Lithia Motors Inc. (NYSE:LAD) Q1 2015 Earnings Conference Call Transcript

Apr 22, 2016 • 10:00 am ET

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Lithia Motors Inc. (NYSE:LAD) Q1 2015 Earnings Conference Call Transcript

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Presentation
Operator
operator

Greetings. And welcome to the Lithia Motors First Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now turn the conference over to our host, John North, Vice President of Finance. Please go ahead.

Executive
John North

Thanks and good morning. Welcome to Lithia Motors first quarter 2015 earnings conference call.

(Forward-Looking Cautionary Statements)

On the call today are Bryan DeBoer, President and CEO; Chris Holzshu, Senior Vice President and CFO; and Sid DeBoer, Executive Chairman. At the end of our prepared remarks, we will open the call to questions. I am also available in my office after the call for any follow-up you may have.

With that, I will turn the call over to Bryan.

Executive
Bryan DeBoer

Good morning and thank you for joining us. Earlier today we reported first quarter adjusted net income from continuing operations of $36.9 million, compared to $27.1 million a year ago. We earned a $1.39 per share in the first quarter, compared to a $1.33 per share last year or an increase of 35%. Our revenue was approximately $1.8 billion in the first quarter, an increase of 56% over the prior year. From this point forward, all comparisons will be on a same-store basis.

For the fourth quarter in a row, we saw double-digit increases in all four business lines. Total sales increased 11% and SAAR was $17.1 million for the first quarter, the best quarterly results in 2006.

In the quarter, new vehicle revenues increased 11%. Our new vehicle average selling price increased 3%. Unit sales increased 9%, which was higher than the national average of 6%. Domestic units increased 7%, compared to 4% nationally. Import increased 10%, compared to 6% nationally, and luxury units were up 12%, compared to 11% nationally.

Retail used vehicle revenues increased 11% in the quarter. Our retail used vehicle average selling prices increased 4% as late model vehicles continued to make up a greater percentage of the overall used vehicle sales mix.

We retailed 6% more used units over the prior year, resulting in a used to new ratio of 0.9 to 1. In the quarter, certified units grew 15%, core units increased 5% and finally, value auto units, or vehicles over 80,000 miles and increased 3%.

Our used vehicle gross margins were unchanged from the prior year. We sold a monthly average of 57 used vehicles per store, up from 55 units in the first quarter of 2014 and 50 units in the first quarter of 2013.

We continue to focus on procuring core product and selling 75 used units per store per month. We believe that the increased availability of used cars presents a continued opportunity for our stores to increase unit sales in the future. This remains a top priority for our teams in 2015 and beyond.

Gross profit per new vehicle retailed was $2,168 compared to $2,258 in the first quarter of