Lithia Motors, Inc. · NYSE:LAD
Lithia Motors — Q3 2024 Earnings Presentation
27 slides from Lithia Motors's earnings presentation, Oct 23, 2024
Slide 1: Investor Presentation
Investor Presentation OCTOBER 2024 UPDATED 10/23/24
Slide 2: Disclosure
NYSE: LAD Disclosure Forward-Looking Statements Any forward-looking statement made by us in this presentation is based only on information currently available to us and Certain statements in this presentation, and at times made by our officers and representatives, constitute forward- speaks only as
Slide 3: Lithia & Driveway
NYSE: LAD Lithia & Driveway HIGHLIGHTS EBITDA GROWTH +783% Strategy ▪ Diverse synergistic portfolio of businesses ▪ Complete ownership lifecycle attachment +157% ▪ 100% participation in $2 trillion+ market +45% +11% Year 2014 2019 YTD 2024 End Track Record* ▪ 10-year Revenue Growth CAGR: 23% # Store
Slide 4: LAD Strategy Design
NYSE: LAD KEY Verticals – Consumer Growth (REV) LAD Strategy Design Horizontals – Consumer Synergies (EPS) 4
Slide 5: Key Strategic Highlights
NYSE: LAD Key Strategic Highlights Profitably Modernizing an Industry Building a profitable platform with the ability to respond to changing consumer and industry trends. 01 LARGEST RETAIL INDUSTRY Early stages of consolidation and modernization. Variety of brands, financing solutions, leasing, repa
Slide 6: Largest Retail Industry
NYSE: LAD 01 LARGEST RETAIL INDUSTRY Over $3 Trillion in Revenue Across Industries TRADITIONAL NEW PUBLIC USED ONLY AUTO FRANCHISE DEALERS RETAILERS $3T i ersify nd arkets Mobility $900B Diversified Mobility Verticals Used $800B Combined market share In-Store & Online Retail Marketplaces for New & U
Slide 7: Lithia & Driveway Ecosystem
NYSE: LAD 02 CONSUMER ECOSYSTEM Lithia & Driveway Ecosystem Earning Customers for Life 50+ OEMs Shop, Sell, & Trade The LAD Ecosystem fulfills customer needs wherever, whenever, and however they desire, creating infectious Finance Options customer loyalty. Products & Services Aftersales Support Dive
Slide 8: Operating Results and Efficiency
NYSE: LAD 03 OPERATIONAL EXCELLENCE Operating Results and Efficiency Competitive Advantage – LAD vs Brick & Mortar Retailers1 2023 Vehicle Operations SG&A Performance at a Store Level PER LOCATION PER EMPLOYEE 36% range between top and 22% range between top and 20% range between top and bottom quart
Slide 9: Regenerative Growth Engine
NYSE: LAD 03 OPERATIONAL EXCELLENCE Regenerative Growth Engine LAD Growth Strategy vs. Peer Share Buyback Strategy Free Cash Flow Generation (EBITDA) Capital Allocation $2.5bn 25% CAGR LAD PEERS 25% CAGR $2.0bn 6% $1.5bn 11% CAGR 3% 64% Cash Dividends Cash Dividends 11% CAGR Acquisitions 25% $1.0bn
Slide 10: Leveraging Growth & Scale
NYSE: LAD 04 GROWTH & SCALE Leveraging Growth & Scale 90% Reach, 100-mile Density 90% Reach, 200-mile Density 90% Reach, 300-mile Density Driveway Hub With a focus on consumer convenience and a disciplined, proven M&A strategy, LAD is reducing the distance to our customers. National network works in
Slide 11: Mergers & Acquisitions
NYSE: LAD 04 GROWTH & SCALE Mergers & Acquisitions U.S. PUBLIC DEALERSHIP TRANSACTIONS & HISTORICAL RETURNS BY VINTAGE ANNUALIZED REVENUES (R) ACQUIRED 391 225% 350 205% Number of Dealerships 150% 250 216 Cumulative Return 131% 169 (43%) 100% return R: $16.7B 88% 77% 150 75% 68 (31%) 32% R: $6B 51 3
Slide 12: Driveway Finance Corporation (DFC)
NYSE: LAD 05 ADJACENCIES Driveway Finance Corporation (DFC) $20B $1B Business Proposition Portfolio Design Serving LAD customers through: • Full credit spectrum lender $17B • Variety of financing options • Focus on prime FICO portfolio $16B $800M • Integration throughout Lithia profile • DFC INCOME
Slide 13: Driveway Finance Corporation (DFC)
NYSE: LAD 05 ADJACENCIES Driveway Finance Corporation (DFC) UNDERWRITING METRICS PORTFOLIO SIZE $4.5bn 50% $600m $561m 44% $518m 10.8% $502m $3.8bn $493m 42% 36% $2.8bn % Invested Capital $500m Portfolio Size ($bn) Originations ($m) $429m 10.5% $3.0bn $2.3bn 34% APR $400m 28% 10.3% 10.2% $2.3bn 10.2
Slide 14: Future Growth
NYSE: LAD 06 PREMIER RETAILER Future Growth EPS PER BILLION: PATH TO $2+ Diversified. Dynamic. Profitable. $2.50 Revenue: $75-100B SG&A % GP: mid-50% Leveraging our platform for growth Op Margin: 5+% and scale in revenue and EPS. $1.75-2.00 $2.00 Adjacencies: Operations Efficiencies Financing Ops $0
Slide 15: LAD Over the Years
NYSE: LAD LAD Over the Years The pragmatic disrupter with a proven multifaceted success strategy, uniquely and competitively leading the modernization of personal transportation by providing consumers solutions wherever, whenever, and however they desire. 1946 2012 2020 2023 Near-Term Walt DeBoer fo
Slide 16: Appendix
NYSE: LAD Appendix 16
Slide 17: Resilient Business Model
NYSE: LAD Resilient Business Model Profitable business with diversified brand mix, geographic mix and multiple earnings streams Business Mix New New Vehicle Mix New and Used Revenue / Gross Profit includes F&I Used Aftersales Segment Segment %4 Brand Brand Revenue Brand Unit Sales Toyota 11% 12% FY
Slide 18: SAAR and Market Share
NYSE: LAD SAAR and Market Share US Light Vehicle New & Used SAAR1 LAD US Market Share2 45.0 40.0 3.0% 35.0 30.0 Units (in millions) 2.0% 25.0 20.0 15.0 1.0% 10.0 5.0 0.0 0.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024e 2019 2020 2021 2022 2023 YTD 2024 Unit growth: US vehicle market
Slide 19: Used Vehicle Marketplace
NYSE: LAD Used Vehicle Marketplace Q3 2024 Same Store Metrics2 Focus on broad used vehicle spectrum addresses largest proportion of used vehicle TAM of any Average retailer Selling Price % Mix ROI CPO CPO $35,723 26% 52% 8% Core 4 $29,063 54% 63% ▪ Inventory procurement and reconditioning are Value
Slide 20: Driving Positive Change
NYSE: LAD ESG AT LITHIA & DRIVEWAY Driving Positive Change ENVIRONMENTAL GOALS CORE VALUES Increase GreenCars on the Road Earn Customers for Life Create welcoming and trustworthy experiences for our customers Operate Sustainable Stores Improve Constantly Extend Vehicle Lifecycles C ampion one anot e
Slide 21: Revenues, Profitability - Through the Cycle
NYSE: LAD Revenues, Profitability - Through the Cycle Current expectations near cycle lows, margin of safety in implied outlook Gross Margins Quarterly Same Store Gross Profit 1 $6,982 $6,550 $3,482 $2,251 56.3% 10-YR HIGH 100% 56.0% ▪ We expect Margins to continue normalizing as New and Used Percen
Slide 22: Valuation Framework
NYSE: LAD Valuation Framework Implied Valuation Inputs 11x 11x 23% 10-year average 10-year average 10-year average • Shares trading at a discount on relative and TTM P/E1 TTM EV/EBITDA1 TTM ROE1 absolute multiples ~10x Current ~11x Current ~18% 2023 ROE • High visibility in cash flow outlook provide
Slide 23: 2024 Quarterly Income Statement
NYSE: LAD Supplemental Information 2024 Quarterly Income Statement $M YTD 2024 Q4 2024 Q3 2024 Q2 2024 Q1 2024 FY2023 Q4 2023 Q3 2023 Q2 2023 Q1 2023 New vehicle retail $12,847.9 $4,430.0 $4,403.7 $4,014.1 $15,154.2 $3,974.8 $3,885.8 $4,014.7 $3,278.9 Used vehicle retail 8,630.1 2,843.3 2,986.0 2,80
Slide 24: 2024 Adjusted non-GAAP Income Statement
NYSE: LAD Supplemental Information 2024 Adjusted non-GAAP Income Statement YTD Net loss (gain) on Insurance Premium on YTD Acquisition expenses Redeemable NCI Tax attributes 2024 disposal of stores reserves Buyout 2024 $M, except for per share As Reported Q3 Q2 Q1 Q2 Q3 Q3 Q2 Q3 Adjusted amounts Sel
Slide 25: 2023 Adjusted non-GAAP Income Statement
NYSE: LAD Supplemental Information 2023 Adjusted non-GAAP Income Statement YTD Net disposal loss (gain) on Insurance Contract YTD 2023 sale of stores Reserves Acquisition expenses Buyouts 2023 $M, except for per As Reported Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Adjusted share amounts Selling,
Slide 26: EBITDA, Adjusted EBITDA, and Net Debt
NYSE: LAD Supplemental Information EBITDA, Adjusted EBITDA, and Net Debt $M YT ’2024 FY’2023 FY’2022 FY’2021 FY’2020 Net Income 604.4 1,011.7 1,261.6 1,062.7 470.3 Add: Flooring interest expense 214.0 150.9 38.8 22.3 34.4 Add: Other interest expense 189.3 201.2 129.1 103.4 71.6 Add: Financing operat
Slide 27: Thank You
NYSE: LAD Thank You