Lithia Motors, Inc. (NYSE: LAD) today reported preliminary
financial results for the three months ended March 31, 2020. Based
on preliminary information available today, Lithia expects first
quarter 2020 net income to be in the range of $45.5 million to
$47.0 million and net income per diluted share between $1.95 to
$2.00.
First Quarter 2020-over-First Quarter 2019 Preliminary
Highlights:
- Same store new vehicle sales expected to decrease between 10%
to 11%
- Same store used vehicle retail sales expected to increase
between 2% to 3%
- Same store F&I per retail unit expected to be between
$1,525 to $1,575
- Same store service, body, and parts sales expected to increase
between 0% to 1%
- Same store SG&A as a percentage of gross profit expected to
be between 74% to 76%
For the first two months of 2020 prior to the COVID-19 pandemic,
same store new vehicle revenue increased 4%, used vehicle revenues
increased 22%, F&I increased 18%, and service, body, and parts
increased 6%. These results continued into early March then
progressively declined throughout the rest of the month as "stay
home" and "shelter in place" policies (“shelter in place policies”)
were established by several states. Those policies created varying
levels of business interruption across our locations.
In March, since shelter in place policies were enacted, vehicle
unit sales declined approximately 50%, with new and used vehicle
sales responding similarly. Our stores declined between 15% and
75%, other than our most restricted states, Pennsylvania and
Vermont, having virtually no sales. The most stable states were
Montana and Texas, with very little year-over-year change. In our
vehicle sales departments, we are providing varying levels of
service, including normal business hours to complete closures in
Pennsylvania and Vermont. Where sales are allowed, we are providing
in-store appointments and home delivery through both digital and
traditional solutions.
All of our service, parts and collision center departments have
remained open during the crisis and home offerings are providing
some additional offset to the weakened demand. Service, body and
parts sales in March, since shelter in place policies were enacted,
declined approximately 30%. Our state performance, during this same
period, had declines ranging between 10% to 50%, with Nevada and
Texas remaining the strongest at the lower end of the range and the
Northeast towards the upper end of this range.
As of the time of this release, all of the states we do business
in, except for North Dakota and Iowa, are still subject to varying
forms of shelter in place policies. These policies greatly impacted
consumer demand, though we are beginning to observe vehicle sales
recoveries in states as they relax or clarify definitions and
consumers begin to again circulate.
We believe that volume recoveries in all departments will be
linked to the lifting or modification of shelter in place policies
and a recovery will begin as consumers transition back to work and
more normal lives. In response to the decline in sales, we have
adjusted staffing headcount by 37%, mainly as furloughs, and have
implemented marketing, vendor and inventory cost reduction or
control strategies. We have not yet realized the associated cost
savings and expect to see these benefits early in the second
quarter. We expect to be able to have team members return to work
as future volume levels recover.
"We have approximately $550 million in cash and available
credit. Combined with the potential for additional liquidity
through our unfinanced real estate, we have over $1 billion in
total liquidity," said Bryan DeBoer, President and CEO. "We
continue to enact prudent and decisive cost saving measures to
respond to this environment. As previously announced, all
acquisitions are being deferred until the second half of 2020."
We have also sought to modify the structure of the acquisitions
we had been negotiating to gain confidence in their earnings
quality and preserve capital through the use of leasing real estate
at competitive capitalization rates with purchase options rather
than acquiring the related real estate. We have also deferred
approximately $65 million in planned discretionary capital
expenditures and are suspending share repurchases at this time.
The foregoing results are based on preliminary information and
are subject to change following completion of our quarter-end
review process and other developments arising between now and the
time we finalize our financial results. In addition, these
preliminary unaudited results are not comprehensive financial
results for the quarter ended March 31, 2020, should not be viewed
as a substitute for complete GAAP financial statements or more
comprehensive financial information, and are not indicative of the
results for any future period. We will provide additional detail
around the first quarter 2020 results during our earnings call on
April 22nd at 10:00 a.m. Eastern Time. The earnings call may be
accessed by telephone at (877) 407-8029. To listen live on our
website or for replay, visit www.lithiainvestorrelations.com and
click on webcasts.
About Lithia
Lithia Motors, Inc. is one of the largest providers of personal
transportation solutions in the United States and is among the
fastest growing companies in the Fortune 500 (#265-2019). Lithia is
a growth company powered by people and innovation. By purchasing
and building strong businesses that have yet to realize their
potential, Lithia generates significant cash flows with low
leverage. Operational excellence is achieved by refocusing the
business on the consumer experience and by utilizing proprietary
performance measurements to increase market share and
profitability. Lithia’s unique growth model invests to expand its
nationwide network and to fund innovations that create personal
transportation solutions wherever, whenever and however consumers
desire.
Sites www.lithia.com
www.lithiainvestorrelations.com www.lithiacareers.com
Lithia Motors on Facebook http://www.facebook.com/LithiaMotors
Lithia Motors on Twitter http://twitter.com/lithiamotors
Forward-Looking Statements
Certain statements in this press release, 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 press release include, among others, statements
regarding:
- Expected financial results for first quarter 2020;
- Anticipated impacts in consumer demand or governmental
restrictions related to the COVID-19 pandemic or otherwise;
- Expected level of business interruption due to shelter in place
policies or lifting of those restrictions, and when volumes and
consumer demand will return;
- Anticipated availability of liquidity from our cash and
availability on our credit facility and unfinanced operating real
estate;
- Continuation of our sales and services, including in-store
appointments and home deliveries;
- Future market conditions;
- Expectations and plans regarding our capital spending,
including for acquisitions and share repurchases;
- Statements regarding furloughed employees and cost reductions;
and
- 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:
- The ultimate geographic spread of COVID-19, the severity and
the duration of the pandemic, and further actions that may be taken
by governmental authorities or businesses or individuals on their
own initiatives in response to the pandemic;
- Future economic and financial conditions (both nationally and
locally);
- actual, or changes in, customer demand and customers
confidence, and the financial ability of customers to purchase
vehicles;
- 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);
- The adequacy of our cash flow and earnings and other
conditions;
- Disruptions to our technology network including computer
systems and software, as well as natural events such as severe
weather, fires, floods and earthquakes or man-made or other
disruptions of our operating systems, structures, facilities or
equipment; and
- 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.
Any forward-looking statement made by us in this press release
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200413005489/en/
Eric Pitt VP, Investor Relations and Treasurer EPitt@lithia.com
(541) 864-1748
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