Lithia & Driveway (LAD) Reports Record Third Quarter Revenue of $9.2 billion, an 11% Increase

Announces Dividend of $0.53 per Share for Third Quarter

MEDFORD, Ore., Oct. 23, 2024 /PRNewswire/ -- Lithia & Driveway (NYSE:LAD) today reported the highest third quarter revenue in company history and the second profitable quarter for Financing Operations, which includes Driveway Finance Corporation.

Third quarter 2024 revenue increased 11% to $9.2 billion from $8.3 billion in the third quarter of 2023.

Third quarter 2024 diluted earnings per share attributable to LAD was $7.80, an 18% decrease from $9.46 per share reported in the third quarter of 2023. Third quarter 2024 adjusted diluted earnings per share attributable to LAD was $8.21, an 11% decrease compared to $9.22 per share in the same period of 2023. Unrealized investment gains and foreign currency exchange gains positively impacted diluted earnings per share by $0.11.

Third quarter 2024 net income was $223 million, a 16% decrease compared to net income of $265 million in the same period of 2023. Adjusted third quarter 2024 net income was $222 million, a 14% decrease compared to adjusted net income of $258 million for the same period of 2023.

As shown in the attached non-GAAP reconciliation tables, the 2024 third quarter adjusted results exclude a $0.41 per diluted share impact resulting from non-core items, including a premium paid for the redemption of the remaining non-controlling interest in Pfaff Automotive and acquisition expenses, partially offset by a net gain on the disposal of stores and tax attributes. The 2023 third quarter adjusted results exclude a $0.24 per diluted share impact resulting from non-core items, including a net gain on the disposal of stores, partially offset by acquisition expenses, insurance reserves, and one-time contract buyouts.

Key Third Quarter 2024 Highlights:

Total revenues increased 11% compared to third quarter 2023

Aftersales gross profit increased 6.3% on a same-store basis

Financing operations continued profitability with quarterly income of $1 million

Driveway Finance Corporation (DFC) originated $518 million in loans, for a total portfolio of $3.8 billion, and priced a $615 million ABS offering in October, our ninth securitization

Repurchased 0.7% of outstanding shares

"Our third quarter performance was strong and demonstrated the team's ability to grow our business, leveraging size and scale and seizing new opportunities while focusing on operational efficiency. Our core businesses showed consistent growth while delivering substantial cost savings, and our adjacent operations continued building momentum, positioning us well for the future," said Bryan DeBoer, President and CEO. "Our diversified model continues to strengthen our market position, driving shareholder value. We remain committed to creating customer loyalty through exceptional experiences and operational excellence across our omnichannel ecosystem."

For the first nine months of 2024 revenues increased 16% to $27.0 billion, compared to $23.4 billion in 2023.

Diluted earnings per share attributable to LAD for the first nine months of 2024 was $21.54, compared to $28.54 per share in 2023, a decrease of 25%. Adjusted diluted earnings per share attributable to LAD for the first nine months of 2024 decreased 23% to $22.17 from $28.61 in the same period of 2023. Unrealized gain on investments partially offset by foreign currency exchange losses for the first nine months of 2024 positively impacted diluted earnings per share by $0.74.

Corporate DevelopmentDuring the third quarter, LAD continued to expand its network in the Southeast region with the acquisition of three stores from the Duval Motor Company in Jacksonville and Gainesville, Florida. These additions will strengthen LAD's import and luxury store footprint in Florida and increase the geographic reach of the Company's retail network.Year-to-date, LAD acquired over $5.9 billion in annualized revenues.

Balance Sheet UpdateLAD ended the third quarter with approximately $1.1 billion in cash and cash equivalents, marketable securities, and availability on our revolving lines of credit. In addition, unfinanced real estate could provide additional liquidity of approximately $0.4 billion.

Dividend Payment and Share RepurchasesThe Board of Directors approved a dividend of $0.53 per share related to third quarter 2024 financial results. The dividend is expected to be paid on November 15, 2024 to shareholders of record on November 8, 2024.

During 2024, we repurchased approximately 986,000 shares at a weighted average price of $260. Under the current share repurchase authorization approximately $560.9 million remains available.

Third Quarter Earnings Conference Call and Updated PresentationThe third quarter 2024 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the third quarter 2024 results has been added to our investor relations website. To listen live on our website or for replay, visit investors.lithiadriveway.com and click on quarterly earnings.

About Lithia & Driveway (LAD)Lithia & Driveway (NYSE:LAD) is one of the largest global automotive retailers providing a wide array of products and services throughout the vehicle ownership lifecycle. Simple, convenient, and transparent experiences are offered through our comprehensive network of physical locations, e-commerce platforms, captive finance solutions, fleet management offerings, and other synergistic adjacencies. We deliver consistent, profitable growth in a massive and unconsolidated industry. Our highly diversified and competitively differentiated design provides us the flexibility and scale to pursue our vision to modernize personal transportation solutions wherever, whenever and however consumers desire.

Siteswww.lithia.cominvestors.lithiadriveway.comwww.lithiacareers.comwww.driveway.comwww.greencars.comwww.drivewayfinancecorp.com

Lithia & Driveway on Facebookhttps://www.facebook.com/LithiaMotorshttps://www.facebook.com/DrivewayHQ

Lithia & Driveway on Twitterhttps://x.com/lithiamotorshttps://x.com/DrivewayHQhttps://x.com/GreenCarsHQ

Forward-Looking StatementsCertain statements in this presentation, and at times made by our officers and representatives, constitute forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as "project," "outlook," "target," "may," "will," "would," "should," "seek," "expect," "plan," "intend," "forecast," "anticipate," "believe," "estimate," "predict," "potential," "likely," "goal," "strategy," "future," "maintain," and "continue" or the negative of these terms or other comparable terms. Examples of forward-looking statements in this presentation include, among others, statements regarding:

Future market conditions, including anticipated car and other sales levels and the supply of inventory

Our business strategy and plans, including our achieving our long-term EPS and other financial targets

The growth, expansion, make-up and success of our network, including our finding accretive acquisitions that meet our target valuations and acquiring additional stores

Annualized revenues from acquired stores or achieving target returns

The growth and performance of our Driveway e-commerce home solution and Driveway Finance Corporation (DFC), their synergies and other impacts on our business and our ability to meet Driveway and DFC-related targets

The impact of sustainable vehicles and other market and regulatory changes on our business

Our capital allocations and uses and levels of capital expenditures in the future

Expected operating results, such as improved store performance, continued improvement of selling, general and administrative expenses as a percentage of gross profit and any projections

Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facilities, unfinanced real estate and other financing sources

Our continuing to purchase shares under our share repurchase program

Our compliance with financial and restrictive covenants in our credit facilities and other debt agreements

Our programs and initiatives for employee recruitment, training, and retention

Our strategies and targets for customer retention, growth, market position, operations, financial results and risk management

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this presentation. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation:

Future national and local economic and financial conditions, including as a result of regional or global public health issues, inflation and governmental programs, and spending

The market for dealerships, including the availability of stores to us for an acceptable price

Changes in customer demand, our relationship with, and the financial and operational stability of, OEMs and other suppliers

Changes in the competitive landscape, including through technology and our ability to deliver new products, services and customer experiences and a portfolio of in-demand and available vehicles

Risks associated with our indebtedness, including available borrowing capacity, interest rates, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms

The adequacy of our cash flows and other conditions which may affect our ability to fund capital expenditures, obtain favorable financing and pay our quarterly dividend at planned levels

Disruptions to our technology network including computer systems, as well as natural events such as severe weather or man-made or other disruptions of our operating systems, facilities or equipment

Government regulations and legislation

The risks set forth throughout "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in "Part I, Item 1A. Risk Factors" of our most recent Annual Report on Form 10-K, and in "Part II, Item 1A. Risk Factors" of our Quarterly Reports on Form 10-Q, and from time to time in our other filings with the SEC.

Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial MeasuresThis presentation contains non-GAAP financial measures, which may include adjusted net income and adjusted diluted earnings per share, adjusted SG&A as a percentage of revenue and gross profit, adjusted operating margin, adjusted operating profit as a percentage of revenue and gross profit, adjusted pre-tax margin and net profit margin, EBITDA, adjusted EBITDA, leveraged EBITDA and adjusted total debt. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures.

LAD

Consolidated Statements of Operations (Unaudited)

(In millions except per share data)

Three months ended September 30,

%

Nine months ended September 30,

%

Increase

Increase

2024

2023

(Decrease)

2024

2023

(Decrease)

Revenues:

New vehicle retail

$  4,430.0

$  3,885.8

14.0 %

$  12,847.9

$  11,179.5

14.9 %

Used vehicle retail

2,843.3

2,620.2

8.5

8,630.1

7,302.8

18.2

Used vehicle wholesale

390.9

316.1

23.7

1,018.1

1,082.4

(5.9)

Finance and insurance

360.4

349.4

3.1

1,061.9

1,005.6

5.6

Aftersales

1,012.8

838.0

20.9

2,876.3

2,378.8

20.9

Fleet and other

183.6

267.5

(31.4)

580.4

418.9

38.6

Total revenues

9,221.0

8,277.0

11.4 %

27,014.7

23,368.0

15.6 %

Cost of sales:

New vehicle retail

4,123.6

3,526.9

16.9

11,925.4

10,099.6

18.1

Used vehicle retail

2,654.4

2,431.2

9.2

8,062.9

6,735.4

19.7

Used vehicle wholesale

393.0

322.1

22.0

1,020.7

1,091.9

(6.5)

Aftersales

453.0

375.2

20.7

1,285.1

1,077.7

19.2

Fleet and other

166.6

250.3

(33.4)

531.1

395.2

34.4

Total cost of sales

7,790.6

6,905.7

12.8

22,825.2

19,399.8

17.7

Gross profit

1,430.4

1,371.3

4.3 %

4,189.5

3,968.2

5.6 %

Finance operations income (loss)

0.9

(4.4)

NM

6.4

(43.8)

NM

SG&A expense

943.6

850.8

10.9

2,853.0

2,458.1

16.1

Depreciation and amortization

63.5

50.8

25.0

183.6

146.4

25.4

Income from operations

424.2

465.3

(8.8) %

1,159.3

1,319.9

(12.2) %

Floor plan interest expense

(76.6)

(40.2)

90.5

(214.0)

(102.6)

108.6

Other interest expense

(64.5)

(58.5)

10.3

(189.3)

(141.5)

33.8

Other income (expense)

5.1

(5.3)

196.2

35.4

6.8

420.6

Income before income taxes

288.2

361.3

(20.2) %

791.4

1,082.6

(26.9) %

Income tax expense

(65.3)

(96.4)

(32.3)

(187.0)

(287.0)

(34.8)

Income tax rate

22.7 %

26.7 %

23.6 %

26.5 %

Net income

$  222.9

$  264.9

(15.9) %

$  604.4

$  795.6

(24.0) %

Net income attributable to non-controllinginterests

(1.2)

(2.1)

(42.9) %

(3.8)

(4.7)

(19.1) %

Net income attributable to redeemable non-controlling interest

(12.6)

(1.3)

869.2 %

(14.8)

(3.6)

311.1 %

Net income attributable to LAD

$  209.1

$  261.5

(20.0) %

$  585.8

$  787.3

(25.6) %

Diluted earnings per share attributable to LAD:

Net income per share

$     7.80

$     9.46

(17.5) %

$  21.54

$  28.54

(24.5) %

Diluted shares outstanding

26.8

27.6

(2.9) %

27.2

27.6

(1.4) %

NM - not meaningful

 

LAD

Key Performance Metrics (Unaudited)

Three months ended September 30,

%

Nine months endedSeptember 30,

%

Increase

Increase

2024

2023

(Decrease)

2024

2023

(Decrease)

Gross margin

New vehicle retail

6.9 %

9.2 %

         (230) bps

7.2 %

9.7 %

         (250) bps

Used vehicle retail

6.6

7.2

(60)

6.6

7.8

(120)

Finance and insurance

100.0

100.0

—

100.0

100.0

—

Aftersales

55.3

55.2

10

55.3

54.7

60

Gross profit margin

15.5

16.6

(110)

15.5

17.0

(150)

Unit sales

New vehicle retail

94,964

82,188

15.5 %

273,154

233,521

17.0 %

Used vehicle retail

104,898

88,625

18.4

316,583

247,340

28.0

Average selling price

New vehicle retail

$                  46,649

$  47,279

(1.3) %

$                  47,035

$                  47,874

(1.8) %

Used vehicle retail

27,105

29,565

(8.3)

27,260

29,525

(7.7)

Average gross profit per unit

New vehicle retail

$ 3,226

$ 4,367

(26.1) %

$  3,377

$  4,624

(27.0) %

Used vehicle retail

1,801

2,132

(15.5)

1,792

2,294

(21.9)

Finance and insurance

1,803

2,045

(11.8)

1,801

2,091

(13.9)

Total vehicle(1)

4,271

5,218

(18.1)

4,322

5,497

(21.4)

Revenue mix

New vehicle retail

48.0 %

46.9 %

47.6 %

47.8 %

Used vehicle retail

30.8