Lithia Motors, Inc.Consolidated Statements of Operations(Unaudited)(In thousands except per share data) Three months ended % December 31, Increase Increase 2012 2011 (Decrease) (Decrease) ----------- ----------- ----------- ----------Revenues:New vehicle retail $ 506,871 $ 382,004 $ 124,867 32.7%Used vehicle retail 208,367 170,053 38,314 22.5Used vehicle wholesale 35,768 34,862 906 2.6Finance and insurance 29,244 22,397 6,847 30.6Service, body and parts 89,665 82,053 7,612 9.3Fleet and other 7,458 3,979 3,479 87.4 ----------- ----------- ----------- ---------- Total revenues 877,373 695,348 182,025 26.2Cost of sales:New vehicle retail 471,336 353,207 118,129 33.4Used vehicle retail 179,186 147,227 31,959 21.7Used vehicle wholesale 35,010 34,872 138 0.4Service, body and parts 46,410 43,652 2,758 6.3Fleet and other 7,071 3,538 3,533 99.9 ----------- ----------- ----------- ---------- Total cost of sales 739,013 582,496 156,517 26.9 ----------- ----------- ----------- ----------Gross profit 138,360 112,852 25,508 22.6Asset Impairments - 504 (504) NMSG&A expense 97,126 78,331 18,795 24.0Depreciation and amortization 4,441 4,095 346 8.4 ----------- ----------- ----------- ----------Income from operations 36,793 29,922 6,871 23.0Floor plan interest expense (3,490) (2,706) 784 29.0Other interest expense (2,239) (3,532) (1,293) (36.6)Other income, net 754 233 521 223.6 ----------- ----------- ----------- ----------Income from continuing operations before income taxes 31,818 23,917 7,901 33.0Income tax expense (12,154) (7,896) 4,258 53.9Income tax rate 38.2% 33.0% ----------- ----------- ----------- ----------Income from continuing operations $ 19,664 $ 16,021 $ 3,643 22.7%Income from discontinued operations, net of tax 169 2,745 (2,576) (93.8) ----------- ----------- ----------- ----------Net income $ 19,833 $ 18,766 $ 1,067 5.7%Diluted net income per share:Continuing operations $ 0.76 $ 0.61 $ 0.15 24.6%Discontinued operations - 0.10 (0.10) NM ----------- ----------- ----------- ----------Net income per share $ 0.76 $ 0.71 $ 0.05 7.0% =========== =========== =========== ==========Diluted shares outstanding 26,068 26,442 (374) (1.4)%NM - not meaningfulLithia Motors, Inc.Key Performance Metrics(Unaudited) Three months ended % December 31, Increase Increase ---------------------- 2012 2011 (Decrease) (Decrease) ---------- ---------- ---------- ----------Gross marginNew vehicle retail 7.0% 7.5% (50) bpsUsed vehicle retail 14.0 13.4 60 bpsUsed vehicle wholesale 2.1 0.0 210 bpsFinance and insurance 100.0 100.0 - bpsService, body and parts 48.2 46.8 140 bpsFleet and Other 5.2 11.1 (590) bpsGross profit margin 15.8 16.2 (40) bpsUnit salesNew vehicle retail 14,713 11,161 3,552 31.8%Used vehicle retail 11,943 9,810 2,133 21.7Used vehicle wholesale 5,009 4,270 739 17.3Total units sold 31,665 25,241 6,424 25.5Average selling priceNew vehicle retail $ 34,451 $ 34,227 $ 224 0.7%Used vehicle retail 17,447 17,335 112 0.6Used vehicle wholesale 7,141 8,164 (1,023) (12.5)Average gross profit per unitNew vehicle retail $ 2,415 $ 2,580 $ (165) (6.4)%Used vehicle retail 2,443 2,327 116 5.0Used vehicle wholesale 151 (2) 153 NMFinance and insurance 1,097 1,068 29 2.7Revenue mixNew vehicle retail 57.8% 54.9%Used vehicle retail 23.7 24.5Used vehicle wholesale 4.1 5.0Finance and insurance, net 3.3 3.2Service, body and parts 10.2 11.8Fleet and other 0.9 0.6 Adjusted As reported ------------------ ------------------ Three months ended Three months ended December 31, December 31, ------------------ ------------------Other metrics 2012 2011 2012 2011 -------- -------- -------- --------SG&A as a % of revenue 11.1% 12.2% 11.1% 11.3%SG&A as a % of gross profit 70.2 74.4 70.2 69.4Operating profit as a % of revenue 4.2 3.6 4.2 4.3Operating profit as a % of gross profit 26.6 22.0 26.6 26.5Pretax margin 3.6 2.7 3.6 3.4Net profit margin 2.2 1.8 2.2 2.3NM - not meaningfulLithia Motors, Inc.Same Store Operating Highlights(Unaudited) Three months ended % December 31, Increase Increase --------------------- 2012 2011 (Decrease) (Decrease) ---------- ---------- ---------- ----------RevenuesNew vehicle retail $ 489,968 $ 374,573 $ 115,395 30.8%Used vehicle retail 200,409 166,889 33,520 20.1Used vehicle wholesale 33,191 32,653 538 1.6Finance and insurance 28,360 21,703 6,657 30.7Service, body and parts 87,088 80,557 6,531 8.1Fleet and other 7,260 3,544 3,716 104.9 ---------- ---------- ----------Total revenues $ 846,276 $ 679,919 $ 166,357 24.5Gross profitNew vehicle retail $ 34,107 $ 28,178 $ 5,929 21.0%Used vehicle retail 28,300 22,440 5,860 26.1Used vehicle wholesale 685 38 647 NMFinance and insurance 28,360 21,703 6,657 30.7Service, body and parts 41,255 37,777 3,478 9.2Fleet and other 240 (120) 360 NM ---------- ---------- ----------Total gross profit $ 132,947 $ 110,016 $ 22,931 20.8Unit salesNew vehicle retail 14,216 10,933 3,283 30.0%Used vehicle retail 11,482 9,613 1,869 19.4Used vehicle wholesale 4,744 4,076 668 16.4Total units sold 30,442 24,622 5,820 23.6Average selling priceNew vehicle retail $ 34,466 $ 34,261 $ 205 0.6%Used vehicle retail 17,454 17,361 93 0.5Used vehicle wholesale 6,996 8,011 (1,015) (12.7)Average gross profit per unitNew vehicle retail $ 2,399 $ 2,577 $ (178) (6.9)%Used vehicle retail 2,465 2,334 131 5.6Used vehicle wholesale 144 9 135 NMFinance and insurance 1,104 1,056 48 4.5NM - not meaningfulLithia Motors, Inc.Consolidated Statements of Operations(Unaudited)(In thousands except per share data) Twelve months ended % December 31, Increase Increase ---------------------- 2012 2011 (Decrease) (Decrease) ---------- ---------- ---------- ----------Revenues:New vehicle retail $1,847,603 $1,391,375 $ 456,228 32.8%Used vehicle retail 833,484 678,571 154,913 22.8Used vehicle wholesale 139,237 128,329 10,908 8.5Finance and insurance 112,234 84,130 28,104 33.4Service, body and parts 347,703 315,958 31,745 10.0Fleet and other 36,226 34,383 1,843 5.4 ---------- ---------- ---------- ---------- Total revenues 3,316,487 2,632,746 683,741 26.0Cost of sales:New vehicle retail 1,713,156 1,284,225 428,931 33.4Used vehicle retail 711,763 580,357 131,406 22.6Used vehicle wholesale 137,823 127,732 10,091 7.9Service, body and parts 179,633 163,738 15,895 9.7Fleet and other 34,812 31,410 3,402 10.8 ---------- ---------- ---------- ---------- Total cost of sales 2,777,187 2,187,462 589,725 27.0 ---------- ---------- ---------- ----------Gross profit 539,300 445,284 94,016 21.1Asset impairments 115 1,376 (1,261) (91.6)SG&A expense 373,688 316,663 57,025 18.0Depreciation and amortization 17,128 16,427 701 4.3 ---------- ---------- ---------- ----------Income from operations 148,369 110,818 37,551 33.9Floor plan interest expense (12,816) (10,364) 2,452 23.7Other interest expense (9,621) (12,878) (3,257) (25.3)Other income, net 2,525 694 1,831 263.8 ---------- ---------- ---------- ----------Income from continuing operations before income taxes 128,457 88,270 40,187 45.5Income tax expense (49,062) (33,060) 16,002 48.4Income tax rate 38.2% 37.5% ---------- ---------- ---------- ----------Income from continuing operations $ 79,395 $ 55,210 $ 24,185 43.8%Income from discontinued operations, net of tax 967 3,650 (2,683) (73.5) ---------- ---------- ---------- ----------Net income $ 80,362 $ 58,860 $ 21,502 36.5%Diluted net income per share:Continuing operations $ 3.03 $ 2.07 $ 0.96 46.4%Discontinued operations 0.04 0.14 (0.10) (71.4) ---------- ---------- ---------- ----------Net income per share $ 3.07 $ 2.21 $ 0.86 38.9% ========== ========== ========== ==========Diluted shares outstanding 26,170 26,664 (494) (1.9)%Lithia Motors, Inc.Key Performance Metrics(Unaudited) Twelve months ended % December 31, Increase Increase ---------------------- 2012 2011 (Decrease) (Decrease) ---------- ---------- ---------- ----------Gross marginNew vehicle retail 7.3% 7.7% (40) bpsUsed vehicle retail 14.6 14.5 10 bpsUsed vehicle wholesale 1.0 0.5 50 bpsFinance and insurance 100.0 100.0 - bpsService, body and parts 48.3 48.2 10 bpsFleet and Other 3.9 8.6 (470) bpsGross profit margin 16.3 16.9 (60) bpsUnit salesNew vehicle retail 55,666 42,139 13,527 32.1%Used vehicle retail 47,965 39,436 8,529 21.6Used vehicle wholesale 19,144 16,085 3,059 19.0Total units sold 122,775 97,660 25,115 25.7Average selling priceNew vehicle retail $ 33,191 $ 33,019 $ 172 0.5%Used vehicle retail 17,377 17,207 170 1.0Used vehicle wholesale 7,273 7,978 (705) (8.8)Average gross profit per unitNew vehicle retail $ 2,415 $ 2,543 $ (128) (5.0)%Used vehicle retail 2,538 2,490 48 1.9Used vehicle wholesale 74 37 37 100.0Finance and insurance 1,083 1,031 52 5.0Revenue mixNew vehicle retail 55.7% 52.8%Used vehicle retail 25.1 25.8Used vehicle wholesale 4.2 4.9Finance and insurance, net 3.4 3.2Service, body and parts 10.5 12.0Fleet and other 1.1 1.3 Adjusted As reported ---------------------- ---------------------- Twelve months ended Twelve months ended December 31, December 31,Other metrics 2012 2011 2012 2011 ---------- ---------- ---------- ----------SG&A as a % of revenue 11.3% 12.3% 11.3% 12.0%SG&A as a % of gross profit 69.4 72.5 69.3 71.1Operating profit as a % of revenue 4.5 4.0 4.5 4.2Operating profit as a % of gross profit 27.4 23.8 27.5 24.9Pretax margin 3.8 3.2 3.9 3.4Net profit margin 2.3 2.0 2.4 2.1Lithia Motors, Inc.Same Store Operating Highlights(Unaudited) Twelve months ended % December 31, Increase Increase --------------------- 2012 2011 (Decrease) (Decrease) ---------- ---------- ---------- ----------RevenuesNew vehicle retail $1,776,896 $1,367,176 $ 409,720 30.0%Used vehicle retail 802,169 664,292 137,877 20.8Used vehicle wholesale 132,722 123,046 9,676 7.9Finance and insurance 107,376 81,055 26,321 32.5Service, body and parts 329,803 309,805 19,998 6.5Fleet and Other 30,928 33,426 (2,498) (7.5) ---------- ---------- ----------Total revenues $3,179,894 $2,578,800 $ 601,094 23.3Gross profitNew vehicle retail $ 128,894 $ 104,960 $ 23,934 22.8%Used vehicle retail 117,817 96,126 21,691 22.6Used vehicle wholesale 1,320 635 685 107.9Finance and insurance 107,376 81,055 26,321 32.5Service, body and parts 155,813 146,827 8,986 6.1Fleet and Other 739 1,018 (279) (27.4) ---------- ---------- ----------Total gross profit $ 511,959 $ 430,621 $ 81,338 18.9Unit salesNew vehicle retail 53,590 41,391 12,199 29.5%Used vehicle retail 46,179 38,628 7,551 19.5Used vehicle wholesale 18,383 15,613 2,770 17.7Total units sold 118,152 95,632 22,520 23.5Average selling priceNew vehicle retail $ 33,157 $ 33,031 $ 126 0.4%Used vehicle retail 17,371 17,197 174 1.0Used vehicle wholesale 7,220 7,881 (661) (8.4)Average gross profit per unitNew vehicle retail $ 2,405 $ 2,536 $ (131) (5.2)%Used vehicle retail 2,551 2,489 62 2.5Used vehicle wholesale 72 41 31 75.6Finance and insurance 1,076 1,013 63 6.2Lithia Motors, Inc.Other Highlights(Unaudited) As of December 31, --------------------- 2012 2011 Increase ---------- ---------- ----------Days Supply(1)New vehicle inventory 76 62 14 daysUsed vehicle inventory 56 52 4 days(1) Days supply calculated based on current inventorylevels, excluding in-transit vehicles, and a 30-dayhistorical cost of sales level.Financial covenants As of December Requirement 31, 2012 -------------------------- ---------------Current ratio Not less than 1.20 to 1 1.43 to 1Fixed charge coverage ratio Not less than 1.20 to 1 2.35 to 1Leverage ratio Not more than 5.00 to 1 2.08 to 1Funded debt restriction Not more than $375 million $ 195.7 millionLithia Motors, Inc.Other Highlights(Unaudited) Three months ended Twelve months ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------New vehicle unit sales brand mixChrysler 32.0% 31.4% 32.2% 31.4%General Motors 14.7 15.9 15.2 16.7Toyota 13.8 12.0 13.7 12.3Subaru 7.8 6.1 7.3 5.5BMW, MINI 7.5 8.2 6.8 7.0Honda, Acura 6.7 6.1 6.9 6.9Ford 6.2 6.5 5.5 6.2Hyundai 2.7 3.9 3.6 4.4Mercedes 2.7 2.7 2.2 1.7Nissan 2.5 3.1 2.8 3.6Volkswagen, Audi 1.7 2.5 2.0 2.4Kia 0.6 1.0 0.9 1.2Mazda 0.5 0.3 0.5 0.5Other 0.6 0.3 0.4 0.2 Three months ended Twelve months ended December 31, December 31, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------Revenue geographic mixTexas 24.3% 25.0% 25.0% 25.2%Oregon 20.1 20.1 19.9 18.4California 10.5 10.3 10.4 10.4Washington 8.8 8.4 8.3 8.4Montana 8.7 8.2 8.8 8.6Alaska 7.8 8.5 8.5 9.5Iowa 5.2 5.4 5.1 5.4Idaho 5.0 5.8 5.3 6.1Nevada 4.8 4.8 4.7 4.6North Dakota 2.9 2.4 2.5 2.3New Mexico 1.9 1.1 1.5 1.1 As of February 20, 2013 -------------------- # of % ofCurrent store count mix stores total ---------- ---------Chrysler 23 26.4%General Motors 14 16.1Honda, Acura 9 10.3Toyota 8 9.2BMW, MINI 7 8.0Hyundai 6 6.9Ford 5 5.7Nissan 3 3.5Mercedes 3 3.5Subaru 3 3.5Other 3 3.5Kia 2 2.3Volkswagen, Audi 1 1.1Lithia Motors, Inc.Consolidated Balance Sheets(Unaudited)(In thousands) December 31, December 31, 2012 2011 ------------ ------------Cash and cash equivalents $ 42,839 $ 20,851Trade receivables, net 133,149 99,407Inventories, net 723,326 506,484Deferred income taxes 3,832 4,730Other current assets 17,484 16,719Assets held for sale 12,579 - ------------ ------------Total current assets $ 933,209 $ 648,191Property and equipment, net 425,086 373,779Goodwill 32,047 18,958Franchise value 62,429 59,095Deferred income taxes 17,123 29,270Other non-current assets 22,808 16,840 ------------ ------------Total assets $ 1,492,702 1,146,133 ============ ============Floor plan notes payable $ 13,454 $ 114,760Floor plan notes payable: non trade 568,130 229,180Current maturities of long-term debt 8,182 8,221Trade payables 41,589 31,712Accrued liabilities 81,602 72,711Liabilities related to assets held for sale 8,347 - ------------ ------------Total current liabilities $ 721,304 456,584Long-term debt 286,876 278,653Deferred revenue 33,589 25,146Other long-term liabilities 22,832 18,629 ------------ ------------Total liabilities $ 1,064,601 $ 779,012 ------------ ------------Class A common stock 268,801 279,366Class B common stock 343 468Additional paid-in capital 12,399 10,918Accumulated other comprehensive loss (2,615) (4,508)Retained earnings 149,173 80,877 ------------ ------------Total liabilities & stockholders' equity $ 1,492,702 $ 1,146,133 ============ ============Lithia Motors, Inc.Summarized Cash Flow from Operations(Unaudited)(In thousands) Twelve months ended December 31, ---------------------- 2012 2011 ---------- ----------Net income $ 80,362 $ 58,860Adjustments to reconcile net income to net cash used in operating activities:Asset impairments 115 1,376Depreciation and amortization 17,128 16,427Depreciation and amortization within discontinued operations 186 521Stock-based compensation 3,116 2,001Gain on disposal of assets (747) (6,495)(Gain) loss from disposal activities within discontinued operations 621 (4,396)Deferred income taxes 14,172 8,093Excess tax benefit from share-based payment arrangements (2,802) (525)(Increase) decrease: Trade receivables, net (33,704) (22,503) Inventories (230,442) (78,202) Other current assets (4,194) (13,111) Other non-current assets (6,176) (1,108)Increase (decrease): Floor plan notes payable (82,109) 13,510 Trade payables 8,001 5,998 Accrued liabilities 10,538 11,605 Other long-term liabilities and deferred revenue 13,459 7,183 ---------- ----------Net cash used in operating activities $ (212,476) $ (766) ========== ==========Lithia Motors, Inc.Reconciliation of Non-GAAP Cash Flow from Operations(Unaudited)(In thousands) Twelve months ended December 31, ----------------------Net cash provided by (used in) operating activities 2012 2011 ---------- ----------As reported $ (212,476) $ (766) Floor plan notes payable, non-trade 348,477 63,145 ---------- ----------Adjusted $ 136,001 $ 62,379 ========== ==========Lithia Motors, Inc.Reconciliation of Certain Non-GAAP Financial Measures(Unaudited)(In thousands, except for per share data) Three months ended December 31, 2012 ---------------------------------- As Tax reported attribute Adjusted ---------- ---------- ----------Income from continuing operations before income taxes $ 31,818 $ - $ 31,818Income tax expense (12,154) (374) (12,528) ---------- ---------- ----------Net income from continuing operations $ 19,664 $ (374) $ 19,290 ========== ========== ==========Diluted earnings per share from continuing operations $ 0.76 $ (0.02) $ 0.74Diluted share count 26,068 Three months ended December 31, 2011 ------------------------------------------- Asset impairment and As disposal Reserve reported gain adjustments Adjusted -------- ---------- ----------- --------Cost of sales - service, body and parts $ 43,652 $ - $ (950) $ 42,702Gross profit 112,852 - 950 113,802Asset impairments 504 (504) - -Selling, general and administrative 78,331 6,301 - 84,632Income from operations 29,922 (5,797) 950 25,075Income from continuing operations before income taxes $ 23,917 $ (5,797) $ 950 $ 19,070Income tax expense (7,896) 1,842 (360) (6,414) -------- ---------- ----------- --------Net income from continuing operations $ 16,021 $ (3,955) $ 590 $ 12,656 ======== ========== =========== ========Diluted earnings per share from continuing operations $ 0.61 $ (0.15) $ 0.02 $ 0.48Diluted share count 26,442Lithia Motors, Inc.Reconciliation of Certain Non-GAAP Financial Measures(Unaudited)(In thousands, except for per share data) Twelve months ended December 31, 2012 ------------------------------------------------------ Asset impairment and As disposal Equity Tax reported gain investment attribute Adjusted -------- ---------- ---------- --------- ---------Asset impairments $ 115 $ (115) $ - $ - $ -Selling, general and administrative 373,688 739 - - 374,427Income from operations 148,369 (624) - - 147,745Other income, net 2,525 - (244) - 2,281Income from continuing operations before income taxes $128,457 $ (624) $ (244) $ - $ 127,589Income tax expense (49,062) 249 97 (1,447) (50,163) -------- ---------- ---------- --------- ---------Net income from continuing operations $ 79,395 $ (375) $ (147) $ (1,447) $ 77,426 ======== ========== ========== ========= =========Diluted earnings per share from continuing operations $ 3.03 $ (0.01) $ (0.01) $ (0.05) $ 2.96Diluted share count 26,170 Twelve months ended December 31, 2011 --------------------------------------------- Asset impairment and As disposal Reserve reported gain adjustments Adjusted --------- ---------- ----------- ---------Cost of sales - service, body and parts $ 163,738 $ - $ (950) $ 162,788Gross profit 445,284 - 950 446,234Asset impairments 1,376 (1,376) - -Selling, general and administrative 316,663 6,881 - 323,544Income from operations 110,818 (5,505) 950 106,263Income from continuing operations before income taxes $ 88,270 $ (5,505) $ 950 $ 83,715Income tax expense (33,060) 1,724 (360) (31,696) --------- ---------- ----------- ---------Net income from continuing operations $ 55,210 $ (3,781) $ 590 $ 52,019 ========= ========== =========== =========Diluted earnings per share from continuing operations $ 2.07 $ (0.14) $ 0.02 $ 1.95Diluted share count 26,664
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Contact:
John North
VP Finance and Controller
(541) 618-5748
