|
Oregon
|
|
93-0572810
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
150 N. Bartlett Street
|
Medford
|
Oregon
|
97501
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Class A common stock without par value
|
|
LAD
|
|
The New York Stock Exchange
|
Large Accelerated Filer
|
☒
|
|
Accelerated Filer
|
☐
|
Non-Accelerated Filer
|
☐
|
|
Smaller Reporting Company
|
☐
|
|
|
|
Emerging Growth Company
|
☐
|
PART I - FINANCIAL INFORMATION
|
Page
|
|
|
|
|
Item 1.
|
||
|
|
|
|
||
|
|
|
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||
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||
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|
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||
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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
|
|
|
|
|
|
Item 1.
|
Legal Proceedings
|
|
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
LITHIA MOTORS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (In millions)
(Unaudited)
|
||||||||
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
|
||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
56.6
|
|
|
$
|
84.0
|
|
Accounts receivable, net of allowance for doubtful accounts of $6.8 and $7.3
|
|
298.2
|
|
|
505.0
|
|
||
Inventories, net
|
|
2,512.8
|
|
|
2,433.7
|
|
||
Other current assets
|
|
58.2
|
|
|
47.8
|
|
||
Total Current Assets
|
|
2,925.8
|
|
|
3,070.5
|
|
||
|
|
|
|
|
||||
Property and equipment, net of accumulated depreciation of $298.6 and $284.3
|
|
1,631.5
|
|
|
1,611.7
|
|
||
Operating lease right-of-use assets
|
|
244.6
|
|
|
251.9
|
|
||
Goodwill
|
|
457.7
|
|
|
454.6
|
|
||
Franchise value
|
|
306.0
|
|
|
306.7
|
|
||
Other non-current assets
|
|
448.5
|
|
|
388.5
|
|
||
Total Assets
|
|
$
|
6,014.1
|
|
|
$
|
6,083.9
|
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
||||
Floor plan notes payable
|
|
$
|
389.9
|
|
|
$
|
425.2
|
|
Floor plan notes payable: non-trade
|
|
1,595.9
|
|
|
1,642.4
|
|
||
Current maturities of long-term debt
|
|
45.8
|
|
|
39.3
|
|
||
Trade payables
|
|
108.9
|
|
|
125.3
|
|
||
Accrued liabilities
|
|
291.0
|
|
|
336.9
|
|
||
Total Current Liabilities
|
|
2,431.5
|
|
|
2,569.1
|
|
||
|
|
|
|
|
||||
Long-term debt, less current maturities
|
|
1,489.8
|
|
|
1,430.6
|
|
||
Deferred revenue
|
|
140.6
|
|
|
137.9
|
|
||
Deferred income taxes
|
|
137.5
|
|
|
131.1
|
|
||
Non-current operating lease liabilities
|
|
231.3
|
|
|
238.5
|
|
||
Other long-term liabilities
|
|
126.9
|
|
|
109.0
|
|
||
Total Liabilities
|
|
4,557.6
|
|
|
4,616.2
|
|
||
|
|
|
|
|
||||
Stockholders’ Equity:
|
|
|
|
|
||||
Preferred stock - no par value; authorized 15.0 shares; none outstanding
|
|
—
|
|
|
—
|
|
||
Class A common stock - no par value; authorized 100.0 shares; issued and outstanding 22.2 and 22.6
|
|
—
|
|
|
20.5
|
|
||
Class B common stock - no par value; authorized 25.0 shares; issued and outstanding 0.6 and 0.6
|
|
0.1
|
|
|
0.1
|
|
||
Additional paid-in capital
|
|
26.0
|
|
|
46.0
|
|
||
Accumulated other comprehensive loss
|
|
(5.8
|
)
|
|
(0.7
|
)
|
||
Retained earnings
|
|
1,436.2
|
|
|
1,401.8
|
|
||
Total Stockholders’ Equity
|
|
1,456.5
|
|
|
1,467.7
|
|
||
Total Liabilities and Stockholders’ Equity
|
|
$
|
6,014.1
|
|
|
$
|
6,083.9
|
|
LITHIA MOTORS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (In millions, except per share amounts)
(Unaudited)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
|
||||
New vehicle retail
|
|
$
|
1,373.5
|
|
|
$
|
1,461.1
|
|
Used vehicle retail
|
|
874.4
|
|
|
827.9
|
|
||
Used vehicle wholesale
|
|
66.7
|
|
|
77.4
|
|
||
Finance and insurance
|
|
121.9
|
|
|
117.5
|
|
||
Service, body and parts
|
|
329.9
|
|
|
317.4
|
|
||
Fleet and other
|
|
37.4
|
|
|
48.4
|
|
||
Total revenues
|
|
2,803.8
|
|
|
2,849.7
|
|
||
Cost of sales:
|
|
|
|
|
||||
New vehicle retail
|
|
1,295.3
|
|
|
1,375.2
|
|
||
Used vehicle retail
|
|
784.4
|
|
|
743.3
|
|
||
Used vehicle wholesale
|
|
66.1
|
|
|
76.5
|
|
||
Service, body and parts
|
|
161.8
|
|
|
157.9
|
|
||
Fleet and other
|
|
35.3
|
|
|
46.1
|
|
||
Total cost of sales
|
|
2,342.9
|
|
|
2,399.0
|
|
||
Gross profit
|
|
460.9
|
|
|
450.7
|
|
||
Asset impairments
|
|
—
|
|
|
0.5
|
|
||
Selling, general and administrative
|
|
346.0
|
|
|
321.8
|
|
||
Depreciation and amortization
|
|
22.0
|
|
|
19.8
|
|
||
Operating income
|
|
92.9
|
|
|
108.6
|
|
||
Floor plan interest expense
|
|
(14.0
|
)
|
|
(18.1
|
)
|
||
Other interest expense, net
|
|
(17.0
|
)
|
|
(15.3
|
)
|
||
Other income, net
|
|
2.3
|
|
|
2.6
|
|
||
Income before income taxes
|
|
64.2
|
|
|
77.8
|
|
||
Income tax provision
|
|
(18.0
|
)
|
|
(21.4
|
)
|
||
Net income
|
|
$
|
46.2
|
|
|
$
|
56.4
|
|
|
|
|
|
|
||||
Basic net income per share
|
|
$
|
1.99
|
|
|
$
|
2.43
|
|
Shares used in basic per share calculations
|
|
23.3
|
|
|
23.2
|
|
||
|
|
|
|
|
||||
Diluted net income per share
|
|
$
|
1.97
|
|
|
$
|
2.42
|
|
Shares used in diluted per share calculations
|
|
23.5
|
|
|
23.2
|
|
||
|
|
|
|
|
||||
Cash dividends paid per Class A and Class B share
|
|
$
|
0.30
|
|
|
$
|
0.29
|
|
LITHIA MOTORS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net income
|
|
$
|
46.2
|
|
|
$
|
56.4
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
||||
Loss on cash flow hedges, net of tax benefit of $1.8 and $0.0, respectively
|
|
(5.1
|
)
|
|
—
|
|
||
Comprehensive income
|
|
$
|
41.1
|
|
|
$
|
56.4
|
|
LITHIA MOTORS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (In millions)
(Unaudited)
|
|||||||||||||||||||||||||||||
Three Months Ended March 31, 2020
|
|||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Total Stockholders’ Equity
|
||||||||||||||||||||
|
Class A
|
|
Class B
|
|
|||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
Balance at December 31, 2019
|
22.6
|
|
|
$
|
20.5
|
|
|
0.6
|
|
|
$
|
0.1
|
|
|
$
|
46.0
|
|
|
$
|
(0.7
|
)
|
|
$
|
1,401.8
|
|
|
$
|
1,467.7
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46.2
|
|
|
46.2
|
|
||||||
Loss on cash flow hedges, net of tax benefit of $1.8
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.1
|
)
|
|
—
|
|
|
(5.1
|
)
|
||||||
Issuance of stock in connection with employee stock plans
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
||||||
Issuance of restricted stock to employees
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase of Class A common stock
|
(0.5
|
)
|
|
(32.0
|
)
|
|
—
|
|
|
—
|
|
|
(16.2
|
)
|
|
—
|
|
|
—
|
|
|
(48.2
|
)
|
||||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises
|
—
|
|
|
8.9
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
5.1
|
|
||||||
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
|
(7.0
|
)
|
||||||
Adjustment to adopt ASC 326
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.8
|
)
|
|
(4.8
|
)
|
||||||
Balance at March 31, 2020
|
22.2
|
|
|
$
|
—
|
|
|
0.6
|
|
|
$
|
0.1
|
|
|
$
|
26.0
|
|
|
$
|
(5.8
|
)
|
|
$
|
1,436.2
|
|
|
$
|
1,456.5
|
|
LITHIA MOTORS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity (In millions)
(Unaudited)
|
|||||||||||||||||||||||||||||
Three Months Ended March 31, 2019
|
|||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Total Stockholders’ Equity
|
||||||||||||||||||||
|
Class A
|
|
Class B
|
|
|||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
Balance at December 31, 2018
|
22.0
|
|
|
$
|
—
|
|
|
1.0
|
|
|
$
|
0.1
|
|
|
$
|
35.0
|
|
|
$
|
—
|
|
|
$
|
1,162.1
|
|
|
$
|
1,197.2
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
56.4
|
|
|
56.4
|
|
||||||
Issuance of stock in connection with employee stock plans
|
—
|
|
|
2.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
||||||
Issuance of restricted stock to employees
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchase of Class A common stock
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
||||||
Class B common stock converted to Class A common stock
|
0.2
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises
|
—
|
|
|
10.5
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
|
—
|
|
|
—
|
|
|
3.5
|
|
||||||
Dividends paid
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.7
|
)
|
|
(6.7
|
)
|
||||||
Adjustment to adopt ASC 842
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
0.9
|
|
||||||
Balance at March 31, 2019
|
22.3
|
|
|
$
|
9.7
|
|
|
0.8
|
|
|
$
|
0.1
|
|
|
$
|
28.0
|
|
|
$
|
—
|
|
|
$
|
1,212.7
|
|
|
$
|
1,250.5
|
|
LITHIA MOTORS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (In millions)
(Unaudited)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
46.2
|
|
|
$
|
56.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Asset impairments
|
|
—
|
|
|
0.5
|
|
||
Depreciation and amortization
|
|
22.0
|
|
|
19.8
|
|
||
Stock-based compensation
|
|
5.1
|
|
|
3.5
|
|
||
Loss on disposal of other assets
|
|
0.1
|
|
|
—
|
|
||
(Gain) loss on disposal of franchise
|
|
(0.1
|
)
|
|
0.1
|
|
||
Deferred income taxes
|
|
8.2
|
|
|
5.2
|
|
||
(Increase) decrease (net of acquisitions and dispositions):
|
|
|
|
|
||||
Accounts receivable, net
|
|
202.1
|
|
|
49.9
|
|
||
Inventories
|
|
(69.8
|
)
|
|
(81.4
|
)
|
||
Other assets
|
|
(6.8
|
)
|
|
9.0
|
|
||
Increase (decrease) (net of acquisitions and dispositions):
|
|
|
|
|
||||
Floor plan notes payable
|
|
(32.7
|
)
|
|
34.6
|
|
||
Trade payables
|
|
(14.6
|
)
|
|
(6.4
|
)
|
||
Accrued liabilities
|
|
(49.4
|
)
|
|
(14.5
|
)
|
||
Other long-term liabilities and deferred revenue
|
|
11.4
|
|
|
0.5
|
|
||
Net cash provided by operating activities
|
|
121.7
|
|
|
77.2
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(41.6
|
)
|
|
(29.1
|
)
|
||
Proceeds from sales of assets
|
|
0.2
|
|
|
0.4
|
|
||
Cash paid for other investments
|
|
(9.3
|
)
|
|
(6.6
|
)
|
||
Cash paid for acquisitions, net of cash acquired
|
|
(72.3
|
)
|
|
—
|
|
||
Proceeds from sales of stores
|
|
4.7
|
|
|
—
|
|
||
Net cash used in investing activities
|
|
(118.3
|
)
|
|
(35.3
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
(Repayments) borrowings on floor plan notes payable, net: non-trade
|
|
(43.5
|
)
|
|
43.5
|
|
||
Borrowings on lines of credit
|
|
430.0
|
|
|
570.0
|
|
||
Repayments on lines of credit
|
|
(375.0
|
)
|
|
(625.0
|
)
|
||
Principal payments on long-term debt and capital leases, scheduled
|
|
(6.5
|
)
|
|
(6.2
|
)
|
||
Principal payments on long-term debt and capital leases, other
|
|
—
|
|
|
(3.3
|
)
|
||
Proceeds from issuance of long-term debt
|
|
17.2
|
|
|
—
|
|
||
Payments of debt issuance costs
|
|
(0.4
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
|
2.6
|
|
|
2.3
|
|
||
Repurchase of common stock
|
|
(48.2
|
)
|
|
(3.1
|
)
|
||
Dividends paid
|
|
(7.0
|
)
|
|
(6.7
|
)
|
||
Net cash used in financing activities
|
|
(30.8
|
)
|
|
(28.5
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
|
(27.4
|
)
|
|
13.4
|
|
||
Cash and cash equivalents at beginning of period
|
|
84.0
|
|
|
31.6
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
56.6
|
|
|
$
|
45.0
|
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid during the period for interest
|
|
$
|
31.5
|
|
|
$
|
37.9
|
|
Cash paid during the period for income taxes, net
|
|
1.3
|
|
|
0.2
|
|
||
Floor plan debt paid in connection with store disposals
|
|
—
|
|
|
4.8
|
|
||
|
|
|
|
|
||||
Supplemental schedule of non-cash activities:
|
|
|
|
|
||||
ROU assets obtained in exchange for lease liabilities 1
|
|
$
|
1.8
|
|
|
$
|
257.0
|
|
Impact on Consolidated Balance Sheets
|
|
December 31, 2019
|
|
Adjustments
|
|
January 1, 2020
|
||||||
CECL Adoption:
|
|
|
|
|
|
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $7.3
|
|
$
|
505.0
|
|
|
$
|
(0.5
|
)
|
|
$
|
504.5
|
|
Other non-current assets
|
|
388.5
|
|
|
(6.0
|
)
|
|
382.5
|
|
|||
Total Assets
|
|
6,083.9
|
|
|
(6.5
|
)
|
|
6,077.4
|
|
|||
Deferred income taxes
|
|
131.1
|
|
|
(1.7
|
)
|
|
129.4
|
|
|||
Total Liabilities
|
|
4,616.2
|
|
|
(1.7
|
)
|
|
4,614.5
|
|
|||
Retained earnings
|
|
1,401.8
|
|
|
(4.8
|
)
|
|
1,397.0
|
|
|||
Total Liabilities and Stockholders’ Equity
|
|
6,083.9
|
|
|
(6.5
|
)
|
|
6,077.4
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Contracts in transit
|
|
$
|
120.7
|
|
|
$
|
269.7
|
|
Trade receivables
|
|
48.5
|
|
|
52.8
|
|
||
Vehicle receivables
|
|
28.9
|
|
|
50.9
|
|
||
Manufacturer receivables
|
|
77.4
|
|
|
112.4
|
|
||
Auto loan receivables
|
|
56.8
|
|
|
62.2
|
|
||
Other receivables
|
|
19.7
|
|
|
19.4
|
|
||
|
|
352.0
|
|
|
567.4
|
|
||
Less: Allowance for doubtful accounts
|
|
(6.8
|
)
|
|
(7.3
|
)
|
||
Less: Long-term portion of accounts receivable, net
|
|
(47.0
|
)
|
|
(55.1
|
)
|
||
Total accounts receivable, net
|
|
$
|
298.2
|
|
|
$
|
505.0
|
|
•
|
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.
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
New vehicles
|
|
$
|
1,746.1
|
|
|
$
|
1,704.1
|
|
Used vehicles
|
|
676.9
|
|
|
638.1
|
|
||
Parts and accessories
|
|
89.8
|
|
|
91.5
|
|
||
Total inventories
|
|
$
|
2,512.8
|
|
|
$
|
2,433.7
|
|
|
|
Domestic
|
|
Import
|
|
Luxury
|
|
Consolidated
|
||||||||
Balance as of December 31, 2018 ¹
|
|
$
|
164.5
|
|
|
$
|
188.9
|
|
|
$
|
81.5
|
|
|
$
|
434.9
|
|
Adjustments to purchase price allocations 2
|
|
1.6
|
|
|
1.6
|
|
|
1.9
|
|
|
5.1
|
|
||||
Additions through acquisitions 2
|
|
6.2
|
|
|
9.0
|
|
|
2.2
|
|
|
17.4
|
|
||||
Reductions from impairments
|
|
(0.3
|
)
|
|
(1.3
|
)
|
|
(0.1
|
)
|
|
(1.7
|
)
|
||||
Reductions through divestitures
|
|
(0.2
|
)
|
|
(0.9
|
)
|
|
—
|
|
|
(1.1
|
)
|
||||
Balance as of December 31, 2019 ¹
|
|
171.8
|
|
|
197.3
|
|
|
85.5
|
|
|
454.6
|
|
||||
Additions through acquisitions 3
|
|
0.4
|
|
|
2.4
|
|
|
0.4
|
|
|
3.2
|
|
||||
Reductions through divestitures
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Balance as of March 31, 2020 1
|
|
$
|
172.1
|
|
|
$
|
199.7
|
|
|
$
|
85.9
|
|
|
$
|
457.7
|
|
|
Franchise Value
|
||
Balance as of December 31, 2018
|
$
|
288.7
|
|
Adjustments to purchase price allocations 1
|
3.5
|
|
|
Additions through acquisitions 1
|
20.9
|
|
|
Reductions through divestitures
|
(6.0
|
)
|
|
Reductions from impairments
|
(0.4
|
)
|
|
Balance as of December 31, 2019
|
306.7
|
|
|
Reductions through divestitures
|
(0.7
|
)
|
|
Balance as of March 31, 2020 2
|
$
|
306.0
|
|
|
|
Repurchases Occurring in 2020
|
|
Cumulative Repurchases as of March 31, 2020
|
||||||||||
|
|
Shares
|
|
Average Price
|
|
Shares
|
|
Average Price
|
||||||
Share Repurchase Authorization
|
|
529,303
|
|
|
$
|
82.76
|
|
|
3,684,398
|
|
|
$
|
84.19
|
|
•
|
Level 1 - quoted prices in active markets for identical securities;
|
•
|
Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and
|
•
|
Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.
|
Fair Value at March 31, 2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Measured on a recurring basis:
|
|
|
|
|
|
|
||||||
Derivative contract, net
|
|
$
|
—
|
|
|
$
|
7.9
|
|
|
$
|
—
|
|
Fair Value at December 31, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Measured on a recurring basis:
|
|
|
|
|
|
|
||||||
Derivative contract, net
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Carrying value
|
|
|
|
|
||||
5.250% Senior notes due 2025
|
|
$
|
300.0
|
|
|
$
|
300.0
|
|
4.625% Senior notes due 2027
|
|
400.0
|
|
|
400.0
|
|
||
Real estate mortgages and other debt
|
|
479.0
|
|
|
466.6
|
|
||
|
|
$
|
1,179.0
|
|
|
$
|
1,166.6
|
|
Fair value
|
|
|
|
|
||||
5.250% Senior notes due 2025
|
|
$
|
270.0
|
|
|
$
|
315.0
|
|
4.625% Senior notes due 2027
|
|
346.5
|
|
|
412.0
|
|
||
Real estate mortgages and other debt
|
|
527.4
|
|
|
468.7
|
|
||
|
|
$
|
1,143.9
|
|
|
$
|
1,195.7
|
|
Three Months Ended March 31,
|
|
2020
|
|
2019
|
||||||||||||
(in millions, except per share data)
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||
Net income applicable to common stockholders - basic
|
|
$
|
45.0
|
|
|
$
|
1.2
|
|
|
$
|
54.4
|
|
|
$
|
2.0
|
|
Reallocation of net income due to conversion of Class B to Class A common shares outstanding
|
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Conversion of Class B common shares into Class A common shares
|
|
1.0
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
||||
Net income applicable to common stockholders - diluted
|
|
$
|
46.2
|
|
|
$
|
1.2
|
|
|
$
|
56.4
|
|
|
$
|
2.0
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
|
22.7
|
|
|
0.6
|
|
|
22.3
|
|
|
0.8
|
|
||||
Conversion of Class B common shares into Class A common shares
|
|
0.6
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
||||
Effect of employee stock purchases and restricted stock units on weighted average common shares
|
|
0.2
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Weighted average common shares outstanding – diluted
|
|
23.5
|
|
|
0.6
|
|
|
23.2
|
|
|
0.8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share - basic
|
|
$
|
1.99
|
|
|
$
|
1.99
|
|
|
$
|
2.43
|
|
|
$
|
2.43
|
|
Net income per common share - diluted
|
|
$
|
1.97
|
|
|
$
|
1.97
|
|
|
$
|
2.42
|
|
|
$
|
2.42
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
|
|
|
||
Domestic
|
|
|
|
|
||||
New vehicle retail
|
|
$
|
470.6
|
|
|
$
|
492.4
|
|
Used vehicle retail
|
|
327.7
|
|
|
300.4
|
|
||
Used vehicle wholesale
|
|
26.1
|
|
|
29.6
|
|
||
Finance and insurance
|
|
45.1
|
|
|
41.8
|
|
||
Service, body and parts
|
|
117.2
|
|
|
115.4
|
|
||
Fleet and other
|
|
13.7
|
|
|
17.1
|
|
||
|
|
1,000.4
|
|
|
996.7
|
|
||
Import
|
|
|
|
|
||||
New vehicle retail
|
|
600.3
|
|
|
632.6
|
|
||
Used vehicle retail
|
|
354.8
|
|
|
341.3
|
|
||
Used vehicle wholesale
|
|
26.1
|
|
|
27.9
|
|
||
Finance and insurance
|
|
58.1
|
|
|
54.8
|
|
||
Service, body and parts
|
|
124.8
|
|
|
117.7
|
|
||
Fleet and other
|
|
11.8
|
|
|
17.3
|
|
||
|
|
1,175.9
|
|
|
1,191.6
|
|
||
Luxury
|
|
|
|
|
||||
New vehicle retail
|
|
301.0
|
|
|
339.4
|
|
||
Used vehicle retail
|
|
191.1
|
|
|
186.3
|
|
||
Used vehicle wholesale
|
|
14.2
|
|
|
19.9
|
|
||
Finance and insurance
|
|
16.9
|
|
|
16.5
|
|
||
Service, body and parts
|
|
83.4
|
|
|
79.1
|
|
||
Fleet and other
|
|
11.5
|
|
|
13.7
|
|
||
|
|
618.1
|
|
|
654.9
|
|
||
|
|
2,794.4
|
|
|
2,843.2
|
|
||
Corporate and other
|
|
9.4
|
|
|
6.5
|
|
||
|
|
$
|
2,803.8
|
|
|
$
|
2,849.7
|
|
Segment income1:
|
|
|
|
|
|
|
||
Domestic
|
|
$
|
27.8
|
|
|
$
|
19.8
|
|
Import
|
|
24.7
|
|
|
30.0
|
|
||
Luxury
|
|
1.6
|
|
|
8.0
|
|
||
|
|
54.1
|
|
|
57.8
|
|
||
Corporate and other
|
|
46.8
|
|
|
52.5
|
|
||
Depreciation and amortization
|
|
(22.0
|
)
|
|
(19.8
|
)
|
||
Other interest expense
|
|
(17.0
|
)
|
|
(15.3
|
)
|
||
Other income, net
|
|
2.3
|
|
|
2.6
|
|
||
Income before income taxes
|
|
$
|
64.2
|
|
|
$
|
77.8
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Total assets:
|
|
|
|
|
||||
Domestic
|
|
$
|
1,369.9
|
|
|
$
|
1,467.6
|
|
Import
|
|
1,332.4
|
|
|
1,306.5
|
|
||
Luxury
|
|
911.8
|
|
|
945.2
|
|
||
Corporate and other
|
|
2,400.0
|
|
|
2,364.6
|
|
||
|
|
$
|
6,014.1
|
|
|
$
|
6,083.9
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Operating lease liabilities:
|
|
|
|
|
||||
Current portion included in accrued liabilities
|
|
$
|
25.4
|
|
|
$
|
25.2
|
|
Noncurrent operating lease liabilities
|
|
231.3
|
|
|
238.5
|
|
||
Total operating lease liabilities
|
|
256.7
|
|
|
263.7
|
|
||
Finance lease liabilities:
|
|
|
|
|
||||
Current portion included in current maturities of long-term debt
|
|
1.1
|
|
|
1.1
|
|
||
Long-term portion of lease liabilities in long-term debt
|
|
29.2
|
|
|
29.5
|
|
||
Total finance lease liabilities 1
|
|
30.3
|
|
|
30.6
|
|
||
Total lease liabilities
|
|
$
|
287.0
|
|
|
$
|
294.3
|
|
Weighted-average remaining lease term:
|
|
|
|
|
||||
Operating leases
|
|
13 years
|
|
|
|
|||
Finance leases
|
|
13 years
|
|
|
|
|||
Weighted-average discount rate:
|
|
|
|
|
||||
Operating leases
|
|
5.05
|
%
|
|
|
|||
Finance leases
|
|
5.81
|
%
|
|
|
|
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||||
Operating lease cost 1
|
|
$
|
11.9
|
|
|
$
|
12.0
|
|
Variable lease cost 2
|
|
0.9
|
|
|
0.8
|
|
||
Sublease income
|
|
(1.1
|
)
|
|
(1.0
|
)
|
||
Total lease costs
|
|
$
|
11.7
|
|
|
$
|
11.8
|
|
|
|
Operating Leases
|
||
Remainder of 2020
|
|
$
|
37.8
|
|
Year Ending December 31,
|
|
|
||
2021
|
|
34.8
|
|
|
2022
|
|
32.0
|
|
|
2023
|
|
27.1
|
|
|
2024
|
|
24.7
|
|
|
Thereafter
|
|
202.9
|
|
|
Total minimum lease payments
|
|
359.3
|
|
|
Less:
|
|
|
||
Present value adjustment
|
|
(102.6
|
)
|
|
Operating lease liabilities
|
|
$
|
256.7
|
|
•
|
On February 17, 2020, Sacramento Lexus and Roseville Lexus in California.
|
Three Months Ended March 31,
|
|
2020
|
||
Revenue
|
|
$
|
12.7
|
|
Operating income
|
|
—
|
|
|
|
Consideration
|
||
Cash paid, net of cash acquired
|
|
$
|
72.3
|
|
|
|
Assets Acquired and Liabilities Assumed
|
||
Inventories, net
|
|
$
|
24.7
|
|
Property and equipment, net
|
|
0.5
|
|
|
Other non-current assets
|
|
55.7
|
|
|
Floor plan notes payable
|
|
(7.3
|
)
|
|
Other long-term liabilities
|
|
(1.3
|
)
|
|
|
|
$
|
72.3
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Revenue
|
|
$
|
2,805.5
|
|
|
$
|
2,871.8
|
|
Net income
|
|
46.3
|
|
|
56.8
|
|
||
Basic net income per share
|
|
1.99
|
|
|
2.45
|
|
||
Diluted net income per share
|
|
1.97
|
|
|
2.44
|
|
•
|
Future market conditions, including anticipated car sales levels;
|
•
|
Anticipated impacts on consumer demand or governmental restrictions related to the COVID-19 pandemic or otherwise;
|
•
|
Expected level of business interruption due to shelter in place policies or lifting of those restrictions, and when volumes and consumer demand will return;
|
•
|
Continuation of our sales and services, including in-store appointments and home deliveries;
|
•
|
Expectations regarding our inventory levels and manufacturer and lender incentives;
|
•
|
Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses (“SG&A”) as a percentage of gross profit and all projections;
|
•
|
Anticipated integration, success and growth of acquired stores;
|
•
|
Anticipated ability to capture additional market share;
|
•
|
Anticipated ability to find accretive acquisitions;
|
•
|
Expected revenues from acquired stores;
|
•
|
Anticipated synergies, ability to monetize our investment in Shift and digital innovation;
|
•
|
Anticipated additions of dealership locations to our portfolio in the future;
|
•
|
Anticipated financial condition and liquidity, including from our cash, availability on our credit facility and unfinanced real estate;
|
•
|
Anticipated use of proceeds from our financings;
|
•
|
Anticipated allocations, uses and levels of capital expenditures in the future;
|
•
|
Expectations regarding compliance with financial and restrictive covenants in our credit facility and other debt agreements;
|
•
|
Statements regarding furloughed employees and cost reductions; and
|
•
|
Our strategies for customer retention, growth, market position, financial results and risk management.
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
|
|
2020
|
|
2019
|
|
Change
|
|||||
Revenues
|
|
|
|
|
|
|
|||||
New vehicle retail
|
|
$
|
1,373.5
|
|
|
$
|
1,461.1
|
|
|
(6.0)
|
%
|
Used vehicle retail
|
|
874.4
|
|
|
827.9
|
|
|
5.6
|
|
||
Finance and insurance
|
|
121.9
|
|
|
117.5
|
|
|
3.7
|
|
||
Service, body and parts
|
|
329.9
|
|
|
317.4
|
|
|
3.9
|
|
||
Total Revenues
|
|
2,803.8
|
|
|
2,849.7
|
|
|
(1.6
|
)
|
||
|
|
|
|
|
|
|
|||||
Gross profit
|
|
|
|
|
|
|
|||||
New vehicle retail
|
|
$
|
78.2
|
|
|
$
|
85.9
|
|
|
(9.0)
|
%
|
Used vehicle retail
|
|
90.0
|
|
|
84.6
|
|
|
6.4
|
|
||
Finance and insurance
|
|
121.9
|
|
|
117.5
|
|
|
3.7
|
|
||
Service, body and parts
|
|
168.1
|
|
|
159.5
|
|
|
5.4
|
|
||
Total Gross Profit
|
|
460.9
|
|
|
450.7
|
|
|
2.3
|
|
||
|
|
|
|
|
|
|
|||||
Gross profit margins
|
|
|
|
|
|
|
|||||
New vehicle retail
|
|
5.7
|
%
|
|
5.9
|
%
|
|
(20
|
) bps
|
||
Used vehicle retail
|
|
10.3
|
|
|
10.2
|
|
|
10
|
|
||
Finance and insurance
|
|
100.0
|
|
|
100.0
|
|
|
—
|
|
||
Service, body and parts
|
|
51.0
|
|
|
50.2
|
|
|
80
|
|
||
Total Gross Profit Margin
|
|
16.4
|
|
|
15.8
|
|
|
60
|
|
||
|
|
|
|
|
|
|
|||||
Retail units sold
|
|
|
|
|
|
|
|||||
New vehicles
|
|
35,907
|
|
|
39,695
|
|
|
(9.5)
|
%
|
||
Used vehicles
|
|
42,631
|
|
|
40,675
|
|
|
4.8
|
|
||
|
|
|
|
|
|
|
|||||
Average selling price per retail unit
|
|
|
|
|
|
|
|||||
New vehicles
|
|
$
|
38,252
|
|
|
$
|
36,809
|
|
|
3.9
|
%
|
Used vehicles
|
|
20,510
|
|
|
20,353
|
|
|
0.8
|
|
||
|
|
|
|
|
|
|
|||||
Average gross profit per retail unit
|
|
|
|
|
|
|
|||||
New vehicles
|
|
$
|
2,178
|
|
|
$
|
2,165
|
|
|
0.6
|
%
|
Used vehicles
|
|
2,110
|
|
|
2,079
|
|
|
1.5
|
|
||
Finance and insurance
|
|
1,552
|
|
|
1,462
|
|
|
6.2
|
|
|
|
Three Months Ended March 31,
|
|
|
|||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
Change
|
|||||
Revenues
|
|
|
|
|
|
|
|||||
New vehicle retail
|
|
$
|
1,281.5
|
|
|
$
|
1,433.6
|
|
|
(10.6)
|
%
|
Used vehicle retail
|
|
831.6
|
|
|
809.7
|
|
|
2.7
|
|
||
Finance and insurance
|
|
114.5
|
|
|
115.3
|
|
|
(0.7
|
)
|
||
Service, body and parts
|
|
311.0
|
|
|
309.3
|
|
|
0.5
|
|
||
Total Revenues
|
|
2,637.5
|
|
|
2,789.1
|
|
|
(5.4
|
)
|
||
|
|
|
|
|
|
|
|||||
Gross profit
|
|
|
|
|
|
|
|||||
New vehicle retail
|
|
$
|
73.0
|
|
|
$
|
84.6
|
|
|
(13.7)
|
%
|
Used vehicle retail
|
|
83.7
|
|
|
83.0
|
|
|
0.8
|
|
||
Finance and insurance
|
|
114.5
|
|
|
115.3
|
|
|
(0.7
|
)
|
||
Service, body and parts
|
|
158.5
|
|
|
155.9
|
|
|
1.7
|
|
||
Total Gross Profit
|
|
432.6
|
|
|
442.1
|
|
|
(2.1
|
)
|
||
|
|
|
|
|
|
|
|||||
Gross profit margins
|
|
|
|
|
|
|
|||||
New vehicle retail
|
|
5.7
|
%
|
|
5.9
|
%
|
|
(20
|
) bps
|
||
Used vehicle retail
|
|
10.1
|
|
|
10.3
|
|
|
(20
|
)
|
||
Finance and insurance
|
|
100.0
|
|
|
100.0
|
|
|
—
|
|
||
Service, body and parts
|
|
51.0
|
|
|
50.4
|
|
|
60
|
|
||
Total Gross Profit Margin
|
|
16.4
|
|
|
15.9
|
|
|
50
|
|
||
|
|
|
|
|
|
|
|||||
Retail units sold
|
|
|
|
|
|
|
|||||
New vehicles
|
|
33,178
|
|
|
38,865
|
|
|
(14.6)
|
%
|
||
Used vehicles
|
|
40,374
|
|
|
39,708
|
|
|
1.7
|
|
||
|
|
|
|
|
|
|
|||||
Average selling price per retail unit
|
|
|
|
|
|
|
|||||
New vehicles
|
|
$
|
38,625
|
|
|
$
|
36,886
|
|
|
4.7
|
%
|
Used vehicles
|
|
20,597
|
|
|
20,390
|
|
|
1.0
|
|
||
|
|
|
|
|
|
|
|||||
Average gross profit per retail unit
|
|
|
|
|
|
|
|||||
New vehicles
|
|
$
|
2,200
|
|
|
$
|
2,177
|
|
|
1.1
|
%
|
Used vehicles
|
|
2,073
|
|
|
2,091
|
|
|
(0.9
|
)
|
||
Finance and insurance
|
|
1,557
|
|
|
1,468
|
|
|
6.1
|
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
Domestic
|
|
$
|
1,000.4
|
|
|
$
|
996.7
|
|
|
$
|
3.7
|
|
|
0.4
|
%
|
Import
|
|
1,175.9
|
|
|
1,191.6
|
|
|
(15.7
|
)
|
|
(1.3
|
)
|
|||
Luxury
|
|
618.1
|
|
|
654.9
|
|
|
(36.8
|
)
|
|
(5.6
|
)
|
|||
|
|
2,794.4
|
|
|
2,843.2
|
|
|
(48.8
|
)
|
|
(1.7
|
)
|
|||
Corporate and other
|
|
9.4
|
|
|
6.5
|
|
|
2.9
|
|
|
NM
|
|
|||
|
|
$
|
2,803.8
|
|
|
$
|
2,849.7
|
|
|
$
|
(45.9
|
)
|
|
(1.6
|
)%
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Segment income1:
|
|
|
|
|
|
|
|
|
|||||||
Domestic
|
|
$
|
27.8
|
|
|
$
|
19.8
|
|
|
$
|
8.0
|
|
|
40.4
|
%
|
Import
|
|
24.7
|
|
|
30.0
|
|
|
(5.3
|
)
|
|
(17.7
|
)
|
|||
Luxury
|
|
1.6
|
|
|
8.0
|
|
|
(6.4
|
)
|
|
(80.0
|
)
|
|||
|
|
54.1
|
|
|
57.8
|
|
|
(3.7
|
)
|
|
(6.4
|
)
|
|||
Corporate and other
|
|
46.8
|
|
|
52.5
|
|
|
(5.7
|
)
|
|
(10.9
|
)
|
|||
Depreciation and amortization
|
|
(22.0
|
)
|
|
(19.8
|
)
|
|
2.2
|
|
|
11.1
|
|
|||
Other interest expense
|
|
(17.0
|
)
|
|
(15.3
|
)
|
|
1.7
|
|
|
11.1
|
|
|||
Other income, net
|
|
2.3
|
|
|
2.6
|
|
|
(0.3
|
)
|
|
NM
|
|
|||
Income before income taxes
|
|
$
|
64.2
|
|
|
$
|
77.8
|
|
|
$
|
(13.6
|
)
|
|
(17.5
|
)%
|
|
|
Three Months Ended March 31,
|
|
Decrease
|
|
% Decrease
|
||||||
|
|
2020
|
|
2019
|
|
|
||||||
Retail new vehicle unit sales:
|
|
|
|
|
|
|
|
|
||||
Domestic
|
|
10,626
|
|
|
11,755
|
|
|
(1,129
|
)
|
|
(9.6
|
)%
|
Import
|
|
19,842
|
|
|
21,821
|
|
|
(1,979
|
)
|
|
(9.1
|
)
|
Luxury
|
|
5,491
|
|
|
6,192
|
|
|
(701
|
)
|
|
(11.3
|
)
|
|
|
35,959
|
|
|
39,768
|
|
|
(3,809
|
)
|
|
(9.6
|
)
|
Allocated to management
|
|
(52
|
)
|
|
(73
|
)
|
|
(21
|
)
|
|
NM
|
|
|
|
35,907
|
|
|
39,695
|
|
|
(3,788
|
)
|
|
(9.5
|
)%
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle retail
|
|
$
|
470.6
|
|
|
$
|
492.4
|
|
|
$
|
(21.8
|
)
|
|
(4.4
|
)%
|
Used vehicle retail
|
|
327.7
|
|
|
300.4
|
|
|
27.3
|
|
|
9.1
|
|
|||
Used vehicle wholesale
|
|
26.1
|
|
|
29.6
|
|
|
(3.5
|
)
|
|
(11.8
|
)
|
|||
Finance and insurance
|
|
45.1
|
|
|
41.8
|
|
|
3.3
|
|
|
7.9
|
|
|||
Service, body and parts
|
|
117.2
|
|
|
115.4
|
|
|
1.8
|
|
|
1.6
|
|
|||
Fleet and other
|
|
13.7
|
|
|
17.1
|
|
|
(3.4
|
)
|
|
NM
|
|
|||
|
|
$
|
1,000.4
|
|
|
$
|
996.7
|
|
|
$
|
3.7
|
|
|
0.4
|
|
Segment income
|
|
$
|
27.8
|
|
|
$
|
19.8
|
|
|
$
|
8.0
|
|
|
40.4
|
|
Retail new vehicle unit sales
|
|
10,626
|
|
|
11,755
|
|
|
(1,129
|
)
|
|
(9.6
|
)
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle retail
|
|
$
|
600.3
|
|
|
$
|
632.6
|
|
|
$
|
(32.3
|
)
|
|
(5.1
|
)%
|
Used vehicle retail
|
|
354.8
|
|
|
341.3
|
|
|
13.5
|
|
|
4.0
|
|
|||
Used vehicle wholesale
|
|
26.1
|
|
|
27.9
|
|
|
(1.8
|
)
|
|
(6.5
|
)
|
|||
Finance and insurance
|
|
58.1
|
|
|
54.8
|
|
|
3.3
|
|
|
6.0
|
|
|||
Service, body and parts
|
|
124.8
|
|
|
117.7
|
|
|
7.1
|
|
|
6.0
|
|
|||
Fleet and other
|
|
11.8
|
|
|
17.3
|
|
|
(5.5
|
)
|
|
NM
|
|
|||
|
|
$
|
1,175.9
|
|
|
$
|
1,191.6
|
|
|
$
|
(15.7
|
)
|
|
(1.3
|
)
|
Segment income
|
|
$
|
24.7
|
|
|
$
|
30.0
|
|
|
$
|
(5.3
|
)
|
|
(17.7
|
)
|
Retail new vehicle unit sales
|
|
19,842
|
|
|
21,821
|
|
|
(1,979
|
)
|
|
(9.1
|
)
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||||||
New vehicle retail
|
|
$
|
301.0
|
|
|
$
|
339.4
|
|
|
$
|
(38.4
|
)
|
|
(11.3
|
)%
|
Used vehicle retail
|
|
191.1
|
|
|
186.3
|
|
|
4.8
|
|
|
2.6
|
|
|||
Used vehicle wholesale
|
|
14.2
|
|
|
19.9
|
|
|
(5.7
|
)
|
|
(28.6
|
)
|
|||
Finance and insurance
|
|
16.9
|
|
|
16.5
|
|
|
0.4
|
|
|
2.4
|
|
|||
Service, body and parts
|
|
83.4
|
|
|
79.1
|
|
|
4.3
|
|
|
5.4
|
|
|||
Fleet and other
|
|
11.5
|
|
|
13.7
|
|
|
(2.2
|
)
|
|
NM
|
|
|||
|
|
$
|
618.1
|
|
|
$
|
654.9
|
|
|
$
|
(36.8
|
)
|
|
(5.6
|
)
|
Segment income
|
|
$
|
1.6
|
|
|
$
|
8.0
|
|
|
$
|
(6.4
|
)
|
|
(80.0
|
)
|
Retail new vehicle unit sales
|
|
5,491
|
|
|
6,192
|
|
|
(701
|
)
|
|
(11.3
|
)
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|
% Decrease
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Revenue, net
|
|
$
|
9.4
|
|
|
$
|
6.5
|
|
|
$
|
2.9
|
|
|
NM
|
|
Segment income
|
|
$
|
46.8
|
|
|
$
|
52.5
|
|
|
$
|
(5.7
|
)
|
|
(10.9
|
)%
|
|
|
Three Months Ended
March 31, |
||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
||||
Long-lived assets
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
|
Three Months Ended March 31,
|
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Personnel
|
|
$
|
228.5
|
|
|
$
|
212.1
|
|
|
$
|
16.4
|
|
|
7.7
|
%
|
Advertising
|
|
27.6
|
|
|
26.5
|
|
|
1.1
|
|
|
4.2
|
|
|||
Rent
|
|
10.2
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|||
Facility costs1
|
|
20.1
|
|
|
18.4
|
|
|
1.7
|
|
|
9.2
|
|
|||
Loss on sale of assets
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
NM
|
|
|||
Other
|
|
59.5
|
|
|
54.6
|
|
|
4.9
|
|
|
9.0
|
|
|||
Total SG&A
|
|
$
|
346.0
|
|
|
$
|
321.8
|
|
|
$
|
24.2
|
|
|
7.5
|
%
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|||||
As a % of gross profit
|
|
2020
|
|
2019
|
|
||||
Personnel
|
|
49.6
|
%
|
|
47.1
|
%
|
|
250
|
bp
|
Advertising
|
|
6.0
|
|
|
5.9
|
|
|
10
|
|
Rent
|
|
2.2
|
|
|
2.3
|
|
|
(10
|
)
|
Facility costs
|
|
4.4
|
|
|
4.1
|
|
|
30
|
|
Loss on sale of assets
|
|
—
|
|
|
—
|
|
|
—
|
|
Other
|
|
12.9
|
|
|
12.0
|
|
|
90
|
|
Total SG&A
|
|
75.1
|
%
|
|
71.4
|
%
|
|
370
|
bp
|
|
|
Three Months Ended
March 31, |
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Personnel
|
|
$
|
228.5
|
|
|
$
|
212.1
|
|
|
$
|
16.4
|
|
|
7.7
|
%
|
Advertising
|
|
27.6
|
|
|
26.5
|
|
|
1.1
|
|
|
4.2
|
|
|||
Rent
|
|
10.2
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|||
Facility costs1
|
|
20.1
|
|
|
18.4
|
|
|
1.7
|
|
|
9.2
|
|
|||
Adjusted loss on sale of assets
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
NM
|
|
|||
Adjusted other
|
|
58.2
|
|
|
54.5
|
|
|
3.7
|
|
|
6.8
|
|
|||
Adjusted total SG&A
|
|
$
|
344.8
|
|
|
$
|
321.7
|
|
|
$
|
23.1
|
|
|
7.2
|
%
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|||||
As a % of gross profit
|
|
2020
|
|
2019
|
|
||||
Personnel
|
|
49.6
|
%
|
|
47.1
|
%
|
|
250
|
bp
|
Advertising
|
|
6.0
|
|
|
5.9
|
|
|
10
|
|
Rent
|
|
2.2
|
|
|
2.3
|
|
|
(10
|
)
|
Facility costs
|
|
4.4
|
|
|
4.1
|
|
|
30
|
|
Adjusted loss on sale of assets
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted other
|
|
12.6
|
|
|
12.0
|
|
|
60
|
|
Adjusted total SG&A
|
|
74.8
|
%
|
|
71.4
|
%
|
|
340
|
bp
|
|
|
Three Months Ended March 31,
|
|
Increase
|
|
% Increase
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Depreciation and amortization
|
|
$
|
22.0
|
|
|
$
|
19.8
|
|
|
$
|
2.2
|
|
|
11.1
|
%
|
|
|
Three Months Ended
March 31, |
||||
|
|
2020
|
|
2019
|
||
Operating margin
|
|
3.3
|
%
|
|
3.8
|
%
|
Operating margin adjusted for non-core charges 1
|
|
3.4
|
%
|
|
3.8
|
%
|
|
|
Three Months Ended
March 31, |
|
|
|||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
% Change
|
|||||
Floor plan interest expense (new vehicles)
|
|
$
|
14.0
|
|
|
$
|
18.1
|
|
|
(22.7
|
)%
|
|
|
Three Months Ended March 31,
|
|
|
|
%
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|||||||
Floor plan interest expense (new vehicles)
|
|
$
|
14.0
|
|
|
$
|
18.1
|
|
|
$
|
(4.1
|
)
|
|
(22.7
|
)%
|
Floor plan assistance (included as an offset to cost of sales)
|
|
(14.9
|
)
|
|
(15.1
|
)
|
|
0.2
|
|
|
(1.3
|
)
|
|||
Net new vehicle carrying costs
|
|
$
|
(0.9
|
)
|
|
$
|
3.0
|
|
|
$
|
(3.9
|
)
|
|
NM
|
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
|
% Increase (Decrease)
|
|||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
|
|||||||||
Mortgage interest
|
|
$
|
6.6
|
|
|
$
|
6.9
|
|
|
$
|
(0.3
|
)
|
|
(4.3
|
)
|
Other interest
|
|
10.8
|
|
|
9.0
|
|
|
1.8
|
|
|
20.0
|
|
|||
Capitalized interest
|
|
(0.4
|
)
|
|
(0.6
|
)
|
|
(0.2
|
)
|
|
NM
|
|
|||
Total other interest expense
|
|
$
|
17.0
|
|
|
$
|
15.3
|
|
|
$
|
1.7
|
|
|
11.1
|
%
|
|
|
Three Months Ended
March 31, |
||
|
|
2020
|
|
2019
|
Effective income tax rate
|
|
28.0%
|
|
27.5%
|
|
|
Three Months Ended March 31, 2020
|
||||||||||||||||||
(Dollars in millions, except per share amounts)
|
|
As reported
|
|
Acquisition expenses
|
|
Net disposal gain on sale of stores
|
|
Insurance reserves
|
|
Adjusted
|
||||||||||
Selling, general and administrative
|
|
$
|
346.0
|
|
|
$
|
(0.5
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.8
|
)
|
|
$
|
344.8
|
|
Operating income
|
|
92.9
|
|
|
0.5
|
|
|
(0.1
|
)
|
|
0.8
|
|
|
94.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
|
$
|
64.2
|
|
|
$
|
0.5
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.8
|
|
|
$
|
65.4
|
|
Income tax provision
|
|
(18.0
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
(18.3
|
)
|
|||||
Net income
|
|
$
|
46.2
|
|
|
$
|
0.4
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.6
|
|
|
$
|
47.1
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted net income per share
|
|
$
|
1.97
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
2.01
|
|
Diluted share count
|
|
23.5
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||||||
(Dollars in millions, except per share amounts)
|
|
As reported
|
|
Acquisition expenses
|
|
Net disposal gain on sale of stores
|
|
Asset impairments
|
|
Adjusted
|
||||||||||
Asset impairment
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.5
|
)
|
|
$
|
—
|
|
Selling, general and administrative
|
|
321.8
|
|
|
(0.2
|
)
|
|
0.1
|
|
|
—
|
|
|
321.7
|
|
|||||
Operating income
|
|
108.6
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
0.5
|
|
|
109.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
|
$
|
77.8
|
|
|
$
|
0.2
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.5
|
|
|
$
|
78.4
|
|
Income tax provision
|
|
(21.4
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(21.6
|
)
|
|||||
Net income
|
|
$
|
56.4
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.4
|
|
|
$
|
56.8
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted net income per share
|
|
$
|
2.42
|
|
|
$
|
0.01
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
|
$
|
2.44
|
|
Diluted share count
|
|
23.2
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
in Cash Flow
|
||||||
Net cash provided by operating activities
|
|
$
|
121.7
|
|
|
$
|
77.2
|
|
|
$
|
44.5
|
|
Net cash used in investing activities
|
|
(118.3
|
)
|
|
(35.3
|
)
|
|
(83.0
|
)
|
|||
Net cash used in financing activities
|
|
(30.8
|
)
|
|
(28.5
|
)
|
|
(2.3
|
)
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
in Cash Flow
|
||||||
Net cash provided by operating activities – as reported
|
|
$
|
121.7
|
|
|
$
|
77.2
|
|
|
$
|
44.5
|
|
Add: Net (repayments) borrowings on floor plan notes payable, non-trade
|
|
(43.5
|
)
|
|
43.5
|
|
|
(87.0
|
)
|
|||
Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory
|
|
(14.1
|
)
|
|
—
|
|
|
(14.1
|
)
|
|||
Net cash provided by operating activities – adjusted
|
|
$
|
64.1
|
|
|
$
|
120.7
|
|
|
$
|
(56.6
|
)
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
in Cash Flow
|
||||||
Capital expenditures
|
|
$
|
(41.6
|
)
|
|
$
|
(29.1
|
)
|
|
$
|
(12.5
|
)
|
Cash paid for acquisitions, net of cash acquired
|
|
(72.3
|
)
|
|
—
|
|
|
(72.3
|
)
|
|||
Cash paid for other investments
|
|
(9.3
|
)
|
|
(6.6
|
)
|
|
(2.7
|
)
|
|||
Proceeds from sales of stores
|
|
4.7
|
|
|
—
|
|
|
4.7
|
|
|
|
Three Months Ended March 31,
|
||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
||||
Post-acquisition capital improvements
|
|
$
|
14.1
|
|
|
$
|
6.3
|
|
Facilities for open points
|
|
0.8
|
|
|
0.2
|
|
||
Purchase of facilities for existing operations
|
|
5.9
|
|
|
1.5
|
|
||
Existing facility improvements
|
|
16.4
|
|
|
10.8
|
|
||
Maintenance
|
|
4.4
|
|
|
10.3
|
|
||
Total capital expenditures
|
|
$
|
41.6
|
|
|
$
|
29.1
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Number of stores acquired
|
|
2
|
|
|
—
|
|
||
|
|
|
|
|
||||
(Dollars in millions)
|
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
|
$
|
72.3
|
|
|
$
|
—
|
|
Less: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory
|
|
(14.1
|
)
|
|
—
|
|
||
Cash paid for acquisitions, net of cash acquired – adjusted
|
|
$
|
58.2
|
|
|
$
|
—
|
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
in Cash Flow
|
||||||
Cash used in financing activities, as reported
|
|
$
|
(30.8
|
)
|
|
$
|
(28.5
|
)
|
|
$
|
(2.3
|
)
|
Adjust: Borrowings (repayments) on floor plan notes payable: non-trade
|
|
43.5
|
|
|
(43.5
|
)
|
|
87.0
|
|
|||
Cash provided by (used in) financing activities – adjusted
|
|
$
|
12.7
|
|
|
$
|
(72.0
|
)
|
|
$
|
84.7
|
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||||
(Dollars in millions)
|
|
2020
|
|
2019
|
|
in Cash Flow
|
||||||
Net borrowings (repayments) on lines of credit
|
|
$
|
55.0
|
|
|
$
|
(55.0
|
)
|
|
$
|
110.0
|
|
Proceeds from issuance of long-term debt
|
|
17.2
|
|
|
—
|
|
|
17.2
|
|
|||
Repurchases of common stock
|
|
(48.2
|
)
|
|
(3.1
|
)
|
|
(45.1
|
)
|
|||
Dividends paid
|
|
(7.0
|
)
|
|
(6.7
|
)
|
|
(0.3
|
)
|
Dividend paid:
|
|
Dividend amount
per share
|
|
Total amount of dividend
(in millions)
|
||||
March 2020
|
|
$
|
0.30
|
|
|
$
|
7.0
|
|
|
|
As of March 31, 2020
|
|
|
||||||
(Dollars in millions)
|
|
Outstanding
|
|
Remaining Available
|
|
|
||||
Floor plan note payable: non-trade
|
|
$
|
1,595.9
|
|
|
$
|
—
|
|
|
1
|
Floor plan notes payable
|
|
389.9
|
|
|
—
|
|
|
|
||
Used and service loaner vehicle inventory financing commitments
|
|
204.0
|
|
|
162.9
|
|
|
2
|
||
Revolving lines of credit
|
|
—
|
|
|
338.8
|
|
|
2, 3
|
||
Real estate mortgages
|
|
608.9
|
|
|
—
|
|
|
|
||
5.250% Senior notes due 2025
|
|
300.0
|
|
|
—
|
|
|
|
||
4.625% Senior notes due 2027
|
|
400.0
|
|
|
—
|
|
|
|
||
Other debt
|
|
33.1
|
|
|
—
|
|
|
|
||
Total debt outstanding
|
|
3,531.8
|
|
|
501.7
|
|
|
|
||
Less: unamortized debt issuance costs
|
|
(10.4
|
)
|
|
—
|
|
|
|
||
Total debt
|
|
$
|
3,521.4
|
|
|
$
|
501.7
|
|
|
|
Debt Covenant Ratio
|
|
Requirement
|
|
As of March 31, 2020
|
Current ratio
|
|
Not less than 1.10 to 1
|
|
1.34 to 1
|
Fixed charge coverage ratio
|
|
Not less than 1.20 to 1
|
|
2.68 to 1
|
Leverage ratio
|
|
Not more than 5.75 to 1
|
|
2.67 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
|
||||||
January
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
233,603
|
|
February
|
|
—
|
|
|
—
|
|
|
—
|
|
|
233,603
|
|
||
March
|
|
558,930
|
|
|
86.15
|
|
|
529,303
|
|
|
189,796
|
|
||
|
|
558,930
|
|
|
$
|
86.15
|
|
|
529,303
|
|
|
$
|
189,796
|
|
Date: April 24, 2020
|
LITHIA MOTORS, INC.
|
|
|
|
By: /s/ Tina Miller
|
|
Tina Miller
|
|
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):
|