Lithia & Driveway (LAD) Increases Revenue 11% and Reports Diluted EPS of $9.00
Announces Dividend of $0.42 per Share for Fourth Quarter
MEDFORD, Ore., Feb. 15, 2023 /PRNewswire/ — Lithia & Driveway (NYSE: LAD) today reported the highest fourth quarter revenue in company history.
Fourth quarter 2022 revenue increased 11% to $7.0 billion from $6.3 billion in the fourth quarter of 2021.
Fourth quarter 2022 net income attributable to LAD per diluted share was $9.00, a 6% decrease from $9.57 per diluted share reported in the fourth quarter of 2021. Adjusted fourth quarter 2022 net income attributable to LAD per diluted share was $9.05, a 21% decrease compared to $11.39 per diluted share in the same period of 2021. Unrealized foreign currency gains positively impacted earnings per share by $0.13.
Fourth quarter 2022 net income was $250 million, a 15% decrease compared to net income of $293 million in the same period of 2021. Adjusted fourth quarter 2022 net income was $251 million, a 28% decrease compared to adjusted net income of $348 million for the same period of 2021.
As shown in the attached non-GAAP reconciliation tables, the 2022 fourth quarter adjusted results exclude a $0.05 per diluted share impact resulting from non-core charges, specifically non-cash unrealized investment loss, insurance reserves, and acquisition expenses, partially offset by a net gain on the sale of stores. The 2021 fourth quarter adjusted results were $1.82 per diluted share, net of non-core charges related to a non-cash unrealized investment loss, acquisition expenses, and insurance reserves, partially offset by a net gain on sale of stores.
Fourth Quarter-Over-Quarter Comparisons and 2022 Performance Highlights:
- Revenues increased 11%
- New and used unit growth was 5% and 9%, respectively
- Total vehicle gross profit per unit of $5,691, down $1,191
- Driveway averaged more than 2 million monthly unique visitors in Q4
- Driveway Finance penetration rate rose to over 13% in Q4, originated over $600 million
- Service, body, and parts revenues increased 18%
- Adjusted SG&A as a percentage of gross profit was 62.8%
- Total outstanding share count was reduced by 10%
“The Lithia & Driveway team had another great year with a solid finish in the final quarter of 2022 across all our businesses. Operational excellence is critical across our core in-store operations, growing omnichannel offerings and captive finance arm. We are nimbly adjusting to the environment and focused on achieving our 2025 Plan. Our balance sheet is well capitalized and we’re executing on the growth initiatives across our segments. With the significant capital engine we have built, we are well positioned for further consolidation in our sector,” said Bryan DeBoer, Lithia & Driveway, President and CEO.
Full year 2022 revenue increased 24% to a record $28.2 billion from $22.8 billion in 2021.
Full year 2022 net income attributable to LAD per diluted share increased 21% to $44.17 from $36.54 for 2021. Adjusted net income attributable to LAD per diluted share increased 11% to $44.42 from $40.03 for 2021. Unrealized foreign currency losses negatively impacted earnings per share by $0.54. Full year 2022 net income attributable to LAD increased 19% to $1.3 billion from $1.1 billion for 2021. Adjusted net income attributable to LAD increased 9% to $1.3 billion for 2022 from $1.2 billion for 2021.
As shown in the attached non-GAAP reconciliation tables, the 2022 adjusted results exclude a $0.25 per diluted share net non-core charge related to a non-cash unrealized investment loss, acquisition expenses, and insurance reserves, partially offset by a net gain on sale of stores. The 2021 adjusted results exclude a $3.49 per diluted share net non-core charge related to a non-cash unrealized investment loss, acquisition expenses, loss on redemption of senior notes, insurance reserves, and asset impairment.
Full Year-over-Year Operating Highlights:
- Record full year revenues of $28.2 billion
- Used vehicle retail sales increased 29.9%
- F&I per unit increased 12.3% to $2,203
- Total vehicle gross profit per unit increased 7.6% to $6,300
- Driveway transactions increased by 272% to nearly 38,000
- Driveway Finance scaled portfolio to over $2 billion
During the fourth quarter, LAD acquired a total of nine stores. These stores are expected to generate more than $560 million in annualized revenues. Notably in the quarter, we entered into two new states with Glenn’s Freedom, our first store in Kentucky and expanded our footprint to Colorado, acquiring Ferrari of Denver. Finally, we added to our network in Texas, acquiring Meador Chrysler, Dodge, Jeep, Ram (CDJR), the second largest CDJR store in Dallas/Fort Worth. In the same period, we divested a total of four stores, for a combined $160 million in annualized revenues. In 2022, Lithia acquired thirty-one stores, for a total of $3.5 billion in acquired revenues, offset by thirteen sales, totaling $663 million in revenues. In 2023, Lithia acquired one store in February expected to add $50 million in annual revenues. Since announcing the 2025 Plan in July 2020, we have acquired a total of $13.9 billion in annualized revenues.
Balance Sheet Update
LAD ended the fourth quarter with approximately $1.6 billion in cash and availability on our revolving lines of credit. In addition, unfinanced real estate could provide additional liquidity of approximately $0.5 billion.
Dividend Payment and Share Repurchases
The Board of Directors approved a dividend of $0.42 per share related to fourth quarter 2022 financial results. The dividend is expected to be paid on March 24, 2023 to shareholders of record on March 10, 2023.
During Q4, we repurchased just over 174,000 shares at a weighted average price of $198. In 2022, LAD repurchased approximately 2.4 million shares at a weighted average price of approximately $276. Under the current share repurchase authorization, approximately $501 million remains available.
Fourth Quarter Earnings Conference Call and Updated Presentation
The fourth quarter 2022 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the fourth quarter 2022 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 the premier automotive retailer in North America, offers a wide selection of vehicles across global manufacturers and provides a full suite of financing, leasing, repair, and maintenance options. Purchasing and owning a vehicle is easy and hassle-free with convenient solutions offered through our comprehensive network of locations, e-commerce platforms, and captive finance division. We deliver profitable growth through consolidating the largest retail sector in North America as we modernize the retail experience wherever, whenever and however consumers desire.
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