Business Wire | Jul 22, 2020 08:00AM EDT

Lithia Reports Highest Second Quarter Net Income in Company History

Jul. 22, 2020

MEDFORD, Ore.--(BUSINESS WIRE)--Jul. 22, 2020--Lithia Motors, Inc. (NYSE: LAD) today reported second quarter 2020 revenue of $2.8 billion.

Second quarter 2020 net income per diluted share was $3.38, a 29% increase from $2.63 per diluted share reported in the second quarter of 2019. Adjusted second quarter 2020 net income per diluted share was $3.72, a 26% increase compared to adjusted net income of $2.95 per diluted share in the same period of 2019.

Second quarter 2020 net income was $78 million, a 26% increase compared to net income of $62 million in the same period of 2019. Adjusted second quarter 2020 net income was $86 million, a 23% increase compared to adjusted net income of $69 million for the same period of 2019.

As shown in the attached non-GAAP reconciliation tables, the 2020 second quarter adjusted results exclude a $0.34 net non-core charge related to an impairment charge, insurance reserves and acquisition expenses, partially offset by a net gain on sale of stores and a beneficial tax attribute. The 2019 second quarter adjusted results exclude a $0.32 net non-core charge due to a net loss on sale of stores, insurance reserves, and acquisition expenses.

Second Quarter-over-Quarter Operating Highlights:

* Same store new vehicle sales decreased 23.5 % * Same store used vehicle retail sales increased 0.5% * Same store F&I per unit increased 9.4% to $1,590 * Same store total gross profit per unit increased 11.4% to $4,030 * SG&A as a percentage of gross profit improved 540bps to 64.7%

"The strong sequential improvements throughout the quarter, coupled with our stores' responsiveness to the current environment, led us to the highest quarterly adjusted earnings per share in our company's history," said Bryan DeBoer, President and CEO. "This record performance illustrates the massive opportunity that exists within our $2 trillion industry that we are unlocking through continued growth and the activation of our ecommerce digital home solutions."

For the first six months of 2020 revenues decreased 8% to $5.6 billion, compared to $6.1 billion in 2019.

Net income for the first six months of 2020 was $5.32 per diluted share, compared to $5.08 per diluted share in 2019, an increase of 5%. Adjusted net income per diluted share for the first six months of 2020 increased 5% to $5.70 from $5.42 in the same period of 2019.

Corporate Development

In July, we announced the acquisitions of Smolich CJDR and Nissan in Bend, Oregon and Ladin Subaru in Thousand Oaks, California. These acquisitions are anticipated to generate $160 million in annualized steady state revenues. For the year, this brings our total anticipated annualized revenue from acquired locations to $320 million and expanded our density in both the Southwest and Northwest regions.

Balance Sheet Update

We ended the second quarter with over $750 million in cash and availability on our revolving lines of credit. Earlier this month, we closed on a $255 million syndicated real estate revolving line of credit, bringing our current total cash and available credit to over $1 billion. Our unfinanced real estate could provide additional liquidity of approximately $250 million.

"The acquisition market is robust and we are accelerating the build out of our coast-to-coast network enabling us to serve customers wherever, whenever, and however they desire," said DeBoer. "Our balance sheet is in the strongest position in our company's history and we are well positioned to accelerate our plan to reach 5% national market share."

Dividend Payment

Our Board of Directors approved increasing our dividend to $0.31 per share. We expect to pay the dividend on August 28, 2020 to shareholders of record on August 14, 2020.

Second Quarter Earnings Conference Call and Updated Presentation

The second quarter 2020 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting the second quarter 2020 results has been added to our investor relations website. To listen live on our website or for replay, visit www.lithiainvestorrelations.com and click on webcasts.

About Lithia

Lithia Motors, Inc. is a leading provider of personal transportation solutions in the United States and is among the fastest growing companies in the Fortune 500 (#252-2020). Lithia's rapid growth is powered by people, an industry leading coast-to-coast physical network and ecommerce digital home solutions. Lithia increases market share and optimizes profitability by focusing on the consumer experience and applying proprietary performance measurement systems fueled by data science. Lithia's unique growth model generates significant cash flows, which funds innovations and the expansion of its nationwide network, creating personal transportation solutions wherever, whenever and however consumers desire.

Siteswww.lithia.com www.lithiainvestorrelations.com www.lithiacareers.com

Lithia Motors on Facebook http://www.facebook.com/LithiaMotors

Lithia Motors on Twitter http://twitter.com/lithiamotors

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 identify forward-looking statements by terms such as "project", "outlook", "target", "may", "will", "would", "should", "seek", "expect", "plan", "intend", "forecast", "anticipate", "believe", "estimate", "predict", "potential", "likely", "goal", "strategy", "future", "maintain", and "continue" or the negative of these terms or other comparable terms. Examples of forward-looking statements in this presentation include, among others, statements regarding:

* Future market conditions, including anticipated car sales levels; * Anticipated impacts on consumer demand or governmental restrictions related to the COVID-19 pandemic or otherwise; * Expected level of business interruption due to shelter in place policies or lifting of those restrictions, and when volumes and consumer demand will return; * Continuation of our sales and services, including in-store appointments and home deliveries; * Expected growth from our ecommerce home solutions and digital strategies; * Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses ("SG&A") as a percentage of gross profit and all projections; * Anticipated integration, success and growth of acquired stores; * Anticipated ability to capture additional market share; * Anticipated ability to find accretive acquisitions; * Expected revenues from acquired stores; * Anticipated synergies, ability to monetize our investment in digital innovation; * Anticipated additions of dealership locations to our portfolio in the future; * Anticipated financial condition and liquidity, including from our cash, availability on our credit facility and unfinanced real estate; * Anticipated use of proceeds from our financings; * Anticipated allocations, uses and levels of capital expenditures in the future; * Expectations regarding compliance with financial and restrictive covenants in our credit facility and other debt agreements; and * Our strategies for customer retention, growth, market position, financial results and risk management.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this presentation. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation:

* Future economic and financial conditions (both nationally and locally), including as a result of the COVID-19 pandemic; * Changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers; * Risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms); * The adequacy of our cash flow and earnings and other conditions which may affect our ability to pay our quarterly dividend at the planned level; * Disruptions to our technology network including computer systems and software, as well as natural events such as severe weather, fires, floods and earthquakes or man-made or other disruptions of our operating systems, structures, facilities or equipment; and * Government regulations and legislation, and other risks set forth throughout "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in "Part I, Item 1A. Risk Factors" of our most recent Annual Report on Form 10-K, Item 8.01 in our Form 8-K filed on April 13, 2020, and from time to time in our other filings with the SEC.

Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

This presentation contains non-GAAP financial measures such as adjusted net income and diluted earnings per share, adjusted SG&A as a percentage of revenue and gross profit, adjusted operating margin, adjusted operating profit as a percentage of revenue and gross profit, adjusted pre-tax margin and net profit margin, EBITDA, adjusted EBITDA, leveraged EBITDA and adjusted total debt. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-GAAP financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures.

Lithia Motors, Inc.

Consolidated Statements of Operations (Unaudited)

(In millions except per share data)

Three months ended % Six months ended % June 30, June 30, Increase Increase

2020 2019 (Decrease) 2020 2019 (Decrease)

Revenues:

New vehicle $ 1,367.8 $ 1,707.4 (19.9 )% $ 2,741.3 $ 3,168.5 (13.5 )%retail

Used vehicle 922.2 888.3 3.8 1,796.5 1,716.2 4.7 retail

Used vehicle 51.3 81.7 (37.2 ) 118.0 159.1 (25.8 )wholesale

Finance and 124.9 129.0 (3.2 ) 246.7 246.5 0.1 insurance

Service,body and 275.5 335.5 (17.9 ) 605.4 652.9 (7.3 )parts

Fleet and 16.9 79.8 (78.8 ) 54.4 128.2 (57.6 )other

Total 2,758.6 3,221.7 (14.4 )% 5,562.3 6,071.4 (8.4 )%revenues

Cost of sales:

New vehicle 1,275.6 1,612.0 (20.9 ) 2,570.9 2,987.2 (13.9 )retail

Used vehicle 823.9 795.1 3.6 1,608.3 1,538.4 4.5 retail

Used vehicle 49.2 79.9 (38.4 ) 115.3 156.4 (26.3 )wholesale

Service,body and 131.1 165.2 (20.6 ) 292.8 323.1 (9.4 )parts

Fleet and 14.4 75.9 (81.0 ) 49.7 122.0 (59.3 )other

Total cost 2,294.2 2,728.1 (15.9 ) 4,637.0 5,127.1 (9.6 )of sales

Gross profit 464.4 493.6 (5.9 )% 925.3 944.3 (2.0 )%

Asset 7.9 - NM 7.9 0.5 NMimpairments

SG&A expense 304.5 356.5 (14.6 ) 650.5 678.3 (4.1 )

Depreciationand 22.3 20.2 10.4 44.3 40.0 10.8 amortization

Income from 129.7 116.9 10.9 % 222.6 225.5 (1.3 )%operations

Floor planinterest (8.1 ) (19.4 ) (58.2 ) (22.1 ) (37.5 ) (41.1 )expense

Otherinterest (16.8 ) (15.0 ) 12.0 (33.8 ) (30.3 ) 11.6 expense

Other 3.5 3.0 NM 5.8 5.6 NMincome, net

Incomebefore 108.3 85.5 26.7 % 172.5 163.3 5.6 %income taxes

Income tax (30.6 ) (23.6 ) 29.7 (48.6 ) (45.0 ) 8.0 expense

Income tax 28.3 % 27.6 % 28.2 % 27.6 % rate

Net income $ 77.7 $ 61.9 25.5 % $ 123.9 $ 118.3 4.7 %



Diluted netincome per share:

Net income $ 3.38 $ 2.63 28.5 % $ 5.32 $ 5.08 4.7 %per share



Dilutedshares 23.0 23.5 (2.1 ) % 23.3 23.3 - %outstanding

NM - not meaningful

Lithia Motors, Inc.

Key Performance Metrics (Unaudited)

Three months ended % Six months ended % June 30, June 30, Increase Increase

2020 2019 (Decrease) 2020 2019 (Decrease)

Gross margin

Newvehicle 6.7 % 5.6 % 110 bps 6.2 % 5.7 % 50 bpsretail

Usedvehicle 10.7 10.5 20 10.5 10.4 10 retail

Financeand 100.0 100.0 - 100.0 100.0 - insurance

Service,body and 52.4 50.8 160 51.6 50.5 110 parts

Grossprofit 16.8 15.3 150 16.6 15.6 100 margin



Unit sales

Newvehicle 34,869 45,887 (24.0 )% 70,776 85,582 (17.3 )%retail

Usedvehicle 43,505 42,865 1.5 86,136 83,540 3.1 retail

Totalretail 78,374 88,752 (11.7 ) 156,912 169,122 (7.2 )units sold



Averageselling price

Newvehicle $ 39,226 $ 37,208 5.4 % $ 38,732 $ 37,023 4.6 %retail

Usedvehicle 21,196 20,724 2.3 20,857 20,543 1.5 retail



Averagegross profit perunit

Newvehicle $ 2,643 $ 2,078 27.2 % $ 2,407 $ 2,119 13.6 %retail

Usedvehicle 2,259 2,174 3.9 2,185 2,128 2.7 retail

Financeand 1,593 1,453 9.6 1,572 1,457 7.9 insurance

Totalvehicle^ 4,050 3,598 12.6 3,875 3,596 7.8 (1)



Revenue mix

Newvehicle 49.6 % 53.0 % 49.3 % 52.2 % retail

Usedvehicle 33.4 27.6 32.3 28.3 retail

Usedvehicle 1.9 2.5 2.1 2.6 wholesale

Financeand 4.5 4.0 4.4 4.1 insurance,net

Service,body and 10.0 10.4 10.9 10.8 parts

Fleet and 0.6 2.5 1.0 2.0 other



Gross Profit Mix

Newvehicle 19.8 % 19.3 % 18.4 % 19.2 % retail

Usedvehicle 21.2 18.9 20.3 18.8 retail

Usedvehicle 0.5 0.4 0.3 0.3 wholesale

Financeand 26.9 26.1 26.7 26.1 insurance,net

Service,body and 31.0 34.5 33.8 34.9 parts

Fleet and 0.6 0.8 0.5 0.7 other

Adjusted As reported Adjusted As reported

Three months Three months Six months Six months ended June 30, ended June 30, ended ended June 30, June 30,

Other 2020 2019 2020 2019 2020 2019 2020 2019metrics

SG&A as a% of 10.9 % 10.7 % 11.0 % 11.1 % 11.6 % 11.0 % 11.7 % 11.2 %revenue

SG&A as a% of 64.7 70.1 65.6 72.2 69.7 70.7 70.3 71.8 grossprofit

Operatingprofit as 5.1 3.9 4.7 3.6 4.2 3.9 4.0 3.7 a % ofrevenue

Operatingprofit asa % of 30.5 25.8 27.9 23.7 25.5 25.0 24.1 23.9 grossprofit

Pretax 4.4 3.0 3.9 2.7 3.3 2.9 3.1 2.7 margin

Netprofit 3.1 2.2 2.8 1.9 2.4 2.1 2.2 1.9 margin

^ Includes the sales and gross profit related to new, used retail, used (1) wholesale and finance and insurance and unit sales for new and used retail

Lithia Motors, Inc.

Same Store Operating Highlights (Unaudited)

Three months ended % Six months ended % June 30, June 30, Increase Increase

2020 2019 (Decrease) 2020 2019 (Decrease)

Revenues

Newvehicle $ 1,277.9 $ 1,670.2 (23.5 )% $ 2,550.9 $ 3,092.8 (17.5 )%retail

Usedvehicle 869.6 865.4 0.5 1,695.6 1,668.5 1.6 retail

Financeand 116.9 125.6 (6.9 ) 230.4 240.0 (4.0 )insurance

Service,body and 259.0 326.4 (20.6 ) 567.2 632.4 (10.3 )parts

Total 2,587.4 3,146.2 (17.8 ) 5,206.4 5,912.7 (11.9 )revenues



Gross profit

Newvehicle $ 85.2 $ 93.7 (9.1 ) % $ 157.8 $ 177.6 (11.1 )%retail

Usedvehicle 92.0 91.5 0.5 175.7 174.3 0.8 retail

Financeand 116.9 125.6 (6.9 ) 230.4 240.0 (4.0 )insurance

Service,body and 135.6 166.0 (18.3 ) 292.8 320.2 (8.6 )parts

Totalgross 434.4 482.4 (10.0 ) 864.3 921.1 (6.2 )profit



Gross margin

Newvehicle 6.7 % 5.6 % 110 bps 6.2 % 5.7 % 50 bpsretail

Usedvehicle 10.6 10.6 - 10.4 10.4 - retail

Financeand 100.0 100.0 - 100.0 100.0 - insurance

Service,body and 52.4 50.8 160 51.6 50.6 100 parts

Grossprofit 16.8 15.3 150 16.6 15.6 100 margin



Unit sales

Newvehicle 32,461 44,700 (27.4 )% 65,341 83,173 (21.4 )%retail

Usedvehicle 41,030 41,676 (1.6 ) 81,094 80,967 0.2 retail



Averageselling price

Newvehicle $ 39,366 $ 37,364 5.4 % $ 39,039 $ 37,185 5.0 %retail

Usedvehicle 21,194 20,766 2.1 20,910 20,607 1.5 retail



Averagegross profitper unit

Newvehicle $ 2,625 $ 2,095 25.3 % $ 2,415 $ 2,136 13.1 %retail

Usedvehicle 2,243 2,195 2.2 2,167 2,153 0.7 retail

Financeand 1,590 1,454 9.4 1,573 1,462 7.6 insurance

Totalvehicle^ 4,030 3,618 11.4 3,870 3,622 6.8 (1)

^ Includes the sales and gross profit related to new, used retail, used (1) wholesale and finance and insurance and unit sales for new and used retail

Lithia Motors, Inc.

Other Highlights (Unaudited)

Financial covenants

Requirement As of June 30, 2020

Current ratio Not less than 1.10 to 1 1.37 to 1

Fixed charge coverage ratio Not less than 1.20 to 1 2.78 to 1

Leverage ratio Not more than 5.75 to 1 2.60 to 1

Lithia Motors, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

June 30, December 31, 2020 2019

Cash and cash equivalents $ 120.3 $ 84.0

Trade receivables, net 446.4 505.0

Inventories, net 1,812.8 2,433.7

Other current assets 50.6 47.8

Total current assets $ 2,430.1 $ 3,070.5



Property and equipment, net 1,663.0 1,611.7

Intangibles 947.7 761.3

Other non-current assets 498.2 640.4

Total assets $ 5,539.0 $ 6,083.9



Floor plan notes payable 1,460.6 2,067.6

Other current liabilities 565.8 501.5

Total current liabilities $ 2,026.4 $ 2,569.1



Long-term debt 1,357.9 1,430.6

Other long-term liabilities and deferred 622.5 616.5 revenue

Total liabilities $ 4,006.8 $ 4,616.2



Stockholder's Equity 1,532.2 1,467.7

Total liabilities & stockholders' equity $ 5,539.0 $ 6,083.9

Lithia Motors, Inc.

Summarized Cash Flow from Operations (Unaudited)

(In millions)

Six months ended June 30,

2020 2019

Net income $ 123.9 $ 118.3

Adjustments to reconcile net income to net cash provided by operating activities:

Asset impairments 7.9 0.5

Depreciation and amortization 44.3 40.0

Stock-based compensation 10.0 7.4

Gain on disposal of assets (0.3 ) -

Gain on sale of franchises (1.4 ) 0.3

Deferred income taxes (4.9 ) 7.6

(Increase) decrease:

Trade receivables, net 53.8 40.1

Inventories 624.7 (63.0 )

Other assets (10.6 ) 6.4

Increase (decrease):

Floor plan notes payable, net (130.7 ) 89.7

Trade payables 0.3 3.5

Accrued liabilities 51.1 (8.8 )

Other long-term liabilities and deferred revenue 21.9 2.4

Net cash provided by operating activities $ 790.0 $ 244.4

Lithia Motors, Inc.

Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited)

(In millions)

Six months ended June 30,

Net cash provided by operating activities 2020 2019

As reported $ 790.0 $ 244.4

Floor plan notes payable, non-trade, net (456.8 ) (11.1 )

Less: Borrowings on floor plan notes payable, non-trade (22.3 ) (19.3 )associated with acquired new vehicle inventory

Adjusted $ 310.9 $ 214.0

Lithia Motors, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)

(In millions, except for per share data)

Three Months Ended June 30, 2020

Disposal As gain on Asset Insurance Acquisition Tax Adjusted reported sale impairment reserves expenses attribute of stores

Asset $ 7.9 $ - $ (7.9 ) $ - $ - $ - $ - impairments



Selling,general and 304.5 1.3 - (5.0 ) (0.5 ) - 300.3 administrative



Operating 129.7 (1.3 ) 7.9 5.0 0.5 - 141.8 income



Income before 108.3 (1.3 ) 7.9 5.0 0.5 - 120.4 income taxes

Income tax(provision) (30.6 ) 0.4 (2.3 ) (1.4 ) (0.2 ) (0.8 ) (34.9 )benefit

Net income $ 77.7 $ (0.9 ) $ 5.6 $ 3.6 $ 0.3 $ (0.8 ) $ 85.5



Dilutedearnings per $ 3.38 $ (0.04 ) $ 0.24 $ 0.16 $ 0.01 $ (0.03 ) $ 3.72 share

Diluted share 23.0 count

Three Months Ended June 30, 2019

Disposal As loss Insurance Acquisition reported on sale reserves expenses Adjusted of stores

Selling, generaland $ 356.5 $ (0.4 ) $ (8.4 ) $ (1.5 ) $ 346.2 administrative



Operating income 116.9 0.4 8.4 1.5 127.2



Income before 85.5 0.4 8.4 1.5 95.8 income taxes

Income tax(provision) (23.6 ) (0.1 ) (2.3 ) (0.4 ) (26.4 )benefit

Net income $ 61.9 $ 0.3 $ 6.1 $ 1.1 $ 69.4



Diluted earnings $ 2.63 $ 0.01 $ 0.26 $ 0.05 $ 2.95 per share

Diluted share 23.5 count

Lithia Motors, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (Unaudited)

(In millions, except for per share data)

Six Months Ended June 30, 2020

Disposal As gain on Asset Insurance Acquisition Tax Adjusted reported sale impairment reserves expenses attribute of stores

Asset $ 7.9 $ - $ (7.9 ) $ - $ - $ - $ - impairments



Selling,general and 650.5 1.4 - (5.8 ) (1.0 ) - 645.1 administrative



Operating 222.6 (1.4 ) 7.9 5.8 1.0 - 235.9 income



Income before 172.5 (1.4 ) 7.9 5.8 1.0 - 185.8 income taxes

Income tax(provision) (48.6 ) 0.4 (2.3 ) (1.6 ) (0.3 ) (0.8 ) (53.2 )benefit

Net income $ 123.9 $ (1.0 ) $ 5.6 $ 4.2 $ 0.7 $ (0.8 ) $ 132.6



Dilutedearnings per $ 5.32 $ (0.04 ) $ 0.24 $ 0.18 $ 0.03 $ (0.03 ) $ 5.70 share

Diluted share 23.3 count

Six Months Ended June 30, 2019

Disposal As loss Asset Insurance Acquisition reported on sale impairment reserves expenses Adjusted of stores

Asset $ 0.5 $ - $ (0.5 ) $ - $ - $ - impairments



Selling,general and 678.3 (0.3 ) - (8.4 ) (1.7 ) 667.9 administrative



Operating 225.5 0.3 0.5 8.4 1.7 236.4 income



Income before 163.3 0.3 0.5 8.4 1.7 174.2 income taxes

Income tax(provision) (45.0 ) (0.1 ) (0.1 ) (2.3 ) (0.5 ) (48.0 )benefit

Net income $ 118.3 $ 0.2 $ 0.4 $ 6.1 $ 1.2 $ 126.2



Dilutedearnings per $ 5.08 $ 0.01 $ 0.02 $ 0.26 $ 0.05 $ 5.42 share

Diluted share 23.3 count

Lithia Motors, Inc.

Adjusted EBITDA and Net Debt to Adjusted EBITDA (Unaudited)

(In millions)

Three months ended % Six months ended % June 30, June 30, Increase Increase

2020 2019 (Decrease) 2020 2019 (Decrease)

EBITDA andAdjusted EBITDA

Net income $ 77.7 $ 61.9 25.5 % $ 123.9 $ 118.3 4.7 %

Flooringinterest 8.1 19.4 (58.2 ) 22.1 37.5 (41.1 )expense

Otherinterest 16.8 15.0 12.0 33.8 30.3 11.6 expense

Income tax 30.6 23.6 29.7 48.6 45.0 8.0 expense

Depreciationand 22.3 20.2 10.4 44.3 40.0 10.8 amortization

EBITDA $ 155.5 $ 140.1 11.0 % $ 272.7 $ 271.1 0.6 %



Other adjustments:

Less:flooring $ (8.1 ) $ (19.4 ) (58.2 ) $ (22.1 ) $ (37.5 ) (41.1 )interestexpense

Less: usedvehicle line (0.1 ) (1.1 ) (90.9 ) (0.3 ) (2.7 ) (88.9 )of creditinterest

Add:acquisition 0.5 1.5 (66.7 ) 1.0 1.7 (41.2 )expenses

Less: gainon (1.3 ) 0.4 (425.0 ) (1.4 ) 0.3 (566.7 )divestitures

Add:insurance 5.0 8.4 (40.5 ) 5.8 8.4 (31.0 )reserve

Add: asset 7.9 - NM 7.9 0.5 NMimpairment

Adjusted $ 159.4 $ 129.9 22.7 % $ 263.6 $ 241.8 9.0 %EBITDA

NM - not meaningful

As of %

June 30, Increase

Net Debt to Adjusted EBITDA 2020 2019 (Decrease)

Floor plan notes payable: non-trade $ 1,168.6 $ 1,709.6 (31.6 )%

Floor plan notes payable 292.0 414.1 (29.5 )

Used and service loaner vehicle 40.0 320.0 (87.5 )inventory financing facility

Revolving lines of credit - 104.5 NM

Real estate mortgages 636.9 596.7 6.7

5.250% Senior notes due 2025 300.0 300.0 -

4.625% Senior notes due 2027 400.0 - NM

Other debt 48.0 33.8 42.0

Unamortized debt issuance costs (10.4 ) (5.5 ) 89.1

Total debt $ 2,875.1 $ 3,473.2 (17.2 )%



Less: Floor plan related debt $ (1,500.6 ) $ (2,443.7 ) (38.6 )%

Less: Cash and cash equivalents (120.3 ) (44.7 ) 169.1

Less: Availability on used vehicleand service loaner financing (281.9 ) (1.9 ) NMfacility

Net Debt $ 972.3 $ 982.9 (1.1 )%



TTM Adjusted EBITDA $ 539.7 $ 482.4 11.9 %



Net debt to Adjusted EBITDA 1.80 x 2.04 x (11.8 )%

View source version on businesswire.com: https://www.businesswire.com/news/home/20200722005285/en/

CONTACT: Eric Pitt VP, Investor Relations and Treasurer EPitt@lithia.com (541) 864-1748