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Lithia Motors Reports EPS of $0.84 for First Quarter 2013, an Increase of 42% Over Prior Year Adjusted EPS; Increases 2013 Outlook

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MEDFORD, OR -- (Marketwired) -- 04/24/13 -- Lithia Motors, Inc. (NYSE: LAD) today reported 2013 first quarter income from continuing operations was $21.9 million, or $0.84 per diluted share. This compares to 2012 first quarter adjusted income from continuing operations of $15.6 million, or $0.59 per diluted share.

First Quarter-over-Quarter Operating Highlights:

•New vehicle same store sales increased 22% •Used vehicle retail same store sales increased 22% •Service, body and parts same store sales increased 7% •SG&A expense as a percentage of gross profit was 69%

First quarter 2013 revenue from continuing operations increased $164.9 million, or 22%, to $903.1 million from $738.2 million in the first quarter of 2012.

"We grew quarterly EPS 42% over the adjusted prior year," said Bryan DeBoer, President and CEO. "Total same store sales increased 19% in 2013, on top of an increase of 21% in 2012. We are pleased with our performance in the service, body and parts business, which increased 7% on a same store basis, despite two fewer selling days in 2013 compared to 2012. Warranty sales increased over 9% for the second consecutive quarter, suggesting that the number of vehicles eligible for warranty repair is growing."

We did not have any adjustments to the 2013 first quarter results from continuing operations. As shown in the attached reconciliation table, the 2012 first quarter adjusted results from continuing operations exclude a net benefit of $0.04 per share for an asset impairment charge, the gain on the disposal of assets, an adjustment to an investment and a non-core tax attribute. Unadjusted, net income from continuing operations for the first quarter of 2012 was $16.6 million, or $0.63 per diluted share.

Commenting on SG&A performance, Chris Holzshu, Senior Vice President and Chief Financial Officer, stated, "Cost control remains a key initiative to drive earnings growth. Our incremental throughput, or the percentage of additional gross profit dollars that flow to operating income, was 49% on a same store basis in the first quarter. This was just shy of our objective of 50%. We are focused on effective spending in personnel and advertising, which make up the majority of controllable SG&A expense."

Corporate Development
On April 11, 2013, Lithia was granted a new franchise to sell MINI vehicles in Anchorage, Alaska. The store will be located next to our Anchorage BMW location.

"Developing strong relationships with our manufacturer partners is a key to our success," said Bryan DeBoer. "We appreciate the vote of confidence from MINI in awarding us the franchise. By understanding our customers and increasing our share of vehicles sold in each market we serve, we hope to find additional opportunities with manufacturers in the future."

Share Repurchases
During the first quarter, we repurchased 127,900 shares of our Class A common stock at a weighted average price of $40.76 per share. Our total remaining repurchase authorization is 1,726,953 shares.

Balance Sheet Update
We ended the first quarter with $15 million in cash and $151 million in available credit on our credit facilities. Additionally, approximately $149 million of operating real estate is currently unfinanced, which could provide up to an additional $112 million in available liquidity, for total liquidity of $278 million.

In March, we strategically retired $26 million in mortgages. As a result, we have $165 million in mortgage debt outstanding, of which 78% are fixed rate mortgages. Our nearest maturities, totaling $29 million, are in 2016. We have no convertible notes or high-yield debt outstanding.

Increased Outlook for 2013
We project 2013 second quarter earnings of $0.86 to $0.88 per diluted share and full-year 2013 earnings of $3.48 to $3.55 per diluted share. Both projections are based on the following annual assumptions:

•Total revenues of $3.8 to $3.9 billion •New vehicle same store sales increasing 15.5% •New vehicle gross margin of 6.9% to 7.1% •Used vehicle same store sales increasing 13.0% •Used vehicle gross margin of 14.3% to 14.5% •Service body and parts same store sales increasing 7.0% •Service body and parts gross margin of 48.2% to 48.4% •Finance and insurance gross profit of $1,100 per unit •Tax rate of 39.5% •Average diluted shares outstanding of 26.5 million •Capital expenditures of $55 million •Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items

First Quarter Earnings Conference Call and Updated Presentation
The first quarter conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the first quarter results has been added to www.LithiaInvestorRelations.com.

To listen live on our website or for replay, visit www.LithiaInvestorRelations.com and click on webcasts. A playback of the conference call will be available on April 24, 2013 through May 8, 2013 by calling 877-660-6853 (Conference ID: 412411).

About Lithia
Lithia Motors, Inc. is the ninth largest automotive retailer in the United States. Lithia sells 27 brands of new vehicles and all brands of used vehicles at 88 stores in 11 states. Lithia also arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations.

Sites
www.lithia.com
www.lithiacareers.com
www.assuredservice.com

Lithia Motors on Facebook
http://www.facebook.com/LithiaMotors

Lithia Motors on Twitter
http://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," or "will" and similar references to future periods. Examples of forward-looking statements in this press release include our outlook of earnings per share results and the assumptions that underlie them.

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 industries 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 from time to time in our 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 from continuing operations, adjusted SG&A as a percentage of revenues and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, and adjusted pre-tax margin. 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 % March 31, Increase Increase ---------------------- 2013 2012 (Decrease) (Decrease) ---------- ---------- ---------- ----------Revenues:New vehicle retail $ 493,441 $ 392,946 $ 100,495 25.6%Used vehicle retail 239,228 190,619 48,609 25.5Used vehicle wholesale 39,506 33,357 6,149 18.4Finance and insurance 31,663 24,876 6,787 27.3Service, body and parts 90,440 83,544 6,896 8.3Fleet and other 8,802 12,904 (4,102) (31.8) ---------- ---------- ---------- ---------- Total revenues 903,080 738,246 164,834 22.3Cost of sales:New vehicle retail 458,794 362,694 96,100 26.5Used vehicle retail 204,255 162,342 41,913 25.8Used vehicle wholesale 38,532 32,960 5,572 16.9Service, body and parts 46,661 43,409 3,252 7.5Fleet and other 8,400 12,507 (4,107) (32.8) ---------- ---------- ---------- ---------- Total cost of sales 756,642 613,912 142,730 23.2 ---------- ---------- ---------- ----------Gross profit 146,438 124,334 22,104 17.8Asset Impairments - 115 (115) NMSG&A expense 101,131 88,439 12,692 14.4Depreciation and amortization 4,721 4,138 583 14.1 ---------- ---------- ---------- ----------Income from operations 40,586 31,642 8,944 28.3Floor plan interest expense (3,449) (2,902) 547 18.8Other interest expense (2,361) (2,727) (366) (13.4)Other income, net 801 498 303 60.8 ---------- ---------- ---------- ----------Income from continuing operations before income taxes 35,577 26,511 9,066 34.2Income tax expense (13,695) (9,877) 3,818 38.7Income tax rate 38.5% 37.3% ---------- ---------- ---------- ----------Income from continuing operations $ 21,882 $ 16,634 $ 5,248 31.5%Income from discontinued operations, net of tax 173 162 11 6.8 ---------- ---------- ---------- ----------Net income $ 22,055 $ 16,796 $ 5,259 31.3%Diluted net income per share:Continuing operations $ 0.84 $ 0.63 $ 0.21 33.3%Discontinued operations 0.01 - 0.01 NM ---------- ---------- ---------- ----------Net income per share $ 0.85 $ 0.63 $ 0.22 34.9% ========== ========== ========== ==========Diluted shares outstanding 26,054 26,478 (424) (1.6)%NM - not meaningful




Lithia Motors, Inc.Key Performance Metrics (Unaudited) Three months ended % March 31, Increase Increase ---------------------- 2013 2012 (Decrease) (Decrease) ---------- ---------- ---------- ----------Gross marginNew vehicle retail 7.0% 7.7% (70) bpsUsed vehicle retail 14.6 14.8 (20) bpsUsed vehicle wholesale 2.5 1.2 130 bpsFinance and insurance 100.0 100.0 - bpsService, body and parts 48.4 48.0 40 bpsFleet and Other 4.6 3.1 150 bpsGross profit margin 16.2 16.8 (60) bpsUnit salesNew vehicle retail 14,720 12,138 2,582 21.3%Used vehicle retail 13,661 11,207 2,454 21.9Used vehicle wholesale 5,324 4,481 843 18.8Total units sold 33,705 27,826 5,879 21.1Average selling priceNew vehicle retail $ 33,522 $ 32,373 $ 1,149 3.5%Used vehicle retail 17,512 17,009 503 3.0Used vehicle wholesale 7,420 7,444 (24) (0.3)Average gross profit per unitNew vehicle retail $ 2,354 $ 2,492 $ (138) (5.5)%Used vehicle retail 2,560 2,523 37 1.5Used vehicle wholesale 183 89 94 105.6Finance and insurance 1,116 1,066 50 4.7Revenue mixNew vehicle retail 54.6% 53.2%Used vehicle retail 26.5 25.8Used vehicle wholesale 4.4 4.5Finance and insurance, net 3.5 3.4Service, body and parts 10.0 11.3Fleet and other 1.0 1.8 Adjusted As reported ---------------------- ---------------------- Three months ended Three months ended March 31, March 31, ---------------------- ----------------------Other metrics 2013 2012 2013 2012 ---------- ---------- ---------- ----------SG&A as a % of revenue 11.2% 12.1% 11.2% 12.0%SG&A as a % of gross profit 69.1 71.7 69.1 71.1Operating profit as a % of revenue 4.5 4.2 4.5 4.3Operating profit as a % of gross profit 27.7 24.9 27.7 25.4Pretax margin 3.9 3.5 3.9 3.6Net profit margin 2.4 2.1 2.4 2.3NM - not meaningfulLithia Motors, Inc.Same Store Operating Highlights (Unaudited) Three months ended % March 31, Increase Increase --------------------- 2013 2012 (Decrease) (Decrease) ---------- ---------- ---------- ----------RevenuesNew vehicle retail $ 474,019 $ 388,466 $ 85,553 22.0%Used vehicle retail 227,748 187,500 40,248 21.5Used vehicle wholesale 36,436 32,743 3,693 11.3Finance and insurance 29,978 23,969 6,009 25.1Service, body and parts 87,747 82,366 5,381 6.5Fleet and other 8,639 12,737 (4,098) (32.2) ---------- ---------- ----------Total revenues $ 864,567 $ 727,781 $ 136,786 18.8Gross profitNew vehicle retail $ 32,906 $ 29,794 $ 3,112 10.4%Used vehicle retail 33,749 27,968 5,781 20.7Used vehicle wholesale 899 447 452 101.1Finance and insurance 29,978 23,969 6,009 25.1Service, body and parts 41,826 38,728 3,098 8.0Fleet and other 267 270 (3) (1.1) ---------- ---------- ----------Total gross profit $ 139,625 $ 121,176 $ 18,449 15.2Unit salesNew vehicle retail 14,151 12,004 2,147 17.9%Used vehicle retail 13,050 11,015 2,035 18.5Used vehicle wholesale 4,990 4,387 603 13.7Total units sold 32,191 27,406 4,785 17.5Average selling priceNew vehicle retail $ 33,497 $ 32,361 $ 1,136 3.5%Used vehicle retail 17,452 17,022 430 2.5Used vehicle wholesale 7,302 7,464 (162) (2.2)Average gross profit per unitNew vehicle retail $ 2,325 $ 2,482 $ (157) (6.3)%Used vehicle retail 2,586 2,539 47 1.9Used vehicle wholesale 180 102 78 76.5Finance and insurance 1,102 1,041 61 5.9NM - not meaningfulLithia Motors, Inc.Other Highlights (Unaudited) As of March 31, December 31, March 31, ------------ ------------ ------------ 2013 2012 2012 ------------ ------------ ------------Days Supply(1)New vehicle inventory 71 76 61Used vehicle inventory 46 56 48(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 March 31, 2013 --------------------------- --------------------Current ratio Not less than 1.20 to 1 1.42 to 1Fixed charge coverage ratio Not less than 1.20 to 1 2.57 to 1Leverage ratio Not more than 5.00 to 1 1.70 to 1Funded debt restriction Not more than $375 million $168.7 millionLithia Motors, Inc.Other Highlights (Unaudited) Three months ended March 31, ------------------------ 2013 2012 ----------- -----------New vehicle unit sales brand mixChrysler 31.3% 31.9%General Motors 15.9 14.6Toyota 14.9 12.9Subaru 7.7 7.6BMW, MINI 6.3 7.0Honda, Acura 6.8 6.6Ford 5.9 5.7Hyundai 2.9 4.1Nissan 2.7 3.3Mercedes 2.2 2.0Volkswagen, Audi 1.8 2.1Kia 0.6 1.2Mazda 0.5 0.6Other 0.5 0.4 Three months ended March 31, ------------------------ 2013 2012 ----------- -----------Revenue geographic mixTexas 25.7% 25.0%Oregon 20.8 21.1California 10.7 10.6Montana 9.0 8.6Washington 8.2 7.6Alaska 7.1 8.8Idaho 5.2 5.5Nevada 4.7 5.0Iowa 4.5 4.8North Dakota 2.4 2.0New Mexico 1.7 1.0 As of April 24, 2013 ------------------------Current store count mix # of stores % of total ----------- -----------Chrysler 23 26.2%General Motors 13 14.8Honda, Acura 9 10.2Toyota 9 10.2BMW, MINI 8 9.1Hyundai 5 5.7Ford 5 5.7Mercedes 4 4.5Subaru 4 4.5Nissan 3 3.4Volkswagen, Audi 2 2.3Other 3 3.4Lithia Motors, Inc.Consolidated Balance Sheets (Unaudited)(In thousands) March 31, December 31, 2013 2012 ------------- -------------Cash and cash equivalents $ 15,006 $ 42,839Trade receivables, net 134,109 133,149Inventories, net 714,121 723,326Deferred income taxes 3,079 3,832Other current assets 11,729 17,484Assets held for sale 12,996 12,579 ------------- -------------Total current assets $ 891,040 $ 933,209Property and equipment, net 427,935 425,086Goodwill 32,047 32,047Franchise value 62,429 62,429Deferred income taxes 20,704 17,123Other non-current assets 25,548 22,808 ------------- -------------Total assets $ 1,459,703 $ 1,492,702 ============= =============Floor plan notes payable $ 15,545 $ 13,454Floor plan notes payable: non trade 567,981 568,130Current maturities of long-term debt 7,483 8,182Trade payables 41,339 41,589Accrued liabilities 87,787 81,602Liabilities related to assets held for sale 8,662 8,347 ------------- -------------Total current liabilities $ 728,797 $ 721,304Long-term debt 222,249 286,876Deferred revenue 35,252 33,589Other long-term liabilities 25,602 22,832 ------------- -------------Total liabilities $ 1,011,900 $ 1,064,601 ------------- -------------Class A common stock 263,253 268,801Class B common stock 335 343Additional paid-in capital 15,096 12,399Accumulated other comprehensive loss (2,109) (2,615)Retained earnings 171,228 149,173 ------------- -------------Total liabilities & stockholders' equity $ 1,459,703 $ 1,492,702 ============= =============Lithia Motors, Inc.Summarized Cash Flow from Operations (Unaudited)(In thousands) Three months ended March 31, ---------------------------- 2013 2012 ------------- -------------Net income $ 22,055 $ 16,796Adjustments to reconcile net income to net cash used in operating activities:Asset impairments - 115Depreciation and amortization 4,721 4,138Depreciation and amortization within discontinued operations - 61Stock-based compensation 1,140 576Gain on disposal of assets (19) (988)Deferred income taxes (206) (870)Excess tax benefit from share-based payment arrangements (2,937) (749)(Increase) decrease: Trade receivables, net (960) (11,633) Inventories 7,890 (62,113) Other current assets 5,757 5,292 Other non-current assets (424) 2,778Increase (decrease): Floor plan notes payable 2,257 (3,324) Trade payables (410) 1,549 Accrued liabilities 6,188 5,105 Other long-term liabilities and deferred revenue 4,705 2,280 ------------- -------------Net cash provided by (used in) operating activities $ 49,757 $ (40,987) ============= =============Lithia Motors, Inc.Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)(In thousands) Three months ended March 31, ---------------------------Net cash provided by (used in) operating activities 2013 2012 ------------- -------------As reported $ 49,757 $ (40,987) Floor plan notes payable, non-trade 953 39,401 ------------- -------------Adjusted $ 50,710 $ (1,586) ============= =============Lithia Motors, Inc.Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)(In thousands, except for per share data) Three Months Ended March 31, 2012 ------------------------------------------------------ Asset impairment and As disposal Equity Tax reported gain investment attribute Adjusted -------- ----------- ---------- --------- --------Other asset impairments $ 115 $ (115) $ - $ - $ -Selling, general and administrative 88,439 739 - - 89,178Income from operations 31,642 (624) - - 31,018Other income, net 498 - (244) - 254Income from continuing operations before income taxes $ 26,511 $ (624) $ (244) $ - $ 25,643Income tax expense (9,877) 244 95 (493) (10,031) -------- ----------- ---------- --------- --------Net income from continuing operations $ 16,634 $ (380) $ (149) $ (493) $ 15,612 ======== =========== ========== ========= ========Diluted earnings per share from continuing operations $ 0.63 $ (0.01) $ (0.01) $ (0.02) $ 0.59Diluted share count 26,478





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