Lithia Motors, Inc. · NYSE:LAD
Lithia Motors — Q1 2023 Earnings Presentation
31 slides from Lithia Motors's earnings presentation, Apr 19, 2023
Slide 1: Investor Presentation April 2023
Investor Presentation APRIL 2023
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 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. EBITDA GROWTH +1,172% TOTAL SHAREHOLDER RETUR
Slide 4: LAD Over the Years
NYSE: LAD LAD Over the Years 1946 2012 2019 2022 Walt DeBoer founded Lithia In May 2012, Bryan DeBoer became In July 2020, LAD LAD becomes one of the largest Motors in 1946 as a Chrysler- CEO, accelerating company growth. announces the 5-year plan. automotive retailers in North America Plymouth-Dodg
Slide 5: LAD Strategy Overview
NYSE: LAD KEY Verticals – Consumer Growth (REV) LAD Strategy Overview Horizontals – Consumer Synergies (EPS) 5
Slide 6: 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 7: Over $3 Trillion in Revenue Across Industries
NYSE: LAD 01 LARGEST RETAIL INDUSTRY Over $3 Trillion in Revenue Across Industries PUBLIC USED ONLY AUTO TRADITIONAL NEW RETAILERS FRANCHISE DEALERS $3T Mobility $900B Diversified Mobility Verticals Used $800B Combined market share In-Store & Online Retail Marketplaces for New & Used: ~2% New $700B
Slide 8: SAAR and Market Share
In NYSE: LAD 02 OPERATIONAL EXCELLENCE SAAR and Market Share US Light Vehicle New & Used SAAR LAD US Market Share 45 3.00% 40 2.50% 35 30 2.00% Units (in millions) 25 1.50% 20 15 1.00% 10 0.50% 5 0 0.00% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2019 2020 2021 2022 Unit growth: US vehi
Slide 9: Operating Results and Efficiency
In NYSE: LAD 02 OPERATIONAL EXCELLENCE Operating Results and Efficiency Vehicle Operations Income 2022 Vehicle Operations SG&A Performance at a Store Level Opportunity to add over $125mm in profit by improving operations $M 2020 2021 2022 30% range between top and 21% range between top and 20% range
Slide 10: Leveraging Growth & Scale
NYSE: LAD 03 GROWTH & SCALE Leveraging Growth & Scale 90% Reach, 100-mile Density 90% Reach, 200-mile Density 90% Reach, 300-mile Density 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 tandem with
Slide 11: Mergers & Acquisitions
NYSE: LAD 03 GROWTH & SCALE Mergers & Acquisitions U.S. PUBLIC DEALERSHIP TRANSACTIONS & ANNUALIZED REVENUES (R) ACQUIRED M&A ALLOCATION 310 300 LAD PEERS Number of Dealerships 216 4% 200 Acquisitions 16% 3% Debt Paydown 152 (49%) R: $14.8B 74% Cash Dividends 59% Acquisitions 10% Share Repurchases 1
Slide 12: Consumer Optionality & Lifecycle
NYSE: LAD 04 CONSUMER OPTIONALITY Consumer Optionality & Lifecycle CONSUMER PRODUCTS & POWERED BY BRAND EXPERIENCE SERVICES Shop Personnel Facilities Omnichannel Inventory Technology Sell After Sales Distribution Transparency Online Simple Convenience Financing Solutions/Subscriptions Education Lear
Slide 13: Strategic Omnichannel Infrastructure
NYSE: LAD 04 CONSUMER OPTIONALITY Strategic Omnichannel Infrastructure Average Distance to Customers Consumer Optionality Infrastructure of omnichannel options provides consumer optionality wherever, whenever, and however they desire. In-Person | Online | Flexible | Simple | Transparent | Convenient
Slide 14: 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 • Variety of financing options • Focus on prime FICO portfolio $16B $800M • Integration throughout Lithia profile platform • Maximiz
Slide 15: 2025 & Beyond
NYSE: LAD 06 PREMIER RETAILER 2025 & Beyond $150+ Revenue: $75-100B $1B Revenue = $1.75 - $2 EPS SG&A % GP: <50% Diversified. Dynamic. Profitable. $100B Op Margin: 7+% $100 We’re leveraging our platform for growth & scale in revenue and EPS. Revenue: $50B $1B Revenue = $1.10-$1.20 EPS $75B SG&A % GP
Slide 16: Appendix
NYSE: LAD Appendix Inventory, Strategies, History, Future, & More 16
Slide 17: Used Vehicle Marketplace
NYSE: LAD Used Vehicle Marketplace Q1 2023 Same Store Metrics2 Addressing largest proportion of used vehicle TAM of any retailer Average Selling % Mix ROI Price CPO CPO $33,832 14% 68% 16% Core $29,787 60% 58% Value Autos $16,535 19% 116% § Inventory procurement and reconditioning are critical. Netw
Slide 18: Driveway | Auto done easy.
NYSE: LAD Driveway | Auto done easy. Fully Proprietary New Car Real Time Payment Shopping Experience First in market offering, pays Integrates applicable incentives and consumers instantly when selling a rebates for transparent upfront car to Driveway, no more waiting for pricing. the check to clear
Slide 19: GreenCars | everything in one place
NYSE: LAD GreenCars | everything in one place Accelerate the adoption of Marketplace more sustainable vehicles, while capturing growth Powered by Driveway, the marketplace accelerates a net-zero world with the largest selection Business Proposition Learning Center Everything you need to learn and En
Slide 20: Competitive Advantages
NYSE: LAD Competitive Advantages Lower cost network with higher margin businesses AVG. TRADITIONAL NEW FRANCHISE RETAILERS Revenue ($mm) $28,232 $13,604 $29,685 $20,147 Net Income (Loss) ($mm) $1,262 $(1,587) $485 $919 Network Cost as a % of gross profit1 77% 303% 142% 81% Capex as % of gross profit
Slide 21: Financing Operations Income (Loss)
In NYSE: LAD Financing Operations Income (Loss) Financing Operations Income Contribution of Q1/2023 Originations by Year Front loaded CECL expense drives near-term headwind to Three Months Ended March 31 results as portfolio scales $M 2023 %(1) 2022 %(1) $M 2023 %(1) 2024 %(1) 2025 %(1) Lifetime Net
Slide 22: Q1's Income Statement Summary
NYSE: LAD KEY Q1’s Income Statement Summary Q1 2022 Q1 2023 Q1 2023 Highlights TOTAL REVENUES ADJUSTED EBITDA ADJUSTED EPS $6,973.8 BN $546.5 $11.96 $406.2 $8.44 $6,705.3 BN COMMENTARY SAME STORE QUARTER-OVER-QUARTER COMPARISON VS. Q1 2022 § Increased total revenue by +4.0% REVENUE GROSS PROFIT § De
Slide 23: Resilient Business Model
NYSE: LAD Resilient Business Model Profitable business with diversified brand mix, geographic mix and multiple earnings streams Business Mix New and Used Gross profit includes F&I New Vehicle Mix FY 2015 – FY 2019 Q1 2023 Segment Segment % Brand Brand Revenue Brand Unit Sales Toyota 12% 16% 10% 11%
Slide 24: Acquired Business Earnings Opportunities
NYSE: LAD Acquired Business Earnings Opportunities 100 125% Units $1,450+ 25% 90% Acquiring strong brands 80 and grow profits 90% Units $1,200 20% 75% 65% 35 75% Units 10% FUTURE STATE PRE-TAX $700 PROFIT MARGIN >3% New Vehicle Used Vehicle F&I per Unit Service & SG&A Market Share Units Significant
Slide 25: Supplemental Information: 2023 Quarterly Income Statement
NYSE: LAD Supplemental Information 2023 Quarterly Income Statement $M Q4 Q3 Q2 Q1 YTD’2023 New Vehicle $3,278.9 $3,278.9 Used Vehicle 2,227.5 2,227.5 Wholesale Used Vehicles 356.7 356.7 Finance and Insurance 318.3 318.3 Service Body and Parts 736.3 736.3 Fleet and Other 56.1 56.1 Total Revenues $6,9
Slide 26: Supplemental Information: 2022 Quarterly Income Statement
NYSE: LAD Supplemental Information 2022 Quarterly Income Statement $M Q4 Q3 Q2 Q1 FY’2022 New Vehicle $3,275.1 $3,306.9 $3,250.7 $3,061.8 $12,894.5 Used Vehicle 2,229.5 2,465.8 2,496.7 2,234.5 9,426.4 Wholesale Used Vehicles 336.0 363.2 382.4 385.8 1,467.5 Finance and Insurance 308.4 333.3 330.4 313
Slide 27: Supplemental Information: 2023 Adjusted non-GAAP Income Statement
NYSE: LAD Supplemental Information 2023 Adjusted non-GAAP Income Statement YTD Net disposal loss (gain) on Insurance Acquisition Vendor Contract YTD Investment loss (gain) 2023 sale of stores Reserves expenses Buyouts 2023 $M, except for per share amounts As Reported Q1 Q1 Q1 Q1 Q1 Adjusted $764.4 $
Slide 28: Supplemental Information: 2022 Adjusted non-GAAP Income Statement
NYSE: LAD Supplemental Information 2022 Adjusted non-GAAP Income Statement YTD Net disposal loss (gain) on Insurance YTD Investment loss (gain) Acquisition expenses 12/31/22 sale of stores Reserves 12/31/22 $M, except for per As Reported Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Adjusted share amounts
Slide 29: Supplemental Information: EBITDA, Adjusted EBITDA, and Net Debt
NYSE: LAD Supplemental Information EBITDA, Adjusted EBITDA, and Net Debt $M YTD’2023 FY’2022 FY’2021 FY’2020 FY’2019 Net Income attributable to LAD $229.6 $1,261.6 $1,062.7 $470.3 $271.5 Add: Flooring interest expense $27.7 38.8 22.3 34.4 72.8 Add: Other interest expense $39.0 129.1 103.4 71.6 58.8
Slide 30: LAD's History & Path Forward
NYSE: LAD LAD’s History & Path Forward 2020 2021 2022 2025 2030 2035 Announces 5-Year Plan to Launches national brand, $1 billion in Driveway Completes build out of US OEMs expect that 40 to 50% LAD continues to evolve as profitably consolidate the Driveway, providing proprietary revenue and complet
Slide 31: Thank You
NYSE: LAD Thank You