Document
false--12-31Q220190001023128240500000262800000720000066000000000100000000250000001000000002500000022000000100000022400000800000220000001000000224000008000000.0525P1Y00300000300000030000000150000001500000000
0001023128
2019-01-01
2019-06-30
0001023128
us-gaap:CommonClassAMember
2019-01-01
2019-06-30
0001023128
us-gaap:CommonClassBMember
2019-01-01
2019-06-30
0001023128
us-gaap:CommonClassBMember
2019-07-26
0001023128
us-gaap:CommonClassAMember
2019-07-26
0001023128
2019-06-30
0001023128
us-gaap:CommonClassAMember
2019-06-30
0001023128
2018-12-31
0001023128
us-gaap:CommonClassAMember
2018-12-31
0001023128
us-gaap:CommonClassBMember
2019-06-30
0001023128
us-gaap:CommonClassBMember
2018-12-31
0001023128
lad:NewVehicleMember
2018-04-01
2018-06-30
0001023128
2018-04-01
2018-06-30
0001023128
2018-01-01
2018-06-30
0001023128
lad:ServiceBodyAndPartsMember
2019-01-01
2019-06-30
0001023128
2019-04-01
2019-06-30
0001023128
lad:ServiceBodyAndPartsMember
2018-04-01
2018-06-30
0001023128
lad:UsedWholesaleVehicleMember
2019-01-01
2019-06-30
0001023128
lad:UsedWholesaleVehicleMember
2019-04-01
2019-06-30
0001023128
lad:FinanceAndInsuranceMember
2019-04-01
2019-06-30
0001023128
lad:NewVehicleMember
2018-01-01
2018-06-30
0001023128
lad:FleetAndOtherMember
2019-04-01
2019-06-30
0001023128
lad:UsedRetailVehicleMember
2018-01-01
2018-06-30
0001023128
lad:ServiceBodyAndPartsMember
2019-04-01
2019-06-30
0001023128
lad:NewVehicleMember
2019-04-01
2019-06-30
0001023128
lad:UsedWholesaleVehicleMember
2018-04-01
2018-06-30
0001023128
lad:NewVehicleMember
2019-01-01
2019-06-30
0001023128
lad:UsedWholesaleVehicleMember
2018-01-01
2018-06-30
0001023128
lad:FleetAndOtherMember
2018-01-01
2018-06-30
0001023128
lad:UsedRetailVehicleMember
2018-04-01
2018-06-30
0001023128
lad:ServiceBodyAndPartsMember
2018-01-01
2018-06-30
0001023128
lad:FleetAndOtherMember
2018-04-01
2018-06-30
0001023128
lad:UsedRetailVehicleMember
2019-04-01
2019-06-30
0001023128
lad:FleetAndOtherMember
2019-01-01
2019-06-30
0001023128
lad:FinanceAndInsuranceMember
2018-04-01
2018-06-30
0001023128
lad:UsedRetailVehicleMember
2019-01-01
2019-06-30
0001023128
lad:FinanceAndInsuranceMember
2018-01-01
2018-06-30
0001023128
lad:FinanceAndInsuranceMember
2019-01-01
2019-06-30
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-01-01
2019-03-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-04-01
2019-06-30
0001023128
us-gaap:RetainedEarningsMember
2019-03-31
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-03-31
0001023128
2019-01-01
2019-03-31
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-12-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2019-06-30
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-03-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-03-31
0001023128
us-gaap:RetainedEarningsMember
2019-04-01
2019-06-30
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-04-01
2019-06-30
0001023128
us-gaap:RetainedEarningsMember
2018-12-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-12-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2019-01-01
2019-03-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2018-12-31
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-01-01
2019-03-31
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2019-06-30
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2019-06-30
0001023128
us-gaap:RetainedEarningsMember
2019-01-01
2019-03-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2019-04-01
2019-06-30
0001023128
us-gaap:AdditionalPaidInCapitalMember
2019-03-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2019-06-30
0001023128
us-gaap:RetainedEarningsMember
2019-06-30
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-12-31
0001023128
2019-03-31
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2017-12-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-04-01
2018-06-30
0001023128
2018-01-01
2018-03-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-01-01
2018-03-31
0001023128
2017-12-31
0001023128
2018-06-30
0001023128
us-gaap:RetainedEarningsMember
2018-01-01
2018-03-31
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-03-31
0001023128
us-gaap:RetainedEarningsMember
2017-12-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2017-12-31
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2017-12-31
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-06-30
0001023128
us-gaap:AdditionalPaidInCapitalMember
2018-04-01
2018-06-30
0001023128
us-gaap:AdditionalPaidInCapitalMember
2018-03-31
0001023128
us-gaap:RetainedEarningsMember
2018-04-01
2018-06-30
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-03-31
0001023128
us-gaap:RetainedEarningsMember
2018-03-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2018-01-01
2018-03-31
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2017-12-31
0001023128
2018-03-31
0001023128
us-gaap:AdditionalPaidInCapitalMember
2018-06-30
0001023128
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2018-06-30
0001023128
us-gaap:CommonClassBMember
us-gaap:CommonStockMember
2018-03-31
0001023128
us-gaap:RetainedEarningsMember
2018-06-30
0001023128
us-gaap:CommonClassAMember
us-gaap:CommonStockMember
2018-06-30
0001023128
us-gaap:AccountingStandardsUpdate201602Member
2019-01-01
0001023128
2019-01-01
0001023128
lad:OtherReceivablesMember
2018-12-31
0001023128
lad:ManufacturerReceivablesMember
2018-12-31
0001023128
lad:VehicleReceivablesMember
2018-12-31
0001023128
lad:ContractsInTransitMember
2018-12-31
0001023128
lad:OtherReceivablesMember
2019-06-30
0001023128
lad:ManufacturerReceivablesMember
2019-06-30
0001023128
lad:AutoLoansReceivablesMember
2019-06-30
0001023128
us-gaap:TradeAccountsReceivableMember
2018-12-31
0001023128
lad:AutoLoansReceivablesMember
2018-12-31
0001023128
lad:VehicleReceivablesMember
2019-06-30
0001023128
lad:ContractsInTransitMember
2019-06-30
0001023128
us-gaap:TradeAccountsReceivableMember
2019-06-30
0001023128
lad:NewVehicleMember
2019-06-30
0001023128
lad:PartsAndAccessoriesMember
2018-12-31
0001023128
lad:UsedVehicleMember
2018-12-31
0001023128
lad:NewVehicleMember
2018-12-31
0001023128
lad:UsedVehicleMember
2019-06-30
0001023128
lad:PartsAndAccessoriesMember
2019-06-30
0001023128
2018-01-01
2018-12-31
0001023128
2008-12-31
0001023128
lad:DomesticMember
2018-01-01
2018-12-31
0001023128
lad:ImportMember
2019-01-01
2019-06-30
0001023128
lad:ImportMember
2019-06-30
0001023128
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
lad:ImportMember
2018-01-01
2018-12-31
0001023128
lad:LuxuryMember
2018-01-01
2018-12-31
0001023128
lad:DomesticMember
2017-12-31
0001023128
lad:ImportMember
2018-12-31
0001023128
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
lad:LuxuryMember
2017-12-31
0001023128
lad:DomesticMember
2019-06-30
0001023128
lad:ImportMember
2017-12-31
0001023128
lad:DomesticMember
2018-12-31
0001023128
lad:LuxuryMember
2019-06-30
0001023128
lad:LuxuryMember
2018-12-31
0001023128
us-gaap:CarryingReportedAmountFairValueDisclosureMember
2018-12-31
0001023128
lad:SeniorNotesDue2025Member
us-gaap:EstimateOfFairValueFairValueDisclosureMember
us-gaap:SeniorNotesMember
2018-12-31
0001023128
lad:SeniorNotesDue2025Member
us-gaap:EstimateOfFairValueFairValueDisclosureMember
us-gaap:SeniorNotesMember
2019-06-30
0001023128
lad:SeniorNotesDue2025Member
us-gaap:CarryingReportedAmountFairValueDisclosureMember
us-gaap:SeniorNotesMember
2018-12-31
0001023128
us-gaap:EstimateOfFairValueFairValueDisclosureMember
lad:RealEstateMortgagesAndOtherDebtMember
2019-06-30
0001023128
us-gaap:EstimateOfFairValueFairValueDisclosureMember
2018-12-31
0001023128
us-gaap:EstimateOfFairValueFairValueDisclosureMember
lad:RealEstateMortgagesAndOtherDebtMember
2018-12-31
0001023128
us-gaap:EstimateOfFairValueFairValueDisclosureMember
2019-06-30
0001023128
us-gaap:CarryingReportedAmountFairValueDisclosureMember
lad:RealEstateMortgagesAndOtherDebtMember
2018-12-31
0001023128
us-gaap:CarryingReportedAmountFairValueDisclosureMember
lad:RealEstateMortgagesAndOtherDebtMember
2019-06-30
0001023128
us-gaap:CarryingReportedAmountFairValueDisclosureMember
2019-06-30
0001023128
lad:SeniorNotesDue2025Member
us-gaap:CarryingReportedAmountFairValueDisclosureMember
us-gaap:SeniorNotesMember
2019-06-30
0001023128
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsRecurringMember
2019-06-30
0001023128
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsRecurringMember
2019-06-30
0001023128
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsRecurringMember
2019-06-30
0001023128
us-gaap:FairValueInputsLevel2Member
us-gaap:FairValueMeasurementsNonrecurringMember
2018-12-31
0001023128
us-gaap:FairValueInputsLevel3Member
us-gaap:FairValueMeasurementsNonrecurringMember
2018-12-31
0001023128
us-gaap:FairValueInputsLevel1Member
us-gaap:FairValueMeasurementsNonrecurringMember
2018-12-31
0001023128
lad:SeniorNotesDue2025Member
us-gaap:SeniorNotesMember
2019-06-30
0001023128
us-gaap:CommonClassAMember
2019-04-01
2019-06-30
0001023128
us-gaap:CommonClassBMember
2018-04-01
2018-06-30
0001023128
us-gaap:CommonClassAMember
2018-04-01
2018-06-30
0001023128
us-gaap:CommonClassBMember
2019-04-01
2019-06-30
0001023128
us-gaap:CommonClassBMember
2018-01-01
2018-06-30
0001023128
us-gaap:CommonClassAMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
us-gaap:MaterialReconcilingItemsMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
lad:CorporateAndEliminationsMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:MaterialReconcilingItemsMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:MaterialReconcilingItemsMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:MaterialReconcilingItemsMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
2018-04-01
2018-06-30
0001023128
lad:CorporateAndEliminationsMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
lad:CorporateAndEliminationsMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
lad:CorporateAndEliminationsMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:LuxuryMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:DomesticMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:LuxuryMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ServiceBodyAndPartsMember
lad:ImportMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:DomesticMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FinanceAndInsuranceMember
lad:DomesticMember
2019-04-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedWholesaleVehicleMember
lad:LuxuryMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:LuxuryMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:ImportMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:NewVehicleMember
lad:ImportMember
2018-01-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:FleetAndOtherMember
lad:DomesticMember
2018-04-01
2018-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:UsedRetailVehicleMember
lad:ImportMember
2019-01-01
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ImportMember
2019-06-30
0001023128
lad:CorporateAndEliminationsMember
2018-12-31
0001023128
lad:CorporateAndEliminationsMember
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:LuxuryMember
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:LuxuryMember
2018-12-31
0001023128
us-gaap:OperatingSegmentsMember
lad:DomesticMember
2018-12-31
0001023128
us-gaap:OperatingSegmentsMember
lad:DomesticMember
2019-06-30
0001023128
us-gaap:OperatingSegmentsMember
lad:ImportMember
2018-12-31
0001023128
srt:MaximumMember
2019-06-30
0001023128
srt:MinimumMember
2019-06-30
0001023128
lad:A2019AcquisitionsMember
2019-06-30
0001023128
lad:A2019AcquisitionsMember
2019-01-01
2019-06-30
0001023128
lad:PrestigeAutoGroupMember
2018-03-01
0001023128
lad:DayAutoGroupMember
2018-02-26
xbrli:shares
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:pure
lad:segment
lad:store
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-14733
LITHIA MOTORS INC
(Exact name of registrant as specified in its charter)
|
| | | |
Oregon | | 93-0572810 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | |
150 N. Bartlett Street | Medford | Oregon | 97501 |
(Address of principal executive offices) | (Zip Code) |
(541) 776-6401
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
| | | | |
Large Accelerated Filer | ☒ | | Accelerated Filer | ☐ |
Non-Accelerated Filer | ☐ | | Smaller Reporting Company | ☐ |
| | | Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
|
| | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered | | Outstanding at July 26, 2019 |
Class A common stock without par value | | LAD | | The New York Stock Exchange | | 22,415,392 |
Class B common stock without par value | | LAD | | The New York Stock Exchange | | 800,000 |
LITHIA MOTORS, INC.
FORM 10-Q
INDEX
|
| | |
PART I - FINANCIAL INFORMATION | Page |
| | |
Item 1. | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - Three and Six Months Ended June 30, 2019, and 2018 | |
| | |
| Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30, 2019 and 2018 | |
| | |
| | |
| | |
Item 2. | | |
| | |
Item 3. | | |
| | |
Item 4. | | |
| | |
PART II - OTHER INFORMATION | |
| | |
Item 1. | Legal Proceedings | |
| | |
Item 1A. | | |
| | |
Item 2. | | |
| | |
Item 6. | | |
| | |
| | |
|
| | | | | | | | |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In millions) (Unaudited) |
| | June 30, 2019 | | December 31, 2018 |
Assets | | | | |
Current Assets: | | | | |
Cash and cash equivalents | | $ | 44.7 |
| | $ | 31.6 |
|
Accounts receivable, net of allowance for doubtful accounts of $6.6 and $7.2 | | 489.2 |
| | 529.4 |
|
Inventories, net | | 2,431.9 |
| | 2,365.3 |
|
Other current assets | | 65.7 |
| | 65.1 |
|
Total Current Assets | | 3,031.5 |
| | 2,991.4 |
|
| | | | |
Property and equipment, net of accumulated depreciation of $262.8 and $240.5 | | 1,463.0 |
| | 1,448.0 |
|
Operating lease right-of-use assets | | 255.0 |
| | — |
|
Goodwill | | 457.3 |
| | 434.9 |
|
Franchise value | | 309.1 |
| | 288.7 |
|
Other non-current assets | | 258.7 |
| | 221.0 |
|
Total Assets | | $ | 5,774.6 |
| | $ | 5,384.0 |
|
| | | | |
Liabilities and Stockholders' Equity | | | | |
Current Liabilities: | | | | |
Floor plan notes payable | | $ | 414.1 |
| | $ | 324.4 |
|
Floor plan notes payable: non-trade | | 1,709.6 |
| | 1,733.3 |
|
Current maturities of long-term debt | | 25.4 |
| | 25.9 |
|
Trade payables | | 129.4 |
| | 126.3 |
|
Accrued liabilities | | 326.8 |
| | 283.6 |
|
Total Current Liabilities | | 2,605.3 |
| | 2,493.5 |
|
| | | | |
Long-term debt, less current maturities | | 1,324.1 |
| | 1,358.2 |
|
Deferred revenue | | 129.3 |
| | 121.7 |
|
Deferred income taxes | | 98.5 |
| | 91.2 |
|
Noncurrent operating lease liabilities | | 240.3 |
| | — |
|
Other long-term liabilities | | 102.4 |
| | 122.2 |
|
Total Liabilities | | 4,499.9 |
| | 4,186.8 |
|
| | | | |
Stockholders' Equity: | | | | |
Preferred stock - no par value; authorized 15.0 shares; none outstanding | | — |
| | — |
|
Class A common stock - no par value; authorized 100.0 shares; issued and outstanding 22.4 and 22.0 | | 13.0 |
| | — |
|
Class B common stock - no par value; authorized 25.0 shares; issued and outstanding 0.8 and 1.0 | | 0.1 |
| | 0.1 |
|
Additional paid-in capital | | — |
| | 35.0 |
|
Accumulated other comprehensive loss | | (0.9 | ) | | — |
|
Retained earnings | | 1,262.5 |
| | 1,162.1 |
|
Total Stockholders' Equity | | 1,274.7 |
| | 1,197.2 |
|
Total Liabilities and Stockholders' Equity | | $ | 5,774.6 |
| | $ | 5,384.0 |
|
See accompanying condensed notes to consolidated financial statements.
|
| | | | | | | | | | | | | | | | |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In millions, except per share amounts) (Unaudited) |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2019 | | 2018 | | 2019 | | 2018 |
Revenues: | | | | | | | | |
New vehicle | | $ | 1,707.4 |
| | $ | 1,726.8 |
| | $ | 3,168.5 |
| | $ | 3,181.5 |
|
Used vehicle retail | | 888.3 |
| | 804.1 |
| | 1,716.2 |
| | 1,519.7 |
|
Used vehicle wholesale | | 81.7 |
| | 85.3 |
| | 159.1 |
| | 161.3 |
|
Finance and insurance | | 129.0 |
| | 114.5 |
| | 246.5 |
| | 221.0 |
|
Service, body and parts | | 335.5 |
| | 311.4 |
| | 652.9 |
| | 597.1 |
|
Fleet and other | | 79.8 |
| | 54.4 |
| | 128.2 |
| | 75.6 |
|
Total revenues | | 3,221.7 |
| | 3,096.5 |
| | 6,071.4 |
| | 5,756.2 |
|
Cost of sales: | | | | | | | | |
New vehicle | | 1,612.0 |
| | 1,625.3 |
| | 2,987.2 |
| | 2,993.1 |
|
Used vehicle retail | | 795.1 |
| | 717.0 |
| | 1,538.4 |
| | 1,359.0 |
|
Used vehicle wholesale | | 79.9 |
| | 83.4 |
| | 156.4 |
| | 158.4 |
|
Service, body and parts | | 165.2 |
| | 157.7 |
| | 323.1 |
| | 305.0 |
|
Fleet and other | | 75.9 |
| | 52.4 |
| | 122.0 |
| | 71.9 |
|
Total cost of sales | | 2,728.1 |
| | 2,635.8 |
| | 5,127.1 |
| | 4,887.4 |
|
Gross profit | | 493.6 |
| | 460.7 |
| | 944.3 |
| | 868.8 |
|
Asset impairments | | — |
| | — |
| | 0.5 |
| | — |
|
Selling, general and administrative | | 356.5 |
| | 333.3 |
| | 678.3 |
| | 630.8 |
|
Depreciation and amortization | | 20.2 |
| | 18.8 |
| | 40.0 |
| | 35.7 |
|
Operating income | | 116.9 |
| | 108.6 |
| | 225.5 |
| | 202.3 |
|
Floor plan interest expense | | (19.4 | ) | | (15.6 | ) | | (37.5 | ) | | (29.2 | ) |
Other interest expense, net | | (15.0 | ) | | (13.8 | ) | | (30.3 | ) | | (25.6 | ) |
Other income, net | | 3.0 |
| | 1.6 |
| | 5.6 |
| | 3.0 |
|
Income before income taxes | | 85.5 |
| | 80.8 |
| | 163.3 |
| | 150.5 |
|
Income tax provision | | (23.6 | ) | | (20.1 | ) | | (45.0 | ) | | (37.8 | ) |
Net income | | $ | 61.9 |
| | $ | 60.7 |
| | $ | 118.3 |
| | $ | 112.7 |
|
| | | | | | | | |
Basic net income per share | | $ | 2.65 |
| | $ | 2.45 |
| | $ | 5.10 |
| | $ | 4.52 |
|
Shares used in basic per share calculations | | 23.4 |
| | 24.8 |
| | 23.2 |
| | 24.9 |
|
| | | | | | | | |
Diluted net income per share | | $ | 2.63 |
| | $ | 2.44 |
| | $ | 5.08 |
| | $ | 4.50 |
|
Shares used in diluted per share calculations | | 23.5 |
| | 24.9 |
| | 23.3 |
| | 25.0 |
|
| | | | | | | | |
Cash dividends paid per Class A and Class B share | | $ | 0.30 |
| | $ | 0.29 |
| | $ | 0.59 |
| | $ | 0.56 |
|
See accompanying condensed notes to consolidated financial statements.
|
| | | | | | | | | | | | | | | | |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In millions) (Unaudited) |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2019 | | 2018 | | 2019 | | 2018 |
Net income | | $ | 61.9 |
| | $ | 60.7 |
| | $ | 118.3 |
| | $ | 112.7 |
|
Other comprehensive income, net of tax: | | | | | |
| |
|
Loss on cash flow hedges, net of tax expense of $0.3, $0.0, $0.3, and $0.0, respectively | | (0.9 | ) | | — |
| | (0.9 | ) | | — |
|
Comprehensive income | | $ | 61.0 |
| | $ | 60.7 |
| | $ | 117.4 |
| | $ | 112.7 |
|
See accompanying condensed notes to consolidated financial statements.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity (In millions) (Unaudited) |
Three and Six Months Ended June 30, 2019 |
| Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders' Equity |
| Class A | | Class B | |
| Shares | | Amount | | Shares | | Amount | |
Balance at December 31, 2018 | 22.0 |
| | $ | — |
| | 1.0 |
| | $ | 0.1 |
| | $ | 35.0 |
| | $ | — |
| | $ | 1,162.1 |
| | $ | 1,197.2 |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 56.4 |
| | 56.4 |
|
Issuance of stock in connection with employee stock plans | — |
| | 2.3 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2.3 |
|
Issuance of restricted stock to employees | 0.1 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Repurchase of Class A common stock | — |
| | (3.1 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (3.1 | ) |
Class B common stock converted to Class A common stock | 0.2 |
| | — |
| | (0.2 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — |
| | 10.5 |
| | — |
| | — |
| | (7.0 | ) | | — |
| | — |
| | 3.5 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (6.7 | ) | | (6.7 | ) |
Retained Earnings Adjustment for Adoption of ASC 842 | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 0.9 |
| | 0.9 |
|
Balance at March 31, 2019 | 22.3 |
| | 9.7 |
| | 0.8 |
| | 0.1 |
| | 28.0 |
| | $ | — |
| | 1,212.7 |
| | 1,250.5 |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 61.9 |
| | 61.9 |
|
Loss on cash flow hedges, net of tax expense of $0.3 | — |
| | — |
| | — |
| | — |
| | — |
| | (0.9 | ) | | — |
| | (0.9 | ) |
Issuance of stock in connection with employee stock plans | 0.1 |
| | 2.8 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2.8 |
|
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — |
| | 0.5 |
| | — |
| | — |
| | 3.4 |
| | — |
| | — |
| | 3.9 |
|
Option premiums paid | — |
| | — |
| | — |
| | — |
| | (31.4 | ) | | — |
| | (5.1 | ) | | (36.5 | ) |
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (7.0 | ) | | (7.0 | ) |
Balance at June 30, 2019 | 22.4 |
| | $ | 13.0 |
| | 0.8 |
| | $ | 0.1 |
| | $ | — |
| | $ | (0.9 | ) | | $ | 1,262.5 |
| | $ | 1,274.7 |
|
See accompanying condensed notes to consolidated financial statements.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity (In millions) (Unaudited) |
Three and Six Months Ended June 30, 2018 |
| Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders' Equity |
| Class A | | Class B | |
| Shares | | Amount | | Shares | | Amount | |
Balance at December 31, 2017 | 23.9 |
| | $ | 149.1 |
| | 1.0 |
| | $ | 0.1 |
| | $ | 11.3 |
| | — |
| | $ | 922.7 |
| | $ | 1,083.2 |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 52.1 |
| | 52.1 |
|
Issuance of stock in connection with employee stock plans | — |
| | 1.8 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1.8 |
|
Issuance of restricted stock to employees | 0.1 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Repurchase of Class A common stock | (0.1 | ) | | (8.2 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (8.2 | ) |
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — |
| | 0.3 |
| | — |
| | — |
| | 3.3 |
| | — |
| | — |
| | 3.6 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (6.8 | ) | | (6.8 | ) |
Retained earnings adjustment for adoption of ASC 606 | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1.4 |
| | 1.4 |
|
Balance at March 31, 2018 | 23.9 |
| | 143.0 |
| | 1.0 |
| | 0.1 |
| | 14.6 |
| | — |
| | 969.4 |
| | 1,127.1 |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 60.7 |
| | 60.7 |
|
Issuance of stock in connection with employee stock plans | 0.1 |
| | 2.7 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2.7 |
|
Repurchase of Class A common stock | (0.6 | ) | | (59.1 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | (59.1 | ) |
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — |
| | 7.8 |
| | — |
| | — |
| | (4.5 | ) | | — |
| | — |
| | 3.3 |
|
Option premiums received (paid) | — |
| | — |
| | — |
| | — |
| | 33.4 |
| | — |
| | — |
| | 33.4 |
|
Dividends paid | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (7.2 | ) | | (7.2 | ) |
Balance at June 30, 2018 | 23.4 |
| | $ | 94.4 |
| | 1.0 |
| | $ | 0.1 |
| | $ | 43.5 |
| | $ | — |
| | $ | 1,022.9 |
| | $ | 1,160.9 |
|
See accompanying condensed notes to consolidated financial statements.
|
| | | | | | | | |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In millions) (Unaudited) |
| | Six Months Ended June 30, |
| | 2019 | | 2018 |
Cash flows from operating activities: | | | | |
Net income | | $ | 118.3 |
| | $ | 112.7 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Asset impairments | | 0.5 |
| | — |
|
Depreciation and amortization | | 40.0 |
| | 35.7 |
|
Stock-based compensation | | 7.4 |
| | 6.8 |
|
Gain on disposal of other assets | | — |
| | (0.1 | ) |
Loss on disposal of franchise | | 0.3 |
| | 0.4 |
|
Deferred income taxes | | 7.6 |
| | 0.3 |
|
(Increase) decrease (net of acquisitions and dispositions): | | | | |
Accounts receivable, net | | 40.1 |
| | 47.9 |
|
Inventories | | (63.0 | ) | | (35.5 | ) |
Other assets | | 6.4 |
| | 20.6 |
|
Increase (decrease) (net of acquisitions and dispositions): | | | | |
Floor plan notes payable | | 89.7 |
| | 15.1 |
|
Trade payables | | 3.5 |
| | 2.9 |
|
Accrued liabilities | | (8.8 | ) | | 5.5 |
|
Other long-term liabilities and deferred revenue | | 2.4 |
| | 24.0 |
|
Net cash provided by operating activities | | 244.4 |
| | 236.3 |
|
| | | | |
Cash flows from investing activities: | | | | |
Capital expenditures | | (57.8 | ) | | (72.4 | ) |
Proceeds from sales of assets | | 0.8 |
| | 1.8 |
|
Cash paid for other investments | | (6.7 | ) | | (7.1 | ) |
Cash paid for acquisitions, net of cash acquired | | (75.0 | ) | | (374.6 | ) |
Proceeds from sales of stores | | 28.9 |
| | 0.8 |
|
Net cash used in investing activities | | (109.8 | ) | | (451.5 | ) |
| | | | |
Cash flows from financing activities: | | | | |
(Repayments) borrowings on floor plan notes payable, net: non-trade | | (11.1 | ) | | 85.8 |
|
Borrowings on lines of credit | | 1,411.0 |
| | 1,353.3 |
|
Repayments on lines of credit | | (1,450.0 | ) | | (1,254.1 | ) |
Principal payments on long-term debt and capital leases, scheduled | | (12.0 | ) | | (9.6 | ) |
Principal payments on long-term debt and capital leases, other | | (11.0 | ) | | (5.3 | ) |
Proceeds from issuance of long-term debt | | — |
| | 62.1 |
|
Payments of debt issuance costs | | (0.2 | ) | | (0.2 | ) |
Proceeds from issuance of common stock | | 5.1 |
| | 4.5 |
|
Repurchase of common stock | | (3.1 | ) | | (33.9 | ) |
Dividends paid | | (13.7 | ) | | (13.9 | ) |
Payments of contingent consideration related to acquisitions | | — |
| | (0.8 | ) |
Other financing activity | | (36.5 | ) | | — |
|
Net cash (used in) provided by financing activities | | (121.5 | ) | | 187.9 |
|
Increase (decrease) in cash and cash equivalents | | 13.1 |
| | (27.3 | ) |
Cash and cash equivalents at beginning of period | | 31.6 |
| | 57.3 |
|
Cash and cash equivalents at end of period | | $ | 44.7 |
| | $ | 30.0 |
|
| | | | |
Supplemental disclosure of cash flow information: | | | | |
Cash paid during the period for interest | | $ | 69.5 |
| | $ | 54.7 |
|
Cash paid during the period for income taxes, net | | 7.2 |
| | 2.3 |
|
Floor plan debt paid in connection with store disposals | | 4.8 |
| | 5.2 |
|
| | | | |
Supplemental schedule of non-cash activities: | | | | |
Debt issued in connection with acquisitions | | $ | 26.4 |
| | $ | 125.1 |
|
Debt assumed in connection with acquisitions | | — |
| | 10.8 |
|
ROU assets obtained in exchange for lease liabilities 1 | | 260.3 |
| | — |
|
1
See accompanying condensed notes to consolidated financial statements.
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Interim Financial Statements
Basis of Presentation
These condensed Consolidated Financial Statements contain unaudited information as of June 30, 2019, and for the three and six months ended June 30, 2019 and 2018. The unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America for annual financial statements are not included herein. In management’s opinion, these unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our 2018 audited Consolidated Financial Statements and the related notes thereto. The financial information as of December 31, 2018, is derived from our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2019. The unaudited interim condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in our 2018 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.
In 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet, as right-of-use assets with corresponding operating lease liabilities. In July 2018, the FASB issued ASU No. 2018-11, "Targeted Improvements - Leases (Topic 842)." This update provides an optional transition method that allows entities to elect to apply the standard using the modified retrospective approach at its effective date, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. We adopted the new standard as of January 1, 2019 using the transition method that provides for a cumulative-effect adjustment to retained earnings upon adoption. The Consolidated Financial Statements for the three and six-month periods ended June 30, 2019 are presented under the new standard, while comparative years presented are not adjusted and continue to be reported in accordance with our historical accounting policy. We elected the package of practical expedients, which permits us to not reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected the short-term lease recognition exemption for all leases that qualify. We have both real estate leases and equipment leases that are impacted by the new guidance. Most of our leases do not provide an implicit rate, therefore we use our incremental borrowing rate at the commencement date in determining the present value of lease payments. Adoption of the new standard resulted in the derecognition of a deferred gain from prior completed sale-leaseback transactions. This adjustment, net of tax, was recorded as $0.9 million increase in retained earnings. See Note 10.
The impact of adopting Topic 842 on the accompanying Condensed Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions):
|
| | | | | | | | | | | | |
Impact on Consolidated Balance Sheets | | December 31, 2018 | | Adjustments | | January 1, 2019 |
Operating lease right-of-use assets | | $ | — |
| | $ | 259.7 |
| | $ | 259.7 |
|
Total Assets | | 5,384.0 |
| | 259.7 |
| | 5,643.7 |
|
Operating lease liabilities: | | | | | |
|
|
Accrued liabilities | | 283.6 |
| | 26.6 |
| | 310.2 |
|
Deferred revenue | | 121.7 |
| | (1.3 | ) | | 120.4 |
|
Noncurrent operating lease liabilities | | — |
| | 243.9 |
| | 243.9 |
|
Other long-term liabilities | | 122.2 |
| | (10.3 | ) | | 111.9 |
|
Total Liabilities | | 4,186.8 |
| | 258.8 |
| | 4,445.6 |
|
Retained earnings | | 1,162.1 |
| | 0.9 |
| | 1,163.0 |
|
Total Liabilities and Stockholders' Equity | | 5,384.0 |
| | 259.7 |
| | 5,643.7 |
|
Reclassifications
Certain immaterial reclassifications of amounts previously reported have been made to the accompanying condensed Consolidated Financial Statements to maintain consistency and comparability between periods presented.
Note 2. Contract Liabilities and Assets
Contract Liabilities
We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $160.7 million and $149.6 million as of June 30, 2019, and December 31, 2018, respectively; and we recognized $6.2 million and $12.1 million of revenue in the three and six months ended June 30, 2019, respectively, related to our contract liability balance at December 31, 2018. Our contract liability balance is included in accrued liabilities and deferred revenue.
Contract Assets
Revenue from finance and insurance sales is recognized, net of estimated charge-backs, at the time of the sale of the related vehicle. We act as an agent in the sale of these contracts as the pricing is set by the third-party provider, and our commission is preset. A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and is estimated and recognized upon the sale of the contract. Our contract asset balances associated with future estimated variable consideration were $8.9 million and $9.2 million as of June 30, 2019 and December 31, 2018, respectively; and are included in trade receivables and other non-current assets.
Note 3. Accounts Receivable and Contract Assets
Accounts receivable consisted of the following (in millions):
|
| | | | | | | | |
| | June 30, 2019 | | December 31, 2018 |
Contracts in transit | | $ | 254.5 |
| | $ | 294.0 |
|
Trade receivables | | 54.4 |
| | 54.3 |
|
Vehicle receivables | | 57.8 |
| | 51.6 |
|
Manufacturer receivables | | 102.4 |
| | 105.5 |
|
Auto loan receivables | | 61.1 |
| | 61.5 |
|
Other receivables | | 3.2 |
| | 6.8 |
|
| | 533.4 |
|
| 573.7 |
|
Less: Allowance for doubtful accounts | | (6.6 | ) | | (7.2 | ) |
Less: Long-term portion of accounts receivable, net | | (37.6 | ) | | (37.1 | ) |
Total accounts receivable, net | | $ | 489.2 |
|
| $ | 529.4 |
|
Accounts receivable classifications include the following:
| |
• | Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received approximately ten days after selling a vehicle. |
| |
• | Trade receivables are comprised of amounts due from customers for open charge accounts, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products. |
| |
• | Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer. |
| |
• | Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives and warranty claims. |
| |
• | Auto loan receivables include amounts due from customers related to retail sales of vehicles and certain finance and insurance products. |
Interest income on auto loan receivables is recognized based on the contractual terms of each loan and is accrued until repayment, charge-off, or repossession. Direct costs associated with loan originations are capitalized and expensed as an offset to interest income when recognized on the loans. All other receivables are recorded at invoice and do not bear interest until they are 60 days past due.
The allowance for doubtful accounts is estimated based on our historical write-off experience and is reviewed monthly. Consideration is given to recent delinquency trends and recovery rates. Account balances are charged against the allowance after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. The annual activity for charges and subsequent recoveries is immaterial.
The long-term portion of accounts receivable was included as a component of other non-current assets in the Consolidated Balance Sheets.
Note 4. Inventories
The components of inventories, net, consisted of the following (in millions):
|
| | | | | | | | |
| | June 30, 2019 | | December 31, 2018 |
New vehicles | | $ | 1,751.3 |
| | $ | 1,700.1 |
|
Used vehicles | | 591.5 |
| | 576.8 |
|
Parts and accessories | | 89.1 |
| | 88.4 |
|
Total inventories | | $ | 2,431.9 |
| | $ | 2,365.3 |
|
Note 5. Goodwill and Franchise Value
The changes in the carrying amounts of goodwill are as follows (in millions):
|
| | | | | | | | | | | | | | | | |
| | Domestic | | Import | | Luxury | | Consolidated |
Balance as of December 31, 2017 ¹ | | $ | 114.0 |
| | $ | 104.3 |
| | $ | 38.0 |
| | $ | 256.3 |
|
Additions through acquisitions 2 | | 51.4 |
| | 85.8 |
| | 43.5 |
| | 180.7 |
|
Reductions through divestitures | | (0.9 | ) | | (1.2 | ) | | — |
| | (2.1 | ) |
Balance as of December 31, 2018 ¹ | | 164.5 |
| | 188.9 |
| | 81.5 |
| | 434.9 |
|
Adjustments to purchase price allocations 3 | | 1.6 |
| | 1.6 |
| | 1.9 |
| | 5.1 |
|
Additions through acquisitions 3 | | 6.2 |
| | 9.0 |
| | 2.2 |
| | 17.4 |
|
Reductions through divestitures | | (0.1 | ) | | — |
| | — |
| | (0.1 | ) |
Balance as of June 30, 2019 1 | | $ | 172.2 |
| | $ | 199.5 |
| | $ | 85.6 |
| | $ | 457.3 |
|
1 Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008.
2 Our purchase price allocation for the 2017 acquisitions of the Baierl Auto Group, the Downtown LA Auto Group, Crater Lake Ford Lincoln, Crater Lake Mazda, Albany CJD Fiat and the 2018 acquisition of Broadway Ford were finalized in 2018. Also, our purchase price allocation for the 2018 acquisition of Prestige Auto Group was preliminary and was allocated to our segments in 2018. As a result, we added $180.7 million of goodwill.
3 Our purchase price allocation for the acquisitions of the Ray Laks Honda, Ray Laks Acura, Day Auto Group, Prestige Auto Group, and Buhler Ford were finalized in 2019. As a result, we added $22.5 million of goodwill.
The changes in the carrying amounts of franchise value are as follows (in millions):
|
| | | |
| Franchise Value |
Balance as of December 31, 2017 | $ | 187.0 |
|
Additions through acquisitions 1 | 103.5 |
|
Reductions through divestitures | (1.8 | ) |
Balance as of December 31, 2018 | 288.7 |
|
Adjustments to purchase price allocations 2 | 3.5 |
|
Additions through acquisitions 2 | 20.9 |
|
Reductions through divestitures | (4.0 | ) |
Balance as of June 30, 2019 | $ | 309.1 |
|
1 Our purchase price allocation for the 2017 acquisitions of the Baierl Auto Group, the Downtown LA Auto Group, Crater Lake Ford Lincoln, Crater Lake Mazda, Albany CJD Fiat and the 2018 acquisition of Broadway Ford were finalized in 2018. Also, our purchase price allocation for the 2018 acquisition of Prestige Auto Group was preliminary and was allocated to our segments in 2018. As a result, we added $103.5 million of franchise value.
2 Our purchase price allocation for the acquisitions of the Ray Laks Honda, Ray Laks Acura, Day Auto Group, Prestige Auto Group, and Buhler Ford were finalized in 2019. As a result, we added $24.4 million of franchise value.
Note 6. Stockholders’ Equity
Repurchases of Class A Common Stock
In May 2019, we entered into a structured repurchase agreement involving the use of capped call options for the purchase of our Class A common stock. We paid a fixed sum upon execution of the agreement in exchange for the right to receive either a pre-determined amount of cash or stock. Upon expiration of the agreement, if the closing market price of our common stock is above the pre-determined price, we will have our initial investment returned with a premium in either cash or Class A shares (at our election). If the closing market price of our common stock is at or below the pre-determined price, we will receive the number of shares specified in the agreement. We paid a net premium of $36.5 million in the second quarter of 2019 to enter into this agreement, which was recorded as a reduction of additional paid-in-capital and retained earnings. As of June 30, 2019, the options were outstanding.
Note 7. Fair Value Measurements
Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:
| |
• | Level 1 - quoted prices in active markets for identical securities; |
| |
• | Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and |
| |
• | Level 3 - significant unobservable inputs, including our own assumptions in determining fair value. |
We determined the carrying value of cash equivalents, accounts receivable, trade payables, accrued liabilities and short-term borrowings approximate their fair values because of the nature of their terms and current market rates of these instruments. We believe the carrying value of our variable rate debt approximates fair value.
We have fixed rate debt primarily consisting of amounts outstanding under our senior notes and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1) and calculated the estimated fair value of the fixed rate real estate mortgages using a discounted cash flow methodology with estimated current interest rates based on a similar risk profile and duration (Level 2). The fixed cash flows are discounted and summed to compute the fair value of the debt. As of June 30, 2019, our real estate mortgages and other debt, which includes capital leases, had maturity dates between October 1, 2020, and August 31, 2038.
We have derivative instruments consisting of interest rate collars. The fair value of derivative liabilities is measured using observable Level 2 market expectations at each measurement date and is recorded as current liabilities and other long-term liabilities in the Consolidated Balance Sheets. See Note 11 for more details regarding our derivative contracts.
We estimate the value of other long-lived assets that are recorded at fair value on a non-recurring basis on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. Real estate appraisers' and brokers' valuations are typically developed using one or more valuation techniques including market, income and replacement cost approaches. Because these valuations contain unobservable inputs, we classified the measurement of fair value of long-lived assets as Level 3.
There were no changes to our valuation techniques during the six-month period ended June 30, 2019.
Below are our derivative liabilities that are measured at fair value (in millions):
|
| | | | | | | | | | | | |
Fair Value at June 30, 2019 | | Level 1 | | Level 2 | | Level 3 |
Measured on a recurring basis: | | | | | | |
Derivative contract, net | | $ | — |
| | $ | 1.2 |
| | $ | — |
|
A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows (in millions):
|
| | | | | | | | |
| | June 30, 2019 | | December 31, 2018 |
Carrying value | | | | |
5.25% Senior notes due 2025 | | $ | 300.0 |
| | $ | 300.0 |
|
Real estate mortgages and other debt | | 456.5 |
| | 445.8 |
|
| | $ | 756.5 |
|
| $ | 745.8 |
|
Fair value | | | | |
5.25% Senior notes due 2025 | | $ | 306.4 |
| | $ | 278.6 |
|
Real estate mortgages and other debt | | 457.7 |
| | 448.7 |
|
| | $ | 764.1 |
| | $ | 727.3 |
|
Below are our long-lived assets that were measured at fair value (in millions):
|
| | | | | | | | | | | | |
Fair Value at December 31, 2018 | | Level 1 | | Level 2 | | Level 3 |
Measured on a non-recurring basis: | | | | | | |
Long-lived assets held and used: | | | | | | |
Certain buildings and improvements | | $ | — |
| | $ | — |
| | $ | 2.3 |
|
Long-lived assets held and used are reviewed for impairment whenever events or circumstances indicate that the carrying amount of the assets may not be recoverable. During the six months ended June 30, 2019, we evaluated the future undiscounted net cash flows associated with certain properties, which were under contract to sell, and determined the carrying value was not recoverable and exceeded the estimated fair value. As a result of this evaluation, we recorded $0.5 million of impairment charges associated with a property in 2019. The long-lived asset impaired in the first quarter of 2019 was sold in the second quarter of 2019.
Note 8. Net Income Per Share of Class A and Class B Common Stock
We compute net income per share of Class A and Class B common stock using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding common shares underlying equity awards that are unvested or subject to forfeiture. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the common shares issuable upon the net exercise of stock options and unvested RSUs and is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net income per share of Class B common stock does not assume the conversion of those shares.
Except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock are identical. Under our Articles of Incorporation, the Class A and Class B common stock share equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the shareholders. Additionally, Oregon law provides that amendments to our Articles of Incorporation that would adversely alter the rights, powers or preferences of a given class of stock, must be approved by the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis.
Following is a reconciliation of net income and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in millions, except per share amounts):