MEDFORD, OR – 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.”
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.”
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).
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.