Lithia Motors, Inc. · NYSE:LAD
Lithia Motors — Q1 2021 Earnings Presentation
26 slides from Lithia Motors's earnings presentation, Apr 21, 2021
Slide 1: Investor Presentation April 2021
INVESTOR PRESENTATION APRIL 2021 1 NYSE:LAD
Slide 2: Disclosure: Forward-Looking Statements
DISCLOSURE Forward-Looking Statements Certain 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 i
Slide 3: Lithia & Driveway
LITHIA & Diverse synergistic portfolio of businesses Complete ownership lifecycle attachment DRIVEWAY 100% participation in $2 trillion market #252 in 2020 The pragmatic disruptor, with a #4 10-year Total Shareholder Return #6 10-year EPS Growth proven multifaceted success strategy, uniq
Slide 4: Profitably Modernizing an Industry
PROFITABLY MODERNIZING AN INDUSTRY $50 billion in revenues, $50 EPS in 5 years OMNI-CHANNEL SOLUTIONS Addresses 100% of ~$2 trillion market FULFILLMENT NETWORK Unreplicable design and execution INNOVATION Leveraging personnel and expertise Synergistic business lines Activating the network
Slide 5: Key Strategic Highlights
KEY STRATEGIC HIGHLIGHTS Largest Retail Industry Customer-Centric Omni-channel Approach in Early Innings of Business Model with Solutions Combination of E-commerce Consolidation and Throughout the Consumer Home Solutions and Expansive Modernization Lifecycle Physical Network Proven M&A Track Record
Slide 6: Maximizes Addressable Market
MAXIMIZES ADDRESSABLE MARKET Fragmented $2 trillion revenue industry TRADITIONAL PUBLIC USED NEW FRANCHISE ONLY AUTO RETAILERS RETAILERS Greater gross profit opportunities allowing $2,000 ~$2.0T $400 for maximum ~$350B $1,750 $400B flexibility. $300 GROSS PROFT (in billions) $1,500 ~$350B industry
Slide 7: Consumers' Needs Vary and Selection Matters
CONSUMERS’ NEEDS VARY AND SELECTION MATTERS Solutions to meet needs requires expertise and flexibility Do-it-Yourselfer Building Credit Relationship Builder Selection Driven Desires to transact online Re-establishing or little credit Values lifetime personal relationship Influenced by selection not
Slide 8: Driveway
DRIVEWAY Flexible, empowered, convenient, and transparent Intuitive Negotiation-free Shop. Sell. Service. technologies Nation-wide valets to Friendly experienced, your driveway support team 8 NYSE:LAD
Slide 9: Driveway E-Commerce Offerings
DRIVEWAY E-COMMERCE OFFERINGS Maximizing in-home convenience throughout the customer lifecycle SHOP SELL/TRADE SERVICE Selection of 57,000 vehicles Instant cash offer Home pickup & drop-off New and certified pre-owned sales Offer good for 7 days Free loaner vehicles Negotiation-free pr
Slide 10: Leveraging Data to Create Lifetime Loyalty
LEVERAGING DATA TO CREATE LIFETIME LOYALTY A history of utilizing data to innovate products and services More Data 2.5 million+ COMPETITIVE ADVANTAGES Vehicles Sold in the More Past 10 Years 75 Years Customers of Relationships and Transaction Data Smarter MyDriveway Portal Algorithms Subscription Ta
Slide 11: Five Year Model
FIVE YEAR MODEL Our plan builds upon our strengths KEY ASSUMPTIONS REVENUE EBITDA EPS DRIVEWAY CAGR: 31% CAGR: 37% CAGR: 34% Progressive functionality enhancements in 2021 $50B $50.20 In-home Service & F&I scaled over 3 years $9B $2.6B $10.40 NETWORK EXPANSION $0.4B Annual acquisitions of $3-5
Slide 12: Proven Growth with Disciplined Returns
PROVEN GROWTH WITH DISCIPLINED RETURNS Decades of successfully integrating acquisitions and achieving strong returns ANNUAL REVENUES ACQUIRED1 ($MM) TARGET USES OF CAPITAL $4,000 $3,500 $3,500 $3,100 Internal Investment & $3,000 $2,715 Modernization 25% Actual 5-year average: 17% $2,500 $2,000 $1,74
Slide 13: Profitably Modernizing an Industry
PROFITABLY MODERNIZING AN INDUSTRY We are a growth company powered by people and innovation with a 5-year plan to profitably consolidate the largest retail sector in the country. By providing a wide array of products throughout the entire lifecycle of the consumer’s vehicle ownership experience thro
Slide 14: Appendix
APPENDIX 14 NYSE:LAD
Slide 15: Fun Facts
FUN FACTS Lithia consumers and performance 11% 17% 80% $5,000 AVERAGE CONSUMER NEW VEHICLE MARGINS USED VEHICLE MARGINS ACQUISITION DISEQUITY Gross margins including F&I Gross margins including F&I SUCCESS $2,000 AVERAGE 153 60% 23% 13% 4% 80%+ INVENTORY PROCUREMENT SOURCES 4 43% LENDERS Trade-in Au
Slide 16: Network Cost to Revenue Comparison
NETWORK COST TO REVENUE COMPARISON Lower cost network with higher margin businesses DOLLAR AMOUNTS IN MILLIONS Revenue $12,673 $3,940 $20,320 Gross Profit $1,954 $506 $3,178 Net Income $272 $(365) $888 Network Cost* $1,708 $541 $4,043 % of Rev 13.5% 13.7% 19.9% % of GP 87.4% 106.9% 148.5% % of Net 6
Slide 17: Lithia's Trajectory and Roadmap
LITHIA’S TRAJECTORY AND ROADMAP 2014 2016 2018 2020 2020 Acquires DCH $2.7B in Acquires $1.1B in revenues; Adds $1.3B in revenues with Launches national brand, Acquires $3.5B in revenues with revenues – Largest Expanding presence in acquisition of Day Driveway to provide acquisition of John Eagle, a
Slide 18: Regional Reach & Density Map
REGIONAL REACH & DENSITY MAP 90% Reach, 100-mile Density 90% Reach, 300-mile Density 90% Reach, 400-mile Density 18 NYSE:LAD
Slide 19: Resilient Business Model
RESILIENT BUSINESS MODEL Profitable business with diversified brand mix, geographic mix and multiple earnings streams BUSINESS MIX LITHIA NEW VEHICLE MIX New and Used Gross Profit includes F&I Segment Segment % Brand Brand Revenue % Brand Unit Sales Toyota 17% 19% 9% Honda 13% 18% 31% Subaru 7% 9% I
Slide 20: Earnings Opportunities
EARNINGS OPPORTUNITIES Acquire strong brands and grow profits PRE-ACQUISITION TARGET 20 NYSE:LAD
Slide 21: Q1'21 Income Statement Summary
Q1’21 INCOME STATEMENT SUMMARY Q1 2021 HIGHLIGHTS TOTAL GROSS PROFIT ADJUSTED SG&A ADJUSTED Increased total revenue and PER UNIT TO GROSS PROFIT EPS gross profit by 55% over last year Increased adjusted earnings $4,392 74.8% $5.89 $2.01 per share by 193% $3,701 62.6% Improved adjusted SG&A to
Slide 22: Supplemental Information: 2021 Quarterly Income Statement
SUPPLEMENTAL INFORMATION 2021 Quarterly Income statement $M Q4 Q3 Q2 Q1 2021 New Vehicle $2,193.2 $2,193.2 Used Vehicle 1,352.2 1,352.2 Wholesale Used Vehicles 135.2 135.2 Finance and Insurance 198.4 198.4 Service Body and Parts 404.0 404.0 Fleet and Other 60.0 60.0 Total Revenues $4,343.0 $4,343.0
Slide 23: Supplemental Information: 2021 Adjusted Non-GAAP Reconciliation
SUPPLEMENTAL INFORMATION 2021 Adjusted non-GAAP reconciliation YTD Net Disposal Loss on Insurance Acquisition YTD Investment Loss 3/31/21 Sale of Stores Reserves Expenses 3/31/21 $M, except for per share amounts As Reported Q1 Q1 Q1 Q1 Adjusted Selling, General and Administrative $450.4 $(0.7) $– $(
Slide 24: Supplemental Information: 2020 Quarterly Income Statement
SUPPLEMENTAL INFORMATION 2020 Quarterly Income statement $M Q4 Q3 Q2 Q1 2020 New Vehicle $2,149.4 $1,883.3 $1,367.8 $1,373.5 $6,773.9 Used Vehicle 1,108.7 1,093.2 922.2 874.4 3,998.4 Wholesale Used Vehicles 91.8 98.8 51.3 66.7 308.7 Finance and Insurance 172.6 160.5 124.9 121.9 579.8 Service Body an
Slide 25: Supplemental Information: 2020 Adjusted Non-GAAP Reconciliation
SUPPLEMENTAL INFORMATION 2020 Adjusted non-GAAP reconciliation YTD Net Disposal Gain on Asset Investment Insurance Tax Acquisition YTD 12/31/20 Sale of Stores Impairments Gains Reserves Attribute Expenses 12/31/20 $M, except for per As Q1 Q2 Q4 Q2 Q4 Q1 Q2 Q3 Q2 Q1 Q2 Q3 Q4 Adjusted share amounts Re
Slide 26: EBITDA, Adjusted EBITDA, and Net Debt
SUPPLEMENTAL INFORMATION EBITDA, Adjusted EBITDA, and Net Debt $M YTD’2021 FY’2020 FY’2019 FY’2018 Net Income $156.2 $470.3 $271.5 $265.7 Add : Flooring Interest Expense 6.8 34.4 72.8 62.3 Add : Other Interest Expense 23.5 73.1 60.6 56.0 Add : Income Taxes 55.2 178.2 103.9 71 .8 Add : Depreciation a