Declares Dividend of $0.27 Per Share for
Fourth Quarter
Lithia Motors, Inc. (NYSE: LAD) today reported the highest
fourth quarter and full year revenue and earnings per share in
company history and the 29th consecutive quarter of record
results.
Fourth quarter 2017 net income per diluted share increased 75%
to $3.56 from $2.03 for the fourth quarter of 2016. Adjusted net
income per diluted share increased 16% to $2.15 from $1.86 for the
same period in 2016. Fourth quarter 2017 net income increased 74%
to $89 million from $51 million for the fourth quarter of 2016.
Adjusted net income increased 15% to $54 million compared to $47
million for the same period of 2016.
As shown in the attached non-GAAP reconciliation tables, the
2017 fourth quarter adjusted results excludes $0.10 per share of
non-core benefit related to the sale of a store and a $1.31 benefit
related to adjustments to deferred tax balances due to the recent
tax law changes. The 2016 fourth quarter adjusted results exclude a
$0.10 benefit associated with an equity investment, a $0.02 benefit
related to an indemnified legal reserve and a 0.05 benefit from a
tax attribute.
Fourth quarter 2017 revenue increased 18% to $2.7 billion from
$2.3 billion in the fourth quarter of 2016.
Fourth Quarter-over-Quarter Operating Highlights:
- Total same store sales increased
3%
- New vehicle same store sales increased
3%
- Used vehicle retail same store sales
increased 2%
- Service, body and parts same store
sales increased 4%
- Same store F&I per unit was
$1,342
- Adjusted SG&A expense as a
percentage of gross profit was 68.7%
Net income per diluted share in 2017 increased 26% to $9.75 from
$7.72 for 2016. Adjusted net income per diluted share increased 13%
to $8.39 from $7.42 for 2016. Net income for 2017 increased 24% to
$245 million from $197 million for 2016. Adjusted net income
increased 11% to $211 million for 2017 from $189 million for
2016.
As shown in the attached non-GAAP reconciliation tables, the
2017 adjusted results exclude a $1.36 net non-core benefit from an
OEM settlement, the sale of a store and the Tax Cuts and Jobs Act
partially offset by a charge for insurance reserves and acquisition
expenses. The 2016 adjusted results exclude a $0.30 net non-core
benefit from an equity investment, a disposal gain and a tax
attribute partially offset by an indemnified legal reserve.
Full year 2017 revenue increased 16% to $10.1 billion from $8.7
billion in 2016.
Full Year-over-Year Operating Highlights:
- Total same store sales increased
2%
- New vehicle same store sales increased
1%
- Used vehicle retail same store sales
increased 4%
- Service, body and parts same store
sales increased 5%
- Same store F&I per unit increased
$53 to $1,333
- Adjusted SG&A expense as a
percentage of gross profit was 68.8%
"We are excited to have added an eleventh digit to our annual
revenues, as we exceeded ten billion dollars this year," said Bryan
DeBoer, President and CEO. "We delivered double digit growth in
2017 and our organization is poised to continue its upward growth
trajectory regardless of market conditions. Our store leaders have
significant opportunity to unlock earnings dry powder by improving
operations. We estimate over $200 million in unrealized earnings
potential is possible and remain focused on challenging and
inspiring each other to achieve higher levels of performance."
Corporate DevelopmentDuring the fourth quarter, we
completed the acquisition of Armory Chrysler Jeep Dodge Ram in
Albany, New York and Crater Lake Ford Lincoln and Crater Lake Mazda
in Medford, Oregon. In 2017, we completed the acquisition of 18
stores and opened one store which we forecast will generate over
$1.7 billion in annualized revenues. In January, 2018, we completed
the acquisition of Ray Laks Honda in Orchard Park, NY and Ray Laks
Acura in Buffalo, New York, which we estimate will add $140 million
in annualized revenues.
"For the second consecutive year, we acquired over a billion
dollars in annualized revenues," said DeBoer. "We continue to see
an active acquisition market with ample stores available. Our
leverage ratio is approximately 2.0 times, and coupled with the
free cash flow produced by our operations, we remain poised for
additional acquisition growth in 2018."
Balance Sheet UpdateWe ended the fourth quarter with $57
million in cash and $223 million in availability under our credit
facility. Additionally, approximately $315 million of our operating
real estate is currently unfinanced, which we estimate could
provide $236 million in capital, for total potential liquidity of
$516 million.
Dividend PaymentOur Board of Directors has approved a
dividend of $0.27 per share related to fourth quarter 2017
financial results. We expect to pay the dividend on March 23,
2018 to shareholders of record on March 9, 2018.
Earnings OutlookFor 2018, we target full year revenues of
$11.0 to $11.5 billion and earnings per share of $10.50.
Commenting on the earnings guidance, John North, Senior Vice
President and CFO, stated, "We have updated our guidance to adjust
for the recently passed tax legislation, anticipated interest rate
increases and changing consumer behaviors on the east and west
coasts due to the limitation on the deductibility of state and
local taxes. We anticipate our effective tax rate will decline to
approximately 27% in 2018."
Actual results may be affected by items described under
Forward-Looking Statements below.
Fourth Quarter Earnings Conference Call and Updated
PresentationThe fourth quarter conference call may be accessed
at 10:00 a.m. ET today by telephone at 877-407-8029. An updated
presentation highlighting the fourth quarter 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 LithiaLithia Motors, Inc. is one of the largest
automotive retailers in the United States and is among the fastest
growing companies in the Fortune 500 (#318-2017) with 171 stores
representing 30 brands in 18 states. We offer vehicles online and
through our nationwide retail network. Our "Growth Powered by
People" strategy drives us to innovate and continuously improve the
customer experience.
Siteswww.lithiamotors.comwww.lithiainvestorrelations.comwww.lithiacareers.com
Lithia Motors on Facebookwww.facebook.com/LithiaMotors
Lithia Motors on Twitterhttp://twitter.com/lithiamotors
Forward-Looking StatementsThis 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," "goal," "strategy," "future," "maintain,"
"continue," "remain," "target" or "will" and similar references to
future periods. Examples of forward-looking statements in this
press release include, among others, statements regarding:
- Expected operating results, such as
improved store efficiency and performance; achieving a 2018 full
year earnings target of $10.50 per diluted share and all
projections set forth under the headings "Earnings Outlook";
- Our ability to improve store
performance;
- Anticipated acquisition opportunities
and additions of dealership locations to our portfolio in the
future, and our ability to improve earnings and achieve returns on
investments;
- Anticipated revenues from acquired and
open point stores; and
- Anticipated availability of liquidity
from our credit facility and unfinanced operating real estate.
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 industry 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 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 from time to time in our other 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 MeasuresThis press release and the
attached financial tables contain 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
gross profit, adjusted pre-tax margin, EBITDA, adjusted EBITDA,
leveraged cash flow 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 thousands except per share data)
Three months endedDecember
31,
%Increase(Decrease)
Twelve months endedDecember
31,
%Increase(Decrease) 2017
2016 2017 2016 Revenues: New
vehicle retail $ 1,615,717 $ 1,335,833 21.0 % $ 5,763,587 $
4,938,436 16.7 % Used vehicle retail 629,341 559,693 12.4 2,544,379
2,226,951 14.3 Used vehicle wholesale 71,090 69,485 2.3 277,844
276,616 0.4 Finance and insurance 103,191 84,532 22.1 385,863
330,922 16.6 Service, body and parts 271,511 228,417 18.9 1,015,773
844,505 20.3 Fleet and other 12,180 14,030 (13.2 )
99,064 60,727 63.1
Total revenues
2,703,030 2,291,990 17.9 %
10,086,510 8,678,157 16.2 % Cost of
sales: New vehicle retail 1,514,576 1,261,892 20.0 5,423,744
4,649,024 16.7 Used vehicle retail 564,453 496,320 13.7 2,257,544
1,963,267 15.0 Used vehicle wholesale 70,706 69,406 1.9 273,058
272,303 0.3 Service, body and parts 146,554 117,194 25.1 522,649
434,222 20.4 Fleet and other 10,600 12,342 (14.1 )
93,429 58,026 61.0
Total cost of sales
2,306,889 1,957,154 17.9 8,570,424
7,376,842 16.2
Gross profit 396,141
334,836 18.3 % 1,516,086
1,301,315 16.5 % Asset impairments — 3,498
(100.0 ) — 13,992 (100.0 ) SG&A expense 267,075 236,824 12.8
1,049,378 899,590 16.7 Depreciation and amortization 16,124
12,997 24.1 57,722 49,369 16.9
Income from operations 112,942 81,517
38.6 % 408,986 338,364 20.9
% Floor plan interest expense (11,323 ) (7,227 ) 56.7
(39,336 ) (25,531 ) 54.1 Other interest expense (11,031 ) (6,599 )
67.2 (34,776 ) (23,207 ) 49.9 Other income (expense), net 839
(1,569 ) NM 12,195 (6,103 ) NM
Income before
income taxes 91,427 66,122 38.3 %
347,069 283,523 22.4 % Income tax
expense (2,023 ) (14,803 ) (86.3 ) (101,852 ) (86,465 ) 17.8 Income
tax rate 2.2 % 22.4 % 29.3 % 30.5 %
Net income
$ 89,404 $ 51,319
74.2 % $ 245,217 $
197,058 24.4 % Diluted net
income per share: Net income per share $ 3.56 2.03 75.4 % $
9.75 7.72 26.3 % Diluted shares outstanding 25,103 25,294
(0.8 )% 25,145 25,521 (1.5 )%
NM - not meaningful
Lithia Motors, Inc.
Key Performance Metrics
(Unaudited)
Three months endedDecember
31,
%Increase(Decrease)
Twelve months endedDecember
31,
%Increase(Decrease) 2017
2016 2017 2016 Gross
margin New vehicle retail 6.3 % 5.5 % 80 bps 5.9 % 5.9 %
— bps Used vehicle retail 10.3 11.3 (100 )bps 11.3 11.8 (50 )bps
Finance and insurance 100.0 100.0 — bps 100.0 100.0 — bps Service,
body and parts 46.0 48.7 (270 )bps 48.5 48.6 (10 )bps Gross profit
margin 14.7 14.6 10 bps 15.0 15.0 — bps
Unit
sales New vehicle retail 45,202 38,547 17.3 % 167,146
145,772 14.7 % Used vehicle retail 32,242 28,715 12.3 129,913
113,498 14.5 Total retail units sold 77,444 67,262 15.1 297,059
259,270 14.6
Average selling price New
vehicle retail $ 35,744 $ 34,655 3.1 % $ 34,482 $ 33,878 1.8 % Used
vehicle retail 19,519 19,491 0.1 19,585 19,621 (0.2 )
Average gross profit per unit New vehicle
retail $ 2,238 $ 1,918 16.7 % $ 2,033 $ 1,985 2.4 % Used vehicle
retail 2,013 2,207 (8.8 ) 2,208 2,323 (5.0 ) Finance and insurance
1,332 1,257 6.0 1,299 1,276 1.8 Total vehicle(1) 3,481 3,299 5.5
3,425 3,426 —
Revenue mix New vehicle
retail 59.8 % 58.3 % 57.1 % 56.9 % Used vehicle retail 23.3 24.4
25.2 25.7 Used vehicle wholesale 2.6 3.0 2.8 3.2 Finance and
insurance, net 3.8 3.7 3.8 3.8 Service, body and parts 10.0 10.0
10.1 9.7 Fleet and other 0.5 0.6 1.0 0.7
Adjusted As reported Adjusted As
reported
Three months ended December
31,
Three months ended December
31,
Twelve monthsended December
31,
Twelve monthsended December
31,
Other metrics 2017 2016
2017 2016 2017 2016
2017 2016 SG&A as a % of revenue 10.1 %
10.2 % 9.9
%
10.3 % 10.3 % 10.3 % 10.4 % 10.4 % SG&A as a % of gross profit
68.7 70.1 67.4 70.7 68.8 68.9 69.2 69.1
Operating profit as a % ofrevenue
4.0 3.8 4.2 3.6 4.1 4.1 4.1 3.9
Operating profit as a % ofgross profit
27.2 26.0 28.5 24.3 27.4 27.3 27.0 26.0 Pretax margin 3.2 3.2 3.4
2.9 3.4 3.6 3.4 3.3 Net profit margin 2.0 2.0 3.3 2.2 2.1 2.2 2.4
2.3 (1)
Includes the sales and gross profit
related to new, used retail, used wholesale and finance and
insurance and unit sales for new andused retail
Lithia Motors, Inc.
Same Store Operating Highlights
(Unaudited)
Three months endedDecember
31,
%
Twelve months endedDecember
31,
% Increase Increase 2017
2016 (Decrease) 2017 2016
(Decrease)
Revenues
New vehicle retail $ 1,369,616 $ 1,326,611 3.2 % $ 4,959,751 $
4,898,292 1.3 % Used vehicle retail 567,055 554,555 2.3 2,288,290
2,204,795 3.8 Finance and insurance 91,158 84,091 8.4 347,583
329,031 5.6 Service, body and parts 233,835 225,841 3.5 877,222
835,002 5.1 Total revenues 2,332,960 2,274,020 2.6 8,791,044
8,600,716 2.2
Gross
profit
New vehicle retail $ 84,379 $ 73,250 15.2 % $ 290,309 $ 286,519 1.3
% Used vehicle retail 58,637 62,918 (6.8 ) 263,119 261,589 0.6
Finance and insurance 91,158 84,091 8.4 347,583 329,031 5.6
Service, body and parts 110,336 110,022 0.3 428,169 405,661 5.5
Total gross profit 346,223 332,064 4.3 1,337,976 1,289,862 3.7
Gross
margin
New vehicle retail 6.2 % 5.5 % 70 bps 5.9 % 5.8 % 10 bps Used
vehicle retail 10.3 11.3 (100 )bps 11.5 11.9 (40 )bps Finance and
insurance 100.0 100.0 — bps 100.0 100.0 — bps Service, body and
parts 47.2 48.7 (150 )bps 48.8 48.6 20 bps Gross profit margin 14.8
14.6 20 bps 15.2 15.0 20 bps
Unit
sales
New vehicle retail 38,669 38,351 0.8 % 144,308 144,728 (0.3 )% Used
vehicle retail 29,273 28,489 2.8 116,359 112,387 3.5
Average selling
price
New vehicle retail $ 35,419 $ 34,591 2.4 % $ 34,369 $ 33,845 1.5 %
Used vehicle retail 19,371 19,466 (0.5 ) 19,666 19,618 0.2
Average gross
profit per unit
New vehicle retail $ 2,182 $ 1,910 14.2 % $ 2,012 $ 1,980 1.6 %
Used vehicle retail 2,003 2,209 (9.3 ) 2,261 2,328 (2.9 ) Finance
and insurance 1,342 1,258 6.7 1,333 1,280 4.1
Total vehicle(1)
3,451 3,297 4.7 3,472 3,429 1.3 (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.
Segment Operating Highlights
(Unaudited)
Three months endedDecember
31,
%Increase(Decrease)
Twelve months endedDecember
31,
%Increase(Decrease) 2017
2016 2017 2016
Revenues
Domestic $ 982,812 $ 886,247 10.9 % $ 3,845,830 $ 3,381,715 13.7 %
Import 1,156,093 987,248 17.1 4,432,760 3,764,255 17.8
Luxury
563,601 417,544 35.0 1,810,085 1,528,760
18.4 Total segment revenues 2,702,506 2,291,039 18.0
10,088,675 8,674,730 16.3 Corporate and other 524 951
(44.9 ) (2,165 ) 3,427 NM Total revenues $ 2,703,030
$ 2,291,990 17.9 $ 10,086,510 $ 8,678,157 16.2
Segment
Income(1)
Domestic $ 20,768 $ 21,790 (4.7 )% $ 105,208 $ 106,210 (0.9 )%
Import 26,411 23,326 13.2 117,776 110,204 6.9 Luxury 14,480
9,731 48.8 37,022 31,467 17.7 Total segment
income 61,659 54,847 12.4 260,006 247,881 4.9 Corporate and other
56,084 32,440 72.9 167,366 114,321 46.4 Depreciation and
amortization (16,124 ) (12,997 ) 24.1 (57,722 ) (49,369 ) 16.9
Other interest expense (11,031 ) (6,599 ) 67.2 (34,776 ) (23,207 )
49.9 Other income (expense), net 839 (1,569 ) NM 12,195
(6,103 ) NM Income before income taxes $ 91,427 $
66,122 38.3 $ 347,069 $ 283,523 22.4 (1)
Segment income for each of the segments is defined as
Income before income taxes, less Depreciation and amortization,
Other interest expense and Other income, net.
Retail New Vehicle Unit Sales
Three months endedDecember
31,
%
Twelve months endedDecember
31,
% Increase Increase 2017
2016 (Decrease) 2017 2016
(Decrease) Domestic 13,881 12,531 10.8 % 53,288 47,707 11.7
% Import 24,991 21,188 17.9 94,634 80,769 17.2 Luxury 6,429
4,924 30.6 19,597 17,591 11.4 Total 45,301
38,643 17.2 167,519 146,067 14.7 Allocated to management (99 ) (96
) 3.1 (373 ) (295 ) 26.4 Total new retail unit sales 45,202
38,547 17.3 167,146 145,772 14.7
NM - not meaningful
Lithia Motors, Inc.
Other Highlights (Unaudited)
As of December 31, December 31,
December 31, 2017 2016 2015
Days
Supply(1)
New vehicle inventory 69 68 67 Used vehicle inventory 67 56 55 (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 December 31,
2017 Current ratio Not less than 1.10 to 1
1.21 to 1
Fixed charge coverage ratio Not less than 1.20 to 1
2.82 to 1
Leverage ratio Not more than 5.00 to 1
2.59 to 1
Lithia Motors, Inc.
Condensed Consolidated Balance
Sheets (Unaudited)
(In thousands)
December 31, 2017 December 31, 2016
Cash and cash equivalents $ 57,253 $ 50,282 Trade receivables, net
521,938 417,714 Inventories, net 2,132,744 1,772,587 Other current
assets 70,847 46,611
Total current assets $
2,782,782 $ 2,287,194 Property and
equipment, net 1,185,169 1,006,130 Intangibles 443,297 443,667
Other non-current assets 271,818 107,159
Total assets
$ 4,683,066 $ 3,844,150
Floor plan notes payable 1,919,026 1,601,497 Other current
liabilities 381,955 320,497
Total current liabilities
$ 2,300,981 $ 1,921,994
Long-term debt 1,028,476 769,916 Other long-term liabilities and
deferred revenue 270,391 241,464
Total liabilities
$ 3,599,848 $ 2,933,374
Stockholder's Equity 1,083,218 910,776
Total liabilities
& stockholders' equity $ 4,683,066
$ 3,844,150
Lithia Motors, Inc.
Summarized Cash Flow from
Operations (Unaudited)
(In thousands)
Twelve months ended December 31, 2017
2016 Net income $ 245,217 $ 197,058
Adjustments to reconcile net income to net
cash provided by operating activities:
Asset impairments — 13,992 Depreciation and amortization 57,722
49,369 Stock-based compensation 11,272 11,047 (Gain) loss on
disposal of assets (438 ) (4,343 ) Gain on sale of franchise (5,110
) (1,102 ) Deferred income taxes (2,798 ) 10,138 (Increase)
decrease: Trade receivables, net (57,360 ) (105,961 ) Inventories
(193,099 ) (168,847 ) Other assets (2,682 ) (13,305 ) Increase
(decrease): Floor plan notes payable, net 20,273 16,385 Trade
payables 20,008 16,449 Accrued liabilities 37,227 42,852 Other
long-term liabilities and deferred revenue 19,062 27,173
Net cash provided by operating activities $
149,294 $ 90,905
Lithia Motors, Inc.
Reconciliation of Non-GAAP Cash Flow
from Operations (Unaudited)
(In thousands)
Twelve months ended December 31,
Net cash provided by
operating activities
2017 2016 As reported $ 149,294 $ 90,905 Floor
plan notes payable, non-trade, net 241,479 252,893
Less: Borrowings on floor plan notes
payable, non-trade associated withacquired new vehicle
inventory
(111,017 ) (94,550 )
Adjusted $ 279,756
$ 249,248
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP
Financial Measures (Unaudited)
(In thousands, except for per share
data)
Three Months Ended December 31, 2017 As
reported
Disposalgain on sale of
store
Tax act Adjusted Selling, general and
administrative $ 267,075 5,104 — $ 272,179 Income from
operations 112,942 (5,104 ) — 107,838 Other income
(expense), net 839 — — 839 Income before income taxes $
91,427 $ (5,104 ) $ — $ 86,323 Income tax benefit (expense) (2,023
) 2,482 (32,901 ) (32,443 ) Net income $ 89,404 $
(2,622 ) $ (32,901 ) $ 53,880 Diluted earnings per
share $ 3.56 $ (0.10 ) $ (1.31 ) $ 2.15 Diluted share count 25,103
Three Months Ended December 31, 2016 As
reported
Equityinvestmentfair
value adjustment
Taxattribute
LegalReserve
Adjusted Asset impairments $ 3,498 $ (3,498 ) $ —
$ — $ — Selling, general and administrative 236,824 —
— (2,030 ) 234,794 Income from operations 81,517 3,498 —
2,030 87,045 Other income (expense), net (1,569 ) 2,065 — —
496 Income before income taxes $ 66,122 $ 5,563 $ — $ 2,030
$ 73,715 Income tax expense (14,803 ) (8,155 ) (1,320 )
(2,503 ) (26,782 ) Net income $ 51,319 $ (2,593 ) $ (1,320 )
$ (473 ) $ 46,933 Diluted earnings per share $
2.03 $ (0.10 ) $ (0.05 ) $ (0.02 ) $ 1.86 Diluted share count
25,294
Lithia Motors, Inc.
Reconciliation of Certain Non-GAAP
Financial Measures (Unaudited)
(In thousands, except for per share
data)
Twelve Months Ended December 31, 2017
Asreported
Insurancereserves
Acquisitionexpenses
OEMsettlement
Disposalgain onsale
ofstore
Tax act Adjusted Selling, general and
administrative $ 1,049,378 $ (5,582 ) $ (5,653 ) $ — 5,104 $ — $
1,043,247 Income from operations 408,986 5,582 5,653 —
(5,104 ) — 415,117 Other income (expense), net 12,195 — —
(9,111 ) — — 3,084 Income before income taxes $ 347,069
5,582 $ 5,653 $ (9,111 ) $ (5,104 ) $ — $ 344,089 Income tax
benefit (expense) (101,852 ) (2,174 ) (2,202 ) 3,423 2,482
(32,901 ) (133,224 ) Net income $ 245,217 3,408
$ 3,451 $ (5,688 ) $ (2,622 ) $ (32,901 ) $ 210,865
Diluted earnings per share $ 9.75 0.14 $ 0.14 $ (0.23
) $ (0.10 ) $ (1.31 ) $ 8.39 Diluted share count 25,145
Twelve Months Ended December 31, 2016 As reported
Disposalgain onsale
ofstore
Equityinvestmentfair
valueadjustment
Legal reserve Tax attribute
Adjusted Asset impairments $ 13,992 $ — $ (13,992 ) $ — $ —
$ — Selling, general and administrative 899,590 1,087 —
(3,936 ) — 896,741 Income from operations 338,364 (1,087 )
13,992 3,936 — 355,205 Other income (expense), net (6,103 )
— 8,262 — — 2,159 Income before income taxes $ 283,523 $
(1,087 ) $ 22,254 $ 3,936 $ — $ 308,626 Income tax benefit
(expense) (86,465 ) 426 (28,530 ) (3,250 ) (1,320 ) (119,139
) Net income $ 197,058 $ (661 ) $ (6,276 ) $ 686 $
(1,320 ) $ 189,487 Diluted earnings per share $ 7.72
$ (0.03 ) $ (0.25 ) $ 0.03 $ (0.05 ) $ 7.42 Diluted share count
25,521
Lithia Motors, Inc.
Adjusted EBITDA and Leveraged Free Cash
Flow (Unaudited)
Three months ended December 31, %
Twelve months ended December 31, %
Increase Increase 2017 2016
(Decrease) 2017 2016 (Decrease)
EBITDA and
Adjusted EBITDA
Net income $ 89,404 $ 51,319 74.2 % $ 245,217 $ 197,058 24.4 %
Other interest expense 11,031 6,599 67.2 34,776 23,207 49.9 Income
tax expense 2,023 14,803 NM 101,852 86,465 17.8 Depreciation and
amortization 16,124 12,997 24.1 57,722 49,369
16.9 EBITDA $ 118,582 $ 85,718 38.3 % $
439,567 $ 356,099 23.4 % Other adjustments:
Less: used vehicle line of credit
interestexpense
(218 ) (1,127 ) (80.7 ) (2,740 ) (3,732 ) (26.6 ) Add: equity
investment fair value adjustment — 5,563 NM — 22,254 NM Add:
insurance reserve — — NM 5,582 — NM Add. legal reserve — 2,030 NM —
3,936 NM Add: acquisition expenses — — NM 5,653 — NM Less: OEM
legal settlements — — NM (9,111 ) — NM Less: disposal gain on sale
of store (5,104 ) — NM (5,104 ) (1,087 ) NM Adjusted EBITDA
$ 113,260 $ 92,184 22.9 % $ 433,847 $ 377,470
14.9 %
Leveraged
EBITDA
Adjusted EBITDA $ 113,260 $ 92,184 22.9 % $ 433,847 $ 377,470 14.9
% Less: Capital expenditures (33,642 ) (19,398 ) 73.4 (105,816 )
(100,761 ) 5.0 Leveraged EBITDA $ 79,618 $ 72,786 9.4
% $ 328,031 $ 276,709 18.5 %
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version on businesswire.com: http://www.businesswire.com/news/home/20180214005538/en/
Lithia Motors, Inc.John North, (541) 618-5748Senior Vice
President and Chief Financial Officer
Lithia Motors (NYSE:LAD)
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