EX-99.1 2 a2022q1exx99earningsrelease.htm EX-99.1 Document

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LITHIA & DRIVEWAY (LAD) INCREASES REVENUE 54%, EPS 99%, AND ADJUSTED EPS 103%, RECORD FIRST QUARTER PERFORMANCE
________________________________________________

INCREASES DIVIDEND TO $0.42 PER SHARE FOR FIRST QUARTER

Medford, Oregon, April 20, 2022 - Lithia & Driveway (NYSE: LAD) today reported the highest first quarter revenue and earnings per share in company history.

First quarter 2022 revenue increased 54% to $6.7 billion from $4.3 billion in the first quarter of 2021.

First quarter 2022 net income attributable to LAD per diluted share was $11.55, a 99% increase from $5.81 per diluted share reported in the first quarter of 2021. Adjusted first quarter 2022 net income attributable to LAD per diluted share was $11.96, a 103% increase compared to $5.89 per diluted share in the same period of 2021.

First quarter 2022 net income was $344 million, a 120% increase compared to net income of $156 million in the same period of 2021. Adjusted first quarter 2022 net income was $356 million, a 125% increase compared to adjusted net income of $158 million for the same period of 2021.

As shown in the attached non-GAAP reconciliation tables, the 2022 first quarter adjusted results exclude a $0.41 per diluted share net non-core charge related to a non-cash unrealized investment loss and acquisition expenses, partially offset by a net gain on the sale of stores. The 2021 first quarter adjusted results include a $0.08 per diluted share net non-core charge related to a non-cash unrealized investment loss, a net loss on the sale of stores, insurance reserves, and acquisition expenses.

First Quarter-over-Quarter Comparisons and Operating Highlights:

•Revenues increased 54.4%
•New vehicle retail revenues increased 39.6%
•Used vehicle retail revenues increased 65.2%
•Driveway reached 1 million monthly unique visitors
•Driveway achieved 3,100 transactions in March, quarterly transaction volumes increased over 1,000%
•Driveway Finance (DFC) became #1 lender to LAD customers with 6.2% penetration rate
•F&I per unit increased 28.6% to $2,260
•Service, body, and parts revenues increased 55.4%
•Total vehicle gross profit per unit increased 55.4% to $6,825
•Adjusted SG&A as a percentage of gross profit improved by 550 basis points from 62.6% to 57.1%

“Our teams delivered another record quarter with strong results across all channels,” said Bryan DeBoer, Lithia & Driveway's President and CEO. “Our highly adaptable model generated significant free cash flows and Driveway and DFC each achieved impressive milestones. Combined with our teams’ unique ability to quickly integrate acquired businesses, our path forward to being a diversified, omni-channel retailer has never been clearer.”

Corporate Development
LAD recently acquired three Stellantis stores in Las Vegas, diversifying our brand mix in that growing market. Collectively the stores are expected to generate $400 million in annualized revenues. Year-to-date, LAD has acquired $1.1 billion in annualized revenues and since the announcement of the 2025 Plan in July 2020, we have acquired $11.5 billion in annualized revenues.

“Our recent strong performance has provided significant optionality in our execution of the 2025 Plan,” said DeBoer. “We have deployed incremental capital to Driveway and DFC while maintaining our accelerated acquisition cadence and providing immediate shareholder return through opportunistic share repurchases. These actions are transforming LAD and bringing us closer to the day when each billion dollars of revenues produces significantly more than a dollar of EPS.”



Balance Sheet Update
We ended the first quarter with approximately $1.6 billion in cash and availability on our revolving lines of credit. In addition, our unfinanced real estate could provide additional liquidity of approximately $1.1 billion.

Dividend Payment and Share Repurchases
Our Board of Directors approved a dividend of $0.42 per share related to first quarter 2022 financial results. We expect to pay the dividend on May 27, 2022 to shareholders of record on May 13, 2022.

Year-to-date, we have repurchased 515,130 shares at a weighted average price of $292.80. Approximately $572 million remains available under our authorization.

First Quarter Earnings Conference Call and Updated Presentation
The first quarter 2022 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 2022 results has been added to our investor relations website. To listen live on our website or for replay, visit investors.lithiadriveway.com and click on quarterly earnings.

About Lithia & Driveway (LAD)
LAD is a growth company focused on profitably consolidating the largest retail sector in North America through providing personal transportation solutions wherever, whenever, and however consumers desire. 

Sites
www.lithia.com
investors.lithiadriveway.com
www.lithiacareers.com
www.driveway.com
www.greencars.com
www.drivewayfinancecorp.com

Lithia & Driveway on Facebook
https://www.facebook.com/LithiaMotors
https://www.facebook.com/DrivewayHQ

Lithia & Driveway on Twitter
https://twitter.com/lithiamotors
https://twitter.com/DrivewayHQ
https://twitter.com/GreenCarsHQ

Contact:
Tina Miller 
SVP and Chief Financial Officer
IR@lithia.com 
(541) 864-1748

Forward-Looking Statements
Certain statements in this presentation, and at times made by our officers and representatives, constitute forward-looking statements within the meaning of the “Safe Harbor”provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as “project,” “outlook,” “target,” “may,” “will,” “would,” “should,” “seek,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “likely,” “goal,” “strategy,” “future,” “maintain,” and “continue” or the negative of these terms or other comparable terms. Examples of forward-looking statements in this presentation include, among others, statements regarding:

•Future market conditions, including anticipated car and other sales levels and the supply of inventory
•Our business strategy and plans, including our 2025 Plan (or “50/50” Plan) and any business expansion
•The growth, expansion, make-up and success of our network, including our acquiring additional and accretive stores
•Annualized revenues from acquired stores
•The growth and performance of our Driveway e-commerce home solution and Driveway Finance, their synergies and other impacts on our business and our realizing Driveway and Driveway Finance-related targets
•The impact of sustainable vehicles and other market and regulatory changes on our business


•Our capital allocations and uses and levels of capital expenditures in the future
•Future expected operating and financial results, such as projections of improved store performance and generation of future revenue or earnings
•Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facility, unfinanced real estate and other financing sources
•Our continuing to purchase shares under our share repurchase program
•Impacts from the continued COVID-19 pandemic
•Our compliance with financial and restrictive covenants in our credit facility and other debt agreements
•Our programs and initiatives for employee recruitment, training, and retention
•Our strategies for customer retention, growth, market position, financial results and risk management

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. 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 presentation. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation:

•Future national and local economic and financial conditions, including as a result of the COVID-19 pandemic, inflation and governmental programs and spending
•The market for dealerships, including the availability of stores to us for an acceptable price
•Changes in customer demand, our relationship with, and the financial and operational stability of, OEMs and other suppliers
•Changes in the competitive landscape, including through technology and our ability to deliver new products, services and customer experiences and a portfolio of in-demand and available vehicles
•Risks associated with our indebtedness, including available borrowing capacity, interest rates, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms
•The adequacy of our cash flows and other conditions which may affect our ability to fund capital expenditures, obtain favorable financing and pay our quarterly dividend at planned levels
•Disruptions to our technology network including computer systems, as well as natural events such as severe weather or man-made or other disruptions of our operating systems, facilities or equipment
•Government regulations and legislation
•The risks 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 in “Part II, Item 1A. Risk Factors” of our Quarterly Reports on Form 10-Q, and from time to time in our other filings with the SEC.

Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
 
Non-GAAP Financial Measures
This presentation contains 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 revenue and gross profit, adjusted pre-tax margin and net profit margin, EBITDA, adjusted EBITDA, leveraged EBITDA 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.




LAD
Consolidated Statements of Operations (Unaudited)
(In millions except per share data)
Three months ended March 31,%
Increase
20222021(Decrease)
Revenues:
New vehicle retail$3,061.8 $2,193.2 39.6 %
Used vehicle retail2,234.5 1,352.2 65.2 
Used vehicle wholesale385.8 135.2 185.4 
Finance and insurance313.2 198.4 57.9 
Service, body and parts627.8 404.0 55.4 
Fleet and other82.2 60.0 37.0 
Total revenues
6,705.3 4,343.0 54.4 %
Cost of sales:
New vehicle retail2,660.5 2,036.5 30.6 
Used vehicle retail2,010.7 1,216.0 65.4 
Used vehicle wholesale378.1 130.6 189.5 
Service, body and parts298.8 185.8 60.8 
Fleet and other79.1 58.6 35.0 
Total cost of sales
5,427.2 3,627.5 49.6 
Gross profit1,278.1 715.5 78.6 %
SG&A expense726.1 450.4 61.2 
Depreciation and amortization39.2 26.8 46.3 
Income from operations512.8 238.3 115.2 %
Floor plan interest expense(4.9)(6.8)(27.9)
Other interest expense(30.1)(23.5)28.1 
Other income (expense), net(8.0)3.4 NM
Income before income taxes469.8 211.4 122.2 %
Income tax expense (126.2)(55.2)128.6 
Income tax rate26.9 %26.1 %
Net income$343.6 $156.2 120.0 %
Net income attributable to non-controlling interests(0.5)— NM
Net income attributable to redeemable non-controlling interest(0.9)— NM
Net income attributable to LAD$342.2 $156.2 119.1 %
Diluted earnings per share attributable to LAD:
Net income per share$11.55 $5.81 98.8 %
Diluted shares outstanding29.6 26.9 10.0 %
NM - not meaningful


LAD
Key Performance Metrics (Unaudited)
Three months ended March 31,%
Increase
20222021(Decrease)
Gross margin
New vehicle retail13.1 %7.1 %600 bps
Used vehicle retail10.0 10.1 (10)
Finance and insurance100.0 100.0 — 
Service, body and parts52.4 54.0 (160)
Gross profit margin19.1 16.5 260 
Unit sales
New vehicle retail64,942 53,864 20.6  %
Used vehicle retail73,689 59,027 24.8 
Total retail units sold138,631 112,891 22.8 
Average selling price
New vehicle retail$47,146 $40,718 15.8 %
Used vehicle retail30,323 22,907 32.4 
Average gross profit per unit
New vehicle retail$6,179 $2,910 112.3 %
Used vehicle retail3,037 2,307 31.6 
Finance and insurance2,260 1,757 28.6 
Total vehicle(1)
6,825 4,392 55.4 
Revenue mix
New vehicle retail45.7 %50.5 %
Used vehicle retail33.3 31.1 
Used vehicle wholesale5.8 3.1 
Finance and insurance, net4.7 4.6 
Service, body and parts9.4 9.3 
Fleet and other1.1 1.4 
Gross Profit Mix
New vehicle retail31.4  %21.9  %
Used vehicle retail17.5 19.0 
Used vehicle wholesale0.6 0.6 
Finance and insurance, net24.5 27.7 
Service, body and parts25.8 30.6 
Fleet and other0.2 0.2 
AdjustedAs reported
Three months ended March 31,Three months ended March 31,
Other metrics2022202120222021
SG&A as a % of revenue10.9 %10.3 %10.8 %10.4 %
SG&A as a % of gross profit57.1 62.6 56.8 62.9 
Operating profit as a % of revenue7.6 5.6 7.6 5.5 
Operating profit as a % of gross profit39.9 33.7 40.1 33.3 
Pretax margin7.2 4.9 7.0 4.9 
Net profit margin5.3 3.6 5.1 3.6 
(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


LAD
Same Store Operating Highlights (Unaudited)
Three months ended March 31,%
Increase
20222021(Decrease)
Revenues
New vehicle retail$2,022.3 $2,076.6 (2.6) %
Used vehicle retail1,654.1 1,266.8 30.6 
Finance and insurance218.4 187.3 16.6 
Service, body and parts437.4 386.0 13.3 
Total revenues4,584.0 4,103.6 11.7 
Gross profit
New vehicle retail$272.5 $149.3 82.5  %
Used vehicle retail163.5 127.5 28.2 
Finance and insurance218.4 187.3 16.6 
Service, body and parts238.6 208.9 14.2 
Total gross profit897.2 678.8 32.2 
Gross margin
New vehicle retail13.5 %7.2 %630 bps
Used vehicle retail9.9 10.1 (20)
Finance and insurance100.0 100.0 — 
Service, body and parts54.6 54.1 50 
Gross profit margin19.6 16.5 310 
Unit sales
New vehicle retail42,232 51,145 (17.4) %
Used vehicle retail54,813 55,304 (0.9)
Average selling price
New vehicle retail$47,885 $40,602 17.9 %
Used vehicle retail30,177 22,906 31.7 
Average gross profit per unit
New vehicle retail$6,453 $2,919 121.1 %
Used vehicle retail2,983 2,305 29.4 
Finance and insurance2,251 1,759 28.0 
Total vehicle(1)
6,767 4,401 53.8 
(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


LAD
Other Highlights (Unaudited)

As of
March 31,December 31,
20222021
Days Supply(1)
New vehicle inventory2724
Used vehicle inventory5061
(1) Days supply calculated based on current inventory levels, including in-transit vehicles, and a 30-day historical cost of sales level.

Financial covenants
RequirementAs of March 31, 2022
Current ratioNot less than 1.10 to 11.60 to 1
Fixed charge coverage ratioNot less than 1.20 to 15.19 to 1
Leverage ratioNot more than 5.75 to 11.16 to 1

LAD
Condensed Consolidated Balance Sheets (Unaudited)
(In millions)
March 31, 2022December 31, 2021
Cash, restricted cash, and cash equivalents$161.4 $174.8 
Trade receivables, net923.8 910.0 
Inventories, net2,697.3 2,385.5 
Other current assets 102.1 63.0 
Total current assets$3,884.6 $3,533.3 
Property and equipment, net3,244.5 3,052.6 
Intangibles1,976.0 1,776.4 
Other non-current assets 2,975.7 2,784.6 
Total assets$12,080.8 $11,146.9 
Floor plan notes payable1,391.0 1,190.1 
Other current liabilities1,434.1 1,212.7 
Total current liabilities$2,825.1 $2,402.8 
Long-term debt3,395.2 3,185.7 
Other long-term liabilities and deferred revenue917.9 895.2 
Total liabilities$7,138.2 $6,483.7 
Equity4,942.6 4,663.2 
Total liabilities & equity$12,080.8 $11,146.9 



LAD
Summarized Cash Flow from Operations (Unaudited)
(In millions)
Three months ended March 31,
20222021
Net income$343.7 $156.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization39.2 26.8 
Stock-based compensation10.5 8.0 
Gain on disposal of assets0.9 0.3 
Loss (gain) on sale of franchises(10.0)0.7 
Unrealized investment loss (gain)14.9 0.3 
Deferred income taxes11.3 10.4 
Amortization of operating lease right-of-use assets3.6 8.2 
(Increase) decrease:
Trade receivables, net
(80.4)(126.7)
Inventories
(244.9)244.6 
Other assets
(256.6)(59.0)
Increase (decrease):
Floor plan notes payable, net
33.7 107.3 
Trade payables
26.0 47.8 
Accrued liabilities
111.5 76.7 
Other long-term liabilities and deferred revenue
22.9 (2.1)
Net cash provided by operating activities$26.3 $499.5 



LAD
Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)
(In millions)
Three months ended March 31,
Net cash provided by operating activities20222021
As reported$26.3 $499.5 
Floor plan notes payable, non-trade, net
177.1 (74.8)
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory
(47.6)(69.3)
Adjusted$155.8 $355.4 



LAD
Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)
(In millions, except for per share data)

Three Months Ended March 31, 2022
As reportedNet disposal gain on sale of storesInvestment lossAcquisition expensesAdjusted
Selling, general and administrative$726.1 $10.0 $— $(6.6)$729.5 
Operating income512.8 (10.0)— 6.6 509.4 
Other income (expense), net(8.0)— 14.9 — 6.9 
Income before income taxes469.8 (10.0)14.9 6.6 481.3 
Income tax (provision) benefit(126.2)2.6 — (1.9)(125.5)
Net income$343.6 $(7.4)$14.9 $4.7 $355.8 
Net income attributable to non-controlling interests(0.5)— — — (0.5)
Net income attributable to redeemable non-controlling interest(0.9)— — — (0.9)
Net income attributable to LAD$342.2 $(7.4)$14.9 $4.7 $354.4 
Diluted earnings per share attributable to LAD$11.55 $(0.25)$0.50 $0.16 $11.96 
Diluted share count29.6 

Three Months Ended March 31, 2021
As reportedNet disposal loss on sale of storesInvestment lossInsurance reservesAcquisition expensesAdjusted
Selling, general and administrative$450.4 $(0.7)$— $(0.8)$(1.3)$447.6 
Operating income238.3 0.7 — 0.8 1.3 241.1 
Other income (expense), net3.4 — 0.3 — — 3.7 
Income before income taxes211.4 0.7 0.3 0.8 1.3 214.5 
Income tax (provision) benefit(55.2)(0.2)(0.1)(0.2)(0.4)(56.1)
Net income attributable to LAD$156.2 $0.5 $0.2 $0.6 $0.9 $158.4 
Diluted earnings per share attributable to LAD$5.81 $0.02 $0.01 $0.02 $0.03 $5.89 
Diluted share count26.9 




LAD
Adjusted EBITDA and Net Debt to Adjusted EBITDA (Unaudited)
(In millions)
Three months ended March 31,%
Increase
20222021(Decrease)
EBITDA and Adjusted EBITDA
Net income$343.6 $156.2 120.0  %
Flooring interest expense4.9 6.8 (27.9)
Other interest expense30.1 23.5 28.1 
Income tax expense126.2 55.2 128.6 
Depreciation and amortization39.2 26.8 46.3 
EBITDA$544.0 $268.5 102.6  %
Other adjustments:
Less: flooring interest expense$(4.9)$(6.8)(27.9)
Less: used vehicle line of credit interest(0.2)— NM
Add: acquisition expenses6.6 1.3 407.7 
Add: loss (gain) on divestitures(10.0)0.7 NM
Add: investment loss14.9 0.3 NM
Add: insurance reserves— 0.8 (100.0)
Adjusted EBITDA$550.4 $264.8 107.9 %
NM - not meaningful



As of%
March 31,Increase
Net Debt to Adjusted EBITDA20222021(Decrease)
Floor plan notes payable: non-trade$1,002.8 $1,480.7 (32.3)%
Floor plan notes payable388.2 341.5 13.7 
Used and service loaner vehicle inventory financing facility730.0 — NM
Revolving lines of credit257.1 100.0 157.1
Real estate mortgages573.8 604.7 (5.1)
Finance lease obligations112.1 245.0 (54.2)
Asset backed notes278.3 — NM
5.250% Senior notes due 2025— 300.0 (100.0)
4.625% Senior notes due 2027400.0 400.0 — 
4.375% Senior notes due 2031550.0 550.0 — 
3.875% Senior notes due 2029800.0 — NM
Other debt1.7 2.3 (26.1)
Unamortized debt issuance costs(25.2)(17.7)42.4 
Total debt$5,068.8 $4,006.5 26.5 %
Less: Floor plan related debt$(2,121.0)$(1,822.2)16.4 %
Less: Cash, restricted cash, and cash equivalents(161.4)(175.7)(8.1)
Less: Availability on used vehicle and service loaner financing facilities(55.2)(455.5)(87.9)
Net Debt$2,731.2 $1,553.1 75.9 %
TTM Adjusted EBITDA$2,018.0 $999.7 101.9 %
Net debt to Adjusted EBITDA1.35 x1.55 x
NM - not meaningful