Lithia Motors, Inc. Form 8-K 3rd Quarter Earnings 2003

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):      September 30, 2003

Lithia Motors, Inc.
(Exact Name of Registrant as specified in its charter)

Oregon
(State or other jurisdiction of incorporation)

0-21789
(Commission File Number)

93 - 0572810
(IRS Employer Identification No.)

360 E. Jackson Street, Medford, Oregon
Address of Principal Executive Office

97501
Zip Code

Registrant's telephone number including area code 541-776-6868

(Former name or former address, if changed since last report)      Not applicable

 

Item 7. Financial Statements and Exhibits

 

(a)

Financial statements of business acquired.
 
 

Not applicable.
 
 

(b)

Pro forma financial information.
 
 

Not applicable.
 
 

(c)

Exhibits.
 
 

The following Exhibits are filed as part of this Report.
 
 

Exhibit 99
 

Press Release

Item 12. Regulation FD Disclosure

On October 28, 2003, Lithia Motors, Inc. issued a press release, including certain forward looking statements, disclosing earnings for the quarter ended September 30, 2003.  All of the information in the press release, appearing in Exhibit 99, is not filed but is furnished pursuant to Regulation FD.

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

LITHIA MOTORS, INC.
 

(Registrant)

Date: October 29, 2003

By:

 /s/ Jeffrey B. DeBoer

        Jeffrey B. DeBoer
        Senior Vice President & CFO

 

 

 

LITHIA MOTORS THIRD QUARTER EPS GROWS 17%; EARNS RECORD 69 CENTS PER SHARE; ANNOUNCES SECOND QUARTERLY DIVIDEND OF $0.07 PER SHARE

MEDFORD, OREGON, October 28, 2003 (5:00 a.m. PT) - Lithia Motors, Inc. (NYSE: LAD) today announced that net earnings rose 20% to a record level of $12.9 million in the third quarter of 2003 compared to $10.7 million in the third quarter of 2002. Earnings per share rose 17% to $0.69 per share versus $0.59 in the same period last year. This exceeds First Call estimates of $0.59 by ten cents.

In addition, Lithia announced the payment of a dividend of $0.07 per share for the third quarter of 2003. Shareholders of record as of November 7, 2003 will receive the dividend that will be payable November 21, 2003.

Third Quarter Highlights (vs. Third Quarter 2002):

Operating Profits:

+19%

  

Gross Margin:

 16.1%

Net Profits:

+20%

  

SG&A as a % of Sales:

 12.0%

Earnings per Share:

+17%

  

Operating Margin (EBIT):

  3.7%

Lithia Motors reported that total revenues for the third quarter increased 6% to a record level of $728.3 million in the third quarter of 2003 from $687.6 million in the third quarter of 2002. New vehicle sales increased 10%, used vehicle sales increased 1%, parts/service sales increased 13%, and finance/insurance sales increased 17%. Same store retail sales for the third quarter declined 0.6% as compared to a gain of 11.1% in the same period last year.

Lithia retailed 16,056 new vehicles and 11,732 used vehicles in the quarter. Finance and Insurance income per new and used retail unit increased $98 to $932 from $834 in the same period last year.

Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are pleased to report solid results this quarter. We have seen steady improvements in our gross margin and increasing leverage on our SG&A expenses, as compared to the first and second quarters of the year. This resulted in a 40 basis point year-over-year improvement in operating margin to 3.7% for the third quarter. This is near Lithia's historical averages for the third quarter. The margin improvements were most notable in the used vehicle business, in fact, used vehicle margins have improved throughout the year. The new vehicle side of the business continues to demonstrate strong results. Last year in the third quarter, new vehicle same store sales were up 23%. We were able to add an additional 1.5% of new vehicle same store sales growth, on top of the large increase last year. Year to date new vehicle same store sales are up 6.9% for Lithia. This exceeds the national new vehicle sales levels that were down approximately 1.6% for the same period. Our operational focus continues to allow us to exceed industry sales levels even though we operate in some of the country's most challenging economic environments."

 

 

Jeffrey B. DeBoer, Senior Vice President and CFO, added, "The acquisition pipeline remains strong. Lithia's balance sheet is financially sound with a long-term debt to total capitalization ratio of 29%. Inventories in both new and used vehicles are at low levels. New vehicle inventories at the end of the quarter were approximately 19 days below our year-end 2002 days supply levels and at average levels for this time of the year. Used vehicle inventories are currently at the lowest levels seen by Lithia since it has been a public company. We are well positioned going into the winter selling season."

"Finally, our annual guidance for 2003 has been increased to $1.82 - $1.85 per share. For the full-year 2004 we are providing guidance of $1.90 to $2.00, which includes a steady pace of acquisitions" concluded Jeffrey B. DeBoer.

Lithia Motors will be providing more detailed information on the results for the third quarter 2003 in its conference call scheduled for 7 a.m. PT, 10 a.m. ET today. The live conference call can be accessed by calling 973-582-2700. To listen to a live webcast or hear a replay, log-on to: www.lithia.com - go to Investor Relations - and click on the Live Conference Call icon.

Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 24 brands of new vehicles and operates 78 stores and 145 franchises in 12 states in the Western United States and over the Internet through "Lithia.com-America's Car & Truck Store." Lithia also sells used vehicles; arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations. Lithia retailed 91,478 new and used vehicles and had $2.38 billion in total revenue in 2002.

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, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation economic conditions, acquisition risk factors and others set forth from time to time in the company's filings with the SEC. Specific risks in this press release include margin improvements and SG&A expense leverage, revenue growth rates, market conditions and the inventory position going into the fourth quarter of the year.

Additional Information

For additional information on Lithia Motors, contact: Jeff DeBoer, Senior VP and Chief Financial Officer (541) 776-6868 (E-mail: invest@lithia.com) or Dan Retzlaff, Director Investor Relations at (541) 776-6819 (dretzlaff@lithia.com) or log-on to: www.lithia.com - go to About Lithia - Investor Relations

 

LITHIA MOTORS, INC.
(In Thousands except per share and unit data)

Unaudited)

(Unaudited)

  

Three Months Ended
September 30,

      
 		  

2003

  

2002

  

Increase
(Decrease)

% Increase
(Decrease)

New Vehicle Sales

$

429,434

$

390,229

$

39,205

10.0%

Used Vehicle Sales

  

200,899

  

199,443

  

1,456

0.7

Service, Body & Parts Sales

  

71,155

  

62,964

  

8,191

13.0

Finance & Insurance

  

25,908

  

22,107

  

3,801

17.2

Fleet & Other Revenues

  

888

  

12,902

  

(12,014)

(93.1)
   

Total Revenues

  

728,284

  

687,645

  

40,639

5.9

Cost of Sales

  

611,280

  

583,039

  

28,241

4.8

Gross Profit

  

117,004

  

104,606

  

12,398

11.9

SG&A Expense

  

87,730

  

80,209

  

7,521

9.4

Depreciation/Amortization

  

2,681

  

2,044

  

637

31.2

Income from Operations

  

26,593

  

22,353

  

4,240

19.0

Flooring Interest Expense

  

(3,413)

  

(2,943)

  

(470)

16.0

Other Interest Expense

  

(1,510)

  

(1,581)

  

71

(4.5)

Other Income (Expense), net

  

(272)

  

(252)

  

(20)

7.9
   

Pre-Tax Profit

  

21,398

  

17,577

  

3,821

21.7

Income Tax

  

8,517

  

6,848

  

1,669

24.4

Income Tax Rate

  

39.8%

  

39.0%

      

Net Profit

$

12,881

$

10,729

$

2,152

20.1%
   

Shares Outstanding

  

18,708

  

18,269

  

439

2.4%

Diluted EPS

$

0.69

$

0.59

$

0.10

16.9%
               

Unit Sales:

              
             

New

  

16,056

  

14,972

  

1,084

7.2%

Used - Retail

  

11,732

  

11,538

  

194

1.7

Used - Wholesale

  

7,207

  

6,923

  

284

4.1

Total Units Sold

  

34,995

  

33,433

  

1,562

4.7

Finance/Insurance per retail unit

$

932

$

834

  

98

11.8
               

Average Selling Price:

              
             

New

$

26,746

$

26,064

$

682

2.6%

Used - Retail

  

14,358

  

14,472

  

(114)

(0.8)

Used - Wholesale

  

4,503

  

4,690

  

(187)

(4.0)
               

Key Financial Data:

              
             

Gross Profit Margin

  

16.1%

  

15.2%

      

SG&A as a % of Sales

  

12.0%

  

11.7%

      

Operating Margin

  

3.7%

  

3.3%

      

Pre-Tax Margin

  

2.9%

  

2.6%

      

Total Retail Same-Store Sales

  

(0.6)%

  

11.1%

      

 

 

LITHIA MOTORS, INC.
(In Thousands except per share and unit data)
(Unaudited)
  

Nine Months Ended
September 30,

      
   

2003

  

2002

  

Increase
(Decrease)

% Increase
(Decrease)

New Vehicle Sales

$

1,134,504

$

958,651

$

175,853

18.3%

Used Vehicle Sales

  

574,205

  

568,415

  

5,790

1.0

Service, Body & Parts Sales

  

195,267

  

169,997

  

25,270

14.9

Finance & Insurance

  

70,486

  

60,186

  

10,300

17.1

Fleet & Other Revenues

 

4,833

  

39,112

  

(34,279)

(87.6)
   

Total Revenues

  

1,979,295

  

1,796,361

  

182,934

10.2

Cost of Sales

  

1,663,896

  

1,515,226

  

148,670

9.8

Gross Profit

  

315,399

  

281,135

  

34,264

12.2

SG&A Expense

  

249,342

  

221,485

  

27,857

12.6

Depreciation/Amortization

  

7,406

  

5,607

  

1,799

32.1
   

Income from Operations

  

58,651

  

54,043

  

4,608

8.5

Flooring Interest Expense

  

(10,954)

  

(8,162)

  

(2,792)

34.2

Other Interest Expense

  

(4,506)

  

(4,637)

  

131

(2.8)

Other Income (Expense), net

  

(724)

  

(334)

  

(390)

116.8
   

Pre-Tax Profit

  

42,467

  

40,910

  

1,557

3.8

Income Tax

  

16,902

  

15,855

  

1,047

6.6

Income Tax Rate

  

39.8%

  

38.8%

      

Net Profit

$

25,565

$

25,055

$

510

2.0%

Shares Outstanding

  

18,430

  

17,381

  

1,049

6.0%

Diluted EPS

$

1.39

$

1.44

$

(0.05)

(3.5)%
               

Unit Sales:

              
             

New

  

43,108

  

37,249

  

5,859

15.7%

Used - Retail

  

32,811

  

32,482

  

329

1.0

Used - Wholesale

  

20,547

  

19,180

  

1,367

7.1

Total Units Sold

  

96,466

  

88,911

  

7,555

8.5

Finance/Insurance per retail unit

$

928

$

863

$

65

7.5
               

Average Selling Price:

              
             

New

$

26,318

$

25,736

$

582

2.3%

Used - Retail

  

14,503

  

14,521

  

(18)

(0.1)

Used - Wholesale

  

4,786

  

5,044

  

(258)

(5.1)
               

Key Financial Data:

              
             

Gross Profit Margin

  

15.9%

  

15.7%

      

SG&A as a % of Sales

  

12.6%

  

12.3%

      

Operating Margin

  

3.0%

  

3.0%

      

Pre-Tax Margin

  

2.1%

  

2.3%

      

Total Retail Same-Store Sales

  

1.6%

  

4.3%

      

 

 

LITHIA MOTORS, INC.
Balance Sheet Highlights (Dollars in Thousands)

Unaudited

  

September 30, 2003

  

December 31, 2002
 
 
 

Cash & Cash Equivalents

$

50,231

$

15,932
 

Trade Receivables*

  

85,540

  

82,173
 

Inventory

  

448,019

  

445,908
 

Other Current Assets

  

12,984

  

11,765
   
 

Total Current Assets

  

596,774

  

555,778
           

Real Estate, net

  

141,358

  

118,696

Equipment & Leases, net

  

64,659

  

58,215

Goodwill, net

  

206,442

  

185,212

Other Assets

  

30,403

  

24,148
   
 
 

Total Assets

$

1,039,636

$

942,049
     
 
           
 

Floorplan Notes Payable

$

376,337

$

364,635
 

Other Current Liabilities

  

87,329

  

64,835
   
 

Total Current Liabilities

  

463,666

  

429,470
           

Used Vehicle Flooring

  

58,149

  

63,000

Real Estate Debt

  

79,706

  

73,798

Other Long-Term Debt

  

59,704

  

30,914

Other Liabilities

  

30,203

  

24,874
   
 
           

Total Liabilities

$

691,428

$

622,056
   
 
           

Shareholders Equity

  

348,208

  

319,993
   
 
           
 

Total Liabilities & Shareholders' Equity

$

1,039,636

$

942,049
     
 

*Note: Includes contracts-in-transit of $42,632 and $41,493 for 2003 and 2002.

Other Balance Sheet Data (Dollars in Thousands)

Current Ratio

  

1.3x

  

1.3x

LT Debt/Total Cap.
     (Excludes Used - Vehicle Flooring)

 

29%

  

25%

Working Capital

$

133,108

$

126,308