Lithia & Driveway (LAD) Reports 12% Revenue Increase and Diluted EPS of $10.78
Announces Dividend to $0.50 per Share for Second Quarter
MEDFORD, Ore., July 26, 2023 /PRNewswire/ -- Lithia & Driveway (NYSE: LAD) today reported the highest second quarter revenue in company history.
Second quarter 2023 revenue increased 12% to $8.1 billion from $7.2 billion in the second quarter of 2022.
Second quarter 2023 net income attributable to LAD per diluted share was $10.78, a 7% decrease from $11.60 per diluted share reported in the second quarter of 2022. Adjusted second quarter 2023 net income attributable to LAD per diluted share was $10.91, a 10% decrease compared to $12.18 per diluted share in the same period of 2022. Unrealized foreign currency gains positively impacted earnings per share by $0.23.
Second quarter 2023 net income was $301 million, an 11% decrease compared to net income of $338 million in the same period of 2022. Adjusted second quarter 2023 net income was $305 million, a 14% decrease compared to adjusted net income of $355 million for the same period of 2022.
As shown in the attached non-GAAP reconciliation tables, the 2023 second quarter adjusted results exclude a $0.13 per diluted share impact resulting from non-core charges, specifically acquisition expenses and insurance reserves, partially offset by a net gain on the sale of stores and non-cash unrealized investment gain. The 2022 second quarter adjusted results exclude a $0.58 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 sale of stores.
Second Quarter-Over-Quarter Comparisons and 2023 Performance Highlights:
- Revenues increased 12%
- New and used unit growth was 22% and (1)% , respectively
- Total vehicle gross profit per unit of $5,710, down $853
- Driveway averaged over 2.7 million monthly unique visitors in the quarter
- Driveway Finance Corporation (DFC) originated $558 million in loans in Q2
- Service, body, and parts revenues increased 18%
- Adjusted SG&A as a percentage of gross profit was 60.4%
"Our second quarter performance was strong across all our business lines and our teams demonstrated strong operating discipline as we continue to build out our adjacencies with consumer optionality and provide products and services fitting all affordability levels," said Bryan DeBoer, Lithia & Driveway, President and CEO. "Our commitment to improving our operating results through a relentless focus on high performance is demonstrated in our results, allowing us to continue acquiring stores domestically and abroad. We see DFC and our omnichannel footprint enhancing our offering and driving us towards our targets in the 2025 Plan and beyond. We are well capitalized and our free cash flow generation gives us flexibility to deliver on our strategy."
For the first six months of 2023 revenues increased 8% to $15.1 billion, compared to $13.9 billion in 2022.
Net income attributable to LAD for the first six months of 2023 was $19.08 per diluted share, compared to $23.15 per diluted share in 2022, a decrease of 18%. Adjusted net income attributable to LAD per diluted share for the first six months of 2023 decreased 20% to $19.35 from $24.14 in the same period of 2022. Foreign currency exchange positively impacted earnings per share by $0.18.
Corporate Development
During the second quarter, LAD acquired a total of 14 locations across the mid-Atlantic and southeast regions of the United States, which are expected to generate nearly $1.5 billion in annualized revenues. LAD divested three stores, combined they made approximately $70 million in revenues the past year. Year-to-date, we have acquired over $3.5 billion in annualized revenues. Since announcing the 2025 Plan in July 2020, we have acquired over $17.5 billion in annualized revenues.
Balance Sheet Update
LAD ended the second quarter with approximately $1.0 billion in cash and availability on our revolving lines of credit. In addition, unfinanced real estate could provide additional liquidity of approximately $0.5 billion.
Dividend Payment
The Board of Directors approved a dividend of $0.50 per share related to second quarter 2023 financial results. The dividend is expected to be paid on August 25, 2023 to shareholders of record on August 11, 2023.
Second Quarter Earnings Conference Call and Updated Presentation
The second quarter 2023 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the second quarter 2023 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)
Lithia & Driveway (NYSE: LAD) is a growth company focused on profitably consolidating the largest retail sector globally 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
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 achieving our 2025 Plan and related targets
- The growth, expansion, make-up and success of our network, including our finding accretive acquisitions and acquiring additional stores
- Annualized revenues from acquired stores
- The growth and performance of our Driveway e-commerce home solution and Driveway Finance Corporation (DFC), their synergies and other impacts on our business and our ability to meet Driveway and DFC-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
- Expected operating results, such as improved store performance, continued improvement of selling, general and administrative expenses as a percentage of gross profit and any projections
- Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facilities, unfinanced real estate and other financing sources
- Our continuing to purchase shares under our share repurchase program
- Our compliance with financial and restrictive covenants in our credit facilities and other debt agreements
- Our programs and initiatives for employee recruitment, training, and retention
- Our strategies and targets for customer retention, growth, market position, operations, 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 regional or global public health issues, 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 | % | Six months ended | % | |||||||||
Increase | Increase | |||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||
Revenues: | ||||||||||||
New vehicle retail | $ 4,014.7 | $ 3,250.7 | 23.5 % | $ 7,293.6 | $ 6,312.4 | 15.5 % | ||||||
Used vehicle retail | 2,455.1 | 2,496.7 | (1.7) | 4,682.6 | 4,731.2 | (1.0) | ||||||
Used vehicle wholesale | 403.9 | 382.4 | 5.6 | 766.3 | 768.2 | (0.2) | ||||||
Finance and insurance | 337.9 | 330.4 | 2.3 | 656.2 | 643.7 | 1.9 | ||||||
Service, body and parts | 804.4 | 682.6 | 17.8 | 1,540.8 | 1,310.4 | 17.6 | ||||||
Fleet and other | 95.5 | 97.3 | (1.8) | 151.5 | 179.5 | (15.6) | ||||||
Total revenues | 8,111.5 | 7,240.1 | 12.0 % | 15,091.0 | 13,945.4 | 8.2 % | ||||||
Cost of sales: | ||||||||||||
New vehicle retail | 3,627.6 | 2,840.3 | 27.7 | 6,572.6 | 5,500.7 | 19.5 | ||||||
Used vehicle retail | 2,242.4 | 2,258.4 | (0.7) | 4,304.3 | 4,269.0 | 0.8 | ||||||
Used vehicle wholesale | 404.6 | 378.6 | 6.9 | 769.8 | 756.8 | 1.7 | ||||||
Service, body and parts | 360.5 | 319.1 | 13.0 | 702.5 | 617.9 | 13.7 | ||||||
Fleet and other | 91.3 | 93.0 | (1.8) | 145.5 | 172.1 | (15.5) | ||||||
Total cost of sales | 6,726.4 | 5,889.4 | 14.2 | 12,494.7 | 11,316.5 | 10.4 | ||||||
Gross profit | 1,385.1 | 1,350.7 | 2.5 % | 2,596.3 | 2,628.9 | (1.2) % | ||||||
Financing operations (loss) income | (18.7) | 3.3 | (666.7) % | (39.5) | 8.3 | (575.9) % | ||||||
SG&A expense | 842.2 | 796.9 | 5.7 | 1,606.6 | 1,537.1 | 4.5 | ||||||
Depreciation and amortization | 48.4 | 38.0 | 27.4 | 95.6 | 74.6 | 28.2 | ||||||
Income from operations | 475.8 | 519.1 | (8.3) % | 854.6 | 1,025.5 | (16.7) % | ||||||
Floor plan interest expense | (34.7) | (3.8) | 813.2 | (62.3) | (8.7) | 616.1 | ||||||
Other interest expense | (43.9) | (28.3) | 55.1 | (83.0) | (54.5) | 52.3 | ||||||
Other income (expense), net | 9.8 | (18.8) | NM | 12.0 | (24.3) | NM | ||||||
Income before income taxes | 407.0 | 468.2 | (13.1) % | 721.3 | 938.0 | (23.1) % | ||||||
Income tax expense | (105.9) | (130.6) | (18.9) | (190.6) | (256.7) | (25.7) | ||||||
Income tax rate | 26.0 % | 27.9 % | 26.4 % | 27.4 % | ||||||||
Net income | $ 301.1 | $ 337.6 | (10.8) % | $ 530.7 | $ 681.3 | (22.1) % | ||||||
Net income attributable to non-controlling interests | (1.8) | (3.8) | (52.6) % | (2.5) | (4.4) | (43.2) % | ||||||
Net income attributable to redeemable non-controlling interest | (2.1) | (2.5) | (16.0) % | (2.3) | (3.4) | (32.4) % | ||||||
Net income attributable to LAD | $ 297.2 | $ 331.3 | (10.3) % | $ 525.9 | $ 673.5 | (21.9) % | ||||||
Diluted earnings per share attributable to LAD: | ||||||||||||
Net income per share | $ 10.78 | $ 11.60 | (7.1) % | $ 19.08 | $ 23.15 | (17.6) % | ||||||
Diluted shares outstanding | 27.6 | 28.6 | (3.5) % | 27.6 | 29.1 | (5.2) % | ||||||
NM - not meaningful | ||||||||||||
LAD Key Performance Metrics (Unaudited) | ||||||||||||
Three months ended | % | Six months ended | % | |||||||||
Increase | Increase | |||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||
Gross margin | ||||||||||||
New vehicle retail | 9.6 % | 12.6 % | (300) bps | 9.9 % | 12.9 % | (300) bps | ||||||
Used vehicle retail | 8.7 | 9.5 | (80) | 8.1 | 9.8 | (170) | ||||||
Finance and insurance | 100.0 | 100.0 | — | 100.0 | 100.0 | — | ||||||
Service, body and parts | 55.2 | 53.3 | 190 | 54.4 | 52.9 | 150 | ||||||
Gross profit margin | 17.1 | 18.7 | (160) | 17.2 | 18.9 | (170) | ||||||
Unit sales | ||||||||||||
New vehicle retail | 83,539 | 68,752 | 21.5 % | 151,334 | 133,694 | 13.2 % | ||||||
Used vehicle retail | 80,573 | 81,026 | (0.6) | 158,715 | 154,715 | 2.6 | ||||||
Average selling price | ||||||||||||
New vehicle retail | $ 48,058 | $ 47,281 | 1.6 % | $ 48,195 | $ 47,216 | 2.1 % | ||||||
Used vehicle retail | 30,471 | 30,814 | (1.1) | 29,503 | 30,580 | (3.5) | ||||||
Average gross profit per unit | ||||||||||||
New vehicle retail | $ 4,635 | $ 5,970 | (22.4) % | $ 4,764 | $ 6,071 | (21.5) % | ||||||
Used vehicle retail | 2,640 | 2,942 | (10.3) | 2,384 | 2,987 | (20.2) | ||||||
Finance and insurance | 2,059 | 2,206 | (6.7) | 2,117 | 2,232 | (5.2) | ||||||
Total vehicle(1) | 5,710 | 6,563 | (13.0) | 5,651 | 6,689 | (15.5) | ||||||
Revenue mix | ||||||||||||
New vehicle retail | 49.5 % | 44.9 % | 48.3 % | 45.3 % | ||||||||
Used vehicle retail | 30.3 | 34.5 | 31.0 | 33.9 | ||||||||
Used vehicle wholesale | 5.0 | 5.3 | 5.1 | 5.5 | ||||||||
Finance and insurance, net | 4.2 | 4.6 | 4.3 | 4.6 | ||||||||
Service, body and parts | 9.9 | 9.4 | 10.2 | 9.4 | ||||||||
Fleet and other | 1.1 | 1.3 | 1.1 | 1.3 | ||||||||
Gross Profit Mix | ||||||||||||
New vehicle retail | 28.0 % | 30.4 % | 27.8 % | 30.9 % | ||||||||
Used vehicle retail | 15.4 | 17.6 | 14.6 | 17.6 | ||||||||
Used vehicle wholesale | — | 0.3 | (0.1) | 0.4 | ||||||||
Finance and insurance, net | 24.4 | 24.5 | 25.3 | 24.5 | ||||||||
Service, body and parts | 31.9 | 26.9 | 32.2 | 26.3 | ||||||||
Fleet and other | 0.3 | 0.3 | 0.2 | 0.3 | ||||||||
Adjusted | As reported | Adjusted | As reported | |||||||||||||
Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
Other metrics | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||
SG&A as a % of revenue | 10.3 % | 11.0 % | 10.4 % | 11.0 % | 10.6 % | 11.1 % | 10.6 % | 11.0 % | ||||||||
SG&A as a % of gross profit | 60.4 | 59.1 | 60.8 | 59.0 | 61.5 | 58.7 | 61.9 | 58.5 | ||||||||
Operating profit as a % of revenue | 5.9 | 7.1 | 5.9 | 7.2 | 5.7 | 7.3 | 5.7 | 7.4 | ||||||||
Operating profit as a % of gross profit | 34.8 | 38.3 | 34.4 | 38.4 | 33.3 | 38.8 | 32.9 | 39.0 | ||||||||
Pretax margin | 5.1 | 6.7 | 5.0 | 6.5 | 4.8 | 6.9 | 4.8 | 6.7 | ||||||||
Net profit margin | 3.8 | 4.9 | 3.7 | 4.7 | 3.6 | 5.1 | 3.5 | 4.9 | ||||||||
(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 | % | Six months ended | % | |||||||||
Increase | Increase | |||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||
Revenues | ||||||||||||
New vehicle retail | $ 3,402.8 | $ 3,178.8 | 7.0 % | $ 6,299.0 | $ 6,169.0 | 2.1 % | ||||||
Used vehicle retail | 2,061.8 | 2,447.9 | (15.8) | 4,048.1 | 4,629.0 | (12.5) | ||||||
Finance and insurance | 300.6 | 322.8 | (6.9) | 584.6 | 628.0 | (6.9) | ||||||
Service, body and parts | 702.0 | 663.3 | 5.8 | 1,369.2 | 1,273.3 | 7.5 | ||||||
Total revenues | 6,869.4 | 7,077.8 | (2.9) | 13,074.8 | 13,619.2 | (4.0) | ||||||
Gross profit | ||||||||||||
New vehicle retail | $ 327.5 | $ 401.6 | (18.5) % | $ 622.4 | $ 793.6 | (21.6) % | ||||||
Used vehicle retail | 176.7 | 234.4 | (24.6) | 324.9 | 452.3 | (28.2) | ||||||
Finance and insurance | 300.6 | 322.8 | (6.9) | 584.6 | 628.0 | (6.9) | ||||||
Service, body and parts | 385.4 | 353.9 | 8.9 | 739.8 | 674.0 | 9.8 | ||||||
Total gross profit | 1,193.1 | 1,320.3 | (9.6) | 2,273.4 | 2,566.1 | (11.4) | ||||||
Gross margin | ||||||||||||
New vehicle retail | 9.6 % | 12.6 % | (300) bps | 9.9 % | 12.9 % | (300) bps | ||||||
Used vehicle retail | 8.6 | 9.6 | (100) | 8.0 | 9.8 | (180) | ||||||
Finance and insurance | 100.0 | 100.0 | — | 100.0 | 100.0 | — | ||||||
Service, body and parts | 54.9 | 53.4 | 150 | 54.0 | 52.9 | 110 | ||||||
Gross profit margin | 17.4 | 18.7 | (130) | 17.4 | 18.8 | (140) | ||||||
Unit sales | ||||||||||||
New vehicle retail | 69,473 | 67,069 | 3.6 % | 128,817 | 130,359 | (1.2) % | ||||||
Used vehicle retail | 70,080 | 79,293 | (11.6) | 140,058 | 151,026 | (7.3) | ||||||
Average selling price | ||||||||||||
New vehicle retail | $ 48,980 | $ 47,396 | 3.3 % | $ 48,898 | $ 47,324 | 3.3 % | ||||||
Used vehicle retail | 29,421 | 30,872 | (4.7) | 28,903 | 30,650 | (5.7) | ||||||
Average gross profit per unit | ||||||||||||
New vehicle retail | $ 4,714 | $ 5,987 | (21.3) % | $ 4,832 | $ 6,088 | (20.6) % | ||||||
Used vehicle retail | 2,521 | 2,957 | (14.7) | 2,320 | 2,995 | (22.5) | ||||||
Finance and insurance | 2,154 | 2,206 | (2.4) | 2,174 | 2,232 | (2.6) | ||||||
Total vehicle(1) | 5,761 | 6,577 | (12.4) | 5,683 | 6,702 | (15.2) | ||||||
(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 | |||||
June 30, | December 31, | June 30, | |||
2023 | 2022 | 2022 | |||
Days Supply(1) | |||||
New vehicle inventory | 51 | 47 | 32 | ||
Used vehicle inventory | 58 | 55 | 62 | ||
(1) | Days supply calculated based on current inventory levels, including in-transit vehicles, and a 30-day historical cost of sales level. |
Selected Financing Operations Financial Information | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
($ in millions) | 2023 | % (1) | 2022 | % (1) | 2023 | % (1) | 2022 | % (1) | |||||||
Interest margin: | |||||||||||||||
Interest, fee, and lease income | $ 64.0 | 9.1 | $ 27.0 | 8.9 | $ 117.9 | 9.1 | $ 49.4 | 8.9 | |||||||
Interest expense | (45.6) | (6.5) | (6.1) | (2.0) | (83.1) | (6.4) | (10.0) | (1.8) | |||||||
Total interest margin | $ 18.4 | 2.6 | $ 20.9 | 6.9 | $ 34.8 | 2.7 | $ 39.4 | 7.1 | |||||||
Provision expense | $ (25.8) | (3.7) | $ (7.3) | (2.4) | $ (52.0) | (4.0) | $ (11.0) | (2.0) | |||||||
Financing operations income (loss) | $ (18.7) | (2.7) | $ 3.3 | 1.1 | $ (39.5) | (3.0) | $ 8.3 | 1.5 | |||||||
Total average managed finance receivables | $ 2,823.3 | $ 1,223.9 | $ 2,618.2 | $ 1,120.3 | |||||||||||
Ending funded managed receivables | $ 2,528.6 | $ 977.3 | $ 2,528.6 | $ 977.3 | |||||||||||
% of ending managed receivables | 84.9 % | 69.2 % | 84.9 % | 69.2 % | |||||||||||
(1) | Annualized percentage of total average managed finance receivables |
LAD Condensed Consolidated Balance Sheets (Unaudited) (In millions) | ||||
June 30, 2023 | December 31, 2022 | |||
Cash and restricted cash | $ 199.7 | $ 246.7 | ||
Trade receivables, net | 884.6 | 813.1 | ||
Inventories, net | 4,278.9 | 3,409.4 | ||
Other current assets | 130.8 | 161.7 | ||
Total current assets | $ 5,494.0 | $ 4,630.9 | ||
Property and equipment, net | 3,907.5 | 3,574.6 | ||
Finance receivables, net | 2,882.4 | 2,187.6 | ||
Intangibles | 3,626.4 | 3,316.9 | ||
Other non-current assets | 1,772.4 | 1,296.6 | ||
Total assets | $ 17,682.7 | $ 15,006.6 | ||
Floor plan notes payable | 2,816.7 | 2,116.6 | ||
Other current liabilities | 1,231.5 | 1,061.6 | ||
Total current liabilities | $ 4,048.2 | $ 3,178.2 | ||
Long-term debt, less current maturities | 5,414.0 | 5,088.3 | ||
Non-recourse notes payable, less current maturities | 1,198.7 | 422.2 | ||
Other long-term liabilities and deferred revenue | 1,219.1 | 1,066.8 | ||
Total liabilities | $ 11,880.0 | $ 9,755.5 | ||
Equity | 5,802.7 | 5,251.1 | ||
Total liabilities & equity | $ 17,682.7 | $ 15,006.6 | ||
LAD Condensed Statements of Cash Flows (Unaudited) (In millions) | ||||
Six months ended June 30, | ||||
Cash flows from operating activities: | 2023 | 2022 | ||
Net income | $ 530.7 | $ 681.3 | ||
Adjustments to reconcile net income to net cash (used in) provided by operating activities | 174.3 | 158.5 | ||
Changes in: | ||||
Inventories | (350.2) | (507.0) | ||
Finance receivables, net | (684.6) | (573.1) | ||
Floor plan notes payable, net | 58.4 | 56.9 | ||
Other operating activities | (27.3) | (79.7) | ||
Net cash used in operating activities | (298.7) | (263.1) | ||
Cash flows from investing activities: | ||||
Capital expenditures | (97.1) | (136.6) | ||
Cash paid for acquisitions, net of cash acquired | (978.5) | (706.0) | ||
Proceeds from sales of stores | 85.7 | 52.7 | ||
Other investing activities | (10.3) | 7.2 | ||
Net cash used in investing activities | (1,000.2) | (782.7) | ||
Cash flows from financing activities: | ||||
Net borrowings on floor plan notes payable, non-trade | 223.5 | 243.5 | ||
Net borrowings (repayments) of non-recourse notes payable | 824.9 | (80.1) | ||
Net borrowings of other debt and finance lease liabilities | 249.6 | 1,454.4 | ||
Proceeds from issuance of common stock | 14.9 | 18.7 | ||
Repurchase of common stock | (14.5) | (623.4) | ||
Dividends paid | (25.4) | (22.2) | ||
Other financing activity | (24.5) | (6.3) | ||
Net cash provided by financing activities | 1,248.5 | 984.6 | ||
Effect of exchange rate changes on cash and restricted cash | 8.1 | (0.4) | ||
Change in cash and restricted cash | (42.3) | (61.6) | ||
Cash and restricted cash at beginning of period | 271.5 | 178.5 | ||
Cash and restricted cash at end of period | 229.2 | 116.9 | ||
LAD Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited) (In millions) | ||||
Six months ended June 30, | ||||
Net cash provided by operating activities | 2023 | 2022 | ||
As reported | $ (298.7) | $ (263.1) | ||
Floor plan notes payable, non-trade, net | 223.5 | 243.5 | ||
Adjust: finance receivables activity | 684.6 | 573.1 | ||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory | (109.7) | (63.1) | ||
Adjusted | $ 499.7 | $ 490.4 | ||
LAD Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (In millions, except for per share data) | |||||||||||
Three Months Ended June 30, 2023 | |||||||||||
As reported | Net disposal | Investment | Insurance | Acquisition | Adjusted | ||||||
Selling, general and administrative | $ 842.2 | $ 1.0 | $ — | $ (2.4) | $ (4.5) | $ 836.3 | |||||
Operating income | 475.8 | (1.0) | — | 2.4 | 4.5 | 481.7 | |||||
Other income (expense), net | 9.8 | — | (1.2) | — | — | 8.6 | |||||
Income before income taxes | 407.0 | (1.0) | (1.2) | 2.4 | 4.5 | 411.7 | |||||
Income tax (provision) benefit | (105.9) | 0.4 | — | (0.6) | (0.5) | (106.6) | |||||
Net income | $ 301.1 | $ (0.6) | $ (1.2) | $ 1.8 | $ 4.0 | $ 305.1 | |||||
Net income attributable to non-controlling interests | (1.8) | — | — | — | — | (1.8) | |||||
Net income attributable to redeemable non-controlling interest | (2.1) | — | — | — | — | (2.1) | |||||
Net income attributable to LAD | $ 297.2 | $ (0.6) | $ (1.2) | $ 1.8 | $ 4.0 | $ 301.2 | |||||
Diluted earnings per share attributable to LAD | $ 10.78 | $ (0.02) | $ (0.05) | $ 0.06 | $ 0.14 | $ 10.91 | |||||
Diluted share count | 27.6 | ||||||||||
Three Months Ended June 30, 2022 | |||||||||
As reported | Net disposal | Investment | Acquisition | Adjusted | |||||
Selling, general and administrative | $ 796.9 | $ 3.1 | $ — | $ (1.5) | $ 798.5 | ||||
Operating income | 519.1 | (3.1) | — | 1.5 | 517.5 | ||||
Other income (expense), net | (18.8) | — | 18.1 | — | (0.7) | ||||
Income before income taxes | 468.2 | (3.1) | 18.1 | 1.5 | 484.7 | ||||
Income tax (provision) benefit | (130.6) | 0.9 | — | (0.5) | (130.2) | ||||
Net income | $ 337.6 | $ (2.2) | $ 18.1 | $ 1.0 | $ 354.5 | ||||
Net income attributable to non-controlling interests | $ (3.8) | $ — | $ — | $ — | $ (3.8) | ||||
Net income attributable to redeemable non-controlling interest | $ (2.5) | $ — | $ — | $ — | $ (2.5) | ||||
Net income attributable to LAD | $ 331.3 | $ (2.2) | $ 18.1 | $ 1.0 | $ 348.2 | ||||
Diluted earnings per share attributable to LAD | $ 11.60 | $ (0.08) | $ 0.63 | $ 0.03 | $ 12.18 | ||||
Diluted share count | 28.6 | ||||||||
LAD Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (In millions, except for per share data) | |||||||||||||
Six Months Ended June 30, 2023 | |||||||||||||
As reported | Net disposal | Investment | Insurance | Acquisition | Vendor | Adjusted | |||||||
Selling, general and administrative | $ 1,606.6 | $ 8.2 | $ — | $ (2.5) | $ (5.7) | $ (10.1) | $ 1,596.5 | ||||||
Operating income | 854.6 | (8.2) | — | 2.5 | 5.7 | 10.1 | 864.7 | ||||||
Other income (expense), net | 12.0 | — | (0.8) | — | — | — | 11.2 | ||||||
Income before income taxes | 721.3 | (8.2) | (0.8) | 2.5 | 5.7 | 10.1 | 730.6 | ||||||
Income tax (provision) benefit | (190.6) | 2.4 | — | (0.7) | (0.7) | (2.7) | (192.3) | ||||||
Net income | $ 530.7 | $ (5.8) | $ (0.8) | $ 1.8 | $ 5.0 | $ 7.4 | $ 538.3 | ||||||
Net income attributable to non-controlling interests | (2.5) | — | — | — | — | — | (2.5) | ||||||
Net income attributable to redeemable non-controlling interest | (2.3) | — | — | — | — | — | (2.3) | ||||||
Net income attributable to LAD | $ 525.9 | $ (5.8) | $ (0.8) | $ 1.8 | $ 5.0 | $ 7.4 | $ 533.5 | ||||||
Diluted earnings per share attributable to LAD | $ 19.08 | $ (0.21) | $ (0.03) | $ 0.06 | $ 0.18 | $ 0.27 | $ 19.35 | ||||||
Diluted share count | 27.6 | ||||||||||||
Six Months Ended June 30, 2022 | |||||||||
As reported | Net disposal | Investment | Acquisition | Adjusted | |||||
Selling, general and administrative | $ 1,537.1 | $ 13.1 | $ — | $ (8.1) | $ 1,542.1 | ||||
Operating income | 1,025.5 | (13.1) | — | 8.1 | 1,020.5 | ||||
Other income (expense), net | (24.3) | — | 33.0 | — | 8.7 | ||||
Income before income taxes | 938.0 | (13.1) | 33.0 | 8.1 | 966.0 | ||||
Income tax (provision) benefit | (256.7) | 3.5 | — | (2.5) | (255.7) | ||||
Net income | $ 681.3 | $ (9.6) | $ 33.0 | $ 5.6 | $ 710.3 | ||||
Net income attributable to non-controlling interests | (4.4) | — | — | — | (4.4) | ||||
Net income attributable to redeemable non-controlling interest | (3.4) | — | — | (0.1) | (3.5) | ||||
Net income attributable to LAD | $ 673.5 | $ (9.6) | $ 33.0 | $ 5.5 | $ 702.4 | ||||
Diluted earnings per share attributable to LAD | $ 23.15 | $ (0.33) | $ 1.13 | $ 0.19 | $ 24.14 | ||||
Diluted share count | 29.1 | ||||||||
LAD Adjusted EBITDA and Net Debt to Adjusted EBITDA (Unaudited) (In millions) | ||||||||||||
Three months ended | % | Six months ended | % | |||||||||
Increase | Increase | |||||||||||
2023 | 2022 | (Decrease) | 2023 | 2022 | (Decrease) | |||||||
EBITDA and Adjusted EBITDA | ||||||||||||
Net income | $ 301.1 | $ 337.6 | (10.8) % | $ 530.7 | $ 681.3 | (22.1) % | ||||||
Flooring interest expense | 34.7 | 3.8 | 813.2 | 62.3 | 8.7 | 616.1 | ||||||
Other interest expense | 43.9 | 28.3 | 55.1 | 83.0 | 54.5 | 52.3 | ||||||
Financing operations interest expense | 45.6 | 6.1 | 647.5 | 83.1 | 10.0 | 731.0 | ||||||
Income tax expense | 105.9 | 130.6 | (18.9) | 190.6 | 256.7 | (25.7) | ||||||
Depreciation and amortization | 48.4 | 38.0 | 27.4 | 95.6 | 74.6 | 28.2 | ||||||
Financing operations depreciation expense | 2.0 | 2.9 | (31.0) % | 4.4 | 5.6 | (21.4) % | ||||||
EBITDA | $ 581.6 | $ 547.3 | 6.3 % | $ 1,049.7 | $ 1,091.4 | (3.8) % | ||||||
Other adjustments: | ||||||||||||
Less: flooring interest expense | $ (34.7) | $ (3.8) | 813.2 | $ (62.3) | $ (8.7) | 616.1 | ||||||
Less: financing operations interest expense | (45.6) | (6.1) | 647.5 | (83.1) | (10.0) | 731.0 | ||||||
Less: used vehicle line of credit interest | (3.3) | (2.0) | 65.0 | (4.8) | (2.2) | 118.2 | ||||||
Add: acquisition expenses | 4.5 | 1.5 | 200.0 | 5.7 | 8.1 | (29.6) | ||||||
Add: gain on divestitures | (1.0) | (3.1) | NM | (8.2) | (13.1) | NM | ||||||
Add: investment loss (gain) | (1.2) | 18.1 | NM | (0.8) | 33.0 | NM | ||||||
Add: insurance reserves | 2.4 | — | NM | 2.5 | — | NM | ||||||
Add: vendor contract buyouts | — | — | NM | 10.1 | — | NM | ||||||
Adjusted EBITDA | $ 502.7 | $ 551.9 | (8.9) % | $ 908.8 | $ 1,098.5 | (17.3) % | ||||||
NM - not meaningful | ||||||||||||
As of | % | |||||
June 30, | Increase | |||||
Net Debt to Adjusted EBITDA | 2023 | 2022 | (Decrease) | |||
Floor plan notes payable: non-trade | $ 1,708.8 | $ 1,060.2 | 61.2 % | |||
Floor plan notes payable | 1,107.9 | 410.8 | 169.7 | |||
Used and service loaner vehicle inventory financing facility | 876.0 | 1,063.3 | (17.6) | |||
Revolving lines of credit | 1,453.6 | 858.5 | 69.3 | |||
Warehouse facilities | 705.0 | 300.0 | 135.0 | |||
Non-recourse notes payable | 1,247.1 | 237.4 | 425.3 | |||
4.625% Senior notes due 2027 | 400.0 | 400.0 | — | |||
4.375% Senior notes due 2031 | 550.0 | 550.0 | — | |||
3.875% Senior notes due 2029 | 800.0 | 800.0 | — | |||
Finance leases and other debt | 687.8 | 658.0 | 4.5 | |||
Unamortized debt issuance costs | (31.4) | (25.2) | 24.6 | |||
Total debt | $ 9,504.8 | $ 6,313.0 | 50.6 % | |||
Less: Floor plan related debt | $ (3,692.7) | $ (2,534.3) | 45.7 % | |||
Less: Investment in floorplan offset accounts | — | — | — | |||
Less: Financing operations related debt | (1,952.1) | (537.4) | 263.2 | |||
Less: Unrestricted cash | (88.7) | (64.4) | 37.7 | |||
Less: Availability on used vehicle and service loaner financing facilities | (48.7) | (35.3) | 38.0 | |||
Net Debt | $ 3,722.6 | $ 3,141.6 | 18.5 % | |||
TTM Adjusted EBITDA | $ 1,825.7 | $ 2,162.9 | (15.6) % | |||
Net debt to Adjusted EBITDA | 2.04 x | 1.45 x | ||||
NM - not meaningful | ||||||
SOURCE Lithia Motors, Inc.
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