lithia8k2ndqtr2004

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2004

Lithia Motors, Inc.
(Exact Name of Registrant as specified in its charter)

Oregon    0-21789    93 - 0572810 
(State or other jurisdiction of    (Commission File    (IRS Employer 
incorporation)    Number)    Identification No. 

360 E. Jackson Street, Medford, Oregon    97501 
Address of Principal Executive Office    Zip Code 

Registrant's telephone number including area code 541-776-6868

(Former name or former address, if changed since last report) Not applicable

Item 7. Financial Statements and Exhibits 

                     (a) Financial statements of business acquired. 

                                           Not applicable. 

                     (b) Pro forma financial information. 

                                           Not applicable. 

                     (c) Exhibits. 

                                           The following Exhibits are filed as part of this Report. 

                                           Exhibit 99.1 2nd Quarter 2004 Press Release 

Item 12. Regulation FD Disclosure 

                   On July 22, 2004, Lithia Motors, Inc. issued a press release, including certain forward looking statements, disclosing earnings for the quarter ended June 30, 2004. All of the information in the press release appearing in Exhibit 99.1, is not filed but is furnished pursuant to Regulation FD. 

 

SIGNATURES

                   Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 


    LITHIA MOTORS, INC. 
    (Registrant) 
 

Date: July 22, 2004 

  By: /s/ Kenneth E. Roberts 
    Kenneth E. Roberts 
    Assistant Secretary 

EXHIBIT 99.1

 

LITHIA MOTORS REPORTS A 25% INCREASE IN NET INCOME; RECORD 2Q 
REVENUES AND EARNINGS PER SHARE OF 56 CENTS 

 

Lithia Motors' Second-quarter2004 Highlights for continuing operations: 

Operating Income:         +22% 

Net Income:                  +25% 

Earnings Per Share:      +19% 

 

MEDFORD, OREGON, JULY 22, 2004 (5:00 a.m. Pacific) - Lithia Motors, Inc. (NYSE: LAD) today announced that net earnings from continuing operations rose 25% to $10.8 million in the second quarter of 2004 compared to $8.6 million in the second quarter of 2003. Earnings per share from continuing operations rose 19% to $0.56 per share versus $0.47 in the same period last year. This was on 4% more diluted shares outstanding. 

Second quarter 2004 sales increased 7% to $682.3 million from $640.3 million in the second quarter of 2003. New vehicle sales increased 10%, used vehicle sales decreased 4%, parts/service sales increased 18%, and finance/insurance sales increased 10%. 

Sidney B. DeBoer, Lithia's Chairman and Chief Executive Officer, commented, "Lithia's second quarter performance resulted from overall sales growth, margin improvements in all business lines, and strength in the parts and service business." 

"Lithia continues to fully integrate each store on the day of acquisition and we have been successful in our efforts to standardize and apply common operating systems across our entire store network. The benefits of this model are apparent in our ability to control and even increase margins in a volatile vehicle sales environment where margins are declining for many auto retailers. Our new and used vehicle gross margins increased 30 and 70 basis points respectively, for the quarter as compared to the same period last year.  Service and Parts gross margins improved 190 basis points for the quarter. A focus on service-advisor training and margin improvements in the wholesale parts business have lead to increases in the parts and service business. Our operating margin for the quarter improved 50 basis points to 3.6%. Lithia has experienced year-over-year operating margin improvements for 4 consecutive quarters." 

"Total retail same-store sales for the quarter declined 5.3%. We faced a difficult comparison of 5.7% growth in the same period last year. For the first six months, total retail same-store sales have declined 2.0%. Total retail same-store gross profits for the first six months are positive due to increased gross margins," concluded Mr. DeBoer. 

For the six-month period ending June 30, 2004, Lithia's net earnings from continuing operations rose 42% to $18.3 million as compared to $12.9 million in the same period last year. Earnings per share rose 37% to $0.96 per share versus $0.70 in the same period last year. This was on 4% more diluted shares outstanding. 

For the first six months, sales increased 10% to $1.32 billion from $1.20 billion in the same period last year. New vehicle sales increased12%, used vehicle sales increased 3%, parts/service sales increased 20%, and finance/insurance sales increased 12%. 


Jeffrey B. DeBoer, Senior Vice President and CFO added, "In the second quarter, Lithia completed two acquisitions; Chevrolet of Anchorage and Chevrolet of Wasilla, Alaska. These stores have combined annualized sales of approximately $125 million. We now have five stores in the major Alaskan markets, which have been very favorable for Lithia. More recently in July, we acquired a Toyota store in Odessa Texas with approximately $20 million in annualized sales. So far this year we have completed acquisitions with approximately $240 million in annualized sales. Over the past 12 months, we have acquired $395 million in annualized sales, which represents approximately 16% growth on our total revenues for the same period. We will continue to make acquisitions throughout the rest of the year."

"Finally, our annual guidance for 2004 is from $2.11 - $2.16 per share. We expect third quarter earnings per share in the range of $0.68 to $0.70," concluded Jeffrey B. DeBoer.

Conference Call Information

Lithia Motors will be providing more detailed information on the results for the second quarter 2004 in its conference call scheduled for 11 a.m. PDT today. The call can be accessed live by calling 973-582-2700. To listen to a live webcast or hear a replay, log-on to: www.lithia.com - go to Investor Relations - and click on the Live Webcast icon.

About Lithia

Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 24 brands of new vehicles and operates 83 stores and 152 franchises in 12 states in the Western United States and over the Internet through "Lithia.com-America's Car & Truck Store." 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. Lithia retailed 95,255 new and used vehicles and had $2.51 billion in total revenue in 2003.

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 economic conditions, acquisition risk factors and others set forth from time to time in the company's filings with the SEC. Specific risks in this press release include the benefits of Lithia's operating model, anticipated revenues of recently acquired stores, ability to complete additional acquisitions in 2004 and projected third quarter and full-year 2004 earnings per share guidance, which are subject to potential changes in accounting standards.

Additional Information

For additional information on Lithia Motors, contact: Jeff DeBoer, Senior VP and Chief Financial Officer (541) 776-6868 (E-mail: invest@lithia.com) or Dan Retzlaff, Director Investor Relations at (541) 776-6819 (dretzlaff@lithia.com) or log-on to: www.lithia.com - go to About Lithia - Investor Relations.

LITHIA MOTORS, INC.
(In Thousands except per share and unit data)

Unaudited    Three Months Ended         
      June 30,    $Increase    % Increase 
    2004    2003    (Decrease)    (Decrease) 
New Vehicle Sales    $400,217    $363,845    $36,372    10.0% 
Used Vehicle Sales    184,186    191,092    (6,906)    (3.6) 
Service, Body & Parts Sales    71,753    61,032    10,721    17.6 
Finance & Insurance    24,744    22,478    2,266    10.1 
Fleet & Other Revenues    1,367    1,865    (498)    (26.7) 
   
 
 
 
Total Revenues    682,267    640,312    41,955    6.6 
Cost of Sales    566,328    538,573    27,755    5.2 
   
 
 
 
Gross Profit    115,939    101,739    14,200    14.0 
SG&A Expense    88,565    79,585    8,980    11.3 
Depreciation/Amortization    3,089    2,254    835    37.0 
   
 
 
 
Income from Operations    24,285    19,900    4,385    22.0 
Flooring Interest Expense    (4,123)    (3,672)    451    12.3 
Other Interest Expense    (2,157)    (1,564)    593    37.9 
Other Expense, net    (358)    (255)    103    40.4 
   
 
 
 
Income from continuing operations                 
 before income taxes    17,647    14,409    3,238    22.5 
Income Tax Expense    6,882    5,808    1,074    18.5 
Income Tax Rate    39.0%    40.3%         
Net Income from continuing ops.    10,765    8,601    2,164    25.2 
   
 
 
 
Income (Loss) from discontinued                 
 operations, net of income taxes    75    (82)    157     
Net Income    $10,840    $8,519    $2,321    27.2% 
   
 
 
 
 
Diluted Net income per share:                 
   Continuing Operations    $0.56    $0.47    $0.09    19.1% 
   Discontinued Operations    0.01    (0.01)         
   
 
       
   Net Income    $0.57    $0.46    $0.11    23.9% 
   
 
 
 
   Diluted Shares Outstanding    19,142    18,379    763    4.2% 
 
 
Unit Sales:    2004    2003         
New Vehicle    14,398    13,720    678    4.9% 
Used - Retail Vehicle    10,253    10,792    (539)    (5.0) 
Used - Wholesale    5,720    6,794    (1,074)    (15.8) 
Total Units Sold    30,371    31,306    (935)    (3.0) 
 
Average Selling Price:                 
New Vehicle    $27,797    $26,519    $1,278    4.8% 
Used - Retail Vehicle    14,977    14,699    278    1.9 
Used - Wholesale    5,354    4,778    576    12.1 
 
Key Financial Data:                 
Gross Profit Margin    17.0%    15.9%         
SG&A as a % of Gross Profit    76.4%    78.2%         
Operating Margin    3.6%    3.1%         
Pre-Tax Margin    2.6%    2.3%         
Total Retail Same-Store Sales    (5.3)%    5.7%         

LITHIA MOTORS, INC.
(In Thousands except per share and unit data)

Unaudited   

Six Months Ended 

       
   

June 30, 

  $Increase    % Increase 
    2004    2003    (Decrease)    (Decrease) 
New Vehicle Sales    $753,818    $672,339    $81,479    12.1% 
Used Vehicle Sales    374,092    363,188    10,904    3.0 
Service, Body & Parts Sales    141,179    117,517    23,662    20.1 
Finance & Insurance    48,129    42,888    5,241    12.2 
Fleet & Other Revenues    2,898    3,940    (1,042)    (26.4) 
   
 
 
 
Total Revenues    1,320,116    1,199,872    120,244    10.0 
Cost of Sales    1,097,943    1,009,646    88,297    8.7 
   
 
 
 
Gross Profit    222,173    190,226    31,947    16.8 
SG&A Expense    173,752    153,814    19,938    13.0 
Depreciation/Amortization    6,043    4,385    1,658    37.8 
   
 
 
 
Income from Operations    42,378    32,027    10,351    32.3 
Flooring Interest Expense    (7,739)    (7,218)    521    7.2 
Other Interest Expense    (3,897)    (2,952)    945    32.0 
Other Expense, net    (697)    (402)    295    73.4 
   
 
 
 
Income from continuing operations                 
 before income taxes    30,045    21,455    8,590    40.0 
Income Tax Expense    11,718    8,539    3,179    37.2 
Income Tax Rate    39.0%    39.8%         
Net Income from continuing ops.    18,327    12,916    5,411    41.9 
   
 
 
 
Income (Loss) from discontinued                 
 operations, net of income taxes    (8)    (232)    224    96.6 
Net Income    $18,319    $12,684    $5,635    44.4% 
   
 
 
 
 
Diluted Net income per share:                 
   Continuing Operations    $0.96    $0.70    $0.26    37.1% 
   Discontinued Operations    0    (0.01)         
   
 
       
   Net Income    $0.96    $0.69    $0.27    39.1% 
   
 
 
 
   Diluted Shares Outstanding    19,127    18,326    801    4.4% 
 
 
Unit Sales:    2004    2003         
New Vehicle    27,243    25,730    1,513    5.9% 
Used - Retail Vehicle    21,030    20,544    486    2.4 
Used - Wholesale    11,807    12,941    (1,134)    (8.8) 
Total Units Sold    60,080    59,215    865    1.5 
 
Average Selling Price:                 
New Vehicle    $27,670    $26,131    $1,539    5.9% 
Used - Retail Vehicle    14,801    14,603    198    1.4 
Used - Wholesale    5,320    4,882    438    9.0 
 
Key Financial Data:                 
Gross Profit Margin    16.8%    15.9%         
SG&A as a % of Gross Profit    78.2%    80.9%         
Operating Margin    3.2%    2.7%         
Pre-Tax Margin    2.3%    1.8%         
Total Retail Same-Store Sales    (2.0)%    3.3%         

Balance Sheet Highlights (Dollars in Thousands)

    June 30, 2004    December 31, 2003 
    Unaudited     
Cash & Cash Equivalents    $9,971    $74,408 
   Trade Receivables*    84,266    86,908 
   Inventory    604,449    445,281 
   Assets Held for Sale    16,537    20,408 
   Other Current Assets    12,919    9,932 
   
 
Total Current Assets    728,142    636,937 
 
Real Estate, net    195,389    164,676 
Equipment & Leases, net    71,476    62,637 
Goodwill, net    233,500    207,027 
Other Assets    44,639    31,505 
   
 
         Total Assets    $1,273,146    $1,102,782 
   
 
 
   Floorplan Notes Payable    $514,750    $378,961 
   Liabilities Held for Sale    3,292    13,045 
   Other Current Liabilities    82,607    84,865 
   
 
Total Current Liabilities    600,649    476,871 
 
Used Vehicle Flooring    0    56,267 
Real Estate Debt    112,364    80,159 
Other Long-Term Debt    136,607    98,308 
Other Liabilities    41,428    32,251 
   
 
 
Total Liabilities    891,048    743,856 
   
 
 
Shareholders' Equity    382,098    358,926 
   
 
 
         Total Liabilities &         
         Shareholders' Equity    $1,273,146    $1,102,782 
   
 
   

______________

* Includes contracts-in-transit of $40,698 and $44,709 for 2004 and 2003 respectively.

Other Balance Sheet Data (Dollars in Thousands)

Current Ratio    1.2x    1.3x 
LT Debt/Total Cap. (Excludes Used -         
         Vehicle Flooring)    39%    33% 
Working Capital    $127,493    $160,066