UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR (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 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents Lithia Motors, Inc.'s unaudited consolidated financial statements and management's discussion for Q1 2021, detailing financial position, performance, cash flows, and equity [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This item presents the unaudited consolidated balance sheets, statements of operations, comprehensive income, equity changes, and cash flows, with condensed notes [Consolidated Balance Sheets (Unaudited) - March 31, 2021, and December 31, 2020](index=3&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)%20-%20March%2031%2C%202021%2C%20and%20December%2031%2C%202020) The consolidated balance sheets show the company's financial position at March 31, 2021, and December 31, 2020, highlighting increases in total assets and stockholders' equity, driven by growth in accounts receivable and other non-current assets, while inventories decreased Consolidated Balance Sheet Highlights (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | Total assets | $8,251.6 | $7,902.1 | +$349.5 | | Total liabilities | $5,444.0 | $5,240.6 | +$203.4 | | Total stockholders' equity | $2,807.6 | $2,661.5 | +$146.1 | | Cash and cash equivalents | $170.3 | $160.2 | +$10.1 | | Accounts receivable, net | $740.7 | $614.0 | +$126.7 | | Inventories, net | $2,329.7 | $2,492.9 | -$163.2 | | Other non-current assets | $1,497.5 | $1,159.8 | +$337.7 | | Floor plan notes payable | $341.5 | $234.2 | +$107.3 | | Floor plan notes payable: non-trade | $1,480.7 | $1,563.0 | -$82.3 | [Consolidated Statements of Operations (Unaudited) - Three Months Ended March 31, 2021 and 2020](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)%20-%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) The consolidated statements of operations show significant revenue and net income growth for the three months ended March 31, 2021, compared to the same period in 2020, driven by strong performance across all revenue streams, particularly new and used vehicle retail sales, and improved gross profit margins Consolidated Statements of Operations Highlights (in millions, except per share amounts) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | % Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Total revenues | $4,343.0 | $2,803.8 | +$1,539.2 | +54.9% | | Gross profit | $715.5 | $460.9 | +$254.6 | +55.2% | | Operating income | $238.3 | $92.9 | +$145.4 | +156.5% | | Net income | $156.2 | $46.2 | +$110.0 | +238.1% | | Basic net income per share | $5.86 | $1.99 | +$3.87 | +194.5% | | Diluted net income per share | $5.81 | $1.97 | +$3.84 | +194.9% | | Cash dividends paid per share | $0.31 | $0.30 | +$0.01 | +3.3% | [Consolidated Statements of Comprehensive Income (Unaudited) – Three Months Ended March 31, 2021 and 2020](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) The consolidated statements of comprehensive income show a substantial increase in comprehensive income for the three months ended March 31, 2021, primarily due to higher net income and a positive gain on cash flow hedges, contrasting with a loss in the prior year Consolidated Statements of Comprehensive Income (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net income | $156.2 | $46.2 | +$110.0 | | Gain (loss) on cash flow hedges, net of tax | $1.8 | $(5.1) | +$6.9 | | Comprehensive income | $158.0 | $41.1 | +$116.9 | [Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - Three Months Ended March 31, 2021 and 2020](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)%20-%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Stockholders' equity significantly increased from $2,661.5 million at the beginning of the period to $2,807.6 million by March 31, 2021, primarily driven by net income and compensation for stock issuances, partially offset by share repurchases and dividends paid Changes in Stockholders' Equity (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | Total stockholders' equity, beginning balances | $2,661.5 | $1,467.7 | +$1,193.8 | | Net income | $156.2 | $46.2 | +$110.0 | | Dividends paid | $(8.2) | $(7.0) | $(1.2) | | Repurchase of Class A common stock | $(15.9) | $(32.0) | +$16.1 | | Total stockholders' equity, ending balances | $2,807.6 | $1,456.5 | +$1,351.1 | [Consolidated Statements of Cash Flows (Unaudited) - Three Months Ended March 31, 2021 and 2020](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20-%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) The company generated substantial cash from operating activities, $496.4 million, for the three months ended March 31, 2021, a significant increase from the prior year, which was largely used for investing activities, particularly acquisitions, and partially offset by cash used in financing activities Consolidated Statements of Cash Flows (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $496.4 | $121.7 | +$374.7 | | Net cash used in investing activities | $(442.8) | $(118.3) | $(324.5) | | Net cash used in financing activities | $(43.5) | $(30.8) | $(12.7) | | Increase (decrease) in cash and cash equivalents | $10.1 | $(27.4) | +$37.5 | | Cash and cash equivalents at end of period | $170.3 | $56.6 | +$113.7 | [Condensed Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations and disclosures for the unaudited interim financial statements, covering accounting policies, specific balance sheet and income statement items, segment information, fair value measurements, and recent accounting pronouncements and subsequent events - Interim financial statements are unaudited and prepared under Form **10-Q** rules, with certain annual disclosures omitted[15](index=15&type=chunk) - Results for interim periods are **not indicative** of full-year performance[15](index=15&type=chunk) [Note 1. Interim Financial Statements](index=8&type=section&id=Note%201.%20Interim%20Financial%20Statements) This note clarifies the basis of presentation for the unaudited interim financial statements, stating they comply with Form 10-Q regulations and include only normal recurring adjustments, with results not necessarily indicative of the full year - Unaudited interim financial statements as of **March 31, 2021**, and for the **three months** ended **March 31, 2021** and **2020**[15](index=15&type=chunk) - Prepared pursuant to Form **10-Q** rules, omitting certain GAAP disclosures required for annual statements[15](index=15&type=chunk) - Results for interim periods are **not necessarily indicative** of full-year results[15](index=15&type=chunk) [Note 2. Contract Liabilities and Assets](index=8&type=section&id=Note%202.%20Contract%20Liabilities%20and%20Assets) The company's contract liabilities, primarily from lifetime oil contracts, increased to $202.3 million as of March 31, 2021, with $9.4 million revenue recognized from the prior period's balance. Contract assets related to finance and insurance sales remained stable at $8.2 million Contract Liabilities and Assets (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | Contract liability balances | $202.3 | $194.1 | +$8.2 | | Revenue recognized from contract liability (3 months ended March 31, 2021) | $9.4 | N/A | N/A | | Contract asset balances | $8.2 | $8.2 | $0.0 | - Revenue from lifetime oil contracts is recognized over time as services are provided[17](index=17&type=chunk) - Revenue from finance and insurance sales is recognized at the time of vehicle sale, net of estimated charge-backs[18](index=18&type=chunk) [Note 3. Accounts Receivable and Contract Assets](index=8&type=section&id=Note%203.%20Accounts%20Receivable%20and%20Contract%20Assets) Total accounts receivable, net, increased to $740.7 million as of March 31, 2021, from $614.0 million at December 31, 2020, primarily driven by increases in contracts in transit and auto loan receivables Accounts Receivable Composition (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | Contracts in transit | $375.3 | $286.8 | +$88.5 | | Auto loan receivables | $256.0 | $175.6 | +$80.4 | | Total accounts receivable, net | $740.7 | $614.0 | +$126.7 | - Auto loan receivables are secured by the related vehicle, with over **99%** aged less than **60 days** past due[21](index=21&type=chunk) - Allowance for credit losses for auto loan receivables was **$12.4 million** as of March 31, 2021[21](index=21&type=chunk) [Note 4. Inventories](index=9&type=section&id=Note%204.%20Inventories) Total inventories, net, decreased to $2,329.7 million as of March 31, 2021, from $2,492.9 million at December 31, 2020, with reductions in both new and used vehicle inventories Inventories, Net (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | New vehicles | $1,432.4 | $1,556.6 | $(124.2) | | Used vehicles | $790.1 | $835.9 | $(45.8) | | Parts and accessories | $107.2 | $100.4 | +$6.8 | | Total inventories | $2,329.7 | $2,492.9 | $(163.2) | [Note 5. Goodwill and Franchise Value](index=9&type=section&id=Note%205.%20Goodwill%20and%20Franchise%20Value) Goodwill increased to $617.5 million and franchise value to $368.0 million as of March 31, 2021, primarily due to additions from acquisitions, with purchase price allocations for recent acquisitions still preliminary Goodwill and Franchise Value (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | | :--------------------------------- | :--------------- | :---------------- | :----- | | Goodwill | $617.5 | $593.0 | +$24.5 | | Franchise value | $368.0 | $350.2 | +$17.8 | - Additions to goodwill and franchise value in Q1 2021 resulted from finalizing purchase price allocations for a portion of 2020 acquisitions[24](index=24&type=chunk)[25](index=25&type=chunk) - Purchase price allocations for remaining 2020 and 2021 acquisitions are preliminary[24](index=24&type=chunk)[25](index=25&type=chunk) [Note 6. Stockholders' Equity](index=10&type=section&id=Note%206.%20Stockholders'%20Equity) The company repurchased $15.9 million of Class A common stock in Q1 2021, primarily for tax withholding on RSU vesting, and had $187.5 million remaining under its share repurchase authorization as of March 31, 2021. No shares were issued under the ATM Equity Offering Sales Agreement - Repurchased **54,218 shares** of Class A common stock for **$15.9 million** in Q1 2021, related to tax withholding on RSU vesting[27](index=27&type=chunk) - **$187.5 million** remained available for repurchases under the share repurchase authorization as of March 31, 2021[26](index=26&type=chunk) - **No shares** have been issued under the **$400 million** ATM Equity Offering Sales Agreement as of March 31, 2021[28](index=28&type=chunk) [Note 7. Fair Value Measurements](index=11&type=section&id=Note%207.%20Fair%20Value%20Measurements) The company measures financial assets and liabilities using a three-level fair value hierarchy. Investments, primarily in Shift Technologies, Inc., are valued using Level 1 and Level 2 inputs, while derivative instruments (interest rate collars) are measured using Level 2 observable market expectations. Fixed rate debt fair values are determined using Level 1 and Level 2 inputs - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[36](index=36&type=chunk) - Investments (primarily Shift Technologies, Inc.) are measured at fair value using **Level 1** (**$98.5 million**) and **Level 2** (**$8.5 million**) inputs as of March 31, 2021[35](index=35&type=chunk) - Derivative assets (**$1.2 million**) and liabilities (**$7.3 million**) are measured at fair value using **Level 2** inputs as of March 31, 2021[37](index=37&type=chunk) - The carrying value of fixed rate debt (senior notes, real estate mortgages) was **$1,958.3 million**, with a fair value of **$1,997.6 million** as of March 31, 2021[37](index=37&type=chunk) [Note 8. Net Income Per Share of Class A and Class B Common Stock](index=12&type=section&id=Note%208.%20Net%20Income%20Per%20Share%20of%20Class%20A%20and%20Class%20B%20Common%20Stock) Net income per share is computed using the two-class method, with identical basic and diluted EPS for both Class A and Class B common stock due to their equal participation rights in dividends and liquidation proceeds. Diluted EPS for Class A was $5.81 in Q1 2021, up from $1.97 in Q1 2020 Net Income Per Share (in millions, except per share amounts) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net income applicable to common stockholders - basic (Class A) | $155.8 | $45.0 | | Net income applicable to common stockholders - diluted (Class A) | $156.2 | $46.2 | | Basic net income per share (Class A) | $5.86 | $1.99 | | Diluted net income per share (Class A) | $5.81 | $1.97 | | Weighted average common shares outstanding – diluted (Class A) | 26.9 | 23.5 | - Class A and Class B common stock have **identical rights** regarding dividends and liquidation proceeds[39](index=39&type=chunk) [Note 9. Segments](index=13&type=section&id=Note%209.%20Segments) The company operates through three reportable segments: Domestic, Import, and Luxury, each selling new and used vehicles, parts, services, and finance/insurance products. Segment performance is evaluated based on earnings from operations, with internal corporate expense allocations to enhance comparability - Reportable segments are **Domestic** (Chrysler, GM, Ford), **Import** (Honda, Toyota, Subaru, Nissan, VW), and **Luxury** (BMW, Mercedes, Lexus)[43](index=43&type=chunk) - All segments sell new/used vehicles, parts, services, and finance/insurance products[43](index=43&type=chunk) - Corporate and other revenue/income includes stand-alone body shops and unallocated corporate overhead, with internal expense allocations to segments[44](index=44&type=chunk) Segment Revenues (in millions) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Domestic | $1,310.0 | $1,000.4 | 30.9% | | Import | $1,864.8 | $1,175.9 | 58.6% | | Luxury | $1,171.5 | $618.1 | 89.5% | | Total Revenues | $4,346.3 | $2,794.4 | 55.5% | Segment Income (Non-GAAP, in millions) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Domestic | $73.9 | $27.8 | 165.8% | | Import | $101.5 | $24.7 | 310.9% | | Luxury | $44.1 | $1.6 | 2,656.3% | | Total Segment Income | $219.5 | $54.1 | 305.7% | [Note 10. Leases](index=15&type=section&id=Note%2010.%20Leases) The company leases dealerships, office space, land, and equipment, with most leases including renewal options. Finance lease liabilities are part of long-term debt, and related assets are in property, plant, and equipment - Leases with initial terms of **12 months or less** are not recorded on the balance sheet[49](index=49&type=chunk) - Most leases include renewal options extending from **one to 24-year**+[50](index=50&type=chunk) - Finance lease liabilities are included in long-term debt, and related assets in property, plant, and equipment[52](index=52&type=chunk) [Note 11. Derivative Financial Instruments](index=15&type=section&id=Note%2011.%20Derivative%20Financial%20Instruments) The company uses derivative financial instruments, primarily a 5-year zero-cost interest rate collar with a notional amount of $300 million, to hedge exposure to rising interest rates on variable rate debt. This derivative is accounted for as a cash flow hedge, with gains/losses reported in AOCI and reclassified to earnings - Entered into a **5-year, zero-cost interest rate collar** with a **$300 million** notional amount in 2019 to hedge interest rate risk on non-trade floor plan notes payable[54](index=54&type=chunk)[55](index=55&type=chunk) - Derivative instruments are recorded at fair value as assets or liabilities, with gains/losses on cash flow hedges reported in AOCI[53](index=53&type=chunk) - **Expected net losses of $2.7 million** from AOCI to be reclassified into interest expense within the next **twelve months** as of March 31, 2021[56](index=56&type=chunk) [Note 12. Acquisitions](index=17&type=section&id=Note%2012.%20Acquisitions) In Q1 2021, the company completed three acquisitions, contributing $71.3 million in revenue and $3.8 million in operating income. Total cash paid for acquisitions, net of cash acquired, was $383.5 million, with purchase price allocations still preliminary - Completed **three acquisitions** in Q1 2021: Chrysler Jeep Dodge Ram of Sanford, Orlando Land Rover (Florida), Fink Auto Group (Florida), and Avondale Nissan (Arizona)[59](index=59&type=chunk) Acquisition Contributions (in millions) | Item | Three Months Ended March 31, 2021 | | :--------------------------------- | :-------------------------------- | | Revenue from 2021 acquisitions | $71.3 | | Operating income from 2021 acquisitions | $3.8 | - Cash paid for acquisitions, net of cash acquired, was **$383.5 million** in Q1 2021[60](index=60&type=chunk) - Pro forma revenue for Q1 2021, assuming all 2020 and 2021 acquisitions occurred on Jan 1, 2020, would be **$4,463.0 million**, with net income of **$160.4 million**[62](index=62&type=chunk) [Note 13. Recent Accounting Pronouncements](index=18&type=section&id=Note%2013.%20Recent%20Accounting%20Pronouncements) The company adopted ASU 2019-12 ("Income Taxes") and ASU 2020-10 ("Codification Improvements") in Q1 2021, neither of which had a material impact on its consolidated financial statements - Adopted ASU 2019-12 ("Income Taxes") in Q1 2021, with **no material impact**[63](index=63&type=chunk) - Adopted ASU 2020-10 ("Codification Improvements") in Q1 2021, with **no material impact**[64](index=64&type=chunk) [Note 14. Subsequent Events](index=19&type=section&id=Note%2014.%20Subsequent%20Events) On April 12, 2021, the company entered into a new $300.0 million real estate-backed revolving credit facility with Ally Bank, maturing in April 2023, to provide additional liquidity - Entered into a **$300.0 million** real estate-backed revolving credit facility with Ally Bank on April 12, 2021[65](index=65&type=chunk) - The facility matures in **April 2023** and is secured by company-owned real estate[65](index=65&type=chunk) - Interest rate is the greater of **3.00%** or Ally Bank's prime rate, minus **25 basis points**[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Q1 2021 financial performance, condition, operational strategies, segment results, and liquidity, addressing forward-looking statements - Discussion includes forward-looking statements about future market conditions, COVID-19 impacts, inventory levels, digital strategies, operating results, acquisitions, and financial condition[69](index=69&type=chunk) - Forward-looking statements involve known and unknown risks and uncertainties[70](index=70&type=chunk) [Forward-Looking Statements and Risk Factors](index=20&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This subsection highlights that the report contains forward-looking statements regarding future market conditions, business operations, and financial performance, which are subject to known and unknown risks and uncertainties detailed in previous SEC filings - Forward-looking statements are identified by terms like "project," "outlook," "expect," and "anticipate"[69](index=69&type=chunk) - These statements involve risks and uncertainties that could cause actual results to differ materially[70](index=70&type=chunk) - The company assumes **no obligation** to update or revise any forward-looking statement[71](index=71&type=chunk) [Overview](index=20&type=section&id=Overview) Lithia Motors & Driveway is a growth company focused on consolidating the retail automotive sector, operating 216 locations across 22 states as of March 31, 2021. The company offers a full lifecycle of personal transportation solutions, emphasizing operational excellence, innovation, diversification, and an omni-channel strategy to provide seamless customer experiences - Lithia Motors & Driveway is a **growth company** aiming to **consolidate the retail sector**, operating **216 locations** across **22 states** as of March 31, 2021[72](index=72&type=chunk) - Offers a wide array of products and services covering the **entire vehicle ownership lifecycle**[73](index=73&type=chunk) - Employs an **omni-channel strategy** leveraging experienced teams, owned inventories, technology, and a nationwide network for seamless online and physical experiences[75](index=75&type=chunk) - Long-term strategy includes driving **operational excellence**, **innovation**, **diversification**, **growth through acquisition**, and **thoughtful capital allocation**[76](index=76&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) [Key Revenue and Gross Profit Metrics](index=23&type=section&id=Key%20Revenue%20and%20Gross%20Profit%20Metrics) The company experienced significant growth in total revenues (54.9%) and gross profit (55.2%) for the three months ended March 31, 2021, compared to the prior year. This was driven by strong increases in new vehicle retail (59.7% revenue growth, 100.4% gross profit growth) and used vehicle retail (54.6% revenue growth, 51.3% gross profit growth), along with improved gross profit margins across most categories Key Revenue and Gross Profit Metrics (Three Months Ended March 31, in millions, except percentages) | Metric | 2021 | 2020 | Change | % Change | | :--------------------------------- | :--------------- | :--------------- | :----- | :------- | | Total revenues | $4,343.0 | $2,803.8 | +$1,539.2 | +54.9% | | New vehicle retail revenue | $2,193.2 | $1,373.5 | +$819.7 | +59.7% | | Used vehicle retail revenue | $1,352.2 | $874.4 | +$477.8 | +54.6% | | Finance and insurance revenue | $198.4 | $121.9 | +$76.5 | +62.8% | | Service, body and parts revenue | $404.0 | $329.9 | +$74.1 | +22.5% | | Total Gross Profit | $715.5 | $460.9 | +$254.6 | +55.2% | | New vehicle retail gross profit | $156.7 | $78.2 | +$78.5 | +100.4% | | Used vehicle retail gross profit | $136.2 | $90.0 | +$46.2 | +51.3% | | Finance and insurance gross profit | $198.4 | $121.9 | +$76.5 | +62.8% | | Service, body and parts gross profit | $218.2 | $168.1 | +$50.1 | +29.8% | Gross Profit Margins and Unit Sales (Three Months Ended March 31, except percentages) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :--------------- | :--------------- | :------- | | New vehicle retail gross margin | 7.1% | 5.7% | +140 bps | | Used vehicle retail gross margin | 10.1% | 10.3% | (20) bps | | Service, body and parts gross margin | 54.0% | 51.0% | +300 bps | | Total Gross Profit Margin | 16.5% | 16.4% | +10 bps | | New vehicles retail units sold | 53,864 | 35,907 | +50.0% | | Used vehicles retail units sold | 59,027 | 42,631 | +38.5% | | Average selling price per new vehicle | $40,718 | $38,252 | +6.4% | | Average selling price per used vehicle | $22,907 | $20,510 | +11.7% | | Average gross profit per new vehicle | $2,910 | $2,178 | +33.6% | | Average gross profit per used vehicle | $2,307 | $2,110 | +9.3% | | Average gross profit per F&I | $1,757 | $1,552 | +13.2% | [Same Store Operating Data](index=23&type=section&id=Same%20Store%20Operating%20Data) Same store revenues increased by 27.6% and gross profit by 27.9% for the three months ended March 31, 2021, compared to the prior year. This growth was primarily driven by new vehicle retail (29.4% revenue increase) and used vehicle retail (32.0% revenue increase), with new vehicle gross profit per unit increasing by 36.2% Same Store Operating Data (Three Months Ended March 31, in millions, except percentages) | Metric | 2021 | 2020 | Change | % Change | | :--------------------------------- | :--------------- | :--------------- | :----- | :------- | | Total Revenues | $3,492.3 | $2,737.4 | +$754.9 | +27.6% | | New vehicle retail revenue | $1,735.2 | $1,341.2 | +$394.0 | +29.4% | | Used vehicle retail revenue | $1,128.0 | $854.6 | +$273.4 | +32.0% | | Finance and insurance revenue | $155.0 | $119.5 | +$35.5 | +29.7% | | Service, body and parts revenue | $317.3 | $320.5 | $(3.2) | (1.0)% | | Total Gross Profit | $577.3 | $451.4 | +$125.9 | +27.9% | | New vehicle retail gross profit | $127.5 | $76.8 | +$50.7 | +66.0% | | Used vehicle retail gross profit | $120.7 | $88.8 | +$31.9 | +35.9% | | Finance and insurance gross profit | $155.0 | $119.5 | +$35.5 | +29.7% | | Service, body and parts gross profit | $169.5 | $163.3 | +$6.2 | +3.8% | Same Store Gross Profit Margins and Unit Sales (Three Months Ended March 31, except percentages) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :--------------- | :--------------- | :------- | | New vehicle retail gross margin | 7.4% | 5.7% | +170 bps | | Used vehicle retail gross margin | 10.7% | 10.4% | +30 bps | | Service, body and parts gross margin | 53.4% | 51.0% | +240 bps | | Total Gross Profit Margin | 16.5% | 16.5% | — | | New vehicles retail units sold | 42,816 | 35,098 | +22.0% | | Used vehicles retail units sold | 49,764 | 41,676 | +19.4% | | Average selling price per new vehicle | $40,527 | $38,214 | +6.1% | | Average selling price per used vehicle | $22,666 | $20,505 | +10.5% | | Average gross profit per new vehicle | $2,979 | $2,188 | +36.2% | | Average gross profit per used vehicle | $2,426 | $2,131 | +13.8% | | Average gross profit per F&I | $1,674 | $1,557 | +7.5% | [New Vehicles](index=25&type=section&id=New%20Vehicles) Same store new vehicle revenue increased 29.4% in Q1 2021, driven by a 22.0% increase in unit volume and a 6.1% rise in average selling prices. Gross profit per unit for new vehicles saw a significant 36.2% increase, leading to a 170 bps improvement in gross profit margins - Same store new vehicle revenue **increased 29.4%** in Q1 2021 compared to Q1 2020[87](index=87&type=chunk) - Unit volume **increased by 22.0%**, and average selling prices **increased by 6.1%**[87](index=87&type=chunk) - Same store new vehicle gross profit per unit **increased 36.2%**, improving gross profit margins by **170 bps**[89](index=89&type=chunk) [Used Vehicles](index=25&type=section&id=Used%20Vehicles) Used vehicle retail sales are a strategic focus, with average sales of 83 units per store per month in Q1 2021, up from 78 in Q1 2020. Total used vehicle revenue increased 54.6%, and same store used vehicle sales increased 32.0%, driven by strong growth in the core vehicle category - Average used vehicle sales were **83 units** per store per month in Q1 2021, **up from 78** in Q1 2020[90](index=90&type=chunk) - Total used vehicle revenue **increased 54.6%** in Q1 2021 compared to Q1 2020[91](index=91&type=chunk) - Same store used vehicle sales **increased 32.0%**, with core vehicle category **growth of 37.7%**[91](index=91&type=chunk) - Total same store used vehicle gross profit per unit, including F&I, **increased $421** to **$3,994**[94](index=94&type=chunk) [Finance and Insurance](index=25&type=section&id=Finance%20and%20Insurance) Finance and insurance revenue increased 62.8% in Q1 2021, with same store F&I revenues up 29.7%. The average F&I revenue per retail unit increased by $117 to $1,674, primarily due to higher service contract revenue - Finance and insurance revenue **increased 62.8%** in Q1 2021 compared to Q1 2020[96](index=96&type=chunk) - Same store finance and insurance revenues **increased 29.7%**[96](index=96&type=chunk) - Same store F&I revenue per retail unit **increased $117** to **$1,674**, mainly due to service contract revenue[96](index=96&type=chunk) [Service, body and parts](index=27&type=section&id=Service%2C%20body%20and%20parts) Service, body, and parts revenue increased 22.5% in Q1 2021, driven by higher customer pay revenues. Same store gross profit increased 3.8%, and gross margins improved by 240 bps, reflecting a shift towards higher-margin customer pay transactions - Service, body, and parts revenue **increased 22.5%** in Q1 2021 compared to Q1 2020[98](index=98&type=chunk) - Largest contribution to revenue was same store customer pay revenue of **$182.8 million**[99](index=99&type=chunk) - Same store gross profit **increased 3.8%**, and gross margins **improved by 240 bps**, driven by a shift to customer pay[100](index=100&type=chunk) [Segments](index=27&type=section&id=Segments) All three segments (**Domestic**, **Import**, **Luxury**) reported significant revenue and segment income growth in Q1 2021 compared to Q1 2020, with **Luxury** showing the highest percentage increases. Corporate and other income decreased due to changes in internal allocations and reserves Segment Revenues (in millions) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Domestic | $1,310.0 | $1,000.4 | +30.9% | | Import | $1,864.8 | $1,175.9 | +58.6% | | Luxury | $1,171.5 | $618.1 | +89.5% | | Corporate and other | $(3.3) | $9.4 | NM | Segment Income (Non-GAAP, in millions) | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Domestic | $73.9 | $27.8 | +165.8% | | Import | $101.5 | $24.7 | +310.9% | | Luxury | $44.1 | $1.6 | +2,656.3% | | Corporate and other | $38.8 | $46.8 | (17.1)% | [Domestic](index=28&type=section&id=Domestic) The **Domestic** segment's revenue increased 30.9% and segment income surged 165.8% in Q1 2021, driven by growth across all business lines, a 34.9% increase in gross profit, and a 46.4% decrease in floor plan interest expense. SG&A as a percentage of gross profit improved from 75.7% to 63.4% Domestic Segment Performance (in millions, except percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total Revenue | $1,310.0 | $1,000.4 | +30.9% | | Segment income | $73.9 | $27.8 | +165.8% | | Retail new vehicle unit sales | 13,065 | 10,626 | +23.0% | - Gross profit **grew 34.9%**, and floor plan interest expense **decreased 46.4%**[106](index=106&type=chunk) - SG&A as a percentage of gross profit **decreased from 75.7% to 63.4%**[106](index=106&type=chunk) [Import](index=30&type=section&id=Import) The **Import** segment's revenue increased 58.6% and segment income soared 310.9% in Q1 2021, fueled by increases across all business lines, a 62.0% gross profit growth, and a 14.1% decrease in floor plan interest expense. SG&A as a percentage of gross profit improved from 82.7% to 66.2% Import Segment Performance (in millions, except percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total Revenue | $1,864.8 | $1,175.9 | +58.6% | | Segment income | $101.5 | $24.7 | +310.9% | | Retail new vehicle unit sales | 30,454 | 19,842 | +53.5% | - Gross profit **grew 62.0%**, and floor plan interest expense **decreased 14.1%**[110](index=110&type=chunk) - SG&A as a percentage of gross profit **decreased from 82.7% to 66.2%**[110](index=110&type=chunk) [Luxury](index=30&type=section&id=Luxury) The **Luxury** segment achieved an 89.5% revenue increase and a remarkable 2,656.3% surge in segment income in Q1 2021, driven by growth across all business lines, an 84.2% increase in gross profit, and a 16.7% decrease in floor plan interest expense. SG&A as a percentage of gross profit improved from 90.5% to 70.7% Luxury Segment Performance (in millions, except percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Total Revenue | $1,171.5 | $618.1 | +89.5% | | Segment income | $44.1 | $1.6 | +2,656.3% | | Retail new vehicle unit sales | 10,495 | 5,491 | +91.1% | - Gross profit **grew 84.2%**, and floor plan interest expense **decreased 16.7%**[113](index=113&type=chunk) - SG&A as a percentage of gross profit **decreased from 90.5% to 70.7%**[113](index=113&type=chunk) [Corporate and Other](index=32&type=section&id=Corporate%20and%20Other) Corporate and other revenue decreased in Q1 2021 due to changes in certain reserves related to unwound vehicle sales. Corporate and other income also decreased by $8.0 million, primarily due to lower internal floor plan financing charges received and increased internal finance reserves paid to dealerships Corporate and Other Financials (in millions, except percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Decrease | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Revenue, net | $(3.3) | $9.4 | NM | | Segment income | $38.8 | $46.8 | (17.1)% | - Revenue decrease primarily due to changes in reserves for revenue reversals associated with unwound vehicle sales[116](index=116&type=chunk) - Income decrease due to lower internal floor plan financing charges received and **increased internal finance reserves** paid to dealerships[118](index=118&type=chunk) [Selling, General and Administrative Expense (SG&A)](index=32&type=section&id=Selling%2C%20General%20and%20Administrative%20Expense%20(SG%26A)) Total SG&A expense increased 30.2% to $450.4 million in Q1 2021, primarily due to higher personnel costs. However, SG&A as a percentage of gross profit significantly decreased from 75.1% to 62.9%, reflecting increased gross profit without proportional increases in all SG&A costs SG&A Expense (in millions, except percentages) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :--------- | | Personnel | $314.0 | $228.5 | +$85.5 | +37.4% | | Total SG&A | $450.4 | $346.0 | +$104.4 | +30.2% | SG&A as a % of Gross Profit (bps) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Decrease (bps) | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------------- | | Personnel | 43.9% | 49.6% | (570) | | Total SG&A | 62.9% | 75.1% | (1,220) | - The decrease in SG&A as a percentage of gross profit was primarily driven by **increased gross profit** without proportional increases in all SG&A costs[106](index=106&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk)[120](index=120&type=chunk) [Depreciation and Amortization](index=33&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expense increased by 21.8% to $26.8 million in Q1 2021, primarily due to acquisition activity in 2020 and capital expenditures of $50.0 million in Q1 2021 Depreciation and Amortization (in millions, except percentages) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :--------- | | Depreciation and amortization | $26.8 | $22.0 | +$4.8 | +21.8% | - Increase attributed to approximately **$177 million** of depreciable property acquired in 2020 and **$50.0 million** in capital expenditures in Q1 2021[127](index=127&type=chunk) [Operating Margin](index=35&type=section&id=Operating%20Margin) Operating margin increased by 220 basis points to 5.5% in Q1 2021, primarily due to a 55.2% increase in gross profit outpacing the 30.2% increase in SG&A expenses Operating Margin (percentages) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Operating margin | 5.5% | 3.3% | - Increase driven by gross profit growth (**55.2%**) exceeding SG&A expense growth (**30.2%**)[128](index=128&type=chunk) [Floor Plan Interest Expense and Floor Plan Assistance](index=35&type=section&id=Floor%20Plan%20Interest%20Expense%20and%20Floor%20Plan%20Assistance) Floor plan interest expense for new vehicles decreased by 51.4% to $6.8 million in Q1 2021, primarily due to lower interest rates (LIBOR) and decreased same store inventory levels. Net new vehicle carrying costs significantly improved to a benefit of $18.0 million, compared to a cost of $0.9 million in the prior year, due to increased floor plan assistance Floor Plan Interest Expense and Assistance (in millions, except percentages) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | % Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :--------- | | Floor plan interest expense (new vehicles) | $6.8 | $14.0 | $(7.2) | (51.4)% | | Floor plan assistance (included as an offset to cost of sales) | $(24.8) | $(14.9) | $(9.9) | +66.4% | | Net new vehicle carrying costs | $(18.0) | $(0.9) | $(17.1) | NM | - Decrease in floor plan interest expense due to **25.8% decrease** in same store inventory levels and **30.2% decrease** in LIBOR rates[129](index=129&type=chunk) - Floor plan assistance **increased 66.4%**, offsetting carrying costs[132](index=132&type=chunk) [Other Interest Expense](index=35&type=section&id=Other%20Interest%20Expense) Other interest expense increased by 38.2% to $23.5 million in Q1 2021, primarily due to additional interest expense associated with senior notes issued in 2020 Other Interest Expense (in millions, except percentages) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase | % Increase | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :------- | :--------- | | Mortgage interest | $6.8 | $6.6 | +$0.2 | +3.0% | | Other interest | $17.1 | $10.8 | +$6.3 | +58.3% | | Total other interest expense | $23.5 | $17.0 | +$6.5 | +38.2% | - Increase primarily related to additional interest expense from senior notes issued in 2020[135](index=135&type=chunk) [Income Tax Provision](index=37&type=section&id=Income%20Tax%20Provision) The effective income tax rate decreased to 26.1% in Q1 2021 from 28.0% in Q1 2020, favorably impacted by excess tax benefits from stock awards, a reduction in the state effective tax rate due to changing state mix, and an increase in forecasted pre-tax income Effective Income Tax Rate (percentages) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Effective income tax rate | 26.1% | 28.0% | - Rate **positively affected** by excess tax benefits on stock awards, reduced state effective tax rate, and **increased forecasted pre-tax income**[136](index=136&type=chunk) - Estimated annual effective income tax rate, excluding non-core charges, is **27.5%**[136](index=136&type=chunk) [Non-GAAP Reconciliations](index=37&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of non-GAAP financial measures, such as adjusted SG&A, operating income, net income, and diluted EPS, to their most comparable GAAP measures. These adjustments exclude non-core items like net disposal loss/gain on sale of stores, investment loss, insurance reserves, and acquisition expenses, aiming to improve transparency and comparability of core business operations - Non-GAAP measures are used to **improve transparency and comparability** of core business operations by excluding non-core and non-cash items[137](index=137&type=chunk) Non-GAAP Reconciliations (Three Months Ended March 31, 2021, in millions, except per share amounts) | Item | As reported | Net disposal loss on sale of stores | Investment loss | Insurance reserves | Acquisition expenses | Adjusted | | :--------------------------------- | :---------- | :-------------------------------- | :-------------- | :----------------- | :----------------- | :------- | | Selling, general and administrative | $450.4 | $(0.7) | — | $(0.8) | $(1.3) | $447.6 | | Operating income | $238.3 | $0.7 | — | $0.8 | $1.3 | $241.1 | | Net income | $156.2 | $0.5 | $0.2 | $0.6 | $0.9 | $158.4 | | Diluted net income per share | $5.81 | $0.02 | $0.01 | $0.02 | $0.03 | $5.89 | Non-GAAP Reconciliations (Three Months Ended March 31, 2020, in millions, except per share amounts) | Item | As reported | Net disposal gain on sale of stores | Insurance reserves | Acquisition expenses | Adjusted | | :--------------------------------- | :---------- | :-------------------------------- | :----------------- | :----------------- | :------- | | Selling, general and administrative | $346.0 | $0.1 | $(0.8) | $(0.5) | $344.8 | | Operating income (loss) | $92.9 | $(0.1) | $0.8 | $0.5 | $94.1 | | Net income (loss) | $46.2 | $(0.1) | $0.6 | $0.4 | $47.1 | | Diluted net income per share | $1.97 | — | $0.02 | $0.02 | $2.01 | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The company manages liquidity through cash from operations and credit facilities, targeting 65% of free cash flow for acquisitions, 25% for capital expenditures and modernization, and 10% for shareholder returns. As of March 31, 2021, available funds totaled $1,370.6 million, with operating activities providing $496.4 million in cash - Capital deployment strategy targets **65% for acquisitions**, **25% for capital expenditures/modernization**, and **10% for shareholder returns**[141](index=141&type=chunk) - Main liquidity sources are cash from operations and credit facility borrowings[142](index=142&type=chunk) - Potential additional sources include equity offerings, real estate financing, and debt offerings[142](index=142&type=chunk) [Available Sources](index=38&type=section&id=Available%20Sources) As of March 31, 2021, the company had $170.3 million in cash and cash equivalents and $1,200.3 million in available credit on credit facilities, totaling $1,370.6 million in immediately available funds Available Funds (in millions) | Item | March 31, 2021 | December 31, 2020 | Change | % Change | | :--------------------------------- | :--------------- | :---------------- | :----- | :------- | | Cash and cash equivalents | $170.3 | $160.2 | +$10.1 | +6.3% | | Available credit on credit facilities | $1,200.3 | $1,237.1 | $(36.8) | (3.0)% | | Total current available funds | $1,370.6 | $1,397.3 | $(26.7) | (1.9)% | [Operating Activities](index=38&type=section&id=Operating%20Activities) Net cash provided by operating activities increased significantly by $374.7 million to $496.4 million in Q1 2021, primarily due to increased net income, a decrease in inventories, and higher floor plan notes payable borrowings, partially offset by an increase in accounts receivable. Adjusted net cash from operating activities was $352.3 million Cash Flows from Operating Activities (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase in Cash Flow | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | | Net cash provided by operating activities | $496.4 | $121.7 | +$374.7 | - Increase primarily related to **increased net income**, **decreased inventories**, and **increased floor plan notes payable borrowings**[144](index=144&type=chunk) - Adjusted net cash provided by operating activities was **$352.3 million** in Q1 2021[146](index=146&type=chunk) [Investing Activities](index=39&type=section&id=Investing%20Activities) Net cash used in investing activities increased to $442.8 million in Q1 2021, up from $118.3 million in Q1 2020, primarily driven by a substantial increase in cash paid for acquisitions, net of cash acquired, which totaled $383.5 million Cash Flows from Investing Activities (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Decrease in Cash Flow | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | | Net cash used in investing activities | $(442.8) | $(118.3) | $(324.5) | | Cash paid for acquisitions, net of cash acquired | $(383.5) | $(72.3) | $(311.2) | | Capital expenditures | $(50.0) | $(41.6) | $(8.4) | [Capital Expenditures](index=39&type=section&id=Capital%20Expenditures) Capital expenditures increased to $50.0 million in Q1 2021, up from $41.6 million in Q1 2020, primarily due to higher post-acquisition capital improvements resulting from an increase in prior year acquisitions Capital Expenditures (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Post-acquisition capital improvements | $2.2 | $14.1 | | Existing facility improvements | $20.3 | $16.4 | | Maintenance | $17.1 | $4.4 | | Total capital expenditures | $50.0 | $41.6 | - Increase primarily due to **higher post-acquisition capital improvements** from **increased acquisitions** in the prior year[150](index=150&type=chunk) [Acquisitions](index=40&type=section&id=Acquisitions) The company acquired 8 locations in Q1 2021, compared to 2 in Q1 2020. Cash paid for acquisitions, net of cash acquired, was $383.5 million, with an adjusted amount of $314.2 million after accounting for floor plan notes payable Acquisition Activity (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Number of locations acquired | 8 | 2 | | Cash paid for acquisitions, net of cash acquired | $(383.5) | $(72.3) | | Adjusted cash paid for acquisitions, net of cash acquired | $(314.2) | $(58.2) | - Acquisitions are targeted at attractive purchase prices that meet return thresholds and strategic objectives, diversifying brand and geographic mix[152](index=152&type=chunk) [Financing Activities](index=40&type=section&id=Financing%20Activities) Net cash used in financing activities was $43.5 million in Q1 2021. After adjusting for non-trade floor plan notes payable, adjusted cash provided by financing activities was $31.3 million, primarily from net borrowings on lines of credit Cash Flows from Financing Activities (in millions) | Item | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Increase (Decrease) in Cash Flow | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | | Cash used in financing activities, as reported | $(43.5) | $(30.8) | $(12.7) | | Adjust: Repayments on floor plan notes payable: non-trade | $74.8 | $43.5 | +$31.3 | | Cash provided by financing activities – adjusted | $31.3 | $12.7 | +$18.6 | - Net borrowings on lines of credit contributed **$61.0 million** in Q1 2021[155](index=155&type=chunk) [Equity Transactions](index=40&type=section&id=Equity%20Transactions) In Q1 2021, the company repurchased 54,218 shares of Class A common stock for $15.9 million, solely for tax withholding on RSU vesting, with $187.5 million remaining under the share repurchase authorization. Dividends of $0.31 per share were declared and paid, totaling $8.2 million - Repurchased **54,218 Class A common shares** for **$15.9 million** in Q1 2021, **solely for tax withholding** on RSU vesting[156](index=156&type=chunk) - **$187.5 million** remained available under the share repurchase authorization as of March 31, 2021[156](index=156&type=chunk) - Declared and paid dividends of **$0.31 per share**, totaling **$8.2 million**, in March 2021[157](index=157&type=chunk) [Summary of Outstanding Balances on Credit Facilities and Long-Term Debt](index=41&type=section&id=Summary%20of%20Outstanding%20Balances%20on%20Credit%20Facilities%20and%20Long-Term%20Debt) As of March 31, 2021, total debt was $4,006.5 million, with $1,200.3 million remaining available on credit facilities. Key components include floor plan notes payable ($1,480.7 million non-trade, $341.5 million trade), senior notes ($1,250.0 million), and real estate mortgages ($604.7 million) Outstanding Balances on Credit Facilities and Long-Term Debt (in millions) | Item | Outstanding (March 31, 2021) | Remaining Available | | :--------------------------------- | :----------------------------- | :------------------ | | Floor plan note payable: non-trade | $1,480.7 | $— | | Floor plan notes payable | $341.5 | $— | | Revolving lines of credit | $100.0 | $744.8 | | Real estate mortgages | $604.7 | $— | | 5.250% Senior notes due 2025 | $300.0 | $— | | 4.625% Senior notes due 2027 | $400.0 | $— | | 4.375% Senior notes due 2031 | $550.0 | $— | | Total debt | $4,006.5 | $1,200.3 | [Credit Facility](index=41&type=section&id=Credit%20Facility) The company's syndicated credit facility, maturing in January 2025, has a total financing commitment of $2.8 billion (potentially $3.2 billion with an increase option). It is secured by substantial assets and includes variable interest rates based on LIBOR and leverage ratio, with the company in compliance with all financial covenants as of March 31, 2021 - Syndicated credit facility matures in **January 2025**, with a **total commitment of $2.8 billion** (expandable to **$3.2 billion**)[160](index=160&type=chunk)[161](index=161&type=chunk) - **Secured by inventory**, equipment, accounts receivable, and equity interests in subsidiaries[162](index=162&type=chunk) - **Variable interest rates** based on one-month LIBOR plus a margin (e.g., **1.10%** for new vehicle floor plan financing)[163](index=163&type=chunk) - **In compliance** with all financial covenants (current ratio, fixed charge coverage ratio, leverage ratio) as of March 31, 2021[165](index=165&type=chunk) [Floor Plan Notes Payable](index=42&type=section&id=Floor%20Plan%20Notes%20Payable) The company has floor plan agreements with manufacturer-affiliated finance companies for new vehicles and service loaners, with $341.5 million outstanding as of March 31, 2021, at variable interest rates up to 4.75% - **$341.5 million** outstanding on floor plan agreements for new vehicles and service loaners as of March 31, 2021[168](index=168&type=chunk) - Interest rates are variable and range **up to 4.75%**[168](index=168&type=chunk) - Borrowings and repayments are classified as operating activities in cash flows[168](index=168&type=chunk) [Other Lines of Credit](index=42&type=section&id=Other%20Lines%20of%20Credit) The company has several other lines of credit, including a $20.0 million facility secured by Chrysler assets, a $60.0 million facility with Ford Motor Credit Company, and a $254.7 million real estate-backed facility, all with no outstanding amounts as of March 31, 2021. A $150 million securitization facility had $100.0 million drawn - **$20.0 million** line of credit secured by Chrysler assets and **$60.0 million** line of credit with Ford Motor Credit Company, both maturing in 2021, with **no outstanding amounts**[169](index=169&type=chunk) - **$254.7 million** real estate-backed facility, maturing July 2025, for working capital and acquisitions, with **no outstanding amounts**[170](index=170&type=chunk) - **$150 million** securitization facility, maturing July 2022, had **$100.0 million drawn** as of March 31, 2021[171](index=171&type=chunk) [5.250% Senior Notes Due 2025](index=43&type=section&id=5.250%25%20Senior%20Notes%20Due%202025) The company has $300 million in aggregate principal amount of 5.250% senior notes due 2025, issued in July 2017. Interest is payable semiannually, and the notes are redeemable by the company or subject to repurchase upon certain change of control events - **$300 million** aggregate principal amount of **5.250% senior notes due 2025**[173](index=173&type=chunk) - Issued July 24, 2017, with semiannual interest payments on February 1 and August 1[173](index=173&type=chunk) - Redeemable by the company or subject to repurchase at **101% of principal** upon certain change of control events[173](index=173&type=chunk) [4.625% Senior Notes Due 2027](index=43&type=section&id=4.625%25%20Senior%20Notes%20Due%202027) The company has $400 million in aggregate principal amount of 4.625% senior notes due 2027, issued in December 2019. Interest is payable semiannually, and the notes are redeemable by the company (with a make-whole premium before December 2022) or subject to repurchase upon certain change of control events - **$400 million** aggregate principal amount of **4.625% senior notes due 2027**[174](index=174&type=chunk) - Issued December 9, 2019, with semiannual interest payments on June 15 and December 15[174](index=174&type=chunk) - Redeemable by the company on or after December 15, 2022, or earlier with a make-whole premium[174](index=174&type=chunk) [4.375% Senior Notes Due 2031](index=43&type=section&id=4.375%25%20Senior%20Notes%20Due%202031) The company has $550 million in aggregate principal amount of 4.375% senior notes due 2031, issued in October 2020. Interest is payable semiannually, and the notes are redeemable by the company (with a make-whole premium before October 2025) or subject to repurchase upon certain change of control events - **$550 million** aggregate principal amount of **4.375% notes due 2031**[175](index=175&type=chunk) - Issued October 9, 2020, with semiannual interest payments on January 15 and July 15[175](index=175&type=chunk) - Redeemable by the company on or after October 15, 2025, or earlier with a make-whole premium[175](index=175&type=chunk) [Real Estate Mortgages, Finance Lease Obligations, and Other Debt](index=43&type=section&id=Real%20Estate%20Mortgages%2C%20Finance%20Lease%20Obligations%2C%20and%20Other%20Debt) The company holds real estate mortgages with interest rates from 2.2% to 5.3%, payable through August 2038, with 76.2% at fixed rates. Finance lease obligations have interest rates from 1.9% to 8.5%, extending through August 2037. Other debt, including sellers' notes, has interest rates from 4.4% to 5.3%, due through January 2031 - Real estate mortgages have interest rates from **2.2% to 5.3%**, with **76.2% at fixed rates**[176](index=176&type=chunk) - Finance lease obligations have interest rates from **1.9% to 8.5%**[177](index=177&type=chunk) - Other debt, including sellers' notes, has interest rates from **4.4% to 5.3%**[177](index=177&type=chunk) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted ASU 2019-12 ("Income Taxes") and ASU 2020-10 ("Codification Improvements") in Q1 2021, neither of which had a material impact on its consolidated financial statements - Refer to Note **13** for details on recent accounting pronouncements[178](index=178&type=chunk) [Critical Accounting Policies and Use of Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) There have been no material changes to the critical accounting policies and use of estimates previously disclosed in the company's 2020 Annual Report on Form 10-K - **No material changes** in critical accounting policies and estimates since the 2020 Annual Report on Form **10-K**[179](index=179&type=chunk) [Seasonality and Quarterly Fluctuations](index=44&type=section&id=Seasonality%20and%20Quarterly%20Fluctuations) The company's sales are historically lower in the first quarter due to consumer purchasing patterns and inclement weather. Financial performance is also influenced by interest rates, consumer debt, confidence, manufacturer incentives, and general economic conditions - Sales are **historically lower** in Q1 due to consumer patterns and weather[180](index=180&type=chunk) - Financial performance **fluctuates** based on interest rates, consumer debt, confidence, manufacturer incentives, and economic conditions[180](index=180&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements that are material or reasonably likely to have a material current or future effect on its financial condition, results of operations, liquidity, or capital resources - **No material off-balance sheet arrangements**[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's reported market risks or risk management policies since the filing of its 2020 Annual Report on Form 10-K - **No material changes** in market risks or risk management policies since the 2020 Form **10-K**[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of March 31, 2021, concluding they were effective. There were no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed **effective** as of March 31, 2021[183](index=183&type=chunk) - **No material changes** in internal control over financial reporting during the quarter[184](index=184&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=44&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, ensuring timely accumulation, communication, recording, processing, summarization, and reporting of required information - **CEO** and **CFO** concluded disclosure controls and procedures were **effective** as of March 31, 2021[183](index=183&type=chunk) - Controls ensure timely and accurate reporting of information required under the Securities Exchange Act of **1934**[183](index=183&type=chunk) [Changes in Internal Control Over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting - **No material changes** in internal control over financial reporting during the quarter[184](index=184&type=chunk) [PART II - OTHER INFORMATION](index=45&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information, including legal proceedings, risk factors, unregistered equity sales, and a list of exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in numerous legal proceedings in the normal course of business but does not anticipate that their resolution will have a material adverse effect on its business, results of operations, financial condition, or cash flows - Party to numerous legal proceedings arising in the normal course of business[186](index=186&type=chunk) - Does not anticipate a **material adverse effect** from the resolution of these proceedings[186](index=186&type=chunk) [Item 1A. Risk Factors](index=45&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2020 Annual Report on Form 10-K - **No material changes** from risk factors disclosed in the 2020 Annual Report on Form **10-K**[187](index=187&type=chunk) - Readers should refer to the 2020 Form **10-K** for primary business and securities risks[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2021, the company repurchased 54,218 shares of Class A common stock for $15.9 million at an average price of $292.86 per share. All repurchases were for tax withholding on RSU vesting and did not reduce the $187.5 million remaining under the share repurchase authorization Class A Common Stock Repurchases (Q1 2021) | Month | Total number of shares purchased | Average price paid per share | Maximum dollar value of shares that may yet be purchased under publicly announced plan (in thousands) | | :------ | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------------ | | January | 54,087 | $292.67 | $187,522 | | February | 5 | $292.67 | $187,522 | | March | 126 | $373.95 | $187,522 | | **Total** | **54,218** | **$292.86** | **$187,522** | - All repurchases were related to tax withholding on RSU vesting[188](index=188&type=chunk) - **$187.5 million** remained available under the share repurchase authorization as of March 31, 2021[188](index=188&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including restated articles of incorporation, bylaws, credit agreements, certifications from the CEO and CFO, and Inline XBRL documents - Includes Restated Articles of Incorporation, Second Amended and Restated Bylaws, and Credit Agreement dated April 12, 2021[192](index=192&type=chunk) - Contains certifications from the **CEO** and **CFO** (Rule **13a-14(a)/(b)** and **18 U.S.C. Section 1350**)[192](index=192&type=chunk) - Lists Inline XBRL documents for financial data[192](index=192&type=chunk) [SIGNATURE](index=47&type=section&id=SIGNATURE) The report is duly signed on behalf of Lithia Motors, Inc. by Tina Miller, Chief Financial Officer, Senior Vice President, and Principal Accounting Officer, on April 29, 2021 - **Signed by Tina Miller**, **Chief Financial Officer**, **Senior Vice President**, and **Principal Accounting Officer**[193](index=193&type=chunk) - Date of signature: **

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended: December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-14733 Lithia Motors, Inc. (Commission File (State or other jurisdiction of incorporation or organization) Number) 150 N. Bartlett Street, Medford, Oregon 97501 (Address of pri ...

ar|veWa 1 NYSE:LAD INVESTOR PRESENTATION FEBRUARY 2021 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 identify forward-looking statements by terms such as "project", "outlook", "target", "may", "will", "would", "should", "seek", "expect", "plan", "intend", "fo ...

Lithia Motors, Inc. (NYSE:LAD) Q4 2020 Earnings Conference Call February 3, 2021 10:00 AM ET Company Participants Eric Pitt - VP, IR & Treasurer Bryan DeBoer - CEO, President & Director Christopher Holzshu - COO & Secretary Tina Miller - SVP & CFO Conference Call Participants Rick Nelson - Stephens Inc. Rajat Gupta - JPMorgan Chase & Co. Nicholas Jones - Citigroup Ryan Sigdahl - Craig-Hallum Capital Group John Murphy - Bank of America Merrill Lynch Bret Jordan - Jefferies Adam Jonas - Morgan Stanley David W ...

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 September 30, 2020 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 (I.R.S. Employer Identif ...

Lithia Motors, Inc. (NYSE:LAD) Q3 2020 Results Conference Call October 21, 2020 10:00 AM ET Company Participants Eric Pitt - Vice President, Investor Relations and Treasurer Bryan DeBoer - President and Chief Executive Officer Chris Holzshu - Executive Vice President and Chief Operating Officer Tina Miller - Senior Vice President and Chief Financial Officer Conference Call Participants Rajat Gupta - JP Morgan Adam Jonas - Morgan Stanley Rick Nelson - Stephens Ryan Sigdahl - Craig-Hallum Capital Group John M ...

driveway INVESTOR PRESENTATION OCTOBER 2020 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 identify forward-looking statements by terms such as "project", "outlook", "target", "may", "will", "would", "should", "seek", "expect", "plan", "intend", "forecast", "a ...

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, 2020 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 (I.R.S. Employer Identificati ...

Lithia Motors, Inc. (NYSE:LAD) Q2 2020 Earnings Conference Call July 22, 2020 10:00 AM ET Company Participants Eric Pitt - Vice President, Investor Relations and Treasurer Bryan DeBoer - President and Chief Executive Officer Chris Holzshu - Executive Vice President and Chief Operating Officer Tina Miller - Senior Vice President and Chief Financial Officer Conference Call Participants Rick Nelson - Stephens Armintas Sinkevicius - Morgan Stanley Ryan Sigdahl - Craig-Hallum Capital Rajat Gupta - JPMorgan Bret ...