2016 11 Investor Presentation · presentation include, among others, statements regarding: •...

INVESTOR PRESENTATION

2 LITHIA MOTORS NOVEMBER 2016

DISCLOSUREForward-Looking StatementsThis presentation includes "forward-looking statements" within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward lookingstatements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential futureacquisitions 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 thispresentation include, among others, statements regarding:

• Expected operating results, such as improved store efficiency and performance;• generating 2016 full year earnings of $7.40 to $7.45 per diluted share; generating 2017 full year earnings of $8.00 to $8.30 per diluted share and all projections;• Anticipated national new car sales levels;• Our ability to improve store performance; Anticipated acquisition opportunities and additions of dealership locations to our portfolio in the future; and our ability to achieve

returns on investment;• Anticipated revenues from acquired 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 weoperate may differ materially from those made in or suggested by the forward-looking statements in this presentation. The risks and uncertainties that could cause actual results to differmaterially from estimated or projected results include, without limitation, future economic and financial conditions (both nationally and locally), changes in customer demand, ourrelationship 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, Item7. 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, andfrom 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 dutyto update our forward-looking statements, including our earnings outlook, which are made as of the date of this presentation.

Non-GAAP Financial MeasuresThis presentation contain non-GAAP financial measures such as adjusted net income and diluted earnings per share, adjusted SG&A as a percentage of revenues and gross profit,adjusted operating margin, adjusted operating profit as a percentage of gross profit, and adjusted pre-tax margin. Non-GAAP measures do not have definitions under GAAP and maybe 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 reviewof 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 themwith 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 toimprove 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 theattachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our resultsfrom core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of ourresults from core business operations. These presentations should not be considered an alternative to GAAP measures.


LITHIA MOTORS OVERVIEWNationwide Geographic Footprint


LITHIA MOTORS OVERVIEW152 Dealerships in the United States

NATIONAL MARKET SHARE LITHIA NEW VEHICLE UNIT MIX

Import 51% 56%

Honda 20%

Toyota 19%

Subaru 8%

Nissan 4%

Other Import* 5%

Domestic 44% 33%Chrysler 19%

GM 9%

Ford 5%

Luxury 5% 11%

BMW/Mini 4%

Acura 3%

Audi 1%

Other Luxury** 3%

Note: Quarter-to-date national market share for September 2016 from the “Auto Unit Sales & SAAR” report published by Stephens Inc.; Lithia market share based on new vehicle unit sales for the three months ended September 30, 2016.

* Other import includes Hyundai, Volkswagen, Kia, Mazda and Mitsubishi

** Other luxury includes Mercedes, Lexus, Porsche and Volvo

Two strategies for growth:

Exclusive franchises in medium markets for domestic / import stores and large markets for luxury stores

Extra large and mega markets to cluster domestic, import and luxury stores

FCST 2017

$8.00Milestone

$7.00Milestone


GROWTH MILESTONES

Achieved with organic growth and acquisitions

Completed $6.00 and $7.00 Milestones in 2015

Target completing Milestones in 2-6 years

Delivers $9.00 Earnings Per Share

ADJUSTED EARNINGS PER SHARE$9.00

Milestone$5.00

Milestone$6.00

Milestone

FCST 2016

FY 2015

Note: See appendix for reconciliation of adjusted earnings per share.

$5.00Milestone

($1.0B)

FCST 2016

FY 2015

ORGANIC REVENUE GROWTH ($B)

ACQUISITION REVENUE GROWTH ($B)

FCST 2017

FCST 2016

FY 2015

FCST 2017

$5.00Milestone

($4.3B)

$6.00Milestone

($4.5B)

$7.00Milestone

($4.8B)

$8.00Milestone

($5.1B)

$9.00Milestone

($5.3B)

$6.00Milestone

($2.3B)

$7.00Milestone

($3.1B)

$8.00Milestone

($4.1B)

$9.00Milestone

($4.8B)

$7.02

$7.45

$8.30

$4.00 $5.00 $6.00 $7.00 $8.00 $9.00

$4.8

$4.9

$5.1

$3.5 $4.0 $4.5 $5.0 $5.5

$3.1

$3.6

$4.2

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0

$2.96$3.99

$5.11

$7.02 $7.45E$8.30E

$0.00

$4.00

$8.00

$12.00

2012 2013 2014 2015 2016 2017

Adj

uste

d E

PS


EARNINGS SENSITIVITYAbility to sustain earnings through cyclical periods

Organic opportunities to grow used, F&I and service, body and parts

Acquisition cadence expected to increase if SAAR declines

Ample liquidity with current cash flow and credit facility

UPSIDE/DOWNSIDE CASE

ASSUMPTIONS

BASE DOWNSIDEEPS

IMPACT UPSIDEEPS

IMPACT

New vehicle 17MM SAAR 15MM ($0.64) 19MM $0.52

Used vehicle 64 units/store/mth 55 units ($0.75) 80 units $0.54

F&I $1,290/unit $1,200 ($1.15) $1,400 $1.47

SB&P +4.5% growth +3.5% $0.21 +4.5% $0.45

Acquisitions NA $2B in Rev $1.42 $500MM in Rev $0.57

($0.90) $3.55

Downside: $6.75

Upside: $11.20

14.4SAAR 15.4 16.4 17.4 17.2

Note: See appendix for reconciliation of adjusted EPS. Upside and downside range based on assumptions and analysis performed as of July 2016.

OPERATIONALGROWTH


STABLE, PROFITABLE INDUSTRYFour Separate Diversified Businesses

Note: Margin based on reported adjusted pre-tax income as a percentage of revenue. Peer group average includes Lithia, AutoNation, Sonic, Asbury, Penske, and Group 1.

Recession-tested

Variable cost structure

Diverse and complimentary gross profit mix

Service business consistent

Note: Used vehicles includes both used retail and wholesale vehicles.

YTD 2016 Revenue Mix

YTD 2016 Gross Profit Mix

New vehicles 56% 22%

Used vehicles 29% 21%

Service, body and parts 10% 31%

F&I and other 5% 26%

PROFITABILITY MIX

PROFITABILITY AND SAAR

2.0% 1.9% 1.5% 2.1% 2.5% 2.6% 2.8% 2.7% 2.8%

-3%

-18%-21%

11% 11%13%

7% 6% 6%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Peer Group PTI% SAAR Growth Rate

23%

17% 17%13%

6% 5% 5%3% 3% 3% 2% 1% 1% 1% 0% 0%

CA NY/NJ OR TX MT WA AK NV ID IA HI ND NM MA VT WY


NEW VEHICLE MARKETOpportunities Remain Despite Recovery

After recessionary periods, SAAR at or above the long run average for several years

Geographic and economic diversification

Q3 2016 NEW VEHICLE UNIT STATE MIX

HISTORICAL NEW VEHICLE SAAR PERFORMANCE

Source: US Department of Commerce, Bureau of Economic Analysis, data as of December 23, 2013

10.0

15.0

20.0

1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Recovery spikes above long-run average


USED VEHICLE MARKETLargest Future Opportunity

Used vehicle market 2.5x larger than new

Franchised dealers 37% of used vehicle market

75% of 2015 used retail sales originate from new vehicle sale

12.8 14.4 15.4 16.4 17.4

38.8 40.5 42.038.8 39.4

2011 2012 2013 2014 2015

Ret

ail U

nits

sol

d (in

Mill

ions

)

New UsedSource: WardsAuto Group “U.S. Market Used Vehicle Sales“ report

USED MARKET SIZE USED MARKET SHARECarMax,

2%

Private Party, 29%

Independent Dealers, 32%

Franchised Dealers,

37%

Source: 2015 data from WardsAuto Group “U.S. Market Used Vehicle Sales“ report

3.0x 2.8x 2.7x 2.4x 2.3x

LITHIA USED WATERFALL

In Units Retail Sale Retailed Trade-ins% Sold w/

Retailed Trade

2015 New Vehicles 96,556 38,622 40%

1st Trade-in Retailed 38,622 14,483 15%

2nd Trade-in Retailed 14,483 4,828 5%

3rd Trade-in Retailed 4,828 1,931 2%

Aggregate Retailed Trades 57,933

2014 Used Retail Sales 77,552

75%


USED VEHICLE GROWTH

Achieving 75 unit goal increases unit sales 13%

70% of stores sell less than 75 unit goal

Target 75 Used Units Per Store Per Month

15

55

3525 21

<=25 26-50 51-75 76-100 100+Store Distribution of Average Used Retail Units Sold per Month

2016 AVERAGE USED RETAIL UNITS SOLD PER MONTH

Average:65 units

YTD 2016 SAME STORE USED UNIT MIX YTD 2016 USED MIX DETAILS

Core, 51%

Value Auto, 23%

CPO, 26%

CPO: Manufacturer certified pre-owned vehiclesCore: 3 to 7 year old vehiclesValue Auto: Vehicles over 80,000 miles

11%13%

6%

Same Store Revenue Growth

CPO Core Value Auto

Goal:75 units


VEHICLE SALES GROWTH

F&I per unit $99 lower than peer average

F&I products increase service retention

Total gross profit per unit of $3,481 up $52 from 2015

Opportunity Exists in F&I

Note: Peer average includes AutoNation, Sonic, Asbury, Penske, and Group 1.

F&I PENETRATION RATES

Note: Penetration rates are on a same store basis. 2015 and 2016 LOF penetration rates diluted by DCH, as product offering at DCH stores started in 2015.

$1,271

$1,370

Lithia Peer Average

Q2 2016 F&I PER UNIT

42%

44%

44%

Service Contracts

2014 2015 YTD 2016

37%

33%

27%

Lifetime Oil Contracts

YTD 2016 VEHICLE SALES SAME STORE DETAILS

Revenue Growth

Unit Growth

Gross Profit

GrowthGP per

Retail Unit

GP per Retail Unit

Change

New 3% 1% - % $2,007 ($12)

Used retail 11% 9% 6% $2,375 ($86)

F&I 11% NA 12% $1,289 $89

Total vehicle* 6% 4% 6% $3,481 $52

* Total vehicle metrics include sales and gross profit for new, used retail, used wholesale and F&I and new and used retail units


SERVICE MARKETTailwind as Units in Operation Expand

74,825 74,668 75,025 76,220 79,14985,431

95,145109,052

-4.3%

0.7%

4.5%6.5% 6.7%

11.3% 10.3%8.5%

-10%

-5%

0%

5%

10%

50,000

60,000

70,000

80,000

90,000

100,000

110,000

120,000

130,000

2009 2010 2011 2012 2013 2014 2015 2016E10-year Avg UIO SB&P Y-o-Y SS Sales Growth*

Service growth correlated with SAAR growth

Increasing service work as installed units grow

LITHIA MARKET UIO OPPORTUNITY

TRAILING SAAR/SERVICE GROWTH

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

Trailing 5-year SAAR Growth Trailing 3-year Industry SB&P Growth

*Forecasted same store service, body and parts growth for FY 2016E


SERVICE GROWTHImproving Retention Increases Service Revenue

▪ Average 41% new and 24% used retention in service over 8 years

▪ Across all vehicles sold, cumulative service GP per unit is $724

▪ Ex defections, cumulative GP per unit is $2,287

CUMULATIVE SERVICE GROSS PROFIT PER VEHICLE

% OF VEHICLES SOLD RETURNING FOR SERVICE

46%

65%56%

45%

35%30%

26%21%

32%39%

31%25%

20% 17% 14% 11%

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

% New Vehicle

% Used Vehicle

Total$724

Total$2,287

$76 $140 $126 $105 $86 $75 $64$52Avg GP

Across AllUnits Sold

$193 $265 $284 $298 $311 $314 $312 $310Avg GPper Sold

UnitsRetained

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8


SERVICE GROWTHRetaining Customers Longer

Service revenue increasing due to more units in operation

Average age of vehicles serviced increased 1.3 years since 2008

SAME STORE SALES YEAR-OVER-YEAR COMPARISON

2011 2012 2013 2014 2015 YTD 2016

Customer Pay 4.0% 6.8% 4.7% 9.1% 8.3% 7.3%

Warranty (4.2)% (2.9)% 13.4% 23.0% 25.2% 16.6%

Wholesale Parts 9.3% 8.4% 7.2% 8.2% 4.2% 1.5%

Body Shop 14.0% 15.1% 3.8% 10.5% 5.0% 17.9%

Total 4.5% 6.3% 6.4% 11.3% 10.3% 9.1%

AVERAGE AGE OF VEHICLES SERVICED

Avg # of Veh Srv per month 0-1 Yrs 2-3 Yrs 4-5 Yrs 6-7 Yrs 8-9 Yrs 10+ Yrs

2012 65,507 24% 16% 21% 16% 10% 13%

2013 69,399 26% 18% 15% 16% 11% 14%

2014 75,332 27% 20% 12% 15% 11% 15%

2015 83,357 28% 22% 13% 10% 11% 17%

Serv

iced

Ve

hicl

e M

ix

4.0 4.4 4.5 4.8 4.9 4.9 4.9 5.0 5.3

2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016


LEVERAGING COST STRUCTURE

SG&A as a % of gross profit impacted by acquisitions

Throughput is incremental % of gross profit to operating income after SG&A expenses

Target SG&A as a % of Gross Profit in the Mid to Lower 60% Range

ADJUSTED SG&A AS A % OF GROSS PROFIT

$MM YTD 2016 % of GP YTD 2015 % of GP $ ChangePersonnel $445 46.0 $406 46.0 $39Advertising 59 6.1 50 5.7 9Rent 20 2.1 18 2.0 2Facility Cost 32 3.3 34 3.9 (2)Other 106 11.0 91 10.2 15Total $662 68.5 $599 67.8 $63

Gross Profit $966 $882 $84YTD throughput % 25%

YTD same store throughput % 26%

ADJUSTED SG&A DETAILS

69.4%

67.2%67.7% 67.9%

68.5%

2012 2013 2014 2015 YTD 2016Note: See appendix for reconciliation of adjusted SG&A expense

ACQUISITION OPPORTUNITIES


UNCONSOLIDATED INDUSTRY

Over 18,000 dealerships in the country

10 largest dealers own 1,225 stores

Abundant Acquisition Opportunities

DEALERSHIPS IN THE US

HIGHLY FRAGMENTED MARKET

20,453 18,607

17,653 17,767 17,851 17,838 18,000 18,058

2009 2010 2011 2012 2013 2014 2015 2016

Source: Automotive News, number of Light Vehicle Dealerships in the U.S.

Top 10 Dealers

7%

All Other93%

Source: Automotive News 2015 Top 150 Dealership Groups


FUTURE GROWTH STRATEGYTwo Growth Paths, Over Double the Acquisition Targets

Micro Small Medium Large Extra Large Mega

Vehicle Registrations in Market 0-5K 5K-25K 25K-50K 50K-100K 100K-200K 200K+

Est. Store Count in US 3,950 3.500 1,600 1,700 2,400 4,650

Domestic

Import

Luxury

Est. Acq Targets 210 680 310 30 470 960

1,230 1,430

Two strategies:

Exclusive franchises in medium markets for domestic/import stores and large markets for luxury stores

Extra large and mega markets to cluster domestic, import and luxury stores


ACQUISITION GROWTH

75-100% 5-year after tax ROE

3x-5x EV/EBITDA

10%-20% of annual revenues

Targeting 20% After Tax Return on Equity

ACCUMULATED RETURN ON EQUITY

INVESTMENT METRICS

Improve performance through common systems and measurements

*Equity defined as investment costs, excluding new vehicles and assuming all real estate is leased at actual rent or if owned, a 7% capitalization rate**Assumes steady state revenues 2 years after acquisition, EBITDA adjusted to include flooring interest as an operating expense

2013 2014 2015 2016

$MM Multiple $MM Multiple $MM Multiple $MM Multiple

# of Store 8 36 8 15

Equity* $33 $320 $31 $110

Est. EBITDA** $9 3.7x $69 4.7x $8 3.7x $32 3.4x

Est. Rev** $273 12% $2,715 12% $270 12% $1,020 11%

2010 2011 2012 2013 2014 2015

Year 6

Year 5

Year 4

Year 3

Year 2

Year 1

Acq Year

100%

66% 53%32%

ACQUISITION METRICS

Note: Return based on net income assuming all real estate is leased at actual rent or, if owned, at 7% capitalization rate. Years are based on calendar years. Acquisition year reflects partial year results from acquisition date forward and most recent period results are year-to-date through September 30, 2016.

13%

243%

FINANCIAL DISCIPLINE


FINANCIAL DISCIPLINE

Leverage increased in 2014 and 2016 due to acquisitions

Ample liquidity levels with no near term debt maturities

Positioned for Continued Growth

FUNDS FOR GROWTH

$MM Q3 2016

Cash and Cash Equivalents $24

Availability on Line of Credit 122

Unfinanced Real Estate* 193

Total $339

BALANCE SHEET LEVERAGE

$0 $3

$53$33 $27 $28

$261

2016 2017 2018 2019 2020 2021 Beyond

FUTURE MORTGAGE MATURITIES

41%32%

49% 44%47%

1.9x

1.3x

2.5x

1.8x 2.0x

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2012 2013 2014 2015 YTD 201625.0%

35.0%

45.0%

55.0%

65.0%

Deb

t / A

djus

ted

EBIT

DA

Deb

t to

Tota

l Cap

ital

*Unfinanced real estate represents 80% of the net book value of unfinanced real estate used in operations.

Note: Total capital includes outstanding debt excluding vehicle floor plan financing and total shareholder’s equity. Adjusted EBITDA is defined as earnings before interest excluding floor plan interest, taxes, depreciation and amortization. Debt to adjusted EBITDA calculation is based on outstanding debt as of the end of the period and TTM adjusted EBITDA

Note: Outstanding mortgage amounts as of September 30, 2016


FINANCIAL DISCIPLINEBalance Investment and Shareholder Return

CAPITAL EXPENDITURES

DIVIDENDS PAID

$34

$130$87

$164 $150

$26 $33

$320

$31

$110

2012 2013 2014 2015 YTD 2016

Free Cash Flow** Acquisition Equity Value

FREE CASH FLOW AND ACQUISITIONS

SHARE REPURCHASES

$7 $10 $13 $16 $20

$0.26

$0.37

$0.49*

$0.61$0.76

$0.00

$0.20

$0.40

$0.60

$0.80

2011 2012 2013 2014 2015 $-

$5.0

$10.0

$15.0

$20.0

$25.0$

per S

hare

$MM

Dividends Paid Dividend per Share

$21 $5 $16$32

$108$24.41$40.76

$70.52

$102.84$79.84

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

2012 2013 2014 2015 YTD 2016 $-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$ pe

r Sha

re

$MM

Share Repurchases Price per Share

$MM 2013 2014 2015 FCST 2016

Post-Acq. Improv. $12 $21 $33 $35

Facilities for Open Points 5 7 3 -

Lease Buy-outs 7 25 10 22

Existing Facility Improv. 14 20 20 23

Maintenance 12 13 17 20

Total $50 $86 $83 $100

# of Shares 848,092 127,900 226,729*Q4’12 dividend was accelerated and paid in December 2012 rather in 2013. Data has been normalized to include the $0.10 dividend in 2013

**Free cash flow defined as earnings before interest, taxes, depreciation and amortization (EBITDA) add back stock compensation less cash paid for taxes, interest, dividends and capital expenditures.

306,386 1,315,617

Q3 2016 UPDATE


Q3’16 FINANCIAL RESULTS

Increased revenue 9% and adjusted EPS to $2.06

Grew total same store sales 5%

Revenue Gross Profit

New vehicles 1% (6%)

Used retail vehicles 11% 7%

F&I 11% 11%

Service, parts and body 10% 7%

Total 5% 4%

SAME STORE QUARTER-OVER-QUARTER GROWTH

Q3 2016 HIGHLIGHTS

$2,085

$2,270

Q3 2015 Q3 2016

Revenue ($MM)

$2.03 $2.06

Q3 2015 Q3 2016

Adjusted Diluted EPS

$311$337

Q3 2015 Q3 2016

Gross Profit ($MM)

8% 1%9%

Note: See appendix for reconciliation of adjusted diluted EPS

Income Statement Summary


Q3’16 FINANCIAL RESULTS

SAME STORE GROSS PROFIT GROWTH

SAME STORE SALES GROWTH

ADJUSTED NET PROFIT MARGIN

ADJUSTED SG&A AS A % OF GROSS PROFIT

2.3%2.0% 1.9% 1.8% 1.7%

0.8%

Lithia Asbury AutoNation Penske Group1 SonicNote: See appendix for reconciliation of adjusted net profit margin

LAD ABG AN GPI PAG SAH

New Vehicles 1.3% (0.2)% (2.9)% (5.8)% (2.9)% 1.1%

Used Vehicles 10.6% (0.6)% (2.3)% (1.2)% (2.1)% 0.8%

F&I 10.8% (2.6)% (2.9)% (1.4)% 2.3% 4.2%

SB&P 9.7% 7.6% 2.8% 2.6% 1.8% 3.9%

Total 4.5% 0.5% (1.2)% (3.4)% (1.6)% 2.8%

66.0%69.2% 68.5%

72.5%

77.3%77.7%

67.6%69.2% 70.7%

73.6%

78.1%79.2%

Lithia Asbury AutoNation Group1 Penske Sonic

Q3 2015 Q3 2016

Note: See appendix for reconciliation of adjusted SG&A

Peer Comparisons

4.4%

-0.1% -0.2%-1.1%

-2.7%-3.7%

Lithia Sonic Asbury Group1 Penske AutoNation

bps reduction(increase)

- (110)(160) (220) 80 150


2016 GUIDANCE

FY’16: $7.40 - $7.45PROJECTED EARNINGS RANGE*:

2016 PERFORMANCE ASSUMPTIONS:

*Excludes the impact of future acquisitions, dispositions and any potential non‐core items

Annual Assumptions

Total Revenues $8.5 to $8.6 billion

New vehicle same store sales increase 2.5%

Used vehicle same store sales increase 9.5%

Service body and parts same store sales increase 8.5%

Finance and insurance per unit $1,260 to $1,280 per unit

New vehicle margins 5.7% to 5.9%

Used vehicle margins 11.7% to 11.9%

Service body and parts margins 48.2% to 48.4%

Tax rate 39.5%

Average diluted shares outstanding 25.5 million


2017 GUIDANCE

FY’17: $8.00 - $8.30PROJECTED EARNINGS RANGE*:

2017 PERFORMANCE ASSUMPTIONS:

*Excludes the impact of future acquisitions, dispositions and any potential non‐core items

Annual Assumptions

Total Revenues $9.2 to $9.4 billion

New vehicle same store sales increase 1.5%

Used vehicle same store sales increase 5.5%

Service body and parts same store sales increase 5.0%

Finance and insurance per unit $1,270 to $1,295 per unit

New vehicle margins 5.5% to 5.7%

Used vehicle margins 11.5% to 11.7%

Service body and parts margins 48.2% to 48.4%

Tax rate 39.5%

Average diluted shares outstanding 25.3 million

APPENDIX


SUPPLEMENTAL INFORMATIONBalance Sheet

$KAs of

September 30, 2016

As of December 31,

2015

Cash and cash equivalents 24,116 45,008

Accounts receivable 317,664 308,462

Inventories, net 1,657,693 1,470,987

Other current assets 33,225 54,408

Total current assets 2,032,698 1,878,865

Property and equipment, net 991,721 876,660

Goodwill 219,021 213,220

Franchise value 163,220 157,699

Other non-current assets 156,946 100,855

Total assets 3,563,606 3,227,299

$KAs of

September 30, 2016

As of December 31,

2015

Floor plan notes payable 73,762 48,083

Floor plan notes payable: non-trade 1,351,940 1,265,872

Current maturities of long-term debt 26,674 38,891

Trade payables 78,442 70,871

Accrued liabilities 204,361 167,108

Total current liabilities, 1,735,179 1,590,825

Long-term debt, less current maturities 727,191 606,463

Deferred revenue 77,577 66,734

Deferred income taxes 58,721 53,129

Other long-term liabilities 98,848 81,984

Total liabilities 2,697,516 2,399,135

Total stockholders’ equity 866,090 828,164

Total liabilities and stockholder’s equity 3,563,606 3,227,299


SUPPLEMENTAL INFORMATION2016 Adjusted Income Statement Details

YTD 9/30/2016

Gain on sale of stores Equity investment fair valuation adjustment Legal reserve

adjustmentYTD

9/30/2016

$K, except for per share amounts As Reported Q1 Q1 Q2 Q3 Q1 Adjusted

Asset impairments $10,494 - (3,498) (3,498) (3,498) - -

Selling, general and administrative $662,766 1,087 - - - (1,906) $661,947

Income from operations $256,847 (1,087) 3,498 3,498 3,498 1,906 $268,160

Other income (4,534) - 2,066 2,065 2,066 - 1,663

Income from continuing operationsbefore income taxes $217,401 (1,087) 5,564 5,563 5,564 1,906 $234,911

Income taxes ($71,662) 426 (5,945) (6,837) (7,592) (747) (92,357)

Net income from continuing operations $145,739 (661) (381) (1,274) (2,028) 1,159 $142,554

Diluted earnings per share fromcontinuing operations $5.69 (0.03) (0.01) (0.05) (0.08) 0.05 $5.57

Diluted share count 25,598



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) 1,220 998 11,789 (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 0.03 0.45 (0.05) (0.07) (0.06) (0.10) $ 7.02




YTD 12/31/2014

Disposal Gain

Reserve adjustments

Equity Investment Acquisition expenses Tax Attribute YTD

12/31/2014

$K, except for per share amountsAs

Reported Q2 Q1 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Adjusted

Asset impairments $1,853 - - (1,853) - - - - - - -

Selling, general and administrative $563,207 - (3,931) - (163) (883) (819) - - - $557,411

Income from operations $231,899 - 3,931 1,853 163 883 819 - - - $239,548

Other income 3,199 1,160 $4,359

Income from continuing operations before income taxes $210,495 - 3,931 3,013 163 883 819 - - - $219,304

Income taxes ($74,955) - (1,545) (6,506) (63) (319) (338) (73) (194) (600) (84,593)

Net income from continuing operations $135,540 - 2,386 (3,493) 100 564 481 (73) (194) (600) $134,711

Net income from discontinued operations $3,180 (3,490) - - - - - - - - $(310)

Net income $138,720 (3,490) 2,386 (3,493) 100 564 481 (73) (194) (600) $134,401

Diluted earnings per share from continuing operations $5.14 - 0.09 (0.13) - 0.02 0.02 - (0.01) (0.02) $5.11

Diluted earnings per share from discontinued operations $0.12 (0.13) - - - - - - - - ($0.01)

Diluted earnings per share $5.26 (0.13) 0.09 (0.13) - 0.02 0.02 - (0.01) (0.02) $5.10




YTD 12/31/2013

Disposal gain Reserve adjustments Tax attribute YTD

12/31/2013

$K As Reported Q4 Q2 Q4 Q2 Q3 Q4 Adjusted

Selling, general and administrative $427,400 2,531 (3,812) (2,341) - - - $423,778

Income from operations $183,518 (2,531) 3,812 2,341 - - - $187,140

Income from continuing operations before income taxes $165,788 (2,531) 3,812 2,341 - - - $169,410

Income taxes (60,574) 968 (1,484) (869) (228) (1,284) (1,320) (64,791)

Net income from continuing operations $105,214 (1,563) 2,328 1,472 (228) (1,284) (1,320) $104,619

Net income from discontinued operations 786 - - - - - - 786

Net income $106,000 (1,563) 2,328 1,472 (228) (1,284) (1,320) $105,405

Diluted earnings per share from continuing operations $4.02 (0.06) 0.09 0.05 (0.01) (0.05) (0.05) $3.99

Diluted earnings per share from discontinued operations 0.03 - - - - - - 0.03

Diluted earnings per share $4.05 (0.06) 0.09 0.05 (0.01) (0.05) (0.05) $4.02




YTD 12/31/2012

Asset impairments and disposal

gain

Equity investment Tax attribute YTD

12/31/2012

$K As Reported Q1 Q1 Q1 Q2 Q4 Adjusted

Asset impairments $115 (115) - - - - -

Selling, general and administrative $373,688 739 - - - - $347,427

Income from operations $148,369 (624) - - - - $147,745

Other income, net $2,525 - (224) - - - $2,281

Income from continuing operations before income taxes $128,457 (624) (224) - - - $127,589

Income taxes (49,062) 224 95 (493) (573) (374) (50,163)

Net income from continuing operations $79,395 (380) (149) (493) (573) (374) $77,426

Net income from discontinued operations 967 (172) - - - - 795

Net income $80,362 (552) (149) (493) (573) (374) $78,221

Diluted earnings per share from continuing operations $3.03 (0.01) (0.01) (0.02) (0.02) (0.01) $2.96

Diluted earnings per share from discontinued operations 0.04 (0.01) - - - - 0.03

Diluted earnings per share $3.07 (0.02) (0.01) (0.02) (0.02) (0.01) $2.99


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