ |
8.72 |
|
|
$ |
(0.28 |
) |
|
$ |
0.02 |
|
|
$ |
0.29 |
|
|
$ |
0.06 |
|
|
$ |
8.81 |
|
Diluted share count |
|
23.3 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Lithia Motors, Inc. Adjusted EBITDA and Net Debt to Adjusted EBITDA (Unaudited) (In millions) |
||||||||||||||||||||||
|
|
Three months ended September 30, |
|
% |
|
Nine months ended September 30, |
|
% |
||||||||||||||
|
|
|
Increase |
|
|
Increase |
||||||||||||||||
|
|
2020 |
|
2019 |
|
(Decrease) |
|
2020 |
|
2019 |
|
(Decrease) |
||||||||||
EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income |
|
$ |
158.8 |
|
|
$ |
85.2 |
|
|
86.4 |
% |
|
$ |
282.7 |
|
|
$ |
203.5 |
|
|
38.9 |
% |
Flooring interest expense |
|
6.1 |
|
|
17.9 |
|
|
(65.9 |
) |
|
28.3 |
|
|
55.5 |
|
|
(49.0 |
) |
||||
Other interest expense |
|
16.6 |
|
|
14.8 |
|
|
12.2 |
|
|
50.4 |
|
|
45.0 |
|
|
12.0 |
|
||||
Income tax expense |
|
60.3 |
|
|
32.2 |
|
|
87.3 |
|
|
108.9 |
|
|
77.2 |
|
|
41.1 |
|
||||
Depreciation and amortization |
|
22.9 |
|
|
20.9 |
|
|
9.6 |
|
|
67.3 |
|
|
60.9 |
|
|
10.5 |
|
||||
EBITDA |
|
$ |
264.7 |
|
|
$ |
171.0 |
|
|
54.8 |
% |
|
$ |
537.6 |
|
|
$ |
442.1 |
|
|
21.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Less: flooring interest expense |
|
$ |
(6.1 |
) |
|
$ |
(17.9 |
) |
|
(65.9 |
) |
|
$ |
(28.3 |
) |
|
$ |
(55.5 |
) |
|
(49.0 |
) |
Less: used vehicle line of credit interest |
|
(0.1 |
) |
|
(1.2 |
) |
|
(91.7 |
) |
|
(0.5 |
) |
|
(3.9 |
) |
|
(87.2 |
) |
||||
Add: acquisition expenses |
|
0.6 |
|
|
0.2 |
|
|
200.0 |
|
|
1.6 |
|
|
1.9 |
|
|
(15.8 |
) |
||||
Less: gain on divestitures |
|
— |
|
|
(9.4 |
) |
|
(100.0 |
) |
|
(1.4 |
) |
|
(9.1 |
) |
|
(84.6 |
) |
||||
Add: insurance reserve |
|
0.3 |
|
|
1.1 |
|
|
(72.7 |
) |
|
6.1 |
|
|
9.5 |
|
|
(35.8 |
) |
||||
Add: asset impairment |
|
— |
|
|
— |
|
|
NM |
|
7.9 |
|
|
0.5 |
|
|
NM |
||||||
Adjusted EBITDA |
|
$ |
259.4 |
|
|
$ |
143.8 |
|
|
80.4 |
% |
|
$ |
523.0 |
|
|
$ |
385.5 |
|
|
35.7 |
% |
NM - not meaningful |
||||||||||||||||||||||
|
|
As of |
|
% |
|||||||
|
|
September 30, |
|
Increase |
|||||||
Net Debt to Adjusted EBITDA |
|
2020 |
|
2019 |
|
(Decrease) |
|||||
Floor plan notes payable: non-trade |
|
$ |
1,293.2 |
|
|
$ |
1,594.5 |
|
|
(18.9 |
)% |
Floor plan notes payable |
|
310.3 |
|
|
407.5 |
|
|
(23.9 |
) |
||
Used and service loaner vehicle inventory financing facility |
|
357.0 |
|
|
332.0 |
|
|
7.5 |
|
||
Revolving lines of credit |
|
35.0 |
|
|
69.0 |
|
|
NM |
|||
Real estate mortgages |
|
628.8 |
|
|
585.1 |
|
|
7.5 |
|
||
|
|
300.0 |
|
|
300.0 |
|
|
— |
|
||
|
|
400.0 |
|
|
— |
|
|
NM |
|||
Other debt |
|
147.5 |
|
|
33.5 |
|
|
340.3 |
|
||
Unamortized debt issuance costs |
|
(12.8 |
) |
|
(5.5 |
) |
|
132.7 |
|
||
Total debt |
|
$ |
3,459.0 |
|
|
$ |
3,316.1 |
|
|
4.3 |
% |
|
|
|
|
|
|
|
|||||
Less: Floor plan related debt |
|
$ |
(1,960.5 |
) |
|
$ |
(2,334.0 |
) |
|
(16.0 |
)% |
Less: Cash and cash equivalents |
|
(57.1 |
) |
|
(27.1 |
) |
|
110.7 |
|
||
Less: Availability on used vehicle and service loaner financing facility |
|
(72.0 |
) |
|
— |
|
|
NM |
|||
Net Debt |
|
$ |
1,369.4 |
|
|
$ |
955.0 |
|
|
43.4 |
% |
|
|
|
|
|
|
|
|||||
TTM Adjusted EBITDA |
|
$ |
655.3 |
|
|
$ |
498.6 |
|
|
31.4 |
% |
|
|
|
|
|
|
|
|||||
Net debt to Adjusted EBITDA |
|
2.09 |
x |
|
1.92 |
x |
|
8.9 |
% |
||
