Q COMPANY UPDATE

Transcription

1 Q COMPANY UPDATE

2 DISCLOSURE Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of Forward looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "project," "outlook," "expect," "anticipate," "intend," "plan," "believe," "estimate," "may," "seek," "would," "should," "likely," "goal," "strategy," "future," "maintain," "continue," "remain," "target" or "will" and similar references to future periods. Examples of forward-looking statements in this press release include, among others, statements regarding: Expected operating results, such as improved store efficiency and performance; generating 2017 full year earnings of $8.35 to $8.50 per diluted share and all projections; Our ability to improve store performance; Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future, and our ability to improve earnings and achieve returns on investments; Anticipated revenues from acquired and open point stores; and Anticipated availability of liquidity from our credit facility and unfinanced operating real estate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events that depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this press release. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation, future economic and financial conditions (both nationally and locally), changes in customer demand, our relationship with, and the financial and operational stability of, vehicle manufacturers and other suppliers, risks associated with our indebtedness (including available borrowing capacity, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms), government regulations, legislation and others set forth throughout "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in "Part I, Item 1A. Risk Factors" of our most recent Annual Report on Form 10-K, and from time to time in our other filings with the SEC. We urge you to carefully consider this information and not place undue reliance on forward-looking statements. We undertake no duty to update our forward-looking statements, including our earnings outlook, which are made as of the date of this presentation.. Non-GAAP Financial Measures This presentation contains non-gaap financial measures such as adjusted net income and diluted earnings per share, adjusted SG&A as a percentage of revenue and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit, adjusted pre-tax margin, EBITDA, adjusted EBITDA, leveraged cash flow and adjusted total debt. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. As a result, we review any non-gaap financial measures in connection with a review of the most directly comparable measures calculated in accordance with GAAP. We caution you not to place undue reliance on such non-gaap measures, but also to consider them with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-gaap financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other noncash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures. 2

3 LITHIA AT A GLANCE One of the largest auto retailers in the U.S. (#3 by adj. EBITDA / #5 by revenue) #318 on the Fortune 500 #14 5-year Total Shareholder Return on the Fortune In May, Bryan DeBoer transitioned from role as Company President to CEO 1996 Walt's son Sid took over the business in 1968 and grew it to include 5 stores and 19 franchises in Southern Oregon. In December 1996, the collection of dealerships was transformed into Lithia Motors, Inc., a publicly traded company (NYSE stock symbol-lad) 1 store 5 stores 87 stores 130 stores TODAY Lithia is one of the largest, strongest returning and most diversified public automotive retailers in North America 160 stores ~$10bn in annual revenues 160 dealership locations, 30 vehicle brands Headquartered in Medford, OR 1946 Walt DeBoer founded Lithia Motors in 1946 as a Chrysler- Plymouth-Dodge dealership in Ashland, Oregon 2014 In October, completed the acquisition of DCH Auto Group, adding ~$2.3bn in annualized revenue, one of the largest deals between dealership groups in history Over 60 years of experience in the North American automotive retail market 3

4 LITHIA S STRATEGY CAPITAL ENGINE Proven leadership team Generates substantial cash Four diversified business lines INTERNAL DRY POWDER Vast potential in existing stores World-class performance management Agile, local market approach GREENFIELD-LIKE GROWTH Deliver superb returns Acquire and maximize businesses Create complementary opportunities GROWTH POWERED BY PEOPLE 4

5 MAXIMIZING THE CUSTOMER LIFE CYCLE NEW VEHICLES Average age of vehicle historically high Technology, safety and sustainability drive sales Increase market share Fleet management, shared mobility SERVICE, BODY, AND PARTS Increasing units in operation Greater speed and value Expand product offerings Increase customer retention Innovative Customer Solutions From living room to show room USED VEHICLES Access to 3 levels of trade-ins starting with new car sale Used car market is ~2.5x bigger than new FINANCE AND INSURANCE Expand vehicle finance penetration Improve product profitability Create loyalty in service department 5

6 OUR KEY STRENGTHS 6

7 RESILIENT BUSINESS MODEL WITH MULTIPLE EARNINGS STREAMS LITHIA BUSINESS MIX (Q2 2017) 1 New vehicles Used vehicles Parts and service F&I 5% 10% 29% 25% SUMMARY 53% of gross profit derived from countercyclical segments (Used, P&S) A third of gross profit from high-margin and stable Parts & Service segment Generated 1.7% Adj. EBITDA margin at trough of financial crisis 33% SAAR AND ADJ EBITDA MARGIN 20 10% 56% 20% 22% %4.7%4.6% 4.3% 4.3% 4.6%4.9% 4.7%4.6% 4.3% 4.0%4.0%4.0% 3.8% 3.4% 3.5% 3.1% 3.2% 3.0% 2.7% 1.7% 8% 6% 4% 2% Revenue Gross profit 0 0% Note: Adjusted EBITDA is defined as net income, excluding non-core items, addback other interest expense, taxes and depreciation, less floor plan interest expense, used vehicle LOC interest expense 7

8 DIVERSIFIED BY GEOGRAPHY AND BRAND GEOGRAPHIC PRESENCE BY DEALERSHIPS NEW VEHICLE REVENUE BY BRAND LITHIA NEW VEHICLE UNIT MIX Honda 21% Toyota 18% Import 56% Subaru 8% Nissan 4% Other Import* 5% Chrysler 18% Domestic 33% GM 8% Ford 7% BMW/Mini 4% Luxury 11% Acura 3% Audi 2% Other Luxury** 2% *Other import includes Hyundai, VW, Kia, Mazda and Mitsubishi ** Other luxury includes Mercedes, Lexus, Porsche and Volvo Nationwide footprint with 160 dealership locations across 18 states and 30 brands 8

9 AUTOMOTIVE FOCUSED ACQUISITIONS ACQUISITION FRAMEWORK Seek strong branded, under-earning stores Capable of purchasing $1-2B revenues without leverage Data driven metrics used to identify opportunities COMPLEMENTARY OPPORTUNITIES AUTO RETAIL OPPORTUNITIES INVESTMENT METRICS 3x-5x Ent. Value/EBITDA Equity investment of 10%- 20% of annual revenues INTERNAL DRY POWDER CAPITAL ENGINE 9

10 DISCIPLINED INVESTMENT STRATEGY MAXIMIZE POTENTIAL Unlock earnings in acquired businesses Rapid integration to achieve strong returns Award-winning total shareholder return ACQUISITION FRAMEWORK Data driven metrics used to identify opportunities Target 20+% after tax ROE Generates greenfieldlike returns CREATING OPPORTUNITIES Innovating to meet customer needs Developing and growing complementary businesses Providing further diversification 300% 288% 0-5 Years +5 Years 16.1% 20.0% 21.9% 22.4% 24.4% 22.7% 200% 4.3% 100% 119% 90% 71% 100% return on equity 44% 22% 7% Lithia Return on Equity 0% Accumulated Acquisition Return on Equity 10

11 DCH CASE STUDY: LARGE GROUP Purchased in October 2014 TRANSACTION RATIONALE ACQUISITION SUMMARY Top 10 dealer group; ~$2.3bn in revenue Total Investment: $266mm Blue Sky: $205mm Prior Expand to metro markets partnering with a proven volume retailer Transformed brand mix Revenues ($mm) $2,266 $2,276 $2,339 $2,500 EBITDA ($mm) $43 $59 $85 $98 Implied investment multiple 6.0x 4.4x 3.1x 2.6x Investment as a % of revenue 11% 11% 11% 10% Significant opportunity to improve performance and boost earnings DIVERSIFIED BRAND MIX* Lithia DCH Total Domestic 51% 2% 30% OPERATIONAL INTEGRATION Total Company: 4.3% Adj. EBITDA Margin 3.6% 3.9% Import 38% 80% 56% 1.9% 2.6% Luxury 11% 18% 14% *As of transaction announcement in June 2014 Prior

12 RASMUSSEN CASE STUDY: MEDIUM GROUP Purchased in April 2011 TRANSACTION RATIONALE Luxury platform in metropolitan market of Portland Created scale in market to augment existing locations Required capital investment previous dealer unwilling to make ACQUISITION SUMMARY Total Investment: $22mm Blue Sky: $18mm *Assumes all real estate is leased at actual rent or if owned, at a 7% capitalization rate DIVERSIFIED BRAND MIX* Prior Revenues ($mm) $146 $158 $188 $227 $243 $248 EBITDA* ($mm) $2 $10 $12 $13 $14 $14 Implied investment multiple Investment as a % of revenue 11.8x 2.2x 1.9x 1.7x 1.6x 1.6x 15% 14% 12% 10% 9% 9% OPERATIONAL INTEGRATION Lithia Ras. Total Domestic 52% - 44% Import 42% - 35% Total Company: 4.3% Adj EBITDA Margin 6.3% 6.4% 5.7% 5.8% 5.6% Luxury 6% 100% 21% 1.3% *As of transaction date in April 2011 Prior

13 ISLAND HONDA CASE STUDY: SINGLE STORE Purchased in January 2014 TRANSACTION RATIONALE Exclusive franchise: only Honda store on island of Maui Remodeled store to improve operational efficiencies Entered Hawaii; subsequently added four dealerships on Oahu ACQUISITION SUMMARY Total Investment: $5.5mm Blue Sky: $4.6mm *Assumes all real estate is leased at actual rent or if owned, at a 7% capitalization rate SUBSEQUENT EXPANSION Prior Revenues ($mm) $36 $34 $53 $65 EBITDA* ($mm) $0.3 $2 $4 $6 Implied investment multiple 16.4x 2.9x 1.3x 0.9x Investment as a % of revenue 15% 16% 10% 8% Hawaii Revenues OPERATIONAL INTEGRATION Adj. EBITDA Margin 8.0% 9.0% $145 Total Company: 4.3% 5.6% $65 $ * Island Honda All Other HI stores 0.9% Prior *Assumes full year revenues for Honolulu Ford acquired in

14 PRODUCT LINE OVERVIEW 14

15 NEW VEHICLE OVERVIEW COMMENTARY Significant revenue growth driven by acquisitions and recovering SAAR environment Fundamental indicators support stable SAAR environment Lithia sells 10% more vehicles than OEM market share Growing mobile and internet platforms continue to drive growth HISTORICAL PERFORMANCE $1,848 $2,257 Revenue ($mm) CAGR: 27.9% $3,078 $4,552 $4, Growth 32.8% 22.1% 36.4% 47.9% 8.5% SSS 30.0% 16.3% 11.4% 8.8% 3.3% KEY DEMAND DRIVER HISTORICAL NEW VEHICLE SAAR PERFORMANCE Recovery spikes above long-run average DRY POWDER OPPORTUNITY Company Avg: 108.6% 1.8% % OF SALES ABOVE OEM MARKET SHARE 13.3% 25.0% Lithia Partners Group: 126.0% % 100.0% 100.0% Stores owned < 2 Years Stores owned > 2 Years Target # of stores Incremental Gross Profit at Target: ~ $45mm Note: < 2 Years represent stores acquired after December 31, 2014; > 2 Years represents stores acquired prior to December 31, 2014; Lithia Partners Group includes stores that have outperformed their performance management goal for 2 consecutive years 15

16 USED VEHICLE OVERVIEW COMMENTARY Strong revenue growth Used vehicle market ~2.5x larger than new vehicle market at ~40mm retail sales annually Low correlation with new vehicle cycle Franchised dealers at 37% of used vehicle market, up from 34% in 2007 Used sales increase incremental F&I and parts and service revenue KEY DEMAND DRIVERS HISTORICAL PERFORMANCE Revenue ($mm) CAGR: 27.9% $2,227 $1,927 $1,362 $833 $1, Growth 22.8% 23.8% 32.0% 41.4% 15.6% SSS 20.6% 18.4% 15.3% 13.1% 11.1% DRY POWDER OPPORTUNITY Retail Units sold (mm) USED MARKET SIZE New Used 2.8x 2.7x 2.4x 2.3x USED MARKET SHARE Franchised Dealers, 37% CarMax, 2% Private Party, 29% Independent Dealers, 32% Company Avg: 67 units AVG. USED UNITS PER STORE EACH MONTH Stores owned < 2 Years Stores owned > 2 Years 85 Target Lithia Partners Group: 97 units # of stores Incremental Gross Profit at Target: ~ $80mm Source: WardsAuto Group U.S. Market Used Vehicle Sales report Note: < 2 Years represent stores acquired after December 31, 2014; > 2 Years represents stores acquired prior to December 31, 2014; Lithia Partners Group includes stores that have outperformed their performance management goal for 2 consecutive years 16

17 FINANCE & INSURANCE OVERVIEW COMMENTARY F&I PVR has increased $200 since 2012 Company arranges financing on over 75% of units sold Total PVR has been unchanged the last three years F&I products increase service retention Key opportunity at newly acquired dealerships PERFORMANCE VS. PEERS HISTORICAL PERFORMANCE $112 Revenue ($mm) $139 $1,083 $1,122 CAGR: 31.1% $190 $1,170 F&I PVR $283 $1,196 $331 $1, DRY POWDER OPPORTUNITY F&I PER RETAIL UNIT VS. PEERS F&I PER RETAIL UNIT $146 $1,422 Company Avg: $1,298 per unit $1,314 $1,450 Lithia Partners Group: $1,367 per unit $1,276 $948 Stores owned < 2 Years Stores owned > 2 Years # of stores Target Lithia Peer Average Incremental Gross Profit at Target: ~ $40mm Note: F&I per unit as of the twelve months ended December 31, 2016 Note: < 2 Years represent stores acquired after December 31, 2014; > 2 Years represents stores acquired prior to December 31, 2014; Lithia Partners Group includes stores that have outperformed their performance management goal for 2 consecutive years 17

18 PARTS & SERVICE OVERVIEW COMMENTARY 49% margin business; nearly 1/3 of Company s gross profit Resilient earnings important to cyclical durability Dependent on installed base (264mm units) vs. new vehicle sales Increasing number of vehicles to service as recovering SAAR cohorts age HISTORICAL PERFORMANCE Revenue ($mm) Gross margin % CAGR: 24.8% $845 $739 $512 $348 $ % 48.4% 48.8% 49.2% 48.6% Growth 10.0% 11.1% 33.5% 44.3% 14.3% SSS 6.3% 6.9% 11.3% 10.2% 8.6% KEY DEMAND DRIVER LITHIA MARKET UNITS-IN-OPERATION OPPORTUNITY DRY POWDER OPPORTUNITY % SERVICE RETENTION ABOVE OEM AVERAGE 130, ,000 90,000 70, year Avg UIO 6.3% 6.9% 4.5% 0.7% 74,668 74,908 75,895 78,614 SB&P Y-o-Y SS Sales Growth 11.3% 10.2% 8.6% 126, % 108,617 92,510 84,705 10% 5% 0% (5)% Company Avg: 14.1% 16.0% -9.4% Stores owned < 2 Years Stores owned > 2 Years Target # of stores % Lithia Partners Group: 20.1% 50, E (10)% Incremental Gross Profit at Target: ~ $50mm Note: < 2 Years represent stores acquired after December 31, 2014; > 2 Years represents stores acquired prior to December 31, 2014; Lithia Partners Group includes stores that have outperformed their performance management goal for 2 consecutive years 18

19 SCALABLE OPERATING MODEL TOTAL GP PVR YTD 2017 New $2,039 $1,985 $1,970 Used 2,434 2,323 2,276 F&I 1,196 1,276 1,302 Total* $3,420 $3,426 $3,434 * Total includes gross profit for new retail, used retail, used wholesales, and F&I COMMENTARY Total blended PVR has been unchanged the last three years Targeting the SG&A / Gross in low to mid 60% range - Recent acquisitions dilute performance Mature stores SG&A performance significantly better than newly acquired stores HISTORICAL OPERATING PERFORMANCE SG&A / GROSS DRY POWDER OPPORTUNITY YTD 2017 Total GP $1,176 $1,301 $717 Adjusted SG&A Adj. SG&A as a % of GP 67.9% 68.9% 68.9% Adj. EBITDA $361 $377 $ % 63.5% 62.0% Company Avg: 68.9% Lithia Partners Group: 58.0% Adj. EBITDA margin % 4.6% 4.3% 4.5% Stores owned < 2 Years Stores owned > 2 Years Target # of stores Incremental Gross Profit at Target: ~ $90mm Note: Adjusted EBITDA is defined as net income, excluding non-core items, addback other interest expense, taxes and depreciation, less floor plan interest expense, used vehicle LOC interest expense Note: < 2 Years represent stores acquired after December 31, 2014; > 2 Years represents stores acquired prior to December 31, 2014; Lithia Partners Group includes stores that have outperformed their performance management goal for 2 consecutive years 19

20 DRY POWDER OPPORTUNITY Improvements augment other business lines: - Increased trade-in opportunities to drive used vehicle sales - Increased retail vehicle sales generate additional F&I income - Increased units in operations to grow service business Potential EBITDA opportunity of ~$171mm SUMMARY OF INCREMENTAL PROFIT OPPORTUNITY ($mm) New Vehicle: increase OEM market share Used Vehicle: increase # of used vehicles retailed Current Performance Synergistic Benefit Total $45 - $ F&I: increase PVR Parts & Service: increase retention rate Incremental gross profit opportunity $215 $165 $380 Estimated EBITDA 1 $50 $40 $90 Leverage: reduce SG&A as a % of gross Additional floor plan interest expense (5) (4) (9) Incremental EBITDA opportunity $135 $36 $171 1 Assumes a pre-tax margin as a % of gross profit of 25% 20

21 FINANCIAL STRENGTH 21

22 INDUSTRY LEADING GROWTH AND MARGIN PROFILE COMMENTARY REVENUE 27% revenue CAGR, ~2.5x closest peer Same-store growth outpacing market Best-in-class cost structure Leading EBITDA growth and strong margin profile ADJUSTED SG&A TO GROSS PROFIT sss % growth $3,316 $4,006 $5,390 ADJUSTED EBITDA $7,864 $8, % 15.4% 12.1% 10.6% 5.3% CAGR 27.2% 11.4% 9.9% 8.9% 8.4% 3.9% 69.4% 67.2% 67.7% 67.9% 68.9% Margin 68.9% 69.2% 70.9% 73.4% 77.6% 77.7% Adj EBITDA ($mm) Adj EBITDA margin Margin CAGR $361 $ % 25.2% $ % 21.3% 3.1% 15.7% $197 $ % 12.1% 4.1% 8.4% 4.6% 4.9% 4.7% 4.6% 4.3% 2.9% 3.2% Adjusted EBITDA is defined as net income, excluding non-core items, addback other interest expense, taxes and depreciation, less floor plan interest expense, used vehicle LOC interest expense 22

23 ROBUST FCF GENERATION AND LOW LEVERAGE Strong free cash flow generation Proven ability to delever Low leverage vs. peers Disciplined and transparent capital allocation policies - Organic growth opportunities - Strategic M&A - Dividends - Opportunistic buybacks LEVERAGED FREE CASH FLOW (EBITDA CAPEX) $ % TOTAL DEBT TO EBITDA 1.4x FCF (US$mm) FCF conversion % 0.9x $ x $ % 66.4% $278 $ % 74.6% x 1.5x 1.4x Annualized 2017 Note: Leveraged FCF conversion defined as EBITDA less capex / EBITDA; Total debt exclude floor plan and used vehicle LOC 2016 FCF margin 3.3% 3.2% 3.0% 2.4% 2.0% 1.0% Debt / Adj EBITDA 1.4x 2.7x 2.9x 3.0x 3.1x 3.5x 23

24 PRUDENT STEWARDS OF CAPITAL CAPITAL EXPENDITURES FCF AND ACQUISITIONS $MM FCST 2017 Post-Acq. Improv. $21 $33 $31 $54 Free Cash Flow** $320 Acquisition Equity Value Facilities for Open Points Lease Buy-outs Existing Facility Improv Maintenance $130 $33 $87 $164 $31 $186 $118 $88 $38 Total $86 $83 $100 $113 DIVIDENDS PAID YTD 2017 Note: FCF defined as earnings before interest, taxes, depreciation and amortization (EBITDA) add back stock compensation less cash paid for taxes, interest, dividends and capital expenditures. SHARE REPURCHASES $35.0 Dividends Paid Dividend per Share $1.20 $150.0 Share Repurchases Price per Share $ $MM $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $- $0.76 $0.95 $0.61 $0.49* $0.37 $10 $13 $16 $20 $ $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 $ per Share $MM $125.0 $100.0 $75.0 $50.0 $25.0 $- $40.76 $70.52 $ $80.24 $24.41 $21 $5 $16 $32 $ $ $75.00 $50.00 $25.00 $0.00 $ per Share *Q4 12 dividend was accelerated and paid in December 2012 rather in Data has been normalized to include the $0.10 dividend in 2013 # of Shares 848, , , ,386 1,407,674 24

25 Q2 17 UPDATE

26 Q2 17 INCOME STATEMENT SUMMARY Increased revenue 16% and adjusted EPS to $2.28 Q HIGHLIGHTS Revenue ($MM) 16% Gross Profit Adjusted Diluted ($MM) EPS 16% 16% $2,133 $2,467 $322 $375 $1.96 $2.28 Q Q Q Q Q Q Note: See appendix for reconciliation of adjusted diluted EPS Grew total same store sales 3% SAME STORE QUARTER-OVER-QUARTER GROWTH Revenue Gross Profit New vehicles 1% (2)% Used retail vehicles 4% 3% F&I 8% 8% Service, parts and body 7% 9% Total 3% 5% 26

27 Q2 17 PEER COMPARISON SAME STORE GROSS PROFIT GROWTH ADJUSTED NET PROFIT MARGIN 5.2% 2.3% 2.0% 2.0% 1.6% 1.4% -0.5% -2.7% Lithia Asbury Group1 Penske Sonic AutoNation Note: Sonic and AutoNation have not yet released their Q results. Lithia Asbury Penske Group1 AutoNation Sonic Note: See appendix for reconciliation of adjusted net profit margin. Sonic and AutoNation have not yet released their Q results. SAME STORE SALES GROWTH ADJUSTED SG&A AS A % OF GROSS PROFIT LAD ABG AN SAH GPI PAG New Vehicles 0.7% (0.5)% (5.2)% (8.7)% Used Vehicles 4.1% 4.6% (3.6)% (3.3)% 66.9% 67.0% 72.2% 69.6% 68.8% 73.5% 75.5% 76.1% F&I 8.2% 8.5% (0.3)% 3.3% SB&P 7.1% 5.8% 4.2% 0.2% Total 2.6% 2.4% (3.2)% (4.9)% Note: Sonic and AutoNation have not yet released their Q results. bps reduction (increase) Lithia Asbury Group1 Penske AutoNation Sonic (10) (70) (130) (60) Q Q Note: See appendix for reconciliation of adjusted SG&A. Sonic and AutoNation have not yet released their Q results. 27

28 2017 GUIDANCE PROJECTED EARNINGS RANGE*: FY 17: $ $ PERFORMANCE ASSUMPTIONS: Annual Assumptions Total Revenues $9.6 to $9.9 billion New vehicle same store sales increase 1.0% Used vehicle same store sales increase 5.0% Service body and parts same store sales increase 7.0% Finance and insurance same store per unit $1,325 to $1,350 per unit New vehicle margins 5.6% to 5.8% Used vehicle margins 11.5% to 11.7% Service body and parts margins 48.5% to 49.0% Tax rate 39.5% Average diluted shares outstanding 25.1 million 28

29 APPENDIX 29

30 SUPPLEMENTAL INFORMATION 2017 Adjusted Income Statement Details YTD 6/30/2017 OEM settlements Reserve adjustments Acquisition expenses YTD 6/30/2017 $K, except for per share amounts As Reported Q1 Q2 Q2 Adjusted Selling, general and administrative $500,062 - (3,878) (2,137) 494,047 Income from operations 190,091-3,878 2, ,106 Other income (expense), net 10,232 (9,111) - - $1,121 Income from continuing operations before income taxes $169,099 (9,111) 3,878 2,137 $166,003 Income taxes (65,172) 3,423 (1,231) (821) (63,801) Net income from continuing operations $103,927 (5,688) 2,647 1,316 $102,202 Diluted earnings per share from continuing operations $4.13 (0.23) $4.06 Diluted share count 25,177 30

31 SUPPLEMENTAL INFORMATION 2016 Adjusted Income Statement Details YTD 12/31/2016 Gain on sale of stores Equity investment fair valuation adjustment Legal reserve adjustment Tax attribute YTD 12/31/2016 $K, except for per share amounts As Reported Q1 Q1 Q2 Q3 Q4 Q1 Q4 Q4 Adjusted Asset impairments $13,992 - (3,498) (3,498) (3,498) (3,498) Selling, general and administrative $899,590 1, (1,906) (2,030) - $896,741 Income from operations $338,364 (1,087) 3,498 3,498 3,498 3,498 1,906 2,030 - $355,205 Other income (6,103) - 2,066 2,065 2,066 2, ,159 Income from continuing operations before income taxes $283,523 (1,087) 5,564 5,563 5,564 5,563 1,906 2,030 - $308,626 Income taxes ($86,465) 426 (5,945) (6,837) (7,592) (8,156) (747) (2,503) (1,320) (119,139) Net income from continuing operations $197,058 (661) (381) (1,274) (2,028) (2,593) 1,159 (473) (1,320) $189,487 Diluted earnings per share from continuing operations $7.72 (0.03) (0.01) (0.05) (0.08) (0.11) 0.05 (0.02) (0.05) $7.42 Diluted share count 25,521 31

32 SUPPLEMENTAL INFORMATION 2015 Adjusted Income Statement Details YTD 12/31/2015 Gain on sale of stores Asset impairment Transition Agreement Equity Investment YTD 12/31/2015 $K, except for per share amounts As Reported Q1 Q2 Q2 Q4 Q3 Q1 Q2 Q3 Q4 Adjusted Asset impairments $ 20,124 (2,000) (1,603) (4,130) (4,130) (4,131) (4,130) $ Selling, general and administrative $ 811,175 3,349 2,570 (18,296) $ 798,798 Income from operations $ 302,735 (3,349) (2,570) 2,000 1,603 18,296 4,130 4,130 4,131 4,130 $ 335,236 Other income $ (1,006) 1,732 1,733 1,732 $1,733 $ 5,924 Income from continuing operations before income taxes $ 262,704 (3,349) (2,570) 2,000 1,603 18,296 5,862 5,863 5,863 5,863 $ 302,135 Income taxes $ (79,705) 1,004 1,305 (780) (605) (6,507) (7,250) (7,652) (7,414) (8,516) $ (116,120) Net income from continuing operations $ 182,999 (2,345) (1,265) 1, ,789 (1,388) (1,789) (1,551) (2,653) $ 186,015 Diluted earnings per share from continuing operations $ 6.91 (0.09) (0.05) (0.05) (0.07) (0.06) (0.10) $ 7.02 Diluted share count 26,490 32

33 SUPPLEMENTAL INFORMATION Adjusted EBITDA $K YTD June 30, 2017 FY 2016 FY 2015 Adjusted net income $102,202 $189,467 $186,015 Add: other interest expense 13,840 23,207 19,491 Add: adjusted income taxes 63, , ,120 Add: depreciation and amortization 26,770 49,369 41,600 Less: Used vehicle line of credit interest (2,157) (3,732) (2,456) Adjusted EBITDA 204, , ,770 33