Lithia Motors Announces Third Quarter 2008 Results
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MEDFORD, Ore. October 28, 2008: Lithia Motors, Inc. today announced that net income from continuing operations in the third quarter of 2008 was thirteen cents per diluted share. Consolidated net loss was twelve cents per share after inclusion of the twenty-five cents per share loss on discontinued operations, of which eighteen cents was asset impairment charges and seven cents was operating losses. On a non-GAAP basis, excluding these one-time asset impairment charges, consolidated net income was nine cents per share.
Same store sales for new and used vehicles declined 25.1% and 14.3% respectively, when compared to the same quarter last year. Parts and service same store sales held relatively stable with a slight decline of 1.2% compared to the same quarter last year.
Sid DeBoer, Lithia’s Chairman and CEO, commented, “The Lithia Motors team is continuing to execute our restructuring plan. Combined with the cost cutting measures we have spoken of in the past, Lithia is using every tool available to us to manage our way through this recessionary environment.”
Mr. DeBoer continued, “Further restructuring actions are being taken. We have increased our right-sizing plan by adding fifteen stores into discontinued operations and have continued to take cost cutting measures for operational efficiency in 2009. With these further measures, we expect to reduce our store count by approximately 27%, to achieve our near-term expectations of approximately 50/50% domestic to import mix. Our continuing operations results for the third quarter should provide visibility of our earnings potential as we continue to execute our restructuring and divestiture plan.”
“We have already completed $26 million of annualized cost reductions which is $4 million more than our initial $22 million target. By careful assessment of our staffing and expenses, we have identified additional cost reductions of $7 million in annualized savings, for a total of $33 million in planned annualized savings. We also have a team of talented people dedicated to further reduce our costs, and still maintain the high level of service our customers have come to expect,” concluded Mr. DeBoer.
Inventories of new and used vehicles have been reduced substantially since the end of the second quarter. These actions combined with further inventory reductions in the current quarter will result in an estimated annualized flooring interest expense reduction of $2.5 million, despite an assumed flooring interest rate spread increase of fifty basis points.
The Company raised over $100 million dollars this year through October 3rd, 2008 from the sale of several stores, financing of real estate, and the sale of several development properties. Proceeds from these activities went toward reducing the line of credit from $184 million at the start of the year to approximately $84 million at the end of the third quarter. Additionally, the Company repurchased and retired approximately $16 million of convertible debt in the third quarter and has subsequently repurchased another $22 million in the fourth quarter for a total of $38 million retired at a significant discount. The gain on retirement of debt is recorded in other income.
Conference Call Information
Lithia Motors will be providing more detailed information on the results for the third quarter 2008 in its conference call scheduled for today at 2 p.m. PT and 5 p.m. ET. The call can be accessed live by calling 973-409-9255; Conference ID #: 68743692. To listen LIVE on our website or for REPLAY: Log-on to LITHIA
