FORM 10-Q
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Class A common stock without par value
|
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22,488,323
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Class B common stock without par value
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1,000,000
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(Class)
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Outstanding at October 26, 2018
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PART I - FINANCIAL INFORMATION
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Page
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Item 1.
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Consolidated Balance Sheets (Unaudited)
- September 30, 2018 and December 31, 2017
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Consolidated Statements of Operations (Unaudited) – Three
and Nine Months Ended September 30, 2018 and 2017
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Consolidated Statements of Cash Flows (Unaudited) –
Nine Months Ended September 30, 2018 and 2017
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Item 2.
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Item 3.
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Item 4.
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings
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Item 1A.
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Item 2.
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Item 6.
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September 30, 2018
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December 31, 2017
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||||
Assets
|
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|
||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
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$
|
31,432
|
|
|
$
|
57,253
|
|
Accounts receivable, net of allowance for doubtful accounts of $6,426 and $7,386
|
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470,689
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|
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521,938
|
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||
Inventories, net
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2,275,965
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|
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2,132,744
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||
Other current assets
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47,648
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|
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70,847
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||
Total Current Assets
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2,825,734
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2,782,782
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||
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||||
Property and equipment, net of accumulated depreciation of $228,992 and $197,802
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1,248,692
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1,185,169
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Goodwill
|
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356,968
|
|
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256,320
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||
Franchise value
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256,004
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|
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186,977
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|
||
Other non-current assets
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487,171
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|
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271,818
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Total Assets
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$
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5,174,569
|
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$
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4,683,066
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||||
Liabilities and Stockholders' Equity
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||||
Current Liabilities:
|
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||||
Floor plan notes payable
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$
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135,626
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|
|
$
|
116,774
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Floor plan notes payable: non-trade
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1,820,241
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1,802,252
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||
Current maturities of long-term debt
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33,856
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18,876
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||
Trade payables
|
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113,662
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111,362
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Accrued liabilities
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259,825
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251,717
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Total Current Liabilities
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2,363,210
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2,300,981
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||||
Long-term debt, less current maturities
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1,287,052
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1,028,476
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Deferred revenue
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117,850
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103,111
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Deferred income taxes
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77,684
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56,277
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|
||
Other long-term liabilities
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123,631
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111,003
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Total Liabilities
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3,969,427
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3,599,848
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||||
Stockholders' Equity:
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||||
Preferred stock - no par value; authorized 15,000 shares; none outstanding
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—
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—
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Class A common stock - no par value; authorized 100,000 shares; issued and outstanding 22,912 and 23,968
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50,104
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149,123
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||
Class B common stock - no par value; authorized 25,000 shares; issued and outstanding 1,000 and 1,000
|
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124
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124
|
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Additional paid-in capital
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45,897
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11,309
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Retained earnings
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1,109,017
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922,662
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Total Stockholders' Equity
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1,205,142
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1,083,218
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Total Liabilities and Stockholders' Equity
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$
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5,174,569
|
|
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$
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4,683,066
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|
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Three Months Ended September 30,
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Nine Months Ended
September 30, |
||||||||||||
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2018
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2017
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2018
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2017
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||||||||
Revenues:
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||||||||
New vehicle
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$
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1,732,950
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$
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1,553,511
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$
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4,914,478
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$
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4,147,870
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Used vehicle retail
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805,928
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679,180
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2,325,600
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1,915,038
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||||
Used vehicle wholesale
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91,956
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65,739
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253,246
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206,754
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||||
Finance and insurance
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121,062
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101,044
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342,059
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282,672
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||||
Service, body and parts
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311,327
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265,683
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908,431
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|
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744,262
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||||
Fleet and other
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28,729
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15,185
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104,354
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|
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86,883
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||||
Total revenues
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3,091,952
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|
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2,680,342
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8,848,168
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7,383,479
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||||
Cost of sales:
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||||||||
New vehicle
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1,632,068
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1,465,466
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4,625,155
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|
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3,909,168
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||||
Used vehicle retail
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719,575
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600,522
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2,078,535
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1,693,091
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||||
Used vehicle wholesale
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90,553
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64,565
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248,991
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|
202,351
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|
||||
Service, body and parts
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156,871
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133,191
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461,860
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376,096
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||||
Fleet and other
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26,646
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13,577
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98,550
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82,829
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|
||||
Total cost of sales
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2,625,713
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|
|
2,277,321
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7,513,091
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6,263,535
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|
||||
Gross profit
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466,239
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|
403,021
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1,335,077
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1,119,944
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||||
Selling, general and administrative
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309,024
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|
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282,241
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939,868
|
|
|
782,303
|
|
||||
Depreciation and amortization
|
|
19,649
|
|
|
14,828
|
|
|
55,324
|
|
|
41,598
|
|
||||
Operating income
|
|
137,566
|
|
|
105,952
|
|
|
339,885
|
|
|
296,043
|
|
||||
Floor plan interest expense
|
|
(15,958
|
)
|
|
(10,629
|
)
|
|
(45,126
|
)
|
|
(28,013
|
)
|
||||
Other interest expense, net
|
|
(15,010
|
)
|
|
(9,905
|
)
|
|
(40,645
|
)
|
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(23,745
|
)
|
||||
Other income, net
|
|
2,389
|
|
|
1,125
|
|
|
5,422
|
|
|
11,357
|
|
||||
Income before income taxes
|
|
108,987
|
|
|
86,543
|
|
|
259,536
|
|
|
255,642
|
|
||||
Income tax provision
|
|
(15,880
|
)
|
|
(34,657
|
)
|
|
(53,708
|
)
|
|
(99,829
|
)
|
||||
Net income
|
|
$
|
93,107
|
|
|
$
|
51,886
|
|
|
$
|
205,828
|
|
|
$
|
155,813
|
|
|
|
|
|
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||||||||
Basic net income per share
|
|
$
|
3.85
|
|
|
$
|
2.07
|
|
|
$
|
8.34
|
|
|
$
|
6.21
|
|
Shares used in basic per share calculations
|
|
24,164
|
|
|
25,008
|
|
|
24,670
|
|
|
25,090
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share
|
|
$
|
3.84
|
|
|
$
|
2.07
|
|
|
$
|
8.31
|
|
|
$
|
6.19
|
|
Shares used in diluted per share calculations
|
|
24,258
|
|
|
25,076
|
|
|
24,767
|
|
|
25,158
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid per Class A and Class B share
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
$
|
0.85
|
|
|
$
|
0.79
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
205,828
|
|
|
$
|
155,813
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
55,324
|
|
|
41,598
|
|
||
Stock-based compensation
|
|
9,776
|
|
|
8,396
|
|
||
Gain on disposal of other assets
|
|
(91
|
)
|
|
(382
|
)
|
||
Gain on disposal of franchise
|
|
(15,396
|
)
|
|
—
|
|
||
Deferred income taxes
|
|
19,446
|
|
|
7,398
|
|
||
(Increase) decrease (net of acquisitions and dispositions):
|
|
|
|
|
||||
Accounts receivable, net
|
|
63,419
|
|
|
(13,345
|
)
|
||
Inventories
|
|
(14,466
|
)
|
|
(16,098
|
)
|
||
Other assets
|
|
12,007
|
|
|
15,207
|
|
||
Increase (net of acquisitions and dispositions):
|
|
|
|
|
||||
Floor plan notes payable
|
|
8,073
|
|
|
12,126
|
|
||
Trade payables
|
|
3,645
|
|
|
12,397
|
|
||
Accrued liabilities
|
|
8,637
|
|
|
25,907
|
|
||
Other long-term liabilities and deferred revenue
|
|
23,084
|
|
|
11,519
|
|
||
Net cash provided by operating activities
|
|
379,286
|
|
|
260,536
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(113,386
|
)
|
|
(72,174
|
)
|
||
Proceeds from sales of assets
|
|
2,044
|
|
|
12,327
|
|
||
Cash paid for other investments
|
|
(62,126
|
)
|
|
(7,929
|
)
|
||
Cash paid for acquisitions, net of cash acquired
|
|
(374,026
|
)
|
|
(400,558
|
)
|
||
Proceeds from sales of stores
|
|
32,893
|
|
|
3,417
|
|
||
Net cash used in investing activities
|
|
(514,601
|
)
|
|
(464,917
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings on floor plan notes payable, net: non-trade
|
|
61,705
|
|
|
34,056
|
|
||
Borrowings on lines of credit
|
|
1,964,490
|
|
|
1,306,000
|
|
||
Repayments on lines of credit
|
|
(1,860,222
|
)
|
|
(1,432,853
|
)
|
||
Principal payments on long-term debt and capital leases, scheduled
|
|
(16,944
|
)
|
|
(13,697
|
)
|
||
Principal payments on long-term debt and capital leases, other
|
|
(5,305
|
)
|
|
(46,471
|
)
|
||
Proceeds from issuance of long-term debt
|
|
62,140
|
|
|
395,905
|
|
||
Payments of debt issuance costs
|
|
(477
|
)
|
|
(4,517
|
)
|
||
Proceeds from issuance of common stock
|
|
7,416
|
|
|
5,577
|
|
||
Repurchase of common stock
|
|
(81,622
|
)
|
|
(31,521
|
)
|
||
Dividends paid
|
|
(20,915
|
)
|
|
(19,803
|
)
|
||
Payments of contingent consideration related to acquisitions
|
|
(772
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
|
109,494
|
|
|
192,676
|
|
||
Decrease in cash and cash equivalents
|
|
(25,821
|
)
|
|
(11,705
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
57,253
|
|
|
50,282
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
31,432
|
|
|
$
|
38,577
|
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid during the period for interest
|
|
$
|
88,938
|
|
|
$
|
51,160
|
|
Cash paid during the period for income taxes, net
|
|
2,907
|
|
|
89,206
|
|
||
Floor plan debt paid in connection with store disposals
|
|
33,139
|
|
|
—
|
|
||
|
|
|
|
|
||||
Supplemental schedule of non-cash activities:
|
|
|
|
|
||||
Debt issued in connection with acquisitions
|
|
$
|
125,055
|
|
|
$
|
1,748
|
|
Debt assumed in connection with acquisitions
|
|
10,769
|
|
|
86,902
|
|
||
Issuance of Class A common stock in connection with acquisitions
|
|
—
|
|
|
2,137
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Contracts in transit
|
|
$
|
240,998
|
|
|
$
|
286,578
|
|
Trade receivables
|
|
52,336
|
|
|
45,895
|
|
||
Vehicle receivables
|
|
56,473
|
|
|
60,022
|
|
||
Manufacturer receivables
|
|
94,399
|
|
|
96,141
|
|
||
Auto loan receivables
|
|
64,090
|
|
|
75,052
|
|
||
Other receivables
|
|
5,386
|
|
|
14,634
|
|
||
|
|
513,682
|
|
|
578,322
|
|
||
Less: Allowance for doubtful accounts
|
|
(6,426
|
)
|
|
(7,386
|
)
|
||
Less: Long-term portion of accounts receivable, net
|
|
(36,567
|
)
|
|
(48,998
|
)
|
||
Total accounts receivable, net
|
|
$
|
470,689
|
|
|
$
|
521,938
|
|
•
|
Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received approximately
ten days
after selling a vehicle.
|
•
|
Trade receivables are comprised of amounts due from customers for open charge accounts, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products.
|
•
|
Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer.
|
•
|
Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives and warranty claims.
|
•
|
Auto loan receivables include amounts due from customers related to retail sales of vehicles and certain finance and insurance products.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
New vehicles
|
|
$
|
1,627,700
|
|
|
$
|
1,553,751
|
|
Used vehicles
|
|
562,497
|
|
|
500,011
|
|
||
Parts and accessories
|
|
85,768
|
|
|
78,982
|
|
||
Total inventories
|
|
$
|
2,275,965
|
|
|
$
|
2,132,744
|
|
|
|
Domestic
|
|
Import
|
|
Luxury
|
|
Consolidated
|
||||||||
Balance as of December 31, 2016 ¹
|
|
$
|
114,839
|
|
|
$
|
106,179
|
|
|
$
|
38,381
|
|
|
$
|
259,399
|
|
Adjustments to purchase price allocations
2
|
|
(817
|
)
|
|
(1,006
|
)
|
|
(391
|
)
|
|
(2,214
|
)
|
||||
Reductions through divestitures
|
|
—
|
|
|
(865
|
)
|
|
—
|
|
|
(865
|
)
|
||||
Balance as of December 31, 2017 ¹
|
|
114,022
|
|
|
104,308
|
|
|
37,990
|
|
|
256,320
|
|
||||
Adjustments to purchase price allocations
3
|
|
29,933
|
|
|
51,790
|
|
|
21,074
|
|
|
102,797
|
|
||||
Reductions through divestitures
|
|
(951
|
)
|
|
(1,198
|
)
|
|
—
|
|
|
(2,149
|
)
|
||||
Balance as of September 30, 2018
1, 4
|
|
$
|
143,004
|
|
|
$
|
154,900
|
|
|
$
|
59,064
|
|
|
$
|
356,968
|
|
|
Franchise Value
|
||
Balance as of December 31, 2016
|
$
|
184,268
|
|
Additions through acquisitions
|
495
|
|
|
Adjustments to purchase price allocations
1
|
2,214
|
|
|
Balance as of December 31, 2017
|
186,977
|
|
|
Adjustments to purchase price allocations
2
|
70,828
|
|
|
Reductions through divestitures
|
(1,801
|
)
|
|
Balance as of September 30, 2018
3
|
$
|
256,004
|
|
(Dollars in thousands)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Floor plan notes payable: non-trade
|
|
$
|
1,820,241
|
|
|
$
|
1,802,252
|
|
Floor plan notes payable
|
|
135,626
|
|
|
116,774
|
|
||
Total floor plan debt
|
|
$
|
1,955,867
|
|
|
$
|
1,919,026
|
|
|
|
|
|
|
||||
Used vehicle inventory financing facility
|
|
$
|
316,000
|
|
|
$
|
177,222
|
|
Revolving lines of credit
|
|
60,058
|
|
|
94,568
|
|
||
Real estate mortgages
|
|
623,885
|
|
|
469,969
|
|
||
5.25% Senior Notes due 2025
|
|
300,000
|
|
|
300,000
|
|
||
Other debt
|
|
27,403
|
|
|
12,512
|
|
||
Total long-term debt outstanding
|
|
1,327,346
|
|
|
1,054,271
|
|
||
Less: unamortized debt issuance costs
|
|
(6,438
|
)
|
|
(6,919
|
)
|
||
Less: current maturities (net of current debt issuance costs)
|
|
(33,856
|
)
|
|
(18,876
|
)
|
||
Long-term debt
|
|
$
|
1,287,052
|
|
|
$
|
1,028,476
|
|
|
|
Repurchases Occurring in the Nine Months Ended September 30, 2018
|
|
Cumulative Repurchases as of September 30, 2018
|
||||||||||
|
|
Shares
|
|
Average Price
|
|
Shares
|
|
Average Price
|
||||||
2016 Share Repurchase Authorization
|
|
1,199,257
|
|
|
$
|
93.11
|
|
|
2,241,982
|
|
|
$
|
88.81
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Carrying value
|
|
|
|
|
||||
5.25% Senior Notes due 2025
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Real Estate Mortgages and Other Debt
|
|
462,334
|
|
|
376,880
|
|
||
|
|
$
|
762,334
|
|
|
$
|
676,880
|
|
Fair value
|
|
|
|
|
||||
5.25% Senior Notes due 2025
|
|
$
|
288,000
|
|
|
$
|
312,750
|
|
Real Estate Mortgages and Other Debt
|
|
466,871
|
|
|
385,337
|
|
||
|
|
$
|
754,871
|
|
|
$
|
698,087
|
|
Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||||||
(in thousands, except per share data)
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||
Net income applicable to common stockholders - basic
|
|
$
|
89,254
|
|
|
$
|
3,853
|
|
|
$
|
49,687
|
|
|
$
|
2,199
|
|
Reallocation of net income as a result of conversion of dilutive stock options
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
||||
Reallocation of net income due to conversion of Class B to Class A common shares outstanding
|
|
288
|
|
|
—
|
|
|
285
|
|
|
—
|
|
||||
Conversion of Class B common shares into Class A common shares
|
|
3,551
|
|
|
—
|
|
|
1,908
|
|
|
—
|
|
||||
Effect of dilutive stock options on net income
|
|
13
|
|
|
(13
|
)
|
|
5
|
|
|
(5
|
)
|
||||
Net income applicable to common stockholders - diluted
|
|
$
|
93,107
|
|
|
$
|
3,839
|
|
|
$
|
51,886
|
|
|
$
|
2,193
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
|
23,164
|
|
|
1,000
|
|
|
23,948
|
|
|
1,060
|
|
||||
Conversion of Class B common shares into Class A common shares
|
|
1,000
|
|
|
—
|
|
|
1,060
|
|
|
—
|
|
||||
Effect of dilutive stock options on weighted average common shares
|
|
94
|
|
|
—
|
|
|
68
|
|
|
—
|
|
||||
Weighted average common shares outstanding – diluted
|
|
24,258
|
|
|
1,000
|
|
|
25,076
|
|
|
1,060
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share - basic
|
|
$
|
3.85
|
|
|
$
|
3.85
|
|
|
$
|
2.07
|
|
|
$
|
2.07
|
|
Net income per common share - diluted
|
|
$
|
3.84
|
|
|
$
|
3.84
|
|
|
$
|
2.07
|
|
|
$
|
2.07
|
|
Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||
Diluted EPS
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||
Antidilutive Securities
|
|
|
|
|
|
|
|
|
||||
Shares issuable pursuant to stock options not included since they were antidilutive
|
|
33
|
|
|
—
|
|
|
9
|
|
|
—
|
|
Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||||||
(in thousands, except per share data)
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||
Net income applicable to common stockholders - basic
|
|
$
|
197,485
|
|
|
$
|
8,343
|
|
|
$
|
147,876
|
|
|
$
|
7,937
|
|
Reallocation of distributed net income as a result of conversion of dilutive stock options
|
|
4
|
|
|
(4
|
)
|
|
3
|
|
|
(3
|
)
|
||||
Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding
|
|
844
|
|
|
—
|
|
|
1,006
|
|
|
—
|
|
||||
Conversion of Class B common shares into Class A common shares
|
|
7,466
|
|
|
—
|
|
|
6,909
|
|
|
—
|
|
||||
Effect of dilutive stock options on net income
|
|
29
|
|
|
(29
|
)
|
|
19
|
|
|
(19
|
)
|
||||
Net income applicable to common stockholders - diluted
|
|
$
|
205,828
|
|
|
$
|
8,310
|
|
|
$
|
155,813
|
|
|
$
|
7,915
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
|
23,670
|
|
|
1,000
|
|
|
23,812
|
|
|
1,278
|
|
||||
Conversion of Class B common shares into Class A common shares
|
|
1,000
|
|
|
—
|
|
|
1,278
|
|
|
—
|
|
||||
Effect of employee stock purchases and restricted stock units on weighted average common shares
|
|
97
|
|
|
—
|
|
|
68
|
|
|
—
|
|
||||
Weighted average common shares outstanding – diluted
|
|
24,767
|
|
|
1,000
|
|
|
25,158
|
|
|
1,278
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share - basic
|
|
$
|
8.34
|
|
|
$
|
8.34
|
|
|
$
|
6.21
|
|
|
$
|
6.21
|
|
Net income per common share - diluted
|
|
$
|
8.31
|
|
|
$
|
8.31
|
|
|
$
|
6.19
|
|
|
$
|
6.19
|
|
Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||
Diluted EPS
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||
Antidilutive Securities
|
|
|
|
|
|
|
|
|
||||
Shares issuable pursuant to stock options not included since they were antidilutive
|
|
30
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Domestic
|
|
|
|
|
|
|
|
|
||||||||
New vehicle
|
|
$
|
600,054
|
|
|
$
|
567,423
|
|
|
$
|
1,711,179
|
|
|
$
|
1,581,329
|
|
Used vehicle retail
|
|
288,238
|
|
|
260,622
|
|
|
836,473
|
|
|
756,834
|
|
||||
Used vehicle wholesale
|
|
36,983
|
|
|
27,986
|
|
|
104,502
|
|
|
90,972
|
|
||||
Finance and insurance
|
|
42,541
|
|
|
38,408
|
|
|
125,626
|
|
|
111,970
|
|
||||
Service, body and parts
|
|
114,756
|
|
|
103,070
|
|
|
335,370
|
|
|
292,987
|
|
||||
Fleet and other
|
|
15,282
|
|
|
10,801
|
|
|
50,389
|
|
|
28,926
|
|
||||
|
|
1,097,854
|
|
|
1,008,310
|
|
|
3,163,539
|
|
|
2,863,018
|
|
||||
Import
|
|
|
|
|
|
|
|
|
||||||||
New vehicle
|
|
787,803
|
|
|
737,931
|
|
|
2,227,393
|
|
|
1,933,217
|
|
||||
Used vehicle retail
|
|
334,614
|
|
|
289,723
|
|
|
977,931
|
|
|
806,510
|
|
||||
Used vehicle wholesale
|
|
35,162
|
|
|
24,337
|
|
|
94,340
|
|
|
78,456
|
|
||||
Finance and insurance
|
|
60,494
|
|
|
51,564
|
|
|
167,057
|
|
|
137,419
|
|
||||
Service, body and parts
|
|
114,776
|
|
|
104,106
|
|
|
340,816
|
|
|
289,733
|
|
||||
Fleet and other
|
|
3,512
|
|
|
2,294
|
|
|
21,987
|
|
|
31,332
|
|
||||
|
|
1,336,361
|
|
|
1,209,955
|
|
|
3,829,524
|
|
|
3,276,667
|
|
||||
Luxury
|
|
|
|
|
|
|
|
|
||||||||
New vehicle
|
|
347,568
|
|
|
252,861
|
|
|
988,002
|
|
|
649,566
|
|
||||
Used vehicle retail
|
|
182,479
|
|
|
128,355
|
|
|
510,323
|
|
|
350,992
|
|
||||
Used vehicle wholesale
|
|
19,896
|
|
|
13,418
|
|
|
54,359
|
|
|
37,114
|
|
||||
Finance and insurance
|
|
16,421
|
|
|
10,816
|
|
|
44,606
|
|
|
28,335
|
|
||||
Service, body and parts
|
|
76,906
|
|
|
56,240
|
|
|
218,582
|
|
|
154,598
|
|
||||
Fleet and other
|
|
9,617
|
|
|
1,828
|
|
|
31,039
|
|
|
25,879
|
|
||||
|
|
652,887
|
|
|
463,518
|
|
|
1,846,911
|
|
|
1,246,484
|
|
||||
|
|
3,087,102
|
|
|
2,681,783
|
|
|
8,839,974
|
|
|
7,386,169
|
|
||||
Corporate and other
|
|
4,850
|
|
|
(1,441
|
)
|
|
8,194
|
|
|
(2,690
|
)
|
||||
|
|
$
|
3,091,952
|
|
|
$
|
2,680,342
|
|
|
$
|
8,848,168
|
|
|
$
|
7,383,479
|
|
Segment income
1
:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Domestic
|
|
$
|
25,304
|
|
|
$
|
31,141
|
|
|
$
|
79,466
|
|
|
$
|
84,440
|
|
Import
|
|
37,369
|
|
|
36,954
|
|
|
90,634
|
|
|
91,365
|
|
||||
Luxury
|
|
11,685
|
|
|
7,515
|
|
|
30,510
|
|
|
22,542
|
|
||||
|
|
74,358
|
|
|
75,610
|
|
|
200,610
|
|
|
198,347
|
|
||||
Corporate and other
|
|
66,899
|
|
|
34,541
|
|
|
149,473
|
|
|
111,281
|
|
||||
Depreciation and amortization
|
|
(19,649
|
)
|
|
(14,828
|
)
|
|
(55,324
|
)
|
|
(41,598
|
)
|
||||
Other interest expense
|
|
(15,010
|
)
|
|
(9,905
|
)
|
|
(40,645
|
)
|
|
(23,745
|
)
|
||||
Other income, net
|
|
2,389
|
|
|
1,125
|
|
|
5,422
|
|
|
11,357
|
|
||||
Income before income taxes
|
|
$
|
108,987
|
|
|
$
|
86,543
|
|
|
$
|
259,536
|
|
|
$
|
255,642
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Total assets:
|
|
|
|
|
||||
Domestic
|
|
$
|
1,451,031
|
|
|
$
|
1,338,232
|
|
Import
|
|
1,171,557
|
|
|
1,137,934
|
|
||
Luxury
|
|
767,952
|
|
|
641,118
|
|
||
Corporate and other
|
|
1,784,029
|
|
|
1,565,782
|
|
||
|
|
$
|
5,174,569
|
|
|
$
|
4,683,066
|
|
•
|
On January 15, 2018, Ray Laks Honda in Orchard Park, New York and Ray Laks Acura in Buffalo, New York.
|
•
|
On February 26, 2018, Day Auto Group, a
seven
store platform based in Pennsylvania.
|
•
|
On March 1, 2018, Prestige Auto Group, a
six
store platform based in New Jersey and New York.
|
•
|
On April 2, 2018, Broadway Ford in Idaho Falls, Idaho.
|
•
|
On April 23, 2018, Buhler Ford in Eatontown, New Jersey.
|
Revenue
|
$
|
634,482
|
|
Net loss
|
$
|
(1,949
|
)
|
•
|
On May 1, 2017, we acquired Baierl Auto Group, an
eight
store platform based in Pennsylvania.
|
•
|
On August 7, 2017, we acquired Downtown LA Auto Group, a
seven
store platform based in California.
|
•
|
On November 11, 2017, we acquired Albany CJD Fiat in Albany, New York.
|
•
|
On November 15, 2017, we acquired Crater Lake Ford Lincoln and Crater Lake Mazda in Medford, Oregon.
|
|
|
Consideration
|
||
Cash paid, net of cash acquired
|
|
$
|
374,026
|
|
Debt issued
|
|
125,055
|
|
|
|
|
$
|
499,081
|
|
|
|
Assets Acquired and Liabilities Assumed
|
||
Accounts receivable
|
|
$
|
732
|
|
Inventories, net
|
|
179,973
|
|
|
Property and equipment, net
|
|
9,868
|
|
|
Other non-current assets
|
|
321,629
|
|
|
Floor plan notes payable
|
|
(10,779
|
)
|
|
Other long-term liabilities
|
|
(2,342
|
)
|
|
|
|
$
|
499,081
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
$
|
3,091,952
|
|
|
$
|
3,118,676
|
|
|
$
|
9,048,379
|
|
|
$
|
9,024,723
|
|
Net income
|
|
93,107
|
|
|
52,452
|
|
|
204,526
|
|
|
161,614
|
|
||||
Basic net income per share
|
|
3.85
|
|
|
2.10
|
|
|
8.29
|
|
|
6.44
|
|
||||
Diluted net income per share
|
|
3.84
|
|
|
2.09
|
|
|
8.26
|
|
|
6.42
|
|
•
|
A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and subject to accelerated recognition under the new standard. Accordingly, we recognized a
$9.2 million
asset associated with future estimated variable consideration and a net of tax increase to retained earnings of
$6.5 million
. We do not believe there will be a significant impact to future revenue recognized.
|
•
|
The adoption of the new standard clarifies the determination and capitalization of direct costs incurred. As a result, we reassessed the method used to capitalize and amortize direct costs associated with the sale of lifetime lube, oil and filter contracts, which resulted in a
$7.2 million
reduction in prepaid commissions and a net of tax
$5.1 million
reduction to retained earnings.
|
|
|
As Reported
|
|
|
|
Balances without the adoption of Topic 606
|
||||||
Impact on Consolidated Balance Sheets
|
|
September 30, 2018
|
|
Adjustments
|
|
|||||||
Accounts receivable, net
|
|
$
|
470,689
|
|
|
$
|
(3,631
|
)
|
|
$
|
467,058
|
|
Other current assets
|
|
47,648
|
|
|
(1,732
|
)
|
|
45,916
|
|
|||
Other non-current assets
|
|
487,171
|
|
|
4,835
|
|
|
492,006
|
|
|||
Total Assets
|
|
5,174,569
|
|
|
(528
|
)
|
|
5,174,041
|
|
|||
Accrued Liabilities
|
|
259,825
|
|
|
313
|
|
|
260,138
|
|
|||
Deferred income taxes
|
|
77,684
|
|
|
(599
|
)
|
|
77,085
|
|
|||
Total Liabilities
|
|
3,969,427
|
|
|
(286
|
)
|
|
3,969,141
|
|
|||
Retained earnings
|
|
1,109,017
|
|
|
(242
|
)
|
|
1,108,775
|
|
|||
Total Liabilities and Stockholders' Equity
|
|
5,174,569
|
|
|
(528
|
)
|
|
5,174,041
|
|
•
|
Future market conditions, including anticipated national new car sales levels;
|
•
|
Expected operating results, such as improved store performance; continued improvement of SG&A as a percentage of gross profit and all projections;
|
•
|
Anticipated continued success of acquisitions;
|
•
|
Anticipated ability to capture additional market share;
|
•
|
Anticipated ability to find accretive acquisitions;
|
•
|
Anticipated additions of dealership locations to our portfolio in the future;
|
•
|
Anticipated availability of liquidity from our unfinanced operating real estate; and
|
•
|
Anticipated levels of capital expenditures in the future.
|
•
|
Changing economic conditions, including changes in consumer demand, the availability of credit, fuel prices and interest rates;
|
•
|
Natural disasters, adverse weather conditions, acts of God or other incidents;
|
•
|
Increasing competition in our industry;
|
•
|
Adverse conditions affecting one or more key manufacturers whose brands we sell;
|
•
|
Availability of manufacturer incentives, warranty and other promotional programs;
|
•
|
Manufacturers relationships and our ability to renew or enter into new franchise agreements on acceptable terms;
|
•
|
Changes in laws and regulations;
|
•
|
Breaches in our data security systems or in systems used by our vendor partners; and
|
•
|
Our ability to acquire and successfully integrate additional stores
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle
|
|
$
|
1,732,950
|
|
|
$
|
1,553,511
|
|
|
11.6
|
%
|
|
$
|
4,914,478
|
|
|
$
|
4,147,870
|
|
|
18.5
|
%
|
Used vehicle retail
|
|
805,928
|
|
|
679,180
|
|
|
18.7
|
|
|
2,325,600
|
|
|
1,915,038
|
|
|
21.4
|
|
||||
Finance and insurance
|
|
121,062
|
|
|
101,044
|
|
|
19.8
|
|
|
342,059
|
|
|
282,672
|
|
|
21.0
|
|
||||
Service, body and parts
|
|
311,327
|
|
|
265,683
|
|
|
17.2
|
|
|
908,431
|
|
|
744,262
|
|
|
22.1
|
|
||||
Total Revenues
|
|
3,091,952
|
|
|
2,680,342
|
|
|
15.4
|
|
|
8,848,168
|
|
|
7,383,479
|
|
|
19.8
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle
|
|
$
|
100,882
|
|
|
$
|
88,045
|
|
|
14.6
|
%
|
|
$
|
289,323
|
|
|
$
|
238,702
|
|
|
21.2
|
%
|
Used vehicle retail
|
|
86,353
|
|
|
78,658
|
|
|
9.8
|
|
|
247,065
|
|
|
221,947
|
|
|
11.3
|
|
||||
Finance and insurance
|
|
121,062
|
|
|
101,044
|
|
|
19.8
|
|
|
342,059
|
|
|
282,672
|
|
|
21.0
|
|
||||
Service, body and parts
|
|
154,456
|
|
|
132,492
|
|
|
16.6
|
|
|
446,571
|
|
|
368,166
|
|
|
21.3
|
|
||||
Total Gross Profit
|
|
466,239
|
|
|
403,021
|
|
|
15.7
|
|
|
1,335,077
|
|
|
1,119,944
|
|
|
19.2
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit margins
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle
|
|
5.8
|
%
|
|
5.7
|
%
|
|
10 bp
|
|
5.9
|
%
|
|
5.8
|
%
|
|
10 bp
|
||||||
Used vehicle retail
|
|
10.7
|
|
|
11.6
|
|
|
-90 bp
|
|
10.6
|
|
|
11.6
|
|
|
-100 bp
|
||||||
Finance and insurance
|
|
100.0
|
|
|
100.0
|
|
|
0 bp
|
|
100.0
|
|
|
100.0
|
|
|
0 bp
|
||||||
Service, body and parts
|
|
49.6
|
|
|
49.9
|
|
|
-30 bp
|
|
49.2
|
|
|
49.5
|
|
|
-30 bp
|
||||||
Total Gross Profit Margin
|
|
15.1
|
|
|
15.0
|
|
|
10 bp
|
|
15.1
|
|
|
15.2
|
|
|
-10 bp
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Retail units sold
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicles
|
|
48,790
|
|
|
45,452
|
|
|
7.3
|
%
|
|
139,314
|
|
|
121,944
|
|
|
14.2
|
%
|
||||
Used vehicles
|
|
39,751
|
|
|
34,717
|
|
|
14.5
|
|
|
114,961
|
|
|
97,671
|
|
|
17.7
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average selling price per retail unit
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicles
|
|
$
|
35,519
|
|
|
$
|
34,179
|
|
|
3.9
|
%
|
|
$
|
35,276
|
|
|
$
|
34,015
|
|
|
3.7
|
%
|
Used vehicles
|
|
20,274
|
|
|
19,563
|
|
|
3.6
|
|
|
20,229
|
|
|
19,607
|
|
|
3.2
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average gross profit per retail unit
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicles
|
|
$
|
2,068
|
|
|
$
|
1,937
|
|
|
6.8
|
%
|
|
$
|
2,077
|
|
|
$
|
1,957
|
|
|
6.1
|
%
|
Used vehicles
|
|
2,172
|
|
|
2,266
|
|
|
(4.1
|
)
|
|
2,149
|
|
|
2,272
|
|
|
(5.4
|
)
|
||||
Finance and insurance
|
|
1,367
|
|
|
1,260
|
|
|
8.5
|
|
|
1,345
|
|
|
1,287
|
|
|
4.5
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle
|
|
$
|
1,443,965
|
|
|
$
|
1,480,737
|
|
|
(2.5
|
)%
|
|
$
|
3,954,946
|
|
|
$
|
3,998,702
|
|
|
(1.1
|
)%
|
Used vehicle retail
|
|
688,965
|
|
|
655,814
|
|
|
5.1
|
|
|
1,960,126
|
|
|
1,855,211
|
|
|
5.7
|
|
||||
Finance and insurance
|
|
105,462
|
|
|
97,033
|
|
|
8.7
|
|
|
287,202
|
|
|
273,143
|
|
|
5.1
|
|
||||
Service, body and parts
|
|
260,683
|
|
|
254,084
|
|
|
2.6
|
|
|
740,725
|
|
|
719,898
|
|
|
2.9
|
|
||||
Total Revenues
|
|
2,594,562
|
|
|
2,566,159
|
|
|
1.1
|
|
|
7,230,131
|
|
|
7,134,877
|
|
|
1.3
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle
|
|
$
|
82,596
|
|
|
$
|
83,478
|
|
|
(1.1
|
)%
|
|
$
|
226,531
|
|
|
$
|
228,625
|
|
|
(0.9
|
)%
|
Used vehicle retail
|
|
77,667
|
|
|
76,836
|
|
|
1.1
|
|
|
218,013
|
|
|
217,190
|
|
|
0.4
|
|
||||
Finance and insurance
|
|
105,462
|
|
|
97,033
|
|
|
8.7
|
|
|
287,202
|
|
|
273,143
|
|
|
5.1
|
|
||||
Service, body and parts
|
|
129,720
|
|
|
126,623
|
|
|
2.4
|
|
|
366,878
|
|
|
355,917
|
|
|
3.1
|
|
||||
Total Gross Profit
|
|
398,673
|
|
|
386,805
|
|
|
3.1
|
|
|
1,107,344
|
|
|
1,083,312
|
|
|
2.2
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit margins
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicle
|
|
5.7
|
%
|
|
5.6
|
%
|
|
10 bp
|
|
5.7
|
%
|
|
5.7
|
%
|
|
0 bp
|
||||||
Used vehicle retail
|
|
11.3
|
|
|
11.7
|
|
|
-40 bp
|
|
11.1
|
|
|
11.7
|
|
|
-60 bp
|
||||||
Finance and insurance
|
|
100.0
|
|
|
100.0
|
|
|
0 bp
|
|
100.0
|
|
|
100.0
|
|
|
0 bp
|
||||||
Service, body and parts
|
|
49.8
|
|
|
49.8
|
|
|
0 bp
|
|
49.5
|
|
|
49.4
|
|
|
10 bp
|
||||||
Total Gross Profit Margin
|
|
15.4
|
|
|
15.1
|
|
|
30 bp
|
|
15.3
|
|
|
15.2
|
|
|
10 bp
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Retail units sold
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicles
|
|
40,974
|
|
|
43,171
|
|
|
(5.1
|
)%
|
|
112,660
|
|
|
117,086
|
|
|
(3.8
|
)%
|
||||
Used vehicles
|
|
34,434
|
|
|
33,498
|
|
|
2.8
|
|
|
97,962
|
|
|
94,338
|
|
|
3.8
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average selling price per retail unit
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicles
|
|
$
|
35,241
|
|
|
$
|
34,299
|
|
|
2.7
|
%
|
|
$
|
35,105
|
|
|
$
|
34,152
|
|
|
2.8
|
%
|
Used vehicles
|
|
20,008
|
|
|
19,578
|
|
|
2.2
|
|
|
20,009
|
|
|
19,666
|
|
|
1.7
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Average gross profit per retail unit
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
New vehicles
|
|
$
|
2,016
|
|
|
$
|
1,934
|
|
|
4.2
|
%
|
|
$
|
2,011
|
|
|
$
|
1,953
|
|
|
3.0
|
%
|
Used vehicles
|
|
2,256
|
|
|
2,294
|
|
|
(1.7
|
)
|
|
2,225
|
|
|
2,302
|
|
|
(3.3
|
)
|
||||
Finance and insurance
|
|
1,399
|
|
|
1,266
|
|
|
10.5
|
|
|
1,364
|
|
|
1,292
|
|
|
5.6
|
|
|
|
Three Months Ended September 30,
|
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Domestic
|
|
$
|
1,097,854
|
|
|
$
|
1,008,310
|
|
|
$
|
89,544
|
|
|
8.9
|
%
|
Import
|
|
1,336,361
|
|
|
1,209,955
|
|
|
126,406
|
|
|
10.4
|
|
|||
Luxury
|
|
652,887
|
|
|
463,518
|
|
|
189,369
|
|
|
40.9
|
|
|||
|
|
3,087,102
|
|
|
2,681,783
|
|
|
405,319
|
|
|
15.1
|
|
|||
Corporate and other
|
|
4,850
|
|
|
(1,441
|
)
|
|
6,291
|
|
|
NM
|
|
|||
|
|
$
|
3,091,952
|
|
|
$
|
2,680,342
|
|
|
$
|
411,610
|
|
|
15.4
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Domestic
|
|
$
|
3,163,539
|
|
|
$
|
2,863,018
|
|
|
$
|
300,521
|
|
|
10.5
|
%
|
Import
|
|
3,829,524
|
|
|
3,276,667
|
|
|
552,857
|
|
|
16.9
|
|
|||
Luxury
|
|
1,846,911
|
|
|
1,246,484
|
|
|
600,427
|
|
|
48.2
|
|
|||
|
|
8,839,974
|
|
|
7,386,169
|
|
|
1,453,805
|
|
|
19.7
|
|
|||
Corporate and other
|
|
8,194
|
|
|
(2,690
|
)
|
|
10,884
|
|
|
NM
|
|
|||
|
|
$
|
8,848,168
|
|
|
$
|
7,383,479
|
|
|
$
|
1,464,689
|
|
|
19.8
|
%
|
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Segment income
1
:
|
|
|
|
|
|
|
|
|
|||||||
Domestic
|
|
$
|
25,304
|
|
|
$
|
31,141
|
|
|
$
|
(5,837
|
)
|
|
(18.7
|
)%
|
Import
|
|
37,369
|
|
|
36,954
|
|
|
415
|
|
|
1.1
|
|
|||
Luxury
|
|
11,685
|
|
|
7,515
|
|
|
4,170
|
|
|
55.5
|
|
|||
|
|
74,358
|
|
|
75,610
|
|
|
(1,252
|
)
|
|
(1.7
|
)
|
|||
Corporate and other
|
|
66,899
|
|
|
34,541
|
|
|
32,358
|
|
|
93.7
|
|
|||
Depreciation and amortization
|
|
(19,649
|
)
|
|
(14,828
|
)
|
|
4,821
|
|
|
32.5
|
|
|||
Other interest expense
|
|
(15,010
|
)
|
|
(9,905
|
)
|
|
5,105
|
|
|
51.5
|
|
|||
Other income, net
|
|
2,389
|
|
|
1,125
|
|
|
1,264
|
|
|
NM
|
|
|||
Income before income taxes
|
|
$
|
108,987
|
|
|
$
|
86,543
|
|
|
$
|
22,444
|
|
|
25.9
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Segment income
1
:
|
|
|
|
|
|
|
|
|
|||||||
Domestic
|
|
$
|
79,466
|
|
|
$
|
84,440
|
|
|
$
|
(4,974
|
)
|
|
(5.9
|
)%
|
Import
|
|
90,634
|
|
|
91,365
|
|
|
(731
|
)
|
|
(0.8
|
)
|
|||
Luxury
|
|
30,510
|
|
|
22,542
|
|
|
7,968
|
|
|
35.3
|
|
|||
|
|
200,610
|
|
|
198,347
|
|
|
2,263
|
|
|
1.1
|
|
|||
Corporate and other
|
|
149,473
|
|
|
111,281
|
|
|
38,192
|
|
|
34.3
|
|
|||
Depreciation and amortization
|
|
(55,324
|
)
|
|
(41,598
|
)
|
|
13,726
|
|
|
33.0
|
|
|||
Other interest expense
|
|
(40,645
|
)
|
|
(23,745
|
)
|
|
16,900
|
|
|
71.2
|
|
|||
Other income, net
|
|
5,422
|
|
|
11,357
|
|
|
(5,935
|
)
|
|
NM
|
|
|||
Income before income taxes
|
|
$
|
259,536
|
|
|
$
|
255,642
|
|
|
$
|
3,894
|
|
|
1.5
|
%
|
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|
% Increase
|
||||||
|
|
2018
|
|
2017
|
|
|
||||||
Retail new vehicle unit sales:
|
|
|
|
|
|
|
|
|
||||
Domestic
|
|
14,695
|
|
|
13,911
|
|
|
784
|
|
|
5.6
|
%
|
Import
|
|
27,295
|
|
|
26,621
|
|
|
674
|
|
|
2.5
|
|
Luxury
|
|
6,860
|
|
|
5,029
|
|
|
1,831
|
|
|
36.4
|
|
|
|
48,850
|
|
|
45,561
|
|
|
3,289
|
|
|
7.2
|
|
Allocated to management
|
|
(60
|
)
|
|
(109
|
)
|
|
(49
|
)
|
|
NM
|
|
|
|
48,790
|
|
|
45,452
|
|
|
3,338
|
|
|
7.3
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
||||||
|
|
2018
|
|
2017
|
|
|
||||||
Retail new vehicle unit sales:
|
|
|
|
|
|
|
|
|
||||
Domestic
|
|
42,048
|
|
|
39,407
|
|
|
2,641
|
|
|
6.7
|
%
|
Import
|
|
78,311
|
|
|
69,643
|
|
|
8,668
|
|
|
12.4
|
|
Luxury
|
|
19,248
|
|
|
13,168
|
|
|
6,080
|
|
|
46.2
|
|
|
|
139,607
|
|
|
122,218
|
|
|
17,389
|
|
|
14.2
|
|
Allocated to management
|
|
(293
|
)
|
|
(274
|
)
|
|
19
|
|
|
NM
|
|
|
|
139,314
|
|
|
121,944
|
|
|
17,370
|
|
|
14.2
|
%
|
|
|
Three Months Ended
September 30, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
|
$
|
600,054
|
|
|
$
|
567,423
|
|
|
$
|
32,631
|
|
|
5.8
|
%
|
Used vehicle retail
|
|
288,238
|
|
|
260,622
|
|
|
27,616
|
|
|
10.6
|
|
|||
Used vehicle wholesale
|
|
36,983
|
|
|
27,986
|
|
|
8,997
|
|
|
32.1
|
|
|||
Finance and insurance
|
|
42,541
|
|
|
38,408
|
|
|
4,133
|
|
|
10.8
|
|
|||
Service, body and parts
|
|
114,756
|
|
|
103,070
|
|
|
11,686
|
|
|
11.3
|
|
|||
Fleet and other
|
|
15,282
|
|
|
10,801
|
|
|
4,481
|
|
|
41.5
|
|
|||
|
|
$
|
1,097,854
|
|
|
$
|
1,008,310
|
|
|
$
|
89,544
|
|
|
8.9
|
|
Segment income
|
|
$
|
25,304
|
|
|
$
|
31,141
|
|
|
$
|
(5,837
|
)
|
|
(18.7
|
)
|
Retail new vehicle unit sales
|
|
14,695
|
|
|
13,911
|
|
|
784
|
|
|
5.6
|
|
|
|
Nine Months Ended
September 30, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
|
$
|
1,711,179
|
|
|
$
|
1,581,329
|
|
|
$
|
129,850
|
|
|
8.2
|
%
|
Used vehicle retail
|
|
836,473
|
|
|
756,834
|
|
|
79,639
|
|
|
10.5
|
|
|||
Used vehicle wholesale
|
|
104,502
|
|
|
90,972
|
|
|
13,530
|
|
|
14.9
|
|
|||
Finance and insurance
|
|
125,626
|
|
|
111,970
|
|
|
13,656
|
|
|
12.2
|
|
|||
Service, body and parts
|
|
335,370
|
|
|
292,987
|
|
|
42,383
|
|
|
14.5
|
|
|||
Fleet and other
|
|
50,389
|
|
|
28,926
|
|
|
21,463
|
|
|
74.2
|
|
|||
|
|
$
|
3,163,539
|
|
|
$
|
2,863,018
|
|
|
$
|
300,521
|
|
|
10.5
|
%
|
Segment income
|
|
$
|
79,466
|
|
|
$
|
84,440
|
|
|
$
|
(4,974
|
)
|
|
(5.9
|
)%
|
Retail new vehicle unit sales
|
|
42,048
|
|
|
39,407
|
|
|
2,641
|
|
|
6.7
|
%
|
|
|
Three Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
|
$
|
787,803
|
|
|
$
|
737,931
|
|
|
$
|
49,872
|
|
|
6.8
|
%
|
Used vehicle retail
|
|
334,614
|
|
|
289,723
|
|
|
44,891
|
|
|
15.5
|
|
|||
Used vehicle wholesale
|
|
35,162
|
|
|
24,337
|
|
|
10,825
|
|
|
44.5
|
|
|||
Finance and insurance
|
|
60,494
|
|
|
51,564
|
|
|
8,930
|
|
|
17.3
|
|
|||
Service, body and parts
|
|
114,776
|
|
|
104,106
|
|
|
10,670
|
|
|
10.2
|
|
|||
Fleet and other
|
|
3,512
|
|
|
2,294
|
|
|
1,218
|
|
|
53.1
|
|
|||
|
|
$
|
1,336,361
|
|
|
$
|
1,209,955
|
|
|
$
|
126,406
|
|
|
10.4
|
|
Segment income
|
|
$
|
37,369
|
|
|
$
|
36,954
|
|
|
$
|
415
|
|
|
1.1
|
|
Retail new vehicle unit sales
|
|
27,295
|
|
|
26,621
|
|
|
674
|
|
|
2.5
|
|
|
|
Nine Months Ended
September 30, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
|
$
|
2,227,393
|
|
|
$
|
1,933,217
|
|
|
$
|
294,176
|
|
|
15.2
|
%
|
Used vehicle retail
|
|
977,931
|
|
|
806,510
|
|
|
171,421
|
|
|
21.3
|
|
|||
Used vehicle wholesale
|
|
94,340
|
|
|
78,456
|
|
|
15,884
|
|
|
20.2
|
|
|||
Finance and insurance
|
|
167,057
|
|
|
137,419
|
|
|
29,638
|
|
|
21.6
|
|
|||
Service, body and parts
|
|
340,816
|
|
|
289,733
|
|
|
51,083
|
|
|
17.6
|
|
|||
Fleet and other
|
|
21,987
|
|
|
31,332
|
|
|
(9,345
|
)
|
|
(29.8
|
)
|
|||
|
|
$
|
3,829,524
|
|
|
$
|
3,276,667
|
|
|
$
|
552,857
|
|
|
16.9
|
%
|
Segment income
|
|
$
|
90,634
|
|
|
$
|
91,365
|
|
|
$
|
(731
|
)
|
|
(0.8
|
)%
|
Retail new vehicle unit sales
|
|
78,311
|
|
|
69,643
|
|
|
8,668
|
|
|
12.4
|
%
|
|
|
Three Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
|
$
|
347,568
|
|
|
$
|
252,861
|
|
|
$
|
94,707
|
|
|
37.5
|
%
|
Used vehicle retail
|
|
182,479
|
|
|
128,355
|
|
|
54,124
|
|
|
42.2
|
|
|||
Used vehicle wholesale
|
|
19,896
|
|
|
13,418
|
|
|
6,478
|
|
|
48.3
|
|
|||
Finance and insurance
|
|
16,421
|
|
|
10,816
|
|
|
5,605
|
|
|
51.8
|
|
|||
Service, body and parts
|
|
76,906
|
|
|
56,240
|
|
|
20,666
|
|
|
36.7
|
|
|||
Fleet and other
|
|
9,617
|
|
|
1,828
|
|
|
7,789
|
|
|
426.1
|
|
|||
|
|
$
|
652,887
|
|
|
$
|
463,518
|
|
|
$
|
189,369
|
|
|
40.9
|
|
Segment income
|
|
$
|
11,685
|
|
|
$
|
7,515
|
|
|
$
|
4,170
|
|
|
55.5
|
|
Retail new vehicle unit sales
|
|
6,860
|
|
|
5,029
|
|
|
1,831
|
|
|
36.4
|
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle
|
|
$
|
988,002
|
|
|
$
|
649,566
|
|
|
$
|
338,436
|
|
|
52.1
|
%
|
Used vehicle retail
|
|
510,323
|
|
|
350,992
|
|
|
159,331
|
|
|
45.4
|
|
|||
Used vehicle wholesale
|
|
54,359
|
|
|
37,114
|
|
|
17,245
|
|
|
46.5
|
|
|||
Finance and insurance
|
|
44,606
|
|
|
28,335
|
|
|
16,271
|
|
|
57.4
|
|
|||
Service, body and parts
|
|
218,582
|
|
|
154,598
|
|
|
63,984
|
|
|
41.4
|
|
|||
Fleet and other
|
|
31,039
|
|
|
25,879
|
|
|
5,160
|
|
|
19.9
|
|
|||
|
|
$
|
1,846,911
|
|
|
$
|
1,246,484
|
|
|
$
|
600,427
|
|
|
48.2
|
%
|
Segment income
|
|
$
|
30,510
|
|
|
$
|
22,542
|
|
|
$
|
7,968
|
|
|
35.3
|
%
|
Retail new vehicle unit sales
|
|
19,248
|
|
|
13,168
|
|
|
6,080
|
|
|
46.2
|
%
|
|
|
Three Months Ended
September 30, |
|
Increase
|
|
% Increase
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
||||||||
Revenue, net
|
|
$
|
4,850
|
|
|
$
|
(1,441
|
)
|
|
$
|
6,291
|
|
|
NM
|
Segment income
|
|
$
|
66,899
|
|
|
$
|
34,541
|
|
|
$
|
32,358
|
|
|
93.7
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
||||||||
Revenue, net
|
|
$
|
8,194
|
|
|
$
|
(2,690
|
)
|
|
$
|
10,884
|
|
|
NM
|
Segment income
|
|
$
|
149,473
|
|
|
$
|
111,281
|
|
|
$
|
38,192
|
|
|
34.3
|
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Personnel
|
|
$
|
213,188
|
|
|
$
|
182,443
|
|
|
$
|
30,745
|
|
|
16.9
|
%
|
Advertising
|
|
28,624
|
|
|
24,572
|
|
|
4,052
|
|
|
16.5
|
|
|||
Rent
|
|
10,490
|
|
|
8,768
|
|
|
1,722
|
|
|
19.6
|
|
|||
Facility costs
|
|
18,214
|
|
|
15,609
|
|
|
2,605
|
|
|
16.7
|
|
|||
Gain on sale of assets
|
|
(15,760
|
)
|
|
(617
|
)
|
|
(15,143
|
)
|
|
NM
|
|
|||
Other
|
|
54,268
|
|
|
51,466
|
|
|
2,802
|
|
|
5.4
|
|
|||
Total SG&A
|
|
$
|
309,024
|
|
|
$
|
282,241
|
|
|
$
|
26,783
|
|
|
9.5
|
%
|
|
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|||||
As a % of gross profit
|
|
2018
|
|
2017
|
|
||||
Personnel
|
|
45.7
|
%
|
|
45.3
|
%
|
|
40
|
bp
|
Advertising
|
|
6.1
|
|
|
6.1
|
|
|
—
|
|
Rent
|
|
2.2
|
|
|
2.2
|
|
|
—
|
|
Facility costs
|
|
3.9
|
|
|
3.9
|
|
|
—
|
|
Gain on sale of assets
|
|
(3.4
|
)
|
|
(0.2
|
)
|
|
(320
|
)
|
Other
|
|
11.8
|
|
|
12.7
|
|
|
(90
|
)
|
Total SG&A
|
|
66.3
|
%
|
|
70.0
|
%
|
|
(370
|
)bp
|
|
|
Nine Months Ended
September 30, |
|
Increase (Decrease)
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Personnel
|
|
$
|
618,948
|
|
|
$
|
513,439
|
|
|
$
|
105,509
|
|
|
20.5
|
%
|
Advertising
|
|
81,714
|
|
|
67,516
|
|
|
14,198
|
|
|
21.0
|
|
|||
Rent
|
|
33,553
|
|
|
23,216
|
|
|
10,337
|
|
|
44.5
|
|
|||
Facility costs
|
|
54,061
|
|
|
44,703
|
|
|
9,358
|
|
|
20.9
|
|
|||
Gain on sale of assets
|
|
(15,387
|
)
|
|
(332
|
)
|
|
(15,055
|
)
|
|
NM
|
|
|||
Other
|
|
166,979
|
|
|
133,761
|
|
|
33,218
|
|
|
24.8
|
|
|||
Total SG&A
|
|
$
|
939,868
|
|
|
$
|
782,303
|
|
|
$
|
157,565
|
|
|
20.1
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase (Decrease)
|
|||||
As a % of gross profit
|
|
2018
|
|
2017
|
|
||||
Personnel
|
|
46.4
|
%
|
|
45.8
|
%
|
|
60
|
bp
|
Advertising
|
|
6.1
|
%
|
|
6.0
|
%
|
|
10
|
|
Rent
|
|
2.5
|
%
|
|
2.1
|
%
|
|
40
|
|
Facility costs
|
|
4.0
|
%
|
|
4.0
|
%
|
|
—
|
|
Gain on sale of assets
|
|
(1.2
|
)%
|
|
—
|
%
|
|
(120
|
)
|
Other
|
|
12.6
|
%
|
|
12.0
|
%
|
|
60
|
|
Total SG&A
|
|
70.4
|
%
|
|
69.9
|
%
|
|
50
|
bp
|
|
|
Three Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Personnel
|
|
$
|
213,188
|
|
|
$
|
182,443
|
|
|
$
|
30,745
|
|
|
16.9
|
%
|
Advertising
|
|
28,624
|
|
|
24,572
|
|
|
4,052
|
|
|
16.5
|
|
|||
Rent
|
|
10,490
|
|
|
8,768
|
|
|
1,722
|
|
|
19.6
|
|
|||
Facility costs
|
|
18,214
|
|
|
15,609
|
|
|
2,605
|
|
|
16.7
|
|
|||
Adjusted gain on sale of assets
|
|
(78
|
)
|
|
(617
|
)
|
|
539
|
|
|
NM
|
|
|||
Adjusted other
|
|
54,267
|
|
|
46,246
|
|
|
8,021
|
|
|
17.3
|
|
|||
Adjusted total SG&A
|
|
$
|
324,705
|
|
|
$
|
277,021
|
|
|
$
|
47,684
|
|
|
17.2
|
%
|
|
|
Three Months Ended
September 30, |
|
Increase
|
|||||
As a % of gross profit
|
|
2018
|
|
2017
|
|
||||
Personnel
|
|
45.7
|
%
|
|
45.3
|
%
|
|
40
|
bp
|
Advertising
|
|
6.1
|
%
|
|
6.1
|
%
|
|
—
|
|
Rent
|
|
2.2
|
%
|
|
2.2
|
%
|
|
—
|
|
Facility costs
|
|
3.9
|
%
|
|
3.9
|
%
|
|
—
|
|
Adjusted gain on sale of assets
|
|
—
|
%
|
|
(0.2
|
)%
|
|
20
|
|
Adjusted other
|
|
11.7
|
%
|
|
11.4
|
%
|
|
30
|
|
Adjusted total SG&A
|
|
69.6
|
%
|
|
68.7
|
%
|
|
90
|
bp
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Personnel
|
|
$
|
618,948
|
|
|
$
|
513,439
|
|
|
$
|
105,509
|
|
|
20.5
|
%
|
Advertising
|
|
81,714
|
|
|
67,516
|
|
|
14,198
|
|
|
21.0
|
%
|
|||
Rent
|
|
33,553
|
|
|
23,216
|
|
|
10,337
|
|
|
44.5
|
%
|
|||
Facility costs
|
|
54,061
|
|
|
44,703
|
|
|
9,358
|
|
|
20.9
|
%
|
|||
Adjusted loss (gain) on sale of assets
|
|
295
|
|
|
(332
|
)
|
|
627
|
|
|
NM
|
|
|||
Adjusted other
|
|
162,237
|
|
|
122,526
|
|
|
39,711
|
|
|
32.4
|
%
|
|||
Adjusted total SG&A
|
|
$
|
950,808
|
|
|
$
|
771,068
|
|
|
$
|
179,740
|
|
|
23.3
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|||||
As a % of gross profit
|
|
2018
|
|
2017
|
|
||||
Personnel
|
|
46.4
|
%
|
|
45.8
|
%
|
|
60
|
bp
|
Advertising
|
|
6.1
|
%
|
|
6.0
|
%
|
|
10
|
|
Rent
|
|
2.5
|
%
|
|
2.1
|
%
|
|
40
|
|
Facility costs
|
|
4.0
|
%
|
|
4.0
|
%
|
|
—
|
|
Adjusted loss (gain) on sale of assets
|
|
—
|
%
|
|
—
|
%
|
|
—
|
|
Adjusted other
|
|
12.2
|
%
|
|
10.9
|
%
|
|
130
|
|
Adjusted total SG&A
|
|
71.2
|
%
|
|
68.8
|
%
|
|
240
|
bp
|
|
|
Three Months Ended September 30,
|
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Depreciation and amortization
|
|
$
|
19,649
|
|
|
$
|
14,828
|
|
|
$
|
4,821
|
|
|
32.5
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Depreciation and amortization
|
|
$
|
55,324
|
|
|
$
|
41,598
|
|
|
$
|
13,726
|
|
|
33.0
|
%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Operating margin
|
|
4.4
|
%
|
|
4.0
|
%
|
|
3.8
|
%
|
|
4.0
|
%
|
Operating margin adjusted for non-core charges
1
|
|
3.9
|
%
|
|
4.1
|
%
|
|
3.7
|
%
|
|
4.2
|
%
|
|
|
Three Months Ended
September 30, |
|
|
|
Nine Months Ended
September 30, |
|
|
||||||||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Floor plan interest expense (new vehicles)
|
|
$
|
15,958
|
|
|
$
|
10,629
|
|
|
50.1
|
%
|
|
$
|
45,126
|
|
|
$
|
28,013
|
|
|
61.1
|
%
|
|
|
Three Months Ended September 30,
|
|
|
|
%
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
Change
|
|||||||
Floor plan interest expense (new vehicles)
|
|
$
|
15,958
|
|
|
$
|
10,629
|
|
|
$
|
5,329
|
|
|
50.1
|
%
|
Floor plan assistance (included as an offset to cost of sales)
|
|
(17,939
|
)
|
|
(15,130
|
)
|
|
(2,809
|
)
|
|
18.6
|
|
|||
Net new vehicle carrying costs
|
|
$
|
(1,981
|
)
|
|
$
|
(4,501
|
)
|
|
$
|
2,520
|
|
|
(56.0
|
)%
|
|
|
Nine Months Ended
September 30, |
|
|
|
%
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
Change
|
|
Change
|
|||||||
Floor plan interest expense (new vehicles)
|
|
$
|
45,126
|
|
|
$
|
28,013
|
|
|
$
|
17,113
|
|
|
61.1
|
%
|
Floor plan assistance (included as an offset to cost of sales)
|
|
(49,589
|
)
|
|
(40,186
|
)
|
|
(9,403
|
)
|
|
23.4
|
|
|||
Net new vehicle carrying costs
|
|
$
|
(4,463
|
)
|
|
$
|
(12,173
|
)
|
|
$
|
7,710
|
|
|
(63.3
|
)%
|
|
|
Three Months Ended September 30,
|
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Mortgage interest
|
|
$
|
7,278
|
|
|
$
|
4,964
|
|
|
$
|
2,314
|
|
|
46.6
|
|
Other interest
|
|
8,107
|
|
|
5,092
|
|
|
3,015
|
|
|
59.2
|
|
|||
Capitalized interest
|
|
(375
|
)
|
|
(151
|
)
|
|
224
|
|
|
148.3
|
|
|||
Total other interest expense
|
|
$
|
15,010
|
|
|
$
|
9,905
|
|
|
5,105
|
|
|
51.5
|
%
|
|
|
Nine Months Ended
September 30, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Mortgage interest
|
|
$
|
17,939
|
|
|
$
|
14,049
|
|
|
$
|
3,890
|
|
|
27.7
|
%
|
Other interest
|
|
23,566
|
|
|
10,040
|
|
|
13,526
|
|
|
134.7
|
|
|||
Capitalized interest
|
|
(860
|
)
|
|
(344
|
)
|
|
516
|
|
|
150.0
|
|
|||
Total other interest expense
|
|
$
|
40,645
|
|
|
$
|
23,745
|
|
|
16,900
|
|
|
71.2
|
%
|
|
|
Three Months Ended September 30,
|
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Other Income, net
|
|
$
|
2,389
|
|
|
$
|
1,125
|
|
|
$
|
1,264
|
|
|
112.4
|
%
|
|
|
Nine Months Ended
September 30, |
|
Decrease
|
|
% Decrease
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Other Income, net
|
|
$
|
5,422
|
|
|
$
|
11,357
|
|
|
$
|
(5,935
|
)
|
|
(52.3
|
)%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Effective income tax rate
|
|
14.6
|
%
|
|
40.0
|
%
|
|
20.7
|
%
|
|
39.1
|
%
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||
(Dollars in thousands, except per share amounts)
|
|
As reported
|
|
Disposal gain on sale of stores
|
|
Tax attribute
|
|
Adjusted
|
||||||||
Selling, general and administrative
|
|
$
|
309,024
|
|
|
$
|
15,681
|
|
|
$
|
—
|
|
|
$
|
324,705
|
|
Operating income (loss)
|
|
137,566
|
|
|
(15,681
|
)
|
|
—
|
|
|
121,885
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income taxes
|
|
$
|
108,987
|
|
|
$
|
(15,681
|
)
|
|
$
|
—
|
|
|
$
|
93,306
|
|
Income tax (provision) benefit
|
|
(15,880
|
)
|
|
4,089
|
|
|
(12,848
|
)
|
|
(24,639
|
)
|
||||
Net income (loss)
|
|
$
|
93,107
|
|
|
$
|
(11,592
|
)
|
|
$
|
(12,848
|
)
|
|
$
|
68,667
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income (loss) per share
|
|
$
|
3.84
|
|
|
$
|
(0.48
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
2.83
|
|
Diluted share count
|
|
24,258
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||
(Dollars in thousands, except per share amounts)
|
|
As reported
|
|
Insurance reserves
|
|
Acquisition expense
|
|
Adjusted
|
||||||||
Selling, general and administrative
|
|
$
|
282,241
|
|
|
$
|
(1,704
|
)
|
|
$
|
(3,516
|
)
|
|
$
|
277,021
|
|
Operating income
|
|
105,952
|
|
|
1,704
|
|
|
3,516
|
|
|
111,172
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
|
$
|
86,543
|
|
|
$
|
1,704
|
|
|
$
|
3,516
|
|
|
$
|
91,763
|
|
Income tax provision
|
|
(34,657
|
)
|
|
(943
|
)
|
|
(1,380
|
)
|
|
(36,980
|
)
|
||||
Net income
|
|
$
|
51,886
|
|
|
$
|
761
|
|
|
$
|
2,136
|
|
|
$
|
54,783
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income per share
|
|
$
|
2.07
|
|
|
$
|
0.03
|
|
|
0.08
|
|
|
$
|
2.18
|
|
|
Diluted share count
|
|
25,076
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||
(Dollars in thousands, except per share amounts)
|
|
As reported
|
|
Disposal gain on sale of stores
|
|
Insurance reserves
|
|
Acquisition expenses
|
|
Tax attribute
|
|
Adjusted
|
||||||||||||
Selling, general and administrative
|
|
$
|
939,868
|
|
|
15,681
|
|
|
$
|
(1,490
|
)
|
|
$
|
(3,251
|
)
|
|
$
|
—
|
|
|
$
|
950,808
|
|
|
Operating income (loss)
|
|
339,885
|
|
|
(15,681
|
)
|
|
1,490
|
|
|
3,251
|
|
|
—
|
|
|
328,945
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) before income taxes
|
|
$
|
259,536
|
|
|
$
|
(15,681
|
)
|
|
$
|
1,490
|
|
|
$
|
3,251
|
|
|
$
|
—
|
|
|
$
|
248,596
|
|
Income tax (provision) benefit
|
|
(53,708
|
)
|
|
4,089
|
|
|
(389
|
)
|
|
(853
|
)
|
|
(14,257
|
)
|
|
(65,118
|
)
|
||||||
Net income (loss)
|
|
$
|
205,828
|
|
|
$
|
(11,592
|
)
|
|
$
|
1,101
|
|
|
$
|
2,398
|
|
|
$
|
(14,257
|
)
|
|
$
|
183,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted net income (loss) per share
|
|
$
|
8.31
|
|
|
$
|
(0.47
|
)
|
|
$
|
0.04
|
|
|
$
|
0.10
|
|
|
$
|
(0.57
|
)
|
|
$
|
7.41
|
|
Diluted share count
|
|
24,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||
(Dollars in thousands, except per share amounts)
|
|
As reported
|
|
Insurance reserves
|
|
Acquisition expense
|
|
OEM settlement
|
|
Adjusted
|
||||||||||
Selling, general and administrative
|
|
$
|
782,303
|
|
|
$
|
(5,582
|
)
|
|
$
|
(5,653
|
)
|
|
$
|
—
|
|
|
$
|
771,068
|
|
Operating income
|
|
296,043
|
|
|
5,582
|
|
|
5,653
|
|
|
—
|
|
|
307,278
|
|
|||||
Other (expense) income, net
|
|
11,357
|
|
|
—
|
|
|
—
|
|
|
(9,111
|
)
|
|
2,246
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes
|
|
$
|
255,642
|
|
|
$
|
5,582
|
|
|
$
|
5,653
|
|
|
$
|
(9,111
|
)
|
|
$
|
257,766
|
|
Income tax (provision) benefit
|
|
(99,829
|
)
|
|
(2,174
|
)
|
|
(2,201
|
)
|
|
3,423
|
|
|
(100,781
|
)
|
|||||
Net income (loss)
|
|
$
|
155,813
|
|
|
$
|
3,408
|
|
|
$
|
3,452
|
|
|
$
|
(5,688
|
)
|
|
$
|
156,985
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted net income (loss) per share
|
|
$
|
6.19
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
(0.23
|
)
|
|
$
|
6.24
|
|
Diluted share count
|
|
25,158
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
|
|||||||||
Cash and cash equivalents
|
|
$
|
31,432
|
|
|
$
|
38,577
|
|
|
$
|
(7,145
|
)
|
|
(18.5
|
)%
|
Available credit on the credit facilities
|
|
197,096
|
|
|
268,831
|
|
|
(71,735
|
)
|
|
(26.7
|
)
|
|||
Total current available funds
|
|
228,528
|
|
|
307,408
|
|
|
(78,880
|
)
|
|
(25.7
|
)
|
|||
Estimated funds from unfinanced real estate
|
|
226,783
|
|
|
211,379
|
|
|
15,404
|
|
|
7.3
|
|
|||
Total estimated available funds
|
|
$
|
455,311
|
|
|
$
|
518,787
|
|
|
$
|
(63,476
|
)
|
|
(12.2
|
)%
|
|
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
in Cash Flow
|
||||||
Net cash provided by operating activities
|
|
$
|
379,286
|
|
|
$
|
260,536
|
|
|
$
|
118,750
|
|
Net cash used in investing activities
|
|
(514,601
|
)
|
|
(464,917
|
)
|
|
(49,684
|
)
|
|||
Net cash provided by financing activities
|
|
109,494
|
|
|
192,676
|
|
|
(83,182
|
)
|
|
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
in Cash Flow
|
||||||
Net cash provided by operating activities – as reported
|
|
$
|
379,286
|
|
|
$
|
260,536
|
|
|
$
|
118,750
|
|
Add: Net borrowings on floor plan notes payable, non-trade
|
|
61,705
|
|
|
34,056
|
|
|
27,649
|
|
|||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory
|
|
(120,899
|
)
|
|
(85,527
|
)
|
|
(35,372
|
)
|
|||
Net cash provided by operating activities – adjusted
|
|
$
|
320,092
|
|
|
$
|
209,065
|
|
|
$
|
111,027
|
|
|
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
in Cash Flow
|
||||||
Capital expenditures
|
|
$
|
(113,386
|
)
|
|
$
|
(72,174
|
)
|
|
$
|
(41,212
|
)
|
Cash paid for acquisitions, net of cash acquired
|
|
(374,026
|
)
|
|
(400,558
|
)
|
|
26,532
|
|
|||
Cash paid for other investments
|
|
(62,126
|
)
|
|
(7,929
|
)
|
|
(54,197
|
)
|
|||
Proceeds from sales of stores
|
|
32,893
|
|
|
3,417
|
|
|
29,476
|
|
|
|
Nine Months Ended September 30,
|
||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
||||
Post-acquisition capital improvements
|
|
$
|
43,079
|
|
|
$
|
19,893
|
|
Facilities for open points
|
|
8,479
|
|
|
714
|
|
||
Existing facility improvements
|
|
35,170
|
|
|
26,400
|
|
||
Maintenance
|
|
26,658
|
|
|
25,167
|
|
||
Total capital expenditures
|
|
$
|
113,386
|
|
|
$
|
72,174
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Number of stores acquired
|
|
17
|
|
|
15
|
|
||
Number of stores opened
|
|
1
|
|
|
1
|
|
||
|
|
|
|
|
||||
(Dollars in thousands)
|
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
|
$
|
374,026
|
|
|
$
|
400,558
|
|
Less: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory
|
|
(120,899
|
)
|
|
(85,527
|
)
|
||
Cash paid for acquisitions, net of cash acquired – adjusted
|
|
$
|
253,127
|
|
|
$
|
315,031
|
|
|
|
Nine Months Ended September 30,
|
|
Decrease
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
in Cash Flow
|
||||||
Cash provided by financing activities, as reported
|
|
$
|
109,494
|
|
|
$
|
192,676
|
|
|
$
|
(83,182
|
)
|
Adjust: Repayments (borrowings) on floor plan notes payable: non-trade
|
|
(61,705
|
)
|
|
(34,056
|
)
|
|
(27,649
|
)
|
|||
Cash provided by (used in) financing activities – adjusted
|
|
$
|
47,789
|
|
|
$
|
158,620
|
|
|
$
|
(110,831
|
)
|
|
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
in Cash Flow
|
||||||
Net borrowings (repayments) on lines of credit
|
|
$
|
104,268
|
|
|
$
|
(126,853
|
)
|
|
$
|
231,121
|
|
Principal payments on long-term debt and capital leases, unscheduled
|
|
(5,305
|
)
|
|
(46,471
|
)
|
|
41,166
|
|
|||
Proceeds from issuance of long-term debt
|
|
62,140
|
|
|
395,905
|
|
|
(333,765
|
)
|
|||
Repurchases of common stock
|
|
(81,622
|
)
|
|
(31,521
|
)
|
|
(50,101
|
)
|
|||
Dividends paid
|
|
(20,915
|
)
|
|
(19,803
|
)
|
|
(1,112
|
)
|
Dividend paid:
|
|
Dividend amount
per share
|
|
Total amount of dividend
(in thousands)
|
||||
March 2018
|
|
$
|
0.27
|
|
|
$
|
6,759
|
|
May 2018
|
|
$
|
0.29
|
|
|
$
|
7,179
|
|
August 2018
|
|
$
|
0.29
|
|
|
$
|
6,977
|
|
|
|
As of September 30, 2018
|
|
|
||||||
(Dollars in thousands)
|
|
Outstanding
|
|
Remaining Available
|
|
|
||||
Floor plan note payable: non-trade
|
|
$
|
1,820,241
|
|
|
$
|
—
|
|
|
1
|
Floor plan notes payable
|
|
135,626
|
|
|
—
|
|
|
|
||
Used vehicle inventory financing facility
|
|
316,000
|
|
|
2,000
|
|
|
2
|
||
Revolving lines of credit
|
|
60,058
|
|
|
195,096
|
|
|
2, 3
|
||
Real estate mortgages
|
|
623,885
|
|
|
—
|
|
|
|
||
5.25% Senior Subordinated Notes due 2025
|
|
300,000
|
|
|
—
|
|
|
|
||
Other debt
|
|
27,403
|
|
|
—
|
|
|
|
||
Total debt outstanding
|
|
3,283,213
|
|
|
197,096
|
|
|
|
||
Less: unamortized debt issuance costs
|
|
(6,438
|
)
|
|
—
|
|
|
|
||
Total debt
|
|
$
|
3,276,775
|
|
|
$
|
197,096
|
|
|
|
Debt Covenant Ratio
|
|
Requirement
|
|
As of September 30, 2018
|
Current ratio
|
|
Not less than 1.10 to 1
|
|
1.28 to 1
|
Fixed charge coverage ratio
|
|
Not less than 1.20 to 1
|
|
2.35 to 1
|
Leverage ratio
|
|
Not more than 5.00 to 1
|
|
2.86 to 1
|
|
|
Total number of shares purchased
2
|
|
Average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans
1
|
|
Maximum dollar value of shares that may yet be purchased under publicly announced plan (in thousands)
1
|
||||||
July
|
|
317,071
|
|
|
$
|
86.35
|
|
|
317,071
|
|
|
$
|
71,193
|
|
August
|
|
122,926
|
|
|
85.26
|
|
|
122,761
|
|
|
60,728
|
|
||
September
|
|
118,839
|
|
|
82.76
|
|
|
118,839
|
|
|
50,892
|
|
||
|
|
558,836
|
|
|
$
|
85.35
|
|
|
558,671
|
|
|
$
|
50,892
|
|
Date: October 26, 2018
|
LITHIA MOTORS, INC.
|
|
|
|
By:
/s/ John F. North III
|
|
John F. North III
|
|
Senior Vice President and Chief Financial Officer
|
|
(Duly Authorized Officer and Principal Financial and
|
|
Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Lithia Motors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Lithia Motors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|