EX-99.1 2 f8kladex991073009.htm EXHIBIT 99.1 f8kladcovwex991073009.htm - Generated by SEC Publisher for SEC Filing

Exhibit 99.1

LITHIA MOTORS REPORTS PROFITABLE SECOND QUARTER

  • Lithia posts profit of 19 cents per share from continuing operations

  • Gross margin of 19.4% of sales compared to 16.8% in 2008

  • Significant progress on $65 million in annualized cost savings, with lower sequential SG&A expenses than in the first quarter of 2009.

Medford, Oregon, July 30, 2009 (1:05 p.m. PT) – Lithia Motors, Inc. (NYSE: LAD) announced today that net income from continuing operations in the second quarter of 2009 was $4.1 million or nineteen cents per diluted share, compared to net loss from continuing operations of $201.2 million, or $10.02 per diluted share in the second quarter of 2008. As disclosed in the attached financial tables, excluding impairment charges and gains on extinguishment of debt, net income from continuing operations in the second quarter of 2009 was nineteen cents per share, compared to net income from continuing operations of ten cents per share in the second quarter of 2008.

Second quarter 2009 revenue from continuing operations totaled $402 million, compared to $532 million in the year-ago period, driven primarily by lower new vehicle sales. Same store retail new vehicle sales declined 36.8% while retail used vehicle sales increased 2.3% when compared to the same quarter last year. Service, body and parts same store sales declined 5.2% compared to the same quarter of last year.

Sid DeBoer, Lithia’s Chairman and CEO, commented: “The restructuring plan we initiated in the second quarter of 2008 is proving to be successful. Despite a new vehicle automotive market that is at historic lows, and the impact of the reorganization of both Chrysler and General Motors, Lithia is profitable. We have focused on improving gross margins and used vehicle retail sales throughout the year and are pleased with our results. We continue to right-size our organization to match industry sales volumes and performance objectives. SG&A as a percentage of gross profit declined by 730 basis points, from 86.8% in the first quarter of 2009 to 79.5% in the second quarter of 2009.”

For the six-month period ending June 30, 2009, total sales declined 27% to $769 million as compared to $1.05 billion in the same period last year. Same store new vehicle sales decreased 37.8%, retail used vehicle sales decreased 4.4% and service, body and parts sales decreased 5.5%. For the first six months, Lithia’s income from continuing operations, net of tax, and excluding asset impairment charges and gains on debt retirements was eighteen cents per share as compared to nine cents per share in 2008.

Jeff DeBoer, Senior Vice President and CFO, added: “We have generated $74.3 million in cash flows from operations in 2009. Including the effects of floorplan repayments classified as financing activities in the statement of cash flows, adjusted cash flows from operations were $48.8 million for the year to date period. We are using these proceeds and cash generated from financing and asset sales to pay down debt and strengthen the balance sheet. We remain in compliance with all debt covenants at the end of the quarter.”

The first quarter conference call may be accessed at 2:00 p.m. Pacific Time today by phone at (800) 254-5933 Conference ID: 19480043. A playback of the conference call will be available

after 5 p.m. Pacific Time July 30, 2009 through August 6, 2009 by calling (800) 642-1687 access code: 19480043.

About Lithia
Lithia Motors, Inc. is a Fortune 700 Company, selling 27 brands of new and all brands of used vehicles at 88 stores, which are located in 13 states. Internet sales are centralized at www.Lithia.com. 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.

Additional Information
For additional information on Lithia Motors, contact the Investor Relations Department: (541) 776-6591 or log-on to: www.lithia.com – go to Investor Relations

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, future economic conditions and others set forth from time to time in the Company’s filings with the SEC.

Non-GAAP Financial Measures
The attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as net income and diluted earnings per share from continuing operations, adjusted to exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improves the period-to-period comparability of the Company's results from its core business operations.

LITHIA MOTORS, INC.                   
(In thousands except per share data)                   
Unaudited    Three Months Ended        %  
     June 30,   Increase   Increase  
    2009   2008   (Decrease)   (Decrease)  
New vehicle sales  $194,489   $308,830   $(114,341)   (37.0) % 
Used vehicle sales    130,281   135,504   (5,223)   (3.9)  
Finance and insurance    13,917   20,263   (6,346)   (31.3)  
Service, body and parts    62,544   65,624   (3,080)   (4.7)  
Fleet and other revenues    597   1,432   (835)   (58.3)  
Total revenues    401,828   531,653   (129,825)   (24.4)  
 
Cost of sales    324,062   442,245   (118,183)   (26.7)  
Gross profit    77,766   89,408   (11,642)   (13.0)  
Asset impairment charges    -   294,075   (294,075)   (100.0)  
SG&A expense    61,858   76,892   (15,034)   (19.6)  
Depreciation and amortization    3,991   4,261   (270)   (6.3)  
Income (loss) from operations    11,917   (285,820)   297,737   104.2  
 
Floorplan interest expense    (2,416)   (4,750)   (2,334)   (49.1)  
Other interest expense    (2,991)   (4,251)   (1,260)   (29.6)  
Other income, net    258   1,068   (810)   (75.8)  
Income (loss) from continuing                   
operations before income taxes    6,768   (293,753)   300,521   NM  
 
Income tax expense (benefit)    2,718   (92,545)   95,263   NM  
Income tax (benefit) rate    40.2%   (31.5)%          
Income (loss) from continuing                   
operations    4,050   (201,208)   205,258   NM % 
 
Discontinued operations:                   
Loss from operations,                   
net of income tax    (26)   (3,068)   (3,042)   (99.2)  
Loss from disposal activities,                   
net of income tax    (361)   (39,508)   (39,147)   (99.1)  
 
Net income (loss)  $3,663   $(243,784)   247,447    NM %
 
Diluted net income (loss) per share:                   
Continuing operations    0.19   (10.02)   10.21   NM % 
Discontinued operations:                   
Loss from operations,                   
net of income tax    -   (0.15)          
Loss from disposal activities,                   
net of income tax    (0.02)   (1.97)          
Net income (loss) per share  $0.17   $(12.14)   $12.31   NM  
Diluted shares outstanding    21,231   20,073   1,158   5.8 % 

NM – not meaningful

LITHIA MOTORS, INC.                   
(Continuing operations)       Three Months Ended        %  
Unaudited    June 30,   Increase   Increase  
    2009    2008   (Decrease)   (Decrease)  
Unit sales:                   
New vehicle    6,509    10,992   (4,483)   (40.8)  %
Used - retail vehicle    6,937    6,527   410   6.3  
Used - wholesale    2,855    4,082   (1,227)   (30.1)  
Total units sold    16,301    21,601   (5,300)   (24.5)  
 
Average selling price:                   
New vehicle  $29,880    $28,096   $1,784   6.4  %
Used - retail vehicle    16,424    17,167   (743)   (4.3)  
Used - wholesale    5,727    5,745   (18)   (0.3)  
 
Gross margin/profit data                   
New vehicle retail    8.2  %  7.8  % 40bps      
Used vehicle retail    14.7  %  12.0  %  270bps      
Used vehicle wholesale    0.2  %  (2.8)  % 300bps      
Service, body & parts    49.4  %  48.8  % 60bps      
Finance & insurance    100.0  %  100.0  % -      
Gross profit margin    19.4  %  16.8  % 260bps      
New retail gross profit/unit  $2,439    $2,179   $260      
Used retail gross profit/unit    2,413    2,057   356      
Used wholesale gross profit/unit    13    (158)   171      
Finance & insurance/retail unit    1,035    1,157   (122)      
 
Revenue mix:                   
New vehicles    48.4  %  58.1  %        
Used retail vehicles    28.3  %  21.1  %         
Used wholesale vehicles    4.1  %  4.4  %        
Finance and insurance, net    3.5  %  3.8  %        
Service and parts    15.6  %  12.3  %        
Fleet and other    0.1  %  0.3  %        

LITHIA MOTORS, INC.           
(Continuing operations)  Three Months Ended
Unaudited  June 30,
  2009   2008
New vehicle unit sales brand mix:           
Chrysler Brands  28.8  %   29.4  %
General Motors & Saturn  17.5  %   18.1  %
Toyota  14.6  %   16.5  %
Honda  10.6  %   10.4  %
Ford  4.8  %   3.7  %
BMW  5.6  %   4.8  %
Hyundai  4.3  %   4.3  %
Nissan  4.3  %   4.7  %
Volkswagen, Audi  3.8  %   3.1  %
Subaru  4.1  %   2.6  %
Mercedes  0.7  %   0.6  %
Other  0.9  %   1.8  %
 
 
 (Selected Same Store Data)           
 Unaudited  Three Months Ended 
  June 30,
  2009   2008 
  vs.   vs.
  2008   2007 
 Same store revenue:           
 New vehicle retail sales  (36.8)  %   (21.0)  %
         Chrysler Brands  (41.4)  % (32.8)  %
         General Motors & Saturn  (35.3)  % (7.8)  %
         Toyota  (45.3)  % (11.7)  %
         All other brands  (30.0)  % (18.5)  %
 Used vehicle retail sales  2.3  % (21.6)  %
 Used wholesale sales  (31.2)  % (20.9)  %
 Total vehicle sales (excluding fleet)  (26.7)  % (21.1)  %
 Finance & insurance sales  (34.8)  % (20.5)  %
 Service, body and parts sales  (5.2)  % (1.2)  %
 Total sales (excluding fleet)  (24.2)  % (19.1)  %
 Total gross profit (excluding fleet)  (13.4)  % (19.7)  %

LITHIA MOTORS, INC.                   
(In thousands except per share data)                   
Unaudited    Six Months Ended        %  
       June 30,   Increase   Increase  
    2009   2008   (Decrease)   (Decrease)  
New vehicle sales  $370,561   $598,447   $(227,886)   (38.1)  %
Used vehicle sales    246,078   275,933   (29,855)   (10.8)  
Finance and insurance    26,570   40,335   (13,765)   (34.1)  
Service, body and parts    125,091   132,621   (7,530)   (5.7)  
Fleet and other revenues    1,133   2,342   (1,209)   (51.6)  
Total revenues    769,433   1,049,678   (280,245)   (26.7)  
 
Cost of sales    620,341   871,921   (251,580)   (28.9)  
Gross profit    149,092   177,757   (28,665)   (16.1)  
Asset impairment charges    -   294,075   (294,075)   (100.0)  
SG&A expense    123,794   152,302   (28,508)   (18.7)  
Depreciation and amortization    8,065   8,559   (494)   (5.8)  
Income (loss) from operations    17,233   (277,179)   294,412   106.2  
 
Floorplan interest expense    (5,122)   (9,458)   (4,336)   (45.8)  
Other interest expense    (6,602)   (8,420)   (1,818)   (21.6)  
Other income, net    1,423   1,123   300   26.7  
Income (loss) from continuing                   
operations before income taxes    6,932   (293,934)   300,866   NM  
 
Income tax expense (benefit)    2,798   (92,619)   95,417   NM  
Income tax (benefit) rate    40.3%   (31.5)%          
Income (loss) from continuing                   
operations    4,134   (201,315)   205,449   NM  %
 
Discontinued operations:                   
Loss from operations,                   
net of income tax    (1,451)   (5,122)   (3,671)   (60.0)  
Gain (Loss) from disposal activities,                   
net of income tax    2,309   (39,508)   41,817   NM  
 
Net income (loss)  $4,992    $(245,945)     250,937    NM  %
 
Diluted net income (loss) per share:                   
Continuing operations    0.20   (10.08)   10.28   NM  %
Discontinued operations:                   
Loss from operations,                   
net of income tax    (0.07)   (0.26)          
Gain (loss) from disposal activities,                   
net of income tax    0.11   (1.98)          
Net income (loss) per share  $0.24   $(12.31)   $12.55   NM  
Diluted shares outstanding    20,960   19,973   987   4.9  %
 
NM – not meaningful                   

 
LITHIA MOTORS, INC.                   
(Continuing Operations)    Six Months Ended       %  
Unaudited    June 30,   Increase   Increase  
    2009    2008   (Decrease)   (Decrease)  
Unit sales:                   
New vehicle    12,382    20,717   (8,335)   (40.2)  %
Used - retail vehicle    13,412    12,911   501   3.9  
Used - wholesale    5,740    8,269   (2,529)   (30.6)  
Total units sold    31,534    41,897   (10,363)   (24.7)  
 
Average selling price:                   
New vehicle  $29,927    $28,887   $1,040   3.6  %
Used - retail vehicle    15,986    17,380   (1,394)   (8.0)  
Used - wholesale    5,518    6,233   (715)   (11.5)  
 
Gross margin/profit data                   
New vehicle retail    8.4  %  7.8 %  60bps      
Used vehicle retail    13.8  %  12.1 %  170bps      
Used vehicle wholesale    1.2  %  (2.0) %  320bps      
Service, body & parts    48.7  %  48.2 %  50bps      
Finance & insurance    100.0  %  100.0 %  -      
Gross profit margin    19.4  %  16.9 %  250bps      
New retail gross profit/unit  $2,505    $2,254   $251      
Used retail gross profit/unit    2,199    2,097   102      
Used wholesale gross profit/unit    69    (123)   192      
Finance & insurance/retail unit    1,030    1,199   (169)      
 
Revenue mix:                   
New vehicles    48.2  %  57.0 %         
Used retail vehicles    27.9  %  21.4 %         
Used wholesale vehicles    4.1  %  4.9 %         
Finance and insurance, net    3.4  %  3.9 %         
Service and parts    16.3  %  12.6 %         
Fleet and other    0.1  %  0.2 %         

LITHIA MOTORS, INC.               
(Continuing operations)  Six Months Ended    
Unaudited  June 30,    
  2009   2008    
New vehicle unit sales brand               
mix:               
Chrysler Brands  31.0  %   31.4  %    
General Motors & Saturn  16.6  % 18.0  %    
Toyota  14.7  % 16.1  %    
Honda  9.5  % 9.3  %    
Ford  4.8  % 4.1  %    
BMW  5.4  % 4.8  %    
Hyundai  4.1  % 3.7  %    
Nissan  3.9  % 5.0  %    
Volkswagen, Audi  3.6  % 2.8  %    
Subaru  4.3  % 2.6  %    
Mercedes  0.7  % 0.5  %    
Other  1.4  % 1.7  %    
 
 
(Selected same store data)               
 Unaudited  Six Months Ended    
  June 30,    
  2009   2008    
  vs.   vs.    
  2008   2007    
 Same store revenue:               
 New vehicle retail sales  (37.8)  %  (17.4)  %  
         Chrysler Brands  (40.4)  %  (25.3)  %
         General Motors & Saturn  (40.3)  %  (7.6)  %
         Toyota  (44.9)  %  (4.9)  %
         All other brands  (31.0)  %  (18.6)  %
 Used vehicle retail sales  (4.4)  %  (16.0)  %
 Used wholesale sales  (39.4)  %  (14.4)  %
 Total vehicle sales (excluding fleet)  (29.3)  %  (16.8)  %
 Finance & insurance sales  (33.6)  %  (16.4)  %
 Service, body and parts sales  (5.5)  %   1.3 %
 Total sales (excluding fleet)  (26.4)  %  (14.9)  %
 Total gross profit (excluding fleet)  (15.5)  %  (17.1) %

LITHIA MOTORS, INC.           
Balance sheet highlights (dollars in thousands)      
Unaudited           
    June 30, 2009   December 31, 2008  
Cash & cash equivalents  $17,009   $10,874  
Trade receivables*    55,975   69,615  
Inventory    300,130   422,812  
Assets held for sale    140,021   161,423  
Other current assets    8,878   31,828  
Total current assets    522,013   696,552  
 
Real estate, net    276,449   284,088  
Equipment & other, net    49,956   62,188  
Other assets    89,794   90,631  
Total assets  $938,212   $1,133,459  
 
Flooring notes payable  $215,987   $337,700  
Liabilities related to assets held for sale    81,917   108,172  
Current maturities of senior subordinated           
convertible notes        42,500  
Current maturity of line of credit    68,000      
Other current liabilities    96,971   108,656  
Total current liabilities    462,875   597,028  
 
Real estate debt    174,976   163,708  
Other long-term debt    12,226   101,476  
Other liabilities    30,512   22,904  
Total liabilities  $680,589   $885,116  
 
Shareholders' equity    257,623   248,343  
 
Total liabilities & shareholders' equity    $938,212    $1,133,459  
 
*Note: Includes contracts-in-transit of $22,786 and $27,799 for 2009 and 2008      
 
Other balance sheet data           
Lt debt/total cap (excludes real estate)    5%   29%  
Book value per basic share  $12.32   $12.30  
 
Debt covenant ratios           
    Requirement   As of June 30, 2009  
Minimum net worth    Not less than $175 million   $257.6 million  
Fixed charge coverage ratio    Not less than 1.00 to 1   1.22 to 1  
Cash flow leverage ratio    Not more than 3.75 to 1   2.86 to 1  
Minimum current ratio    Not less than 1.05 to 1   1.12 to 1  

The following table reconciles reported GAAP income (loss) per the income statement to non-GAAP income (loss):

Unaudited        Three Months Ended June 30,      
            Diluted earnings per  
    Net Income / (Loss)   share  
Continuing Operations    2009   2008   2009   2008  
As reported  $4,050   $(201,208)   $0.19   $(10.02)  
     Goodwill impairment    -   193,638   -   9.65  
     Franchise value impairment    -   5,216   -   0.26  
     Other asset impairment    111   4,283   0.01   0.21  
     Gain on extinguishment of debt    (187)   -   (0.01)   -  
Adjusted  $3,974   $1,929   $0.19   $0.10  
 
Discontinued Operations                   
As reported  $(387)   $(42,576)   $(0.02)   $(2.12)  
     Impairments and disposal loss    361   39,508   0.02   1.97  
Adjusted  $(26)   $(3,068)   -   $(0.15)  
 
Consolidated Operations                   
As reported  $3,663   $(243,784)   $0.17   $(12.14)  
Adjusted  $3,948   $(1,139)   $0.19   $(0.05)  
 
 
        Six Months Ended June 30,      
            Diluted earnings per  
    Net Income / (Loss)   share  
Continuing Operations    2009   2008   2009   2008  
As reported  $4,134   $(201,315)   $0.20   $(10.08)  
     Goodwill impairment    -   193,638   -   9.70  
     Franchise value impairment    -   5,216   -   0.26  
     Other asset impairment    336   4,283   0.02   0.21  
     Gain on extinguishment of debt    (785)   -   (0.04)   -  
Adjusted  $3,684   $1,822   $0.18   $0.09  
 
Discontinued Operations                   
As reported  $858   $(44,630)   $0.04   $(2.23)  
     Impairments and disposal loss    (2,309)   39,508   (0.11)   1.98  
Adjusted  $(1,451)   $(5,122)   $(0.07)   $(0.26)  
 
Consolidated Operations                   
As reported  $4,992   $(245,945)   $0.24   $(12.31)  
Adjusted  $2,233   $(3,300)   $0.11   $(0.17)  

The following table reconciles GAAP cash flows from operations per the statement of cash flows to non-GAAP cash flows from operations:

Consolidated Statement of Cash Flows    Six Months Ended June 30, 2009  
As reported       
     Cash flows from Operations  $74,316  
     Flooring notes payable: non-trade    (25,502)  
Adjusted  $48,814