Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 21, 2020 | Jun. 30, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-14733 | ||
Entity Registrant Name | LITHIA MOTORS INC | ||
Entity Incorporation, State or Country Code | OR | ||
Entity Tax Identification Number | 93-0572810 | ||
Entity Address, Address Line One | 150 N. Bartlett Street | ||
Entity Address, City or Town | Medford | ||
Entity Address, State or Province | OR | ||
Entity Address, Postal Zip Code | 97501 | ||
City Area Code | 541 | ||
Local Phone Number | 776-6401 | ||
Title of 12(b) Security | Class A common stock without par value | ||
Trading Symbol | LAD | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 2,659,094,000 | ||
Documents Incorporated by Reference | The Registrant has incorporated into Part III of Form 10-K, by reference, portions of its Proxy Statement for its 2020 Annual Meeting of Shareholders. | ||
Entity Central Index Key | 0001023128 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class A common stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 22,724,919 | ||
Class B common stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 600,000 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 84 | $ 31.6 |
Accounts receivable, net of allowance for doubtful accounts of $7.3 and $7.2 | 505 | 529.4 |
Inventories, net | 2,433.7 | 2,365.3 |
Other current assets | 47.8 | 65.1 |
Total Current Assets | 3,070.5 | 2,991.4 |
Property and equipment, net of accumulated depreciation of $284.3 and $240.5 | 1,611.7 | 1,448 |
Operating lease right-of-use assets | 251.9 | |
Goodwill | 454.6 | 434.9 |
Franchise value | 306.7 | 288.7 |
Other non-current assets | 388.5 | 221 |
Total Assets | 6,083.9 | 5,384 |
Current Liabilities: | ||
Floor plan notes payable | 425.2 | 324.4 |
Floor plan notes payable: non-trade | 1,642.4 | 1,733.3 |
Current maturities of long-term debt | 39.3 | 25.9 |
Trade payables | 125.3 | 126.3 |
Accrued liabilities | 336.9 | 283.6 |
Total Current Liabilities | 2,569.1 | 2,493.5 |
Long-term debt, less current maturities | 1,430.6 | 1,358.2 |
Deferred revenue | 137.9 | 121.7 |
Deferred income taxes | 131.1 | 91.2 |
Non-current operating lease liabilities | 238.5 | |
Other long-term liabilities | 109 | 122.2 |
Total Liabilities | 4,616.2 | 4,186.8 |
Stockholders’ Equity: | ||
Preferred stock - no par value | 0 | 0 |
Additional paid-in capital | 46 | 35 |
Accumulated other comprehensive loss | (0.7) | 0 |
Retained earnings | 1,401.8 | 1,162.1 |
Total Stockholders’ Equity | 1,467.7 | 1,197.2 |
Total Liabilities and Stockholders’ Equity | 6,083.9 | 5,384 |
Class A common stock | ||
Stockholders’ Equity: | ||
Common stock: Class A and Class B | 20.5 | 0 |
Class B common stock | ||
Stockholders’ Equity: | ||
Common stock: Class A and Class B | $ 0.1 | $ 0.1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 7.3 | $ 7.2 |
Accumulated depreciation | $ 284.3 | $ 240.5 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Class A common stock | ||
Common stock A and B, shares authorized | 100,000,000 | 100,000,000 |
Common stock A and B, shares issued | 22,600,000 | 22,000,000 |
Common stock A and B, shares outstanding | 22,600,000 | 22,000,000 |
Class B common stock | ||
Common stock A and B, shares authorized | 25,000,000 | 25,000,000 |
Common stock A and B, shares issued | 600,000 | 1,000,000 |
Common stock A and B, shares outstanding | 600,000 | 1,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues: | |||
Total revenues | $ 12,672.7 | $ 11,821.4 | $ 10,086.5 |
Cost of sales: | |||
Total cost of sales | 10,718.9 | 10,044.4 | 8,570.4 |
Gross profit | 1,953.8 | 1,777 | 1,516.1 |
Asset impairments | 2.6 | 1.3 | 0 |
Selling, general and administrative | 1,373.8 | 1,253.3 | 1,049.4 |
Depreciation and amortization | 82.4 | 75.4 | 57.7 |
Operating income | 495 | 447 | 409 |
Floor plan interest expense | (72.8) | (62.3) | (39.3) |
Other interest expense | (60.6) | (56) | (34.8) |
Other income, net | 13.8 | 8.8 | 12.2 |
Income before income taxes | 375.4 | 337.5 | 347.1 |
Income tax provision | (103.9) | (71.8) | (101.9) |
Net income | $ 271.5 | $ 265.7 | $ 245.2 |
Basic net income per share (in dollars per share) | $ 11.70 | $ 10.91 | $ 9.78 |
Shares used in basic per share calculations | 23.2 | 24.4 | 25.1 |
Diluted net income per share (in dollars per share) | $ 11.60 | $ 10.86 | $ 9.75 |
Shares used in diluted per share calculations | 23.4 | 24.5 | 25.1 |
Cash dividend paid per Class A and Class B share (in dollars per share) | $ 1.19 | $ 1.14 | $ 1.06 |
New vehicle | |||
Revenues: | |||
Total revenues | $ 6,799.1 | $ 6,602.8 | $ 5,763.6 |
Cost of sales: | |||
Total cost of sales | 6,413.5 | 6,217.7 | 5,423.8 |
Used vehicle retail | |||
Revenues: | |||
Total revenues | 3,527.2 | 3,079 | 2,544.4 |
Cost of sales: | |||
Total cost of sales | 3,159.6 | 2,756.1 | 2,257.6 |
Used vehicle wholesale | |||
Revenues: | |||
Total revenues | 301.2 | 331.3 | 277.8 |
Cost of sales: | |||
Total cost of sales | 297.5 | 325.8 | 273 |
Finance and insurance | |||
Revenues: | |||
Total revenues | 518.6 | 454.8 | 385.9 |
Service, body and parts | |||
Revenues: | |||
Total revenues | 1,325.1 | 1,222.3 | 1,015.8 |
Cost of sales: | |||
Total cost of sales | 657.5 | 621.6 | 522.7 |
Fleet and other | |||
Revenues: | |||
Total revenues | 201.5 | 131.2 | 99 |
Cost of sales: | |||
Total cost of sales | $ 190.8 | $ 123.2 | $ 93.3 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 271.5 | $ 265.7 | $ 245.2 |
Other comprehensive loss, net of tax: | |||
Loss on cash flow hedges, net of tax benefit of $0.3, $0 and $0 | (0.7) | ||
Loss on cash flow hedges, net of tax benefit of $0.3, $0 and $0 | 0 | 0 | |
Comprehensive income | $ 270.8 | $ 265.7 | $ 245.2 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Loss on cash flow hedges, tax benefit | $ 0 | $ 0 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common StockClass A | Common StockClass B | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings |
Balance (in shares) at Dec. 31, 2016 | 23.3 | 1.8 | ||||
Balance at Dec. 31, 2016 | $ 910.8 | $ 165.6 | $ 0.2 | $ 41.2 | $ 0 | $ 703.8 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 245.2 | 245.2 | ||||
Issuance of stock in connection with employee stock plans (in shares) | 0.1 | |||||
Issuance of stock in connection with employee stock plans | 7.5 | $ 7.5 | ||||
Issuance of restricted stock to employees (in shares) | 0.1 | |||||
Repurchase of Class A common stock (in shares) | (0.4) | |||||
Repurchase of Class A common stock | (33.8) | $ (33.8) | ||||
Class B common stock converted to Class A common stock (in shares) | 0.8 | (0.8) | ||||
Class B common stock converted to Class A common stock | $ 0.1 | $ (0.1) | ||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises | 11.3 | 7.6 | 3.7 | |||
Option premiums paid | (33.4) | (33.4) | ||||
Dividends paid | (26.5) | (26.5) | ||||
Issuance of stock in connection with acquisitions | 2.1 | $ 2.1 | ||||
Balance (in shares) at Dec. 31, 2017 | 23.9 | 1 | ||||
Balance at Dec. 31, 2017 | 1,083.2 | $ 149.1 | $ 0.1 | 11.3 | 922.7 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 265.7 | 265.7 | ||||
Issuance of stock in connection with employee stock plans (in shares) | 0.1 | |||||
Issuance of stock in connection with employee stock plans | 10.1 | $ 10.1 | ||||
Issuance of restricted stock to employees (in shares) | 0.1 | |||||
Repurchase of Class A common stock (in shares) | (2.1) | |||||
Repurchase of Class A common stock | (148.9) | $ (168.5) | 19.6 | |||
Compensation for stock and stock option issuances and excess tax benefits from option exercises | 13.4 | $ 9.3 | 4.1 | |||
Dividends paid | (27.7) | (27.7) | ||||
Balance (in shares) at Dec. 31, 2018 | 22 | 1 | ||||
Balance at Dec. 31, 2018 | 1,197.2 | $ 0.1 | 35 | 1,162.1 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 271.5 | 271.5 | ||||
Loss on cash flow hedges, net of tax benefit | (0.7) | (0.7) | ||||
Issuance of stock in connection with employee stock plans (in shares) | 0.1 | |||||
Issuance of stock in connection with employee stock plans | 11 | $ 11 | ||||
Issuance of restricted stock to employees (in shares) | 0.1 | |||||
Repurchase of Class A common stock | (3.2) | $ (3.2) | 0 | |||
Class B common stock converted to Class A common stock (in shares) | 0.4 | (0.4) | ||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises | 16.2 | $ 12.7 | 3.5 | |||
Option premiums received (paid) | 2.4 | 7.5 | (5.1) | |||
Dividends paid | (27.6) | (27.6) | ||||
Balance (in shares) at Dec. 31, 2019 | 22.6 | 0.6 | ||||
Balance at Dec. 31, 2019 | $ 1,467.7 | $ 20.5 | $ 0.1 | $ 46 | $ (0.7) | $ 1,401.8 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Loss on cash flow hedges, tax benefit | $ 0.3 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 271.5 | $ 265.7 | $ 245.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Asset impairments | 2.6 | 1.3 | 0 |
Depreciation and amortization | 82.4 | 75.4 | 57.7 |
Stock-based compensation | 16.2 | 13.3 | 11.3 |
(Gain) loss on disposal of other assets | (0.1) | 0.2 | (0.4) |
Gain from disposal activities | (9.7) | (15.1) | (5.1) |
Deferred income taxes | 40.1 | 33 | (2.8) |
(Increase) decrease (net of acquisitions and dispositions): | |||
Trade receivables, net | 24.4 | 4.7 | (57.4) |
Inventories | (19.7) | (108.9) | (193.1) |
Other assets | 12 | (16) | (3.1) |
Increase (decrease) (net of acquisitions and dispositions): | |||
Floor plan notes payable | 100.7 | 196.9 | 20.3 |
Trade payables | (1.8) | 15.1 | 20 |
Accrued liabilities | (38) | 28.9 | 37.2 |
Other long-term liabilities and deferred revenue | 18.9 | 25.2 | 19.1 |
Net cash provided by operating activities | 499.5 | 519.7 | 148.9 |
Cash flows from investing activities: | |||
Notes receivable issued | 12.5 | 0 | 0 |
Capital expenditures | (124.9) | (158) | (105.4) |
Proceeds from sales of assets | 1.5 | 3.1 | 15.3 |
Cash paid for other investments | (7.2) | (62.7) | (8.6) |
Cash paid for acquisitions, net of cash acquired | (366.6) | (373.8) | (460.4) |
Proceeds from sales of stores | 46.7 | 34.3 | 20.9 |
Net cash used in investing activities | (438) | (557.1) | (538.2) |
Cash flows from financing activities: | |||
(Repayments) borrowings on floor plan notes payable: non-trade, net | (54.6) | (21.9) | 241.5 |
Borrowings on lines of credit | 3,167 | 2,691.4 | 1,754.5 |
Repayments on lines of credit | (3,481.6) | (2,499.6) | (1,836.2) |
Principal payments on long-term debt, scheduled | (26) | (26.5) | (18.2) |
Principal payments on long-term debt and finance lease liabilities, other | (11) | (26.1) | (50.3) |
Proceeds from issuance of long-term debt | 420.3 | 62.1 | 395.9 |
Payment of debt issuance costs | (5.8) | (0.4) | (4.7) |
Proceeds from issuance of common stock | 11 | 10.1 | 7.5 |
Repurchase of common stock | (3.2) | (148.9) | (33.8) |
Dividends paid | (27.6) | (27.7) | (26.5) |
Payments of contingent consideration related to acquisitions | 0 | (0.8) | 0 |
Other financing activity | 2.4 | 0 | (33.4) |
Net cash (used in) provided by financing activities | (9.1) | 11.7 | 396.3 |
(Increase) decrease in cash and cash equivalents | 52.4 | (25.7) | 7 |
Cash and cash equivalents at beginning of year | 31.6 | 57.3 | 50.3 |
Cash and cash equivalents at end of year | 84 | 31.6 | 57.3 |
Supplemental disclosure of cash flow information: | |||
Cash paid during the period for interest | 135.8 | 117.1 | 68.9 |
Cash paid during the period for income taxes, net | 38.4 | 32.9 | 127.3 |
Floor plan debt paid in connection with store disposals | 18.6 | 33.1 | 3.7 |
Supplemental schedule of non-cash activities: | |||
Debt issued in connection with acquisitions | 26.4 | 125.1 | 1.8 |
Debt assumed in connection with acquisitions | 0 | 10.8 | 84.3 |
Issuance of Class A common stock in connection with acquisition | 0 | $ 0 | $ 2.1 |
ROU assets obtained in exchange for lease liabilities | $ 260.3 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization and Business We are one of the largest automotive retailers in the United States and are among the fastest growing companies in the Fortune 500 (# 265 - 2019 ) with 187 stores representing 30 brands in 19 states. We offer vehicles online and through our nationwide retail network. Our “Growth Powered by People” strategy drives us to innovate and continuously improve the customer experience. Basis of Presentation The accompanying Consolidated Financial Statements reflect the results of operations, the financial position and the cash flows for Lithia Motors, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents are defined as cash on hand and cash in bank accounts without restrictions. Accounts Receivable Accounts receivable classifications include the following: • Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received within five to 10 days of selling a vehicle. • Trade receivables are comprised of amounts due from customers, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products. • Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer. • Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives and warranty claims. • Auto loan receivables include amounts due from customers related to retail sales of vehicles and certain finance and insurance products. Receivables are recorded at invoice and do not bear interest until they are 60 days past due. The allowance for doubtful accounts represents an estimate of the amount of net losses inherent in our portfolio of accounts receivable as of the reporting date. We estimate an allowance for doubtful accounts based on our historical write-off experience and consider recent delinquency trends and recovery rates. Account balances are charged against the allowance after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. The annual activity for charges and subsequent recoveries is immaterial. See Note 2 . Inventories Inventories are valued at the lower of net realizable value or cost, using the specific identification method for new vehicles, pooled approach for used vehicles, and the lower of cost (first-in, first-out) or market method for parts. The cost of new and used vehicle inventories includes the cost of any equipment added, reconditioning and transportation. Certain acquired inventories are valued using the last-in first-out (LIFO) method. The LIFO reserve associated with this inventory as of December 31, 2019 and 2018 was immaterial. Manufacturers reimburse us for holdbacks, floor plan interest assistance and advertising assistance, which are reflected as a reduction in the carrying value of each vehicle purchased. We recognize advertising assistance, floor plan interest assistance, holdbacks, cash incentives and other rebates received from manufacturers that are tied to specific vehicles as a reduction to cost of sales as the related vehicles are sold. Parts purchase discounts that we receive from the manufacturer are reflected as a reduction in the carrying value of the parts purchased from the manufacturer and are recognized as a reduction to cost of goods sold as the related inventory is sold. See Note 3 . Property and Equipment Property and equipment are stated at cost and depreciated over their estimated useful lives on the straight-line basis. Leasehold improvements made at the inception of the lease or during the term of the lease are amortized on a straight-line basis over the shorter of the life of the improvement or the remaining term of the lease. The range of estimated useful lives is as follows: Buildings and improvements 5 to 40 years Service equipment 5 to 15 years Furniture, office equipment, signs and fixtures 3 to 10 years The cost for maintenance, repairs and minor renewals is expensed as incurred, while significant remodels and betterments are capitalized. In addition, interest on borrowings for major capital projects, significant remodels, and betterments are capitalized. Capitalized interest becomes a part of the cost of the depreciable asset and is depreciated according to the estimated useful lives as previously stated. For the years ended December 31, 2019 , 2018 and 2017 , we recorded capitalized interest of $2.3 million , $1.3 million and $0.5 million , respectively. When an asset is retired, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is credited or charged to income from operations. Leased property meeting certain criteria are recorded as finance leases. We have finance leases for certain locations, expiring at various dates through August 1, 2037 . Our finance lease right-of-use assets are included in property and equipment on our Consolidated Balance Sheets. Amortization of finance lease right-of-use assets is computed on a straight-line basis over the term of the lease, unless the lease transfers title or it contains a bargain purchase option, in which case, it is amortized over the asset’s useful life and is included in depreciation expense. Finance lease liabilities are recorded as the lesser of the estimated fair market value of the leased property or the net present value of the aggregated future minimum payments and are included in current maturities of long-term debt and long-term debt on our Consolidated Balance Sheets. Interest associated with these obligations is included in other interest expense in the Consolidated Statements of Operations. See Note 7 . Long-lived assets held and used by us are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. We consider several factors when evaluating whether there are indications of potential impairment related to our long-lived assets, including store profitability, overall macroeconomic factors and the impact of our strategic management decisions. If recoverability testing is performed, we evaluate assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows associated with the asset, including its disposition. If such assets are considered to be impaired, the amount by which the carrying amount of the assets exceeds the fair value of the assets is recognized as a charge to income from operations. See Note 4 . Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets. Other identifiable intangible assets, such as franchise rights, are separately recognized if the intangible asset is obtained through contractual or other legal right or if the intangible asset can be sold, transferred, licensed or exchanged. Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount of the reporting unit more likely than not exceeds fair value. We have the option to qualitatively or quantitatively assess goodwill for impairment, and we evaluated our goodwill using a qualitative assessment process. Goodwill is tested for impairment at the reporting unit level. Our reporting units are individual stores as this is the level at which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. We test our goodwill for impairment on October 1 of each year. In 2019 , we evaluated our goodwill using a qualitative assessment process. If the qualitative factors determine that it is more likely than not that the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, we would further evaluate for potential impairment. See Note 5 and Note 13 . Franchise Value We enter into agreements (“Franchise Agreements”) with our manufacturers. Franchise value represents a right received under Franchise Agreements with manufacturers and is identified on an individual store basis. We evaluated the useful lives of our Franchise Agreements based on the following factors: • certain of our Franchise Agreements continue indefinitely by their terms; • certain of our Franchise Agreements have limited terms, but are routinely renewed without substantial cost to us; • other than franchise terminations related to the unprecedented reorganizations of Chrysler and General Motors, and allowed by bankruptcy law, we are not aware of manufacturers terminating Franchise Agreements against the wishes of the franchise owners in the ordinary course of business. A manufacturer may pressure a franchise owner to sell a franchise when the owner is in breach of the franchise agreement over an extended period of time; • state dealership franchise laws typically limit the rights of the manufacturer to terminate or not renew a franchise; • we are not aware of any legislation or other factors that would materially change the retail automotive franchise system; and • as evidenced by our acquisition and disposition history, there is an active market for most automotive dealership franchises within the United States. We attribute value to the Franchise Agreements acquired with the dealerships we purchase based on the understanding and industry practice that the Franchise Agreements will be renewed indefinitely by the manufacturer. Accordingly, we have determined that our Franchise Agreements will continue to contribute to our cash flows indefinitely and, therefore, have indefinite lives. As an indefinite-lived intangible asset, franchise value is tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying value may exceed fair value. The impairment test for indefinite-lived intangible assets requires the comparison of estimated fair value to carrying value. An impairment charge is recorded to the extent the fair value is less than the carrying value. We have the option to qualitatively or quantitatively assess indefinite-lived intangible assets for impairment. We evaluated our indefinite-lived intangible assets using a qualitative assessment process. We have determined the appropriate unit of accounting for testing franchise value for impairment is each individual store. We test our franchise value for impairment on October 1 of each year. In 2019 , we evaluated our franchise value using a qualitative assessment process. If the qualitative factors discussed above determine that it is more likely than not that the fair value of the individual store’s franchise value exceeds the carrying amount, the franchise value is not impaired and the second step is not necessary. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying value, then a quantitative valuation of our franchise value is performed and an impairment would be recorded. See Note 5 and Note 13 . Advertising We expense production and other costs of advertising as incurred as a component of selling, general and administrative expense. Additionally, manufacturer cooperative advertising credits for qualifying, specifically-identified advertising expenditures are recognized as a reduction of advertising expense. Advertising expense and manufacturer cooperative advertising credits were as follows (in millions): Year Ended December 31, 2019 2018 2017 Advertising expense, gross $ 139.8 $ 134.2 $ 116.1 Manufacturer cooperative advertising credits (27.9 ) (25.5 ) (22.8 ) Advertising expense, net $ 111.9 $ 108.7 $ 93.3 Contract Origination Costs Contract origination commissions paid to our employees directly related to the sale of our self-insured lifetime lube, oil and filter service contracts are deferred and charged to expense in proportion to the associated revenue to be recognized. Legal Costs We are a party to numerous legal proceedings arising in the normal course of business. We accrue for certain legal costs, including attorney fees and potential settlement claims related to various legal proceedings that are estimable and probable. See Note 7 . Stock-Based Compensation Compensation costs associated with equity instruments exchanged for employee and director services are measured at the grant date, based on the fair value of the award. If there is a performance-based element to the award, the expense is recognized based on the estimated attainment level, estimated time to achieve the attainment level and/or the vesting period. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. The fair value of non-vested stock awards is based on the intrinsic value on the date of grant. Shares to be issued upon the exercise of stock options and the vesting of stock awards will come from newly issued shares. See Note 10 . Income and Other Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. When there are situations with uncertainty as to the timing of the deduction, the amount of the deduction, or the validity of the deduction, we adjust our financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the largest benefit that is more than 50% likely to be realized. Interest and penalties are recorded as income tax provision in the period incurred or accrued when related to an uncertain tax position. See Note 14 . We account for all taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction (i.e., sales, use, value-added) on a net (excluded from revenues) basis. Concentration of Risk and Uncertainties We purchase substantially all of our new vehicles and inventory from various manufacturers at the prevailing prices charged by auto manufacturers to all franchised dealers. Our overall sales could be impacted by the auto manufacturers’ inability or unwillingness to supply dealerships with an adequate supply of popular models. We depend on our manufacturers to provide a supply of vehicles which supports expected sales levels. In the event that manufacturers are unable to supply the needed level of vehicles, our financial performance may be adversely impacted. We depend on our manufacturers to deliver high-quality, defect-free vehicles. In the event that manufacturers experience future quality issues, our financial performance may be adversely impacted. We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, of a major vehicle manufacturer. Our sales volume could be materially adversely impacted by the manufacturers’ or distributors’ inability to supply the stores with an adequate supply of vehicles. We also receive incentives and rebates from our manufacturers, including cash allowances, financing programs, discounts, holdbacks and other incentives. These incentives are recorded as accounts receivable in our Consolidated Balance Sheets until payment is received. Our financial condition could be materially adversely impacted by the manufacturers’ or distributors’ inability to continue to offer these incentives and rebates at substantially similar terms, or to pay our outstanding receivables. We enter into Franchise Agreements with the manufacturers. The Franchise Agreements generally limit the location of the dealership and provide the auto manufacturer approval rights over changes in dealership management and ownership. The auto manufacturers are also entitled to terminate the Franchise Agreement if the dealership is in material breach of the terms. Our ability to expand operations depends, in part, on obtaining consents of the manufacturers for the acquisition of additional dealerships. See also “ Goodwill ” and “ Franchise Value ” above. We have a credit facility with a syndicate of 19 financial institutions, including seven manufacturer-affiliated finance companies. Several of these financial institutions also provide vehicle financing for certain new vehicles, vehicles that are designated for use as service loaners and mortgage financing. This credit facility is the primary source of floor plan financing for our new vehicle inventory and also provides used vehicle financing and a revolving line of credit. The term of the facility extends through January 2025 . At maturity, our financial condition could be materially adversely impacted if lenders are unable to provide credit that has typically been extended to us or with terms unacceptable to us. Our financial condition could be materially adversely impacted if these providers incur losses in the future or undergo funding limitations. See Note 6 . We anticipate continued organic growth and growth through acquisitions. This growth will require additional credit which may be unavailable or with terms unacceptable to us. If these events were to occur, we may not be able to borrow sufficient funds to facilitate our growth. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and related notes to financial statements. Changes in such estimates may affect amounts reported in future periods. Estimates are used in the calculation of certain reserves maintained for charge-backs on estimated cancellations of service contracts; life, accident and disability insurance policies; finance fees from customer financing contracts and uncollectible accounts receivable. We also use estimates in the calculation of various expenses, accruals and reserves, including anticipated losses related to workers’ compensation insurance; anticipated losses related to self-insurance components of our property and casualty and medical insurance; self-insured lifetime lube, oil and filter service contracts; discretionary employee bonuses, the Transition Agreement with Sidney B. DeBoer, our Chairman of the Board; warranties provided on certain products and services; legal reserves and stock-based compensation. We also make certain estimates regarding the assessment of the recoverability of long-lived assets, indefinite-lived intangible assets and deferred tax assets. We offer a limited warranty on the sale of most retail used vehicles. This warranty is based on mileage and time. We also offer a mileage and time based warranty on parts used in our service repair work and on tire purchases. The cost that may be incurred for these warranties is estimated at the time the related revenue is recorded. A reserve for these warranty liabilities is estimated based on current sales levels, warranty experience rates and estimated costs per claim. The annual activity for reserve increases and claims is immaterial. As of December 31, 2019 and 2018 , the accrued warranty balance was $0.6 million and $0.5 million , respectively. Fair Value of Assets Acquired and Liabilities Assumed We estimate the fair value of the assets acquired and liabilities assumed in a business combination using various assumptions. The most significant assumptions used relate to determining the fair value of property and equipment and intangible franchise rights. We estimate the fair value of property and equipment based on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. We estimate the fair value of our franchise rights primarily using the Multi-Period Excess Earnings (“MPEE”) model. The forecasted cash flows used in the MPEE model contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, general operating expenses, and cost of capital. We use primarily internally-developed forecasts and business plans to estimate the future cash flows that each franchise will generate. We have determined that only certain cash flows of the store are directly attributable to the franchise rights. We estimate the appropriate interest rate to discount future cash flows to their present value equivalent taking into consideration factors such as a risk-free rate, a peer group average beta, an equity risk premium and a small stock risk premium. Additionally, we also may use a market approach to determine the fair value of our franchise rights. These market data points include our acquisition and divestiture experience and third-party broker estimates. We use a relief-from-royalty method to determine the fair value of a trade name. Future cost savings associated with owning, rather than licensing, a trade name is estimated based on a royalty rate and management’s forecasted sales projections. The discount rate applied to the future cost savings factors an equity market risk premium, small stock risk premium, an average peer group beta, a risk-free interest rate and a premium for forecast risk. Revenue Recognition The following describes our major product lines, which represent the disaggregation of our revenues to transactions that are similar in nature, amount, timing, uncertainties and economic factors. New Retail Vehicle and Used Retail Vehicle Sales Revenue from the retail sale of a vehicle is recognized at a point in time, as all performance obligations are satisfied when a contract is signed by the customer, financing has been arranged or collectibility is probable and the control of the vehicle is transferred to the customer. The transaction price for a retail vehicle sale is specified in the contract with the customer and includes all cash and non-cash consideration. In a retail vehicle sale, customers often trade in their current vehicle. The trade-in is measured at its stand-alone selling price in the contract, utilizing various third-party pricing sources. There are no other non-cash forms of consideration related to retail sales. All vehicle rebates are applied to the vehicle purchase price at the time of the sale and are therefore incorporated into the price of the contract at the time of the exchange. We do not allow the return of new or used vehicles, except where mandated by state law. Service, Body and Parts Sales Revenue from service, body and parts sales is recognized upon the transfer of control of the parts or service to the customer. We allow for customer returns on sales of our parts inventory up to 30 days after the sale. Most parts returns generally occur within one to two weeks from the time of sale and are not significant. We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $171.5 million and $149.6 million as of December 31, 2019 , and December 31, 2018 , respectively; and we recognized $25.9 million and $21.9 million of revenue in the years ended December 31, 2019 , and December 31, 2018 , respectively, related to our opening contract liability balances. Our contract liability balance is included in accrued liabilities and deferred revenue. Finance and Insurance Sales Revenue from finance and insurance sales is recognized, net of estimated charge-backs, at the time of the sale of the related vehicle. As a part of the vehicle sale, we seek to arrange financing for customers and sell a variety of add-ons, such as extended warranty service contracts. These products are inherently attached to the governing vehicle and performance of the obligation cannot be performed without the underlying sale of the vehicle. We act as an agent in the sale of these contracts as the pricing is set by the third-party provider, and our commission is preset. A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and is estimated and recognized upon the sale of the contract under the new standard. Our contract asset balance was $8.9 million and $9.2 million as of December 31, 2019 , and December 31, 2018 , respectively; and is included in trade receivables and other non-current assets. Segment Reporting While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes-Benz and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, and automotive finance and insurance products. Corporate and other revenue and income include the results of operations of our stand-alone collision center offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase segment income for Corporate and other while decreasing segment income for the other operating segments. These internal corporate expense allocations are used to increase comparability of our dealerships and reflect the capital burden a stand-alone dealership would experience. Examples of these internal allocations include internal rent expense, internal floor plan financing charges, and internal fees charged to offset employees within our corporate headquarters that perform certain dealership functions. We define our chief operating decision maker (“CODM”) to be certain members of our executive management group. Historical and forecasted operational performance is evaluated on a store-by-store basis and on a consolidated basis by the CODM. We derive the operating results of the segments directly from our internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used to determine our consolidated results, excepted for the internal allocation within Corporate and other discussed above. Our CODM measures the performance of each reportable segment based on several metrics, including earnings from operations, and uses these results, in part, to evaluate the performance of, and to allocate resources to, each of the reportable segments. See Note 18 . |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable consisted of the following (in millions): December 31, 2019 2018 Contracts in transit $ 269.7 $ 294.0 Trade receivables 52.8 54.3 Vehicle receivables 50.9 51.6 Manufacturer receivables 112.4 105.5 Auto loan receivables 62.2 61.5 Other receivables 19.4 6.8 567.4 573.7 Less: Allowance for doubtful accounts (7.3 ) (7.2 ) Less: Long-term portion of accounts receivable, net (55.1 ) (37.1 ) Total accounts receivable, net $ 505.0 $ 529.4 The long-term portion of accounts receivable was included as a component of other non-current assets in the Consolidated Balance Sheets. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of inventories consisted of the following (in millions): December 31, 2019 2018 New vehicles $ 1,704.1 $ 1,700.1 Used vehicles 638.1 576.8 Parts and accessories 91.5 88.4 Total inventories $ 2,433.7 $ 2,365.3 The new vehicle inventory cost is generally reduced by manufacturer holdbacks and incentives, while the related floor plan notes payable are reflective of the gross cost of the vehicle. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following (in millions): December 31, 2019 2018 Land $ 473.0 $ 419.7 Building and improvements 948.0 821.6 Service equipment 113.3 106.3 Furniture, office equipment, signs and fixtures 327.0 283.5 1,861.3 1,631.1 Less accumulated depreciation (284.3 ) (240.5 ) 1,577.0 1,390.6 Construction in progress 34.7 57.4 $ 1,611.7 $ 1,448.0 Long-lived Asset Impairment Charges We recorded $0.5 million and $1.3 million of impairment charges associated with certain properties in 2019 and 2018 , respectively. The long-lived assets were tested for recoverability and were determined to have a carrying value exceeding their fair value. We did no t record any impairment charges associated with property and equipment in 2017 . |
Goodwill and Franchise Value
Goodwill and Franchise Value | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Franchise Value | Goodwill and Franchise Value The following is a roll-forward of goodwill (in millions): Domestic Import Luxury Consolidated Balance as of December 31, 2017 ¹ $ 114.0 $ 104.3 $ 38.0 $ 256.3 Adjustments to purchase price allocations 2 51.4 85.8 43.5 180.7 Reductions through divestitures (0.9 ) (1.2 ) — (2.1 ) Balance as of December 31, 2018 ¹ 164.5 188.9 81.5 434.9 Adjustments to purchase price allocations 3 1.6 1.6 1.9 5.1 Additions through acquisitions 3 6.2 9.0 2.2 17.4 Reductions from impairments (0.3 ) (1.3 ) (0.1 ) (1.7 ) Reductions through divestitures (0.2 ) (0.9 ) — (1.1 ) Balance as of December 31, 2019 1 $ 171.8 $ 197.3 $ 85.5 $ 454.6 (1) Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008. (2) Our purchase price allocation for the 2017 acquisitions of the Baierl Auto Group, the Downtown LA Auto Group, Crater Lake Ford Lincoln, Crater Lake Mazda, Albany CJD Fiat and the 2018 acquisition of Broadway Ford were finalized in 2018. Also, our purchase price allocation for the 2018 acquisition of Prestige Auto Group was preliminary and was allocated to our segments in 2018. As a result, we added $180.7 million of goodwill. (3) Our purchase price allocation for the 2018 acquisitions of the Ray Laks Honda, Ray Laks Acura, Day Auto Group, Prestige Auto Group, and Buhler Ford were finalized in 2019. As a result, we added $22.5 million of goodwill. Our purchase price allocation for the 2019 acquisitions are preliminary and goodwill is not yet allocated to our segments. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 15 . The following is a roll-forward of franchise value (in millions): Franchise Value Balance as of December 31, 2017 $ 187.0 Additions through acquisitions 103.5 Adjustments to purchase price allocations 1 (1.8 ) Balance as of December 31, 2018 288.7 Additions through acquisitions 2 20.9 Adjustments to purchase price allocations 2 3.5 Reductions through divestitures (6.0 ) Reductions from impairments (0.4 ) Balance as of December 31, 2019 $ 306.7 (1) Our purchase price allocation for the 2017 acquisitions of the Baierl Auto Group, the Downtown LA Auto Group, Crater Lake Ford Lincoln, Crater Lake Mazda, Albany CJD Fiat and the 2018 acquisition of Broadway Ford were finalized in 2018.Also, our purchase price allocation for the 2018 acquisition of Prestige Auto Group was preliminary and was allocated to our segments in 2018. As a result, we added $103.5 million of franchise value. (2) Our purchase price allocation for the 2018 acquisitions of the Ray Laks Honda, Ray Laks Acura, Day Auto Group, Prestige Auto Group, and Buhler Ford were finalized in 2019. As a result, we added $24.4 million of franchise value. Our purchase price allocation for the 2019 acquisitions are preliminary and franchise value is not yet allocated to our segments. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 15 . |
Credit Facilities and Long-term
Credit Facilities and Long-term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Credit Facilities and Long-term Debt | Credit Facilities and Long-Term Debt Below is a summary of our outstanding balances on credit facilities and long-term debt (in millions): December 31, 2019 2018 Floor plan notes payable: non-trade $ 1,642.4 $ 1,733.3 Floor plan notes payable 425.2 324.4 Total floor plan debt $ 2,067.6 $ 2,057.7 Used and service loaner vehicle inventory financing commitments $ 149.0 $ 332.0 Revolving lines of credit — 131.6 Real estate mortgages 597.7 592.3 5.250% Senior notes due 2025 300.0 300.0 4.625% Senior notes due 2027 400.0 — Other debt 33.6 34.2 Total long-term debt outstanding 1,480.3 1,390.1 Less: unamortized debt issuance costs (10.4 ) (6.0 ) Less: current maturities (net of current debt issuance costs) (39.3 ) (25.9 ) Long-term debt $ 1,430.6 $ 1,358.2 Credit Facility Effective December 9, 2019, we amended our syndicated credit facility (“credit facility”) increasing the total financing commitment to $2.8 billion and extended the term to January 2025. Our credit facility is comprised of 19 financial institutions, including seven manufacturer-affiliated finance companies. We have the option to reallocate the commitments, provided that the used vehicle inventory floor plan financing commitment does not exceed 16.5% of aggregate commitments, the revolving loan commitment does not exceed 18.75% of aggregate commitments, the service loaner floor plan financing commitment does not exceed $100 million , and the sum of these commitments plus the new vehicle inventory floor plan financing commitment does not exceed the aggregate total financing commitment of $2.8 billion . Additionally, we may request an increase in the aggregate new vehicle floor plan commitment of up to $400 million , provided that the aggregate commitment does not exceed $3.2 billion . All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities. Our obligations under our credit facility are secured by a substantial amount of our assets, including our inventory (including new and used vehicles, parts and accessories), equipment, accounts receivable (and other rights to payment) and our equity interests in certain subsidiaries. Under our credit facility, our obligations relating to new vehicle floor plan loans are secured only be collateral owned by borrowers of new vehicle floor plan loans under the credit facility. The interest rate on the credit facility, as amended, varies based on the type of debt, with the rate of one-month LIBOR plus 1.10% for new vehicle floor plan financing, one-month LIBOR plus 1.40% for used vehicle floor plan financing; and a variable interest rate on the revolving financing ranging from the one-month LIBOR plus 1.00% to 2.00% , depending on our leverage ratio. The annual interest rate associated with our new vehicle floor plan commitment was 2.88% at December 31, 2019 . The annual interest rate associated with both our used vehicle inventory financing commitment and our revolving line of credit was 3.18% at December 31, 2019 . Under the terms of our credit facility, we are subject to financial covenants and restrictive covenants that limit or restrict our incurring additional indebtedness, making investments, selling or acquiring assets and granting security interests in our assets. Under our credit facility, we are required to maintain the ratios detailed in the following table: Debt Covenant Ratio Requirement As of December 31, 2019 Current ratio Not less than 1.10 to 1 1.31 to 1 Fixed charge coverage ratio Not less than 1.20 to 1 2.88 to 1 Leverage ratio Not more than 5.75 to 1 2.62 to 1 Other Lines of Credit During 2019 we entered into a revolving line of credit agreement with Chrysler Capital, a program of Chrysler Group LLC and Santander Consumer USA. The revolving line of credit includes a commitment of up to $20.0 million , secured by certain assets from select Chrysler locations. The interest rate on this revolving line is equal to the one-month LIBOR rate plus 1.50% . Along with this new line with Chrysler Capital, we have a revolving line of credit with Ford Motor Credit Company, bringing our other lines of credit to a total financing commitment of $80.0 million . These other lines of credit mature in 2021 and have interest rates up to 7.33% . As of December 31, 2019 , no amounts were outstanding on these other lines of credit. Floor Plan Notes Payable We have floor plan agreements with manufacturer-affiliated finance companies for certain new vehicles and vehicles that are designated for use as service loaners. As discussed above in “Operating Activities” in “Liquidity and Capital Resources”, during 2019 we entered a floor plan agreement with Chrysler Capital. This facility provides floor plan financing for new vehicle inventory at select Chrysler stores. This facility adds to our existing facility with Ford Motor Credit Company. The interest rates on these floor plan notes payable commitments vary by manufacturer and are variable rates. As of December 31, 2019 , $425.2 million was outstanding on these agreements at interest rates ranging up to 6.25% . Borrowings from, and repayments to, manufacturer-affiliated finance companies are classified as operating activities in the Consolidated Statements of Cash Flows. Real Estate Mortgages and Other Debt We have mortgages associated with our owned real estate. Interest rates related to this debt ranged from 3.0% to 5.3% at December 31, 2019 . The mortgages are payable in various installments through August 1, 2038 . As of December 31, 2019 , we had fixed interest rates on 72.5% of our outstanding mortgage debt. Our other debt includes finance lease liabilities and sellers’ notes. The interest rates associated with our other debt ranged from 2.5% to 8.5% at December 31, 2019 . This debt, which totaled $33.6 million at December 31, 2019 , is due in various installments through August 2037 . 5.250% Senior Notes Due 2025 On July 24, 2017 , we issued $300.0 million in aggregate principal amount of 5.250% Senior Notes due 2025 to eligible purchasers in a private placement under Rule 144A and Regulation S of the Securities Act of 1933. Interest accrues on the Notes from July 24, 2017 and is payable semiannually on February 1 and August 1. The first interest payment was paid on February 1, 2018 . We may redeem the Notes in whole or in part at any time prior to August 1, 2020 at a price equal to 100% of the principal amount plus a make-whole premium set forth in the Indenture and accrued and unpaid interest. After August 1, 2020 , we may redeem some or all of the Notes subject to the redemption prices set forth in the Indenture. If we experience specific kinds of changes of control, as described in the Indenture, we must offer to repurchase the Notes at 101% of their principal amount plus accrued and unpaid interest to the date of purchase. 4.625% Senior Notes Due 2027 On December 9, 2019 , we issued $400.0 million in aggregate principal amount of 4.625% Senior Notes due 2027 to eligible purchasers in a private placement under Rule 144A and Regulation S of the Securities Act of 1933. Interest accrues on the Senior Notes from December 9, 2019 and is payable semiannually on June 15 and December 15. We may redeem the Senior Notes in whole or in part, on or after December 15, 2022 , at the redemption prices set forth in the Indenture. Prior to December 15, 2022 , we may redeem the Senior Notes, in whole or in part, at a price equal to 100% of the principal amount thereof plus a make-whole premium set forth in the Indenture. In addition, prior to December 15, 2022 , we may redeem up to 40% of the Senior Notes from the proceeds of certain equity offerings. Upon certain change of control events (as set forth in the Indenture), the holders of the Senior Notes may require us to repurchase all or a portion of the Senior Notes at a purchase price of 101% of their principal amount plus accrued and unpaid interest, if any, to the date of purchase. Future Principal Payments The schedule of future principal payments associated with real estate mortgages, our Senior Notes and other debt as of December 31, 2019 was as follows (in millions): Year Ending December 31, 2020 $ 41.9 2021 49.5 2022 65.8 2023 60.4 2024 77.6 Thereafter 1,036.1 Total principal payments $ 1,331.3 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases As described further in Note 21 , we adopted Topic 842 as of January 1, 2019, using the modified retrospective approach. This allows adjustment with a cumulative-effect adjustment as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 840. See Note 11 for future minimum operating lease payments after December 31, 2019 , as presented under Topic 842. Charge-Backs for Various Contracts We have recorded a liability of $57.0 million as of December 31, 2019 for our estimated contractual obligations related to potential charge-backs for vehicle service contracts, lifetime oil change contracts and other various insurance contracts that are terminated early by the customer. We estimate that the charge-backs will be paid out as follows (in millions): Year Ending December 31, 2020 $ 31.2 2021 16.3 2022 6.8 2023 2.2 2024 0.5 Thereafter — Total $ 57.0 Lifetime Lube, Oil and Filter Contracts We retain the obligation for lifetime lube, oil and filter service contracts sold to our customers and assumed the liability of certain existing lifetime lube, oil and filter contracts. These amounts are recorded as a contract liability. At the time of sale, we defer the full sale price and recognize the revenue based on the rate we expect future costs to be incurred. As of December 31, 2019 , we had a contract liability balance of $172.0 million associated with these contracts and estimate the contract liability will be recognized as follows (in millions): Year Ending December 31, 2020 $ 34.3 2021 27.4 2022 21.9 2023 18.2 2024 15.4 Thereafter 54.8 Total $ 172.0 The contract liability balance is recorded as components of deferred revenue and accrued liabilities in our Consolidated Balance Sheets. We periodically evaluate the estimated future costs of these assumed contracts and record a charge if future expected claim and cancellation costs exceed the contract liability to be recognized. As of December 31, 2019 , we had a reserve balance of $2.9 million recorded as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets. The charges associated with this reserve were recognized in 2011 and earlier. Self-insurance Programs We self-insure a portion of our property and casualty insurance, vehicle open lot coverage, medical insurance and workers’ compensation insurance. Third parties are engaged to assist in estimating the loss exposure related to the self-retained portion of the risk associated with these insurances. Additionally, we analyze our historical loss and claims experience to estimate the loss exposure associated with these programs. As of December 31, 2019 and 2018 , we had liabilities associated with these programs of $34.4 million and $39.9 million , respectively, recorded as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets. Litigation We are party to numerous legal proceedings arising in the normal course of our business. Although we do not anticipate that the resolution of legal proceedings arising in the normal course of business will have a material adverse effect on our business, results of operations, financial condition, or cash flows, we cannot predict this with certainty. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Class A and Class B Common Stock The shares of Class A common stock are not convertible into any other series or class of our securities. Each share of Class B common stock, however, is freely convertible into one share of Class A common stock at the option of the holder of the Class B common stock. All shares of Class B common stock automatically convert to shares of Class A common stock (on a share-for-share basis, subject to adjustment) on the earliest record date for an annual meeting of our shareholders on which the number of shares of Class B common stock outstanding is less than 1% of the total number of shares of common stock outstanding. Shares of Class B common stock may not be transferred to third parties, except for transfers to certain family members and in other limited circumstances. Holders of Class A common stock are entitled to one vote for each share held of record and holders of Class B common stock are entitled to ten votes for each share held of record. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to shareholders. At a special meeting of shareholders held on January 21, 2019, Sidney B. DeBoer and the Company executed a Class B Conversion Agreement pursuant to which Mr. DeBoer agreed to cause all of the remaining 1,000,000 shares of our Class B common stock to be converted into shares of our Class A common stock by December 31, 2025. The Class B Conversion Agreement will require the conversion of at least 15% of the 1,000,000 Class B shares by the end of every two years , with the first 15% to be converted by December 31, 2020, a total of 30% by December 31, 2022, a total of 45% by December 31, 2024, and the balance by December 31, 2025. As of December 31, 2019, Lithia Holding Company, L.L.C., held 600,000 shares of our Class B common stock. Repurchases of Class A Common Stock Repurchases of our Class A Common Stock occurred under repurchase authorizations granted by our Board of Directors and related to shares withheld as part of the vesting of restricted stock units (“RSUs”). On October 22, 2018, our Board of Directors approved a $250 million repurchase authorization. Share repurchases under our authorizations were as follows: Repurchases Occurring in 2019 Cumulative Repurchases as of December 31, 2019 Shares Average Price Shares Average Price Share Repurchase Authorization — $ — 3,155,095 $ 84.43 As of December 31, 2019 , we had $233.6 million available for repurchases pursuant to our share repurchase authorization. In addition, during 2019 , we repurchased 40,356 shares at an average price of $80.39 per share, for a total of $3.2 million , related to tax withholdings associated with the vesting of RSUs. The repurchase of shares related to tax withholdings associated with stock awards does not reduce the number of shares available for repurchase as approved by our Board of Directors. The following is a summary of our repurchases in the years ended December 31, 2019 , 2018 and 2017 : Year Ended December 31, 2019 2018 2017 Shares repurchased pursuant to repurchase authorizations — 2,112,370 329,000 Total purchase price (in millions) $ — $ 179.0 $ 30.5 Average purchase price per share $ — $ 84.72 $ 92.79 Shares repurchased in association with tax withholdings on the vesting of RSUs 40,356 30,119 32,457 In the second quarter of 2019, we entered into a structured repurchase agreement involving the use of capped call options for the purchase of our Class A common stock. We paid a fixed sum of $36.5 million upon execution of the agreement in exchange for the right to receive either a pre-determined amount of cash or stock. As of December 31, 2019 , the capped call options had expired, and we received $38.9 million in cash. Dividends We declared and paid dividends on our Class A and Class B Common Stock as follows: Quarter declared Dividend amount per Class A and Class B share Total amount of dividends paid (in millions) 2017 First quarter $ 0.25 $ 6.3 Second quarter 0.27 6.8 Third quarter 0.27 6.7 Fourth quarter 0.27 6.7 2018 First quarter $ 0.27 $ 6.7 Second quarter 0.29 7.2 Third quarter 0.29 7.0 Fourth quarter 0.29 6.8 2019 First quarter $ 0.29 $ 6.7 Second quarter 0.30 7.0 Third quarter 0.30 7.0 Fourth quarter 0.30 6.9 |
401(k) Profit Sharing, Deferred
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans | 12 Months Ended |
Dec. 31, 2019 | |
Postemployment Benefits [Abstract] | |
401(k) Profit Sharing, Deferred Compensation and Long-Term Incentive Plans | 401(k) Profit Sharing, Deferred Compensation and Long-Term Incentive Plans We have a defined contribution 401(k) plan and trust covering substantially all full-time employees. The annual contribution to the plan is at the discretion of our Board of Directors. Contributions of $9.8 million , $5.7 million , and $5.8 million were recognized for the years ended December 31, 2019 , 2018 and 2017 , respectively. Employees may contribute to the plan if they meet certain eligibility requirements. We offer a non-qualified deferred compensation and supplemental executive retirement plan (the “SERP”) to provide certain employees the ability to accumulate assets for retirement on a tax deferred basis. We may, depending on position, also make discretionary contributions to the SERP. These discretionary contributions could vest immediately or up to seven years based on the employee’s age. Additionally, a participant may defer a portion of his or her compensation and receive the deferred amount upon certain events, including termination or retirement. The following is a summary related to our SERP (in millions): Year Ended December 31, 2019 2018 2017 Compensation expense $ 0.9 $ 1.3 $ 1.1 Total discretionary contribution $ 0.3 $ 0.8 $ 1.7 Guaranteed annual return 5.00 % 5.00 % 5.00 % As of December 31, 2019 and 2018 , the balance due to participants was $37.9 million and $32.9 million , respectively, and was included as a component of other long-term liabilities in the Consolidated Balance Sheets. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2009 Employee Stock Purchase Plan During 2019, we registered an additional 1,500,000 shares to the 2009 Employee Stock Purchase Plan (the “2009 ESPP”), now allowing for the issuance of 3,000,000 shares of our Class A common stock. The 2009 ESPP is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and is administered by the Compensation Committee of the Board of Directors. Eligible employees are entitled to defer up to 10% of their base pay for the purchase of stock, up to $25,000 of fair market value of our Class A common stock annually. The purchase price is equal to 85% of the fair market value at the end of the purchase period. Following is information regarding our 2009 ESPP: Year Ended December 31, 2019 Shares purchased pursuant to 2009 ESPP 112,138 Weighted average per share price of shares purchased $ 101.03 Weighted average per share discount from market value for shares purchased $ 17.83 As of December 31, 2019 Shares available for purchase pursuant to 2009 ESPP 1,526,505 Compensation expense related to our 2009 ESPP is calculated based on the 15% discount from the per share market price on the date of grant. 2013 Stock Incentive Plan Our 2013 Stock Incentive Plan, as amended, (the “2013 Plan”) allows for the grant of a total of 3.8 million shares in the form of stock appreciation rights, qualified stock options, nonqualified stock options, restricted share awards and restricted stock unit awards (“RSUs”) to our officers, key employees, directors and consultants. The 2013 Plan is administered by the Compensation Committee of the Board of Directors and permits accelerated vesting of outstanding awards upon the occurrence of certain changes in control. As of December 31, 2019 , 1,100,660 shares of Class A common stock were available for future grants. As of December 31, 2019 , there were no stock appreciation rights, qualified stock options, nonqualified stock options or restricted share awards outstanding. Restricted Stock Unit Awards RSU grants vest over a period of time up to four years from the date of grant. RSU activity was as follows: RSUs Weighted average grant date fair value Balance, December 31, 2018 409,865 $ 99.72 Granted 288,761 75.73 Vested (117,873 ) 92.00 Forfeited (84,071 ) 87.53 Balance, December 31, 2019 496,682 90.00 We granted 67,152 time-vesting RSUs to members of our Board of Directors and employees in 2019 . Each grant entitles the holder to receive shares of our Class A common stock upon vesting. A portion of the RSUs vest over four years, beginning on the second anniversary of the grant date, for employees and vests quarterly for our Board of Directors, over their service period. Certain key employees were granted 221,609 performance and time-vesting RSUs in 2019 . Of these, 167,808 shares were earned based on attaining various target levels of operational performance. Based on the levels of performance achieved in 2019 , a weighted average attainment level of 75.7% for these RSUs was met. These RSUs will vest over four years from the grant date. Stock-Based Compensation As of December 31, 2019 , unrecognized stock-based compensation related to outstanding, but unvested RSUs was $14.2 million , which will be recognized over the remaining weighted average vesting period of 2.2 years . Certain information regarding our stock-based compensation was as follows: Year Ended December 31, 2019 2018 2017 Per share intrinsic value of non-vested stock granted $ 75.73 $ 86.84 $ 99.24 Weighted average per share discount for compensation expense recognized under the 2009 ESPP 17.83 13.10 15.20 Fair value of non-vested stock that vested during the period (in millions) 92.0 92.0 69.6 Stock-based compensation recognized in Consolidated Statements of Operations, as a component of selling, general and administrative expense (in millions) 16.2 13.4 11.3 Tax benefit recognized in Consolidated Statements of Operations (in millions) 2.7 3.5 3.5 Cash received from options exercised and shares purchased under all share-based arrangements (in millions) 11.3 10.6 7.8 Tax deduction realized related to stock options exercised (in millions) 9.8 9.0 9.0 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases Lease Accounting We lease certain dealerships, office space, land and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We have elected not to bifurcate lease and non-lease components related to leases of real property. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 26 or more years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease certain real estate to third parties. As described further in “ Note 21 . Changes in Accounting Policies,” we adopted Topic 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The table below presents the lease-related liabilities recorded on the balance sheet (in millions): December 31, 2019 December 31, 2018 Operating lease liabilities: Current portion included in accrued liabilities $ 25.2 $ — Noncurrent operating lease liabilities 238.5 — Total operating lease liabilities 263.7 — Finance lease liabilities: Current portion included in current maturities of long-term debt 1.1 2.0 Long-term portion of lease liabilities in long-term debt 29.5 28.8 Total finance lease liabilities 1 30.6 30.8 Total lease liabilities $ 294.3 $ 30.8 Weighted-average remaining lease term: Operating leases 13 years Finance leases 13 years Weighted-average discount rate: Operating leases 5.81 % Finance leases 5.08 % 1 Corresponding finance lease right-of-use assets are not material and are included in property and equipment, net of accumulated depreciation. The components of lease costs, which were included in selling, general and administrative in our Consolidated Statements of Operations, were as follows (in millions): Year Ended December 31, 2019 Operating lease cost 1 $ 48.5 Variable lease cost 2 1.4 Sublease income (4.6 ) Total lease costs $ 45.3 1 Includes short-term and month-to-month lease costs, which are immaterial. 2 Variable lease cost generally includes reimbursement for actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased real estate. Rent expense, net of sublease income, for all operating leases was $43.3 million and $33.4 million for the years ended December 31, 2018 and 2017 , respectively. These amounts are included as a component of selling, general and administrative expenses in our Consolidated Statements of Operations. As of December 31, 2019 , the maturities of our operating lease liabilities were as follows (in millions): Operating Leases Year Ending December 31, 2020 $ 37.7 2021 35.1 2022 33.1 2023 28.2 2024 25.7 Thereafter 210.3 Total minimum lease payments 370.1 Less: Present value adjustment (106.4 ) Operating lease liabilities $ 263.7 |
Leases | Leases Lease Accounting We lease certain dealerships, office space, land and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We have elected not to bifurcate lease and non-lease components related to leases of real property. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 26 or more years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease certain real estate to third parties. As described further in “ Note 21 . Changes in Accounting Policies,” we adopted Topic 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 840. The table below presents the lease-related liabilities recorded on the balance sheet (in millions): December 31, 2019 December 31, 2018 Operating lease liabilities: Current portion included in accrued liabilities $ 25.2 $ — Noncurrent operating lease liabilities 238.5 — Total operating lease liabilities 263.7 — Finance lease liabilities: Current portion included in current maturities of long-term debt 1.1 2.0 Long-term portion of lease liabilities in long-term debt 29.5 28.8 Total finance lease liabilities 1 30.6 30.8 Total lease liabilities $ 294.3 $ 30.8 Weighted-average remaining lease term: Operating leases 13 years Finance leases 13 years Weighted-average discount rate: Operating leases 5.81 % Finance leases 5.08 % 1 Corresponding finance lease right-of-use assets are not material and are included in property and equipment, net of accumulated depreciation. The components of lease costs, which were included in selling, general and administrative in our Consolidated Statements of Operations, were as follows (in millions): Year Ended December 31, 2019 Operating lease cost 1 $ 48.5 Variable lease cost 2 1.4 Sublease income (4.6 ) Total lease costs $ 45.3 1 Includes short-term and month-to-month lease costs, which are immaterial. 2 Variable lease cost generally includes reimbursement for actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased real estate. Rent expense, net of sublease income, for all operating leases was $43.3 million and $33.4 million for the years ended December 31, 2018 and 2017 , respectively. These amounts are included as a component of selling, general and administrative expenses in our Consolidated Statements of Operations. As of December 31, 2019 , the maturities of our operating lease liabilities were as follows (in millions): Operating Leases Year Ending December 31, 2020 $ 37.7 2021 35.1 2022 33.1 2023 28.2 2024 25.7 Thereafter 210.3 Total minimum lease payments 370.1 Less: Present value adjustment (106.4 ) Operating lease liabilities $ 263.7 |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments We account for derivative financial instruments by recording the fair value as either an asset or liability in our Consolidated Balance Sheets and recognize the resulting gains or losses as adjustments to accumulated other comprehensive income (loss). We do not hold or issue derivative financial instruments for trading or speculative purposes. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive loss (“AOCI”) in stockholders’ equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. In the second quarter of 2019, to hedge the business exposure to rising interest rates on a portion of our variable rate debt, we entered into a 5 -year, zero-cost interest rate collar, with an aggregate notional amount of $300 million . This instrument hedges interest rate risk related to a portion of our $1.6 billion of non-trade floor plan notes payable. The gains and losses from the cash flow hedge are recorded in AOCI and released to interest expense in the same period that the hedged interest expense on the floor plan is recognized. As of December 31, 2019, we had a loss of $1.0 million recorded associated with the fair value of our derivative instrument, included as a component of accrued liabilities and other long-term liabilities with the offset in AOCI. As of December 31, 2019, the amount of net losses we expect to reclassify from AOCI into interest expense in earnings within the next twelve months is immaterial. However, the actual amount reclassified could vary due to future changes in the fair value of these derivatives. No amounts were reclassified from AOCI in the twelve months ended December 31, 2019. See Note 13 for information on the fair value of the derivative contract. We did not have any activity related to the effect of derivative instruments in 2018 or 2017. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories: • Level 1 - quoted prices in active markets for identical securities; • Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and • Level 3 - significant unobservable inputs, including our own assumptions in determining fair value. We determined the carrying value of cash equivalents, accounts receivable, trade payables, accrued liabilities and short-term borrowings approximate their fair values because of the nature of their terms and current market rates of these instruments. We believe the carrying value of our variable rate debt approximates fair value. We have fixed rate debt primarily consisting of amounts outstanding under our senior notes and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1) and calculated the estimated fair value of the fixed rate real estate mortgages using a discounted cash flow methodology with estimated current interest rates based on a similar risk profile and duration (Level 2). The fixed cash flows are discounted and summed to compute the fair value of the debt. As of December 31, 2019 , our real estate mortgages and other debt, which includes finance lease liabilities, had maturity dates between September 1, 2020 and August 31, 2038 . We have derivative instruments consisting of interest rate collars. The fair value of derivative liabilities is measured using observable Level 2 market expectations at each measurement date and is recorded as current liabilities and other long-term liabilities in the Consolidated Balance Sheets. See Note 12 for more details regarding our derivative contracts. We estimate the value of other long-lived assets that are recorded at fair value on a non-recurring basis on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. Real estate appraisers’ and brokers’ valuations are typically developed using one or more valuation techniques including market, income and replacement cost approaches. Because these valuations contain unobservable inputs, we classified the measurement of fair value of long-lived assets as Level 3. There were no changes to our valuation techniques during the year ended December 31, 2019 . Below are our derivative liabilities that are measured at fair value (in millions): Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Measured on a recurring basis: Derivative contract, net $ — $ 1.0 $ — A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows (in millions): December 31, 2019 2018 Carrying value 5.250% Senior Notes due 2025 $ 300.0 $ 300.0 4.625% Senior Notes due 2027 400.0 — Real Estate Mortgages and Other Debt 466.6 445.8 $ 1,166.6 $ 745.8 Fair value 5.250% Senior Notes due 2025 $ 315.0 $ 278.6 4.625% Senior Notes due 2027 412.0 — Real Estate Mortgages and Other Debt 468.7 448.7 $ 1,195.7 $ 727.3 Below are our goodwill and franchise value amounts measured at fair value (in millions): Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Measured on a non-recurring basis: Goodwill $ — $ — $ 0.1 Goodwill and franchise value for our reporting units are tested for impairment annually as of October 1 or more frequently when events or changes in circumstances indicate that impairment may have occurred. We elected to perform qualitative franchise value and goodwill impairment tests as of October 1, 2019. As a result of these tests, we identified certain reporting units where it was more likely than not the fair value was less than the carrying amount, and recorded non-cash impairment charges of $1.7 million and $0.4 million , which was equal to the difference between the fair value and the carrying value for goodwill and franchise value, respectively. The non-cash impairment charges are included in “Asset impairments” in the accompanying Consolidated Statements of Operations and are reported in the “Corporate and Other” category of our segment information. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Tax Provision The income tax provision was as follows (in millions): Year Ended December 31, 2019 2018 2017 Current: Federal $ 40.0 $ 30.3 $ 95.1 State 24.0 11.5 16.9 64.0 41.8 112.0 Deferred: Federal 34.7 20.4 (14.2 ) State 5.2 9.6 4.1 39.9 30.0 (10.1 ) Total $ 103.9 $ 71.8 $ 101.9 At December 31, 2019 and 2018 , we had income taxes payable of $10.1 million and income tax receivable of $17.1 million included as a component of accrued liabilities and other current assets, respectively, in our Consolidated Balance Sheets. The reconciliation between amounts computed using the federal income tax rate of 21% in 2019 and 2018, and 35% in 2017 and our income tax provision is shown in the following tabulation (in millions): Year Ended December 31, 2019 2018 2017 Federal tax provision at statutory rate $ 78.8 $ 70.9 $ 121.5 State taxes, net of federal income tax benefit 23.6 16.1 13.3 Non-deductible items 2.6 1.5 1.3 Permanent differences related to stock compensation 0.2 (0.1 ) (0.8 ) Net change in valuation allowance (0.5 ) 0.5 0.3 General business credits (0.9 ) (1.1 ) (0.9 ) Deferred remeasurement for change in statutory tax rate — (15.8 ) (32.9 ) Other 0.1 (0.2 ) 0.1 Income tax provision $ 103.9 $ 71.8 $ 101.9 Deferred Taxes Individually significant components of the deferred tax assets and (liabilities) are presented below (in millions): December 31, 2019 2018 Deferred tax assets: Deferred revenue and cancellation reserves $ 48.4 $ 47.2 Allowances and accruals, including state tax carryforward amounts 42.1 40.8 Lease Liability 69.7 — Credits and other 0.3 0.3 Valuation allowance (0.6 ) (1.1 ) Total deferred tax assets 159.9 87.2 Deferred tax liabilities: Inventories (40.0 ) (42.0 ) Goodwill (60.7 ) (48.2 ) Property and equipment, principally due to differences in depreciation (113.6 ) (78.0 ) Right of Use Asset (66.6 ) — Prepaid expenses and other (10.1 ) (10.2 ) Total deferred tax liabilities (291.0 ) (178.4 ) Total $ (131.1 ) $ (91.2 ) We consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. As of December 31, 2019, we had a $0.6 million valuation allowance recorded associated with our deferred tax assets. The entire allowance is associated with state net operating losses generated in previous years. The valuation allowance decreased $0.5 million in the current year as a result of taxable income and the expected realization of these benefits. As of December 31, 2019, we had state net operating loss (NOL) carryforward amounts totaling approximately $2.2 million , tax effected, with expiration dates through 2039. We believe that it is more likely than not that the benefit from certain state NOL carryforward amounts will not be realized. In recognition of this risk, we have recorded a valuation allowance of $0.6 million on the deferred tax assets relating to these state NOL carryforwards as discussed above. We had $0.2 million , tax effected, in state tax credit carryforwards with expiration dates through 2029. We believe it is more likely than not that the benefits from these state tax credit carryforwards will be realized. Unrecognized Tax Benefits We have no unrecognized tax benefits recorded as of December 31, 2019 , 2018 and 2017 . Open tax years at December 31, 2019 included the following: Federal 2016 - 2019 21 states 2015 - 2019 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions In 2019 , we completed the following acquisitions: • On May 1, 2019, Hamilton Honda in Hamilton Township, New Jersey. • On May 20, 2019, Ford Lincoln of Morgantown in Morgantown, West Virginia. • On July 1, 2019, Jaguar Landrover Mission Viejo in Mission Viejo, California. • On August 19, 2019, Hazleton Honda in Hazle Township, PA. • On October 7, 2019, Chrysler Dodge Jeep Ram Fiat of Morgantown and Subaru of Morgantown in Morgantown, West Virginia. • On November 4, 2019, Wesley Chapel Toyota, Wesley Chapel Honda, and Tampa Honda in Florida. Revenue and operating income contributed by the 2019 acquisitions subsequent to the date of acquisition were as follows (in millions): Year Ended December 31, 2019 Revenue $ 232.3 Operating income 3.1 In 2018 , we completed the following acquisitions: • On January 15, 2018, Ray Laks Honda in Orchard Park, New York and Ray Laks Acura in Buffalo, New York. • On February 26, 2018, Day Auto Group, a seven store platform based in Pennsylvania. • On March 1, 2018, Prestige Auto Group, a six store platform based in New Jersey and New York. • On April 2, 2018, Broadway Ford in Idaho Falls, Idaho. • On April 23, 2018, Buhler Ford in Eatontown, New Jersey. All acquisitions were accounted for as business combinations under the acquisition method of accounting. The results of operations of the acquired stores are included in our Consolidated Financial Statements from the date of acquisition. The following tables summarize the consideration paid in cash and equity securities for the acquisitions and the preliminary amount of identified assets acquired and liabilities assumed as of the acquisition date (in millions): Consideration paid for the Year Ended December 31, 2019 2018 Cash paid, net of cash acquired $ 366.6 $ 373.8 Debt issued 26.4 125.1 $ 393.0 $ 498.9 Assets acquired and liabilities assumed for the Year Ended December 31, 2019 2018 Trade receivables, net $ — $ 0.7 Inventories 105.2 180.0 Franchise value — 29.8 Property and equipment 124.0 179.7 Other assets 193.1 48.6 Floor plan notes payable — (10.8 ) Other liabilities (29.3 ) (2.3 ) 393.0 425.7 Goodwill — 73.2 $ 393.0 $ 498.9 The purchase price allocations for the 2019 acquisitions are preliminary as we have not obtained all of the detailed information to finalize the opening balance sheet related to real estate purchased, leases assumed and the allocation of franchise value to each reporting unit. Management has recorded the purchase price allocations based on the information that is currently available. We expect substantially all of the goodwill related to acquisitions completed in 2019 to be deductible for federal income tax purposes. We account for franchise value as an indefinite-lived intangible asset. We recognized $2.5 million and $4.3 million , respectively, in acquisition related expenses as a component of selling, general and administrative expenses in the Consolidated Statements of Operations in 2019 and 2018 , respectively. The following unaudited pro forma summary presents consolidated information as if the acquisitions had occurred on January 1 of the previous year (in millions, except for per share amounts): Year Ended December 31, 2019 2018 Revenue $ 13,193.4 $ 12,831.9 Net income 280.2 275.6 Basic net income per share 12.07 11.31 Diluted net income per share 11.98 11.26 These amounts have been calculated by applying our accounting policies and estimates. The results of the acquired stores have been adjusted to reflect the following: depreciation on a straight-line basis over the expected lives for property, plant and equipment; accounting for inventory on a specific identification method; and recognition of interest expense for real estate financing related to stores where we purchased the facility. No non-recurring pro forma adjustments directly attributable to the acquisitions are included in the reported pro forma revenues and earnings. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Transition Agreement In September 2015, we entered into a transition agreement with Sidney B. DeBoer, our Chairman of the Board, which provided him certain benefits until his death. The agreement has an effective date of January 1, 2016 and the initial payment of these benefits began in the third quarter of 2016. On January 22, 2019, we amended the transition agreement to end the annual payments to Mr. DeBoer after 17 years, commencing January 1, 2019, or upon Mr. DeBoer’s death, whichever occurs first. We recorded a charge of $18.3 million in 2015 as a component of selling, general and administrative expense in our Consolidated Statement of Operations related to the present value of estimated future payments due pursuant to this agreement. We believe that this estimate is reasonable; however, actual cash flows could differ materially. We will periodically evaluate whether significant changes in our assumptions have occurred and record an adjustment if future expected cash flows are significantly different than the reserve recorded. As a result of the amendment to the agreement on January 22, 2019, no change was made to the reserve. The balance associated with this agreement was $14.8 million and $15.7 million as of December 31, 2019 and 2018 , respectively, and was included as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets. |
Net Income Per Share of Class A
Net Income Per Share of Class A and Class B Common Stock | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Income Per Share of Class A and Class B Common Stock | Net Income Per Share of Class A and Class B Common Stock We compute net income per share of Class A and Class B common stock using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and unvested restricted shares subject to repurchase or cancellation. The dilutive effect of outstanding stock options and other grants is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net income per share of Class B common stock does not assume the conversion of those shares. Except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock are identical. Our Restated Articles of Incorporation require that the Class A and Class B common stock must share equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the shareholders. Additionally, Oregon law limits amendments to our Articles of Incorporation that would alter the rights, powers or preferences of a given class of stock without the approval of the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Following is a reconciliation of net income and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in millions, except per share amounts ): Year Ended December 31, 2019 2018 2017 (in millions, except per share data) Class A Class B Class A Class B Class A Class B Net income from continuing operations applicable to common stockholders $ 264.5 $ 7.0 $ 254.8 $ 10.9 $ 233.4 $ 11.8 Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding 0.7 — 1.1 — 1.3 — Conversion of Class B common shares into Class A common shares 6.3 — 9.8 — 10.5 — Net income applicable to common stockholders - diluted $ 271.5 $ 7.0 $ 265.7 $ 10.9 $ 245.2 $ 11.8 Weighted average common shares outstanding – basic 22.6 0.6 23.4 1.0 23.9 1.2 Conversion of Class B common shares into Class A common shares 0.6 — 1.0 — 1.2 — Effect of employee stock purchases and restricted stock units on weighted average common shares 0.2 — 0.1 — — — Weighted average common shares outstanding – diluted 23.4 0.6 24.5 1.0 25.1 1.2 Net income per common share - basic $ 11.70 $ 11.70 $ 10.91 $ 10.91 $ 9.78 $ 9.78 Net income per common share - diluted $ 11.60 $ 11.60 $ 10.86 $ 10.86 $ 9.75 $ 9.75 Antidilutive Securities Shares issuable pursuant to employee stock purchases not included since they were antidilutive — — — — — — |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segments | Segments Certain financial information on a segment basis is as follows (in millions): Year Ended December 31, 2019 2018 2017 Revenues: Domestic $ 4,382.4 $ 4,215.0 $ 3,845.8 Import 5,267.8 5,038.1 4,432.8 Luxury 2,991.9 2,560.3 1,810.1 12,642.1 11,813.4 10,088.7 Corporate and other 30.6 8.0 (2.2 ) $ 12,672.7 $ 11,821.4 $ 10,086.5 Segment income*: Domestic $ 123.4 $ 97.6 $ 105.2 Import 153.9 116.2 117.8 Luxury 57.1 43.9 37.0 334.4 257.7 260.0 Corporate and other 170.2 202.4 167.4 Depreciation and amortization (82.4 ) (75.4 ) (57.7 ) Other interest expense (60.6 ) (56.0 ) (34.8 ) Other income, net 13.8 8.8 12.2 Income before income taxes $ 375.4 $ 337.5 $ 347.1 *Segment income for each of the segments is defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net. Year Ended December 31, 2019 2018 2017 Floor plan interest expense: Domestic $ 53.6 $ 52.4 $ 37.2 Import 44.1 41.6 29.0 Luxury 30.2 25.6 15.8 127.9 119.6 82.0 Corporate and other (55.1 ) (57.3 ) (42.7 ) $ 72.8 $ 62.3 $ 39.3 December 31, 2019 2018 Total assets: Domestic $ 1,467.6 $ 1,488.0 Import 1,306.5 1,224.2 Luxury 945.2 934.6 Corporate and other 2,364.6 1,737.2 $ 6,083.9 $ 5,384.0 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We have designed an allowance for loan loss methodology to comply with these new requirements, which will be adopted for our fiscal year beginning January 1, 2020. Based on information as of December 31, 2019, we expect to record a $5.0 million to $8.0 million increase in the allowance for loan losses on our opening consolidated balance sheet as of January 1, 2020, with a corresponding net-of-tax adjustment to retained earnings. The final adoption impact may vary depending on the company’s portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. We are finalizing testing of the effectiveness of our new allowance for loan loss methodology, as well as designing the relevant controls and governance structure. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We do not expect the adoption of ASU 2017-04 to have a material effect on our financial position, results of operations or cash flows. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes”. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments As of December 31, 2019 , we had $66.1 million in investments in various companies recorded as part of non-current assets on our Consolidated Balance Sheets. A predominant amount of this investment is with Shift Technologies, Inc., a San Francisco-based digital retail start-up company. We have determined that our investment in Shift does not meet the criteria for a variable interest entity, and we do not have control or significant influence over Shift. As of December 31, 2019 , there were no identified events or changes in circumstances that would have a significant effect on the value of any of these investments. We did not record any impairment charges associated with these investments in the years ended December 31, 2019 , 2018 , or 2017 . |
Changes in Accounting Policies
Changes in Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Changes in Accounting Policies | Changes in Accounting Policies In 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet, as right-of-use assets with corresponding operating lease liabilities. In July 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements - Leases (Topic 842).” This update provides an optional transition method that allows entities to elect to apply the standard using the modified retrospective approach at its effective date, versus recasting the prior periods presented. If elected, an entity would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. We adopted the new standard as of January 1, 2019 using the transition method that provides for a cumulative-effect adjustment to retained earnings upon adoption. The Consolidated Financial Statements for the twelve months ended December 31, 2019 are presented under the new standard, while comparative years presented are not adjusted and continue to be reported in accordance with our historical accounting policy. We elected the package of practical expedients, which permits us to not reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We elected the short-term lease recognition exemption for all leases that qualify. We have both real estate leases and equipment leases that are impacted by the new guidance. Most of our leases do not provide an implicit rate, therefore we use our incremental borrowing rate at the commencement date in determining the present value of lease payments. Adoption of the new standard resulted in the derecognition of a deferred gain from prior completed sale-leaseback transactions. This adjustment, net of tax, was recorded as $0.9 million increase in retained earnings. See Note 11 . The impact of adopting Topic 842 on the accompanying Condensed Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions): Impact on Consolidated Balance Sheets December 31, 2018 Adjustments January 1, 2019 Operating lease right-of-use assets $ — $ 259.7 $ 259.7 Total Assets 5,384.0 259.7 5,643.7 Operating lease liabilities: Accrued liabilities 283.6 26.6 310.2 Deferred revenue 121.7 (1.3 ) 120.4 Noncurrent operating lease liabilities — 243.9 243.9 Other long-term liabilities 122.2 (10.3 ) 111.9 Total Liabilities 4,186.8 258.8 4,445.6 Retained earnings 1,162.1 0.9 1,163.0 Total Liabilities and Stockholders’ Equity 5,384.0 259.7 5,643.7 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements reflect the results of operations, the financial position and the cash flows for Lithia Motors, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are defined as cash on hand and cash in bank accounts without restrictions. |
Accounts Receivable | Accounts Receivable Accounts receivable classifications include the following: • Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received within five to 10 days of selling a vehicle. • Trade receivables are comprised of amounts due from customers, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products. • Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer. • Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives and warranty claims. • Auto loan receivables include amounts due from customers related to retail sales of vehicles and certain finance and insurance products. Receivables are recorded at invoice and do not bear interest until they are 60 days past due. The allowance for doubtful accounts represents an estimate of the amount of net losses inherent in our portfolio of accounts receivable as of the reporting date. |
Inventories | Inventories Inventories are valued at the lower of net realizable value or cost, using the specific identification method for new vehicles, pooled approach for used vehicles, and the lower of cost (first-in, first-out) or market method for parts. The cost of new and used vehicle inventories includes the cost of any equipment added, reconditioning and transportation. Certain acquired inventories are valued using the last-in first-out (LIFO) method. The LIFO reserve associated with this inventory as of December 31, 2019 and 2018 was immaterial. Manufacturers reimburse us for holdbacks, floor plan interest assistance and advertising assistance, which are reflected as a reduction in the carrying value of each vehicle purchased. We recognize advertising assistance, floor plan interest assistance, holdbacks, cash incentives and other rebates received from manufacturers that are tied to specific vehicles as a reduction to cost of sales as the related vehicles are sold. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated over their estimated useful lives on the straight-line basis. Leasehold improvements made at the inception of the lease or during the term of the lease are amortized on a straight-line basis over the shorter of the life of the improvement or the remaining term of the lease. The range of estimated useful lives is as follows: Buildings and improvements 5 to 40 years Service equipment 5 to 15 years Furniture, office equipment, signs and fixtures 3 to 10 years The cost for maintenance, repairs and minor renewals is expensed as incurred, while significant remodels and betterments are capitalized. In addition, interest on borrowings for major capital projects, significant remodels, and betterments are capitalized. Capitalized interest becomes a part of the cost of the depreciable asset and is depreciated according to the estimated useful lives as previously stated. For the years ended December 31, 2019 , 2018 and 2017 , we recorded capitalized interest of $2.3 million , $1.3 million and $0.5 million , respectively. When an asset is retired, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is credited or charged to income from operations. Leased property meeting certain criteria are recorded as finance leases. We have finance leases for certain locations, expiring at various dates through August 1, 2037 . Our finance lease right-of-use assets are included in property and equipment on our Consolidated Balance Sheets. Amortization of finance lease right-of-use assets is computed on a straight-line basis over the term of the lease, unless the lease transfers title or it contains a bargain purchase option, in which case, it is amortized over the asset’s useful life and is included in depreciation expense. Finance lease liabilities are recorded as the lesser of the estimated fair market value of the leased property or the net present value of the aggregated future minimum payments and are included in current maturities of long-term debt and long-term debt on our Consolidated Balance Sheets. Interest associated with these obligations is included in other interest expense in the Consolidated Statements of Operations. See Note 7 . |
Goodwill | Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets. Other identifiable intangible assets, such as franchise rights, are separately recognized if the intangible asset is obtained through contractual or other legal right or if the intangible asset can be sold, transferred, licensed or exchanged. Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount of the reporting unit more likely than not exceeds fair value. We have the option to qualitatively or quantitatively assess goodwill for impairment, and we evaluated our goodwill using a qualitative assessment process. Goodwill is tested for impairment at the reporting unit level. Our reporting units are individual stores as this is the level at which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. We test our goodwill for impairment on October 1 of each year. In 2019 |
Franchise Value | Franchise Value We enter into agreements (“Franchise Agreements”) with our manufacturers. Franchise value represents a right received under Franchise Agreements with manufacturers and is identified on an individual store basis. We evaluated the useful lives of our Franchise Agreements based on the following factors: • certain of our Franchise Agreements continue indefinitely by their terms; • certain of our Franchise Agreements have limited terms, but are routinely renewed without substantial cost to us; • other than franchise terminations related to the unprecedented reorganizations of Chrysler and General Motors, and allowed by bankruptcy law, we are not aware of manufacturers terminating Franchise Agreements against the wishes of the franchise owners in the ordinary course of business. A manufacturer may pressure a franchise owner to sell a franchise when the owner is in breach of the franchise agreement over an extended period of time; • state dealership franchise laws typically limit the rights of the manufacturer to terminate or not renew a franchise; • we are not aware of any legislation or other factors that would materially change the retail automotive franchise system; and • as evidenced by our acquisition and disposition history, there is an active market for most automotive dealership franchises within the United States. We attribute value to the Franchise Agreements acquired with the dealerships we purchase based on the understanding and industry practice that the Franchise Agreements will be renewed indefinitely by the manufacturer. Accordingly, we have determined that our Franchise Agreements will continue to contribute to our cash flows indefinitely and, therefore, have indefinite lives. As an indefinite-lived intangible asset, franchise value is tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying value may exceed fair value. The impairment test for indefinite-lived intangible assets requires the comparison of estimated fair value to carrying value. An impairment charge is recorded to the extent the fair value is less than the carrying value. We have the option to qualitatively or quantitatively assess indefinite-lived intangible assets for impairment. We evaluated our indefinite-lived intangible assets using a qualitative assessment process. We have determined the appropriate unit of accounting for testing franchise value for impairment is each individual store. We test our franchise value for impairment on October 1 of each year. In 2019 |
Advertising | Advertising |
Contract Origination Costs | Contract Origination Costs |
Legal Costs | Legal Costs We are a party to numerous legal proceedings arising in the normal course of business. We accrue for certain legal costs, including attorney fees and potential settlement claims related to various legal proceedings that are estimable and probable. See Note 7 . |
Stock-Based Compensation | Stock-Based Compensation Compensation costs associated with equity instruments exchanged for employee and director services are measured at the grant date, based on the fair value of the award. If there is a performance-based element to the award, the expense is recognized based on the estimated attainment level, estimated time to achieve the attainment level and/or the vesting period. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. The fair value of non-vested stock awards is based on the intrinsic value on the date of grant. Shares to be issued upon the exercise of stock options and the vesting of stock awards will come from newly issued shares. See Note 10 . |
Income and Other Taxes | Income and Other Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. When there are situations with uncertainty as to the timing of the deduction, the amount of the deduction, or the validity of the deduction, we adjust our financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the largest benefit that is more than 50% likely to be realized. Interest and penalties are recorded as income tax provision in the period incurred or accrued when related to an uncertain tax position. See Note 14 . |
Concentration of Risk and Uncertainties | Concentration of Risk and Uncertainties We purchase substantially all of our new vehicles and inventory from various manufacturers at the prevailing prices charged by auto manufacturers to all franchised dealers. Our overall sales could be impacted by the auto manufacturers’ inability or unwillingness to supply dealerships with an adequate supply of popular models. We depend on our manufacturers to provide a supply of vehicles which supports expected sales levels. In the event that manufacturers are unable to supply the needed level of vehicles, our financial performance may be adversely impacted. We depend on our manufacturers to deliver high-quality, defect-free vehicles. In the event that manufacturers experience future quality issues, our financial performance may be adversely impacted. We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, of a major vehicle manufacturer. Our sales volume could be materially adversely impacted by the manufacturers’ or distributors’ inability to supply the stores with an adequate supply of vehicles. We also receive incentives and rebates from our manufacturers, including cash allowances, financing programs, discounts, holdbacks and other incentives. These incentives are recorded as accounts receivable in our Consolidated Balance Sheets until payment is received. Our financial condition could be materially adversely impacted by the manufacturers’ or distributors’ inability to continue to offer these incentives and rebates at substantially similar terms, or to pay our outstanding receivables. We enter into Franchise Agreements with the manufacturers. The Franchise Agreements generally limit the location of the dealership and provide the auto manufacturer approval rights over changes in dealership management and ownership. The auto manufacturers are also entitled to terminate the Franchise Agreement if the dealership is in material breach of the terms. Our ability to expand operations depends, in part, on obtaining consents of the manufacturers for the acquisition of additional dealerships. See also “ Goodwill ” and “ Franchise Value ” above. We have a credit facility with a syndicate of 19 financial institutions, including seven manufacturer-affiliated finance companies. Several of these financial institutions also provide vehicle financing for certain new vehicles, vehicles that are designated for use as service loaners and mortgage financing. This credit facility is the primary source of floor plan financing for our new vehicle inventory and also provides used vehicle financing and a revolving line of credit. The term of the facility extends through January 2025 . At maturity, our financial condition could be materially adversely impacted if lenders are unable to provide credit that has typically been extended to us or with terms unacceptable to us. Our financial condition could be materially adversely impacted if these providers incur losses in the future or undergo funding limitations. See Note 6 . We anticipate continued organic growth and growth through acquisitions. This growth will require additional credit which may be unavailable or with terms unacceptable to us. If these events were to occur, we may not be able to borrow sufficient funds to facilitate our growth. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and related notes to financial statements. Changes in such estimates may affect amounts reported in future periods. Estimates are used in the calculation of certain reserves maintained for charge-backs on estimated cancellations of service contracts; life, accident and disability insurance policies; finance fees from customer financing contracts and uncollectible accounts receivable. We also use estimates in the calculation of various expenses, accruals and reserves, including anticipated losses related to workers’ compensation insurance; anticipated losses related to self-insurance components of our property and casualty and medical insurance; self-insured lifetime lube, oil and filter service contracts; discretionary employee bonuses, the Transition Agreement with Sidney B. DeBoer, our Chairman of the Board; warranties provided on certain products and services; legal reserves and stock-based compensation. We also make certain estimates regarding the assessment of the recoverability of long-lived assets, indefinite-lived intangible assets and deferred tax assets. |
Fair Value of Assets Acquired and Liabilities Assumed | Fair Value of Assets Acquired and Liabilities Assumed We estimate the fair value of the assets acquired and liabilities assumed in a business combination using various assumptions. The most significant assumptions used relate to determining the fair value of property and equipment and intangible franchise rights. We estimate the fair value of property and equipment based on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. We estimate the fair value of our franchise rights primarily using the Multi-Period Excess Earnings (“MPEE”) model. The forecasted cash flows used in the MPEE model contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, general operating expenses, and cost of capital. We use primarily internally-developed forecasts and business plans to estimate the future cash flows that each franchise will generate. We have determined that only certain cash flows of the store are directly attributable to the franchise rights. We estimate the appropriate interest rate to discount future cash flows to their present value equivalent taking into consideration factors such as a risk-free rate, a peer group average beta, an equity risk premium and a small stock risk premium. Additionally, we also may use a market approach to determine the fair value of our franchise rights. These market data points include our acquisition and divestiture experience and third-party broker estimates. We use a relief-from-royalty method to determine the fair value of a trade name. Future cost savings associated with owning, rather than licensing, a trade name is estimated based on a royalty rate and management’s forecasted sales projections. The discount rate applied to the future cost savings factors an equity market risk premium, small stock risk premium, an average peer group beta, a risk-free interest rate and a premium for forecast risk. |
Revenue Recognition | Revenue Recognition The following describes our major product lines, which represent the disaggregation of our revenues to transactions that are similar in nature, amount, timing, uncertainties and economic factors. New Retail Vehicle and Used Retail Vehicle Sales Revenue from the retail sale of a vehicle is recognized at a point in time, as all performance obligations are satisfied when a contract is signed by the customer, financing has been arranged or collectibility is probable and the control of the vehicle is transferred to the customer. The transaction price for a retail vehicle sale is specified in the contract with the customer and includes all cash and non-cash consideration. In a retail vehicle sale, customers often trade in their current vehicle. The trade-in is measured at its stand-alone selling price in the contract, utilizing various third-party pricing sources. There are no other non-cash forms of consideration related to retail sales. All vehicle rebates are applied to the vehicle purchase price at the time of the sale and are therefore incorporated into the price of the contract at the time of the exchange. We do not allow the return of new or used vehicles, except where mandated by state law. Service, Body and Parts Sales Revenue from service, body and parts sales is recognized upon the transfer of control of the parts or service to the customer. We allow for customer returns on sales of our parts inventory up to 30 days after the sale. Most parts returns generally occur within one to two weeks from the time of sale and are not significant. We are the obligor on our lifetime oil contracts. Revenue is allocated to these performance obligations and is recognized over time as services are provided to the customer. The amount of revenue recognized is calculated, net of cancellations, using an input method, which most closely depicts performance of the contracts. Our contract liability balances were $171.5 million and $149.6 million as of December 31, 2019 , and December 31, 2018 , respectively; and we recognized $25.9 million and $21.9 million of revenue in the years ended December 31, 2019 , and December 31, 2018 , respectively, related to our opening contract liability balances. Our contract liability balance is included in accrued liabilities and deferred revenue. Finance and Insurance Sales |
Segment Reporting | Segment Reporting While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes-Benz and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, and automotive finance and insurance products. Corporate and other revenue and income include the results of operations of our stand-alone collision center offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase segment income for Corporate and other while decreasing segment income for the other operating segments. These internal corporate expense allocations are used to increase comparability of our dealerships and reflect the capital burden a stand-alone dealership would experience. Examples of these internal allocations include internal rent expense, internal floor plan financing charges, and internal fees charged to offset employees within our corporate headquarters that perform certain dealership functions. |
Recent Accounting Pronouncements | In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” This pronouncement, along with subsequent ASUs issued to clarify provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In developing the estimate for lifetime expected credit loss, entities must incorporate historical experience, current conditions, and reasonable and supportable forecasts. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. We have designed an allowance for loan loss methodology to comply with these new requirements, which will be adopted for our fiscal year beginning January 1, 2020. Based on information as of December 31, 2019, we expect to record a $5.0 million to $8.0 million increase in the allowance for loan losses on our opening consolidated balance sheet as of January 1, 2020, with a corresponding net-of-tax adjustment to retained earnings. The final adoption impact may vary depending on the company’s portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time. We are finalizing testing of the effectiveness of our new allowance for loan loss methodology, as well as designing the relevant controls and governance structure. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment.” ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We do not expect the adoption of ASU 2017-04 to have a material effect on our financial position, results of operations or cash flows. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes”. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Estimated Useful Lives | The range of estimated useful lives is as follows: Buildings and improvements 5 to 40 years Service equipment 5 to 15 years Furniture, office equipment, signs and fixtures 3 to 10 years Property and equipment consisted of the following (in millions): December 31, 2019 2018 Land $ 473.0 $ 419.7 Building and improvements 948.0 821.6 Service equipment 113.3 106.3 Furniture, office equipment, signs and fixtures 327.0 283.5 1,861.3 1,631.1 Less accumulated depreciation (284.3 ) (240.5 ) 1,577.0 1,390.6 Construction in progress 34.7 57.4 $ 1,611.7 $ 1,448.0 |
Advertising Expense and Manufacturer Cooperative Advertising Credits | Advertising expense and manufacturer cooperative advertising credits were as follows (in millions): Year Ended December 31, 2019 2018 2017 Advertising expense, gross $ 139.8 $ 134.2 $ 116.1 Manufacturer cooperative advertising credits (27.9 ) (25.5 ) (22.8 ) Advertising expense, net $ 111.9 $ 108.7 $ 93.3 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable consisted of the following (in millions): December 31, 2019 2018 Contracts in transit $ 269.7 $ 294.0 Trade receivables 52.8 54.3 Vehicle receivables 50.9 51.6 Manufacturer receivables 112.4 105.5 Auto loan receivables 62.2 61.5 Other receivables 19.4 6.8 567.4 573.7 Less: Allowance for doubtful accounts (7.3 ) (7.2 ) Less: Long-term portion of accounts receivable, net (55.1 ) (37.1 ) Total accounts receivable, net $ 505.0 $ 529.4 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | The components of inventories consisted of the following (in millions): December 31, 2019 2018 New vehicles $ 1,704.1 $ 1,700.1 Used vehicles 638.1 576.8 Parts and accessories 91.5 88.4 Total inventories $ 2,433.7 $ 2,365.3 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The range of estimated useful lives is as follows: Buildings and improvements 5 to 40 years Service equipment 5 to 15 years Furniture, office equipment, signs and fixtures 3 to 10 years Property and equipment consisted of the following (in millions): December 31, 2019 2018 Land $ 473.0 $ 419.7 Building and improvements 948.0 821.6 Service equipment 113.3 106.3 Furniture, office equipment, signs and fixtures 327.0 283.5 1,861.3 1,631.1 Less accumulated depreciation (284.3 ) (240.5 ) 1,577.0 1,390.6 Construction in progress 34.7 57.4 $ 1,611.7 $ 1,448.0 |
Goodwill and Franchise Value (T
Goodwill and Franchise Value (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following is a roll-forward of goodwill (in millions): Domestic Import Luxury Consolidated Balance as of December 31, 2017 ¹ $ 114.0 $ 104.3 $ 38.0 $ 256.3 Adjustments to purchase price allocations 2 51.4 85.8 43.5 180.7 Reductions through divestitures (0.9 ) (1.2 ) — (2.1 ) Balance as of December 31, 2018 ¹ 164.5 188.9 81.5 434.9 Adjustments to purchase price allocations 3 1.6 1.6 1.9 5.1 Additions through acquisitions 3 6.2 9.0 2.2 17.4 Reductions from impairments (0.3 ) (1.3 ) (0.1 ) (1.7 ) Reductions through divestitures (0.2 ) (0.9 ) — (1.1 ) Balance as of December 31, 2019 1 $ 171.8 $ 197.3 $ 85.5 $ 454.6 (1) Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008. (2) Our purchase price allocation for the 2017 acquisitions of the Baierl Auto Group, the Downtown LA Auto Group, Crater Lake Ford Lincoln, Crater Lake Mazda, Albany CJD Fiat and the 2018 acquisition of Broadway Ford were finalized in 2018. Also, our purchase price allocation for the 2018 acquisition of Prestige Auto Group was preliminary and was allocated to our segments in 2018. As a result, we added $180.7 million of goodwill. (3) Our purchase price allocation for the 2018 acquisitions of the Ray Laks Honda, Ray Laks Acura, Day Auto Group, Prestige Auto Group, and Buhler Ford were finalized in 2019. As a result, we added $22.5 million of goodwill. Our purchase price allocation for the 2019 acquisitions are preliminary and goodwill is not yet allocated to our segments. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 15 . |
Schedule of Franchise Value | The following is a roll-forward of franchise value (in millions): Franchise Value Balance as of December 31, 2017 $ 187.0 Additions through acquisitions 103.5 Adjustments to purchase price allocations 1 (1.8 ) Balance as of December 31, 2018 288.7 Additions through acquisitions 2 20.9 Adjustments to purchase price allocations 2 3.5 Reductions through divestitures (6.0 ) Reductions from impairments (0.4 ) Balance as of December 31, 2019 $ 306.7 (1) Our purchase price allocation for the 2017 acquisitions of the Baierl Auto Group, the Downtown LA Auto Group, Crater Lake Ford Lincoln, Crater Lake Mazda, Albany CJD Fiat and the 2018 acquisition of Broadway Ford were finalized in 2018.Also, our purchase price allocation for the 2018 acquisition of Prestige Auto Group was preliminary and was allocated to our segments in 2018. As a result, we added $103.5 million of franchise value. (2) Our purchase price allocation for the 2018 acquisitions of the Ray Laks Honda, Ray Laks Acura, Day Auto Group, Prestige Auto Group, and Buhler Ford were finalized in 2019. As a result, we added $24.4 million of franchise value. Our purchase price allocation for the 2019 acquisitions are preliminary and franchise value is not yet allocated to our segments. These amounts are included in other non-current assets until we finalize our purchase accounting. See Note 15 . |
Credit Facilities and Long-te_2
Credit Facilities and Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Outstanding Balances on Credit Facilities and Long-term Debt | Below is a summary of our outstanding balances on credit facilities and long-term debt (in millions): December 31, 2019 2018 Floor plan notes payable: non-trade $ 1,642.4 $ 1,733.3 Floor plan notes payable 425.2 324.4 Total floor plan debt $ 2,067.6 $ 2,057.7 Used and service loaner vehicle inventory financing commitments $ 149.0 $ 332.0 Revolving lines of credit — 131.6 Real estate mortgages 597.7 592.3 5.250% Senior notes due 2025 300.0 300.0 4.625% Senior notes due 2027 400.0 — Other debt 33.6 34.2 Total long-term debt outstanding 1,480.3 1,390.1 Less: unamortized debt issuance costs (10.4 ) (6.0 ) Less: current maturities (net of current debt issuance costs) (39.3 ) (25.9 ) Long-term debt $ 1,430.6 $ 1,358.2 |
Schedule of Debt Covenant Terms | Under our credit facility, we are required to maintain the ratios detailed in the following table: Debt Covenant Ratio Requirement As of December 31, 2019 Current ratio Not less than 1.10 to 1 1.31 to 1 Fixed charge coverage ratio Not less than 1.20 to 1 2.88 to 1 Leverage ratio Not more than 5.75 to 1 2.62 to 1 |
Schedule of Maturities of Long-term Debt | The schedule of future principal payments associated with real estate mortgages, our Senior Notes and other debt as of December 31, 2019 was as follows (in millions): Year Ending December 31, 2020 $ 41.9 2021 49.5 2022 65.8 2023 60.4 2024 77.6 Thereafter 1,036.1 Total principal payments $ 1,331.3 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Estimated Charge Backs | We estimate that the charge-backs will be paid out as follows (in millions): Year Ending December 31, 2020 $ 31.2 2021 16.3 2022 6.8 2023 2.2 2024 0.5 Thereafter — Total $ 57.0 |
Schedule of Deferred Revenue | As of December 31, 2019 , we had a contract liability balance of $172.0 million associated with these contracts and estimate the contract liability will be recognized as follows (in millions): Year Ending December 31, 2020 $ 34.3 2021 27.4 2022 21.9 2023 18.2 2024 15.4 Thereafter 54.8 Total $ 172.0 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Stock Repurchased and Retired | The following is a summary of our repurchases in the years ended December 31, 2019 , 2018 and 2017 : Year Ended December 31, 2019 2018 2017 Shares repurchased pursuant to repurchase authorizations — 2,112,370 329,000 Total purchase price (in millions) $ — $ 179.0 $ 30.5 Average purchase price per share $ — $ 84.72 $ 92.79 Shares repurchased in association with tax withholdings on the vesting of RSUs 40,356 30,119 32,457 Repurchases Occurring in 2019 Cumulative Repurchases as of December 31, 2019 Shares Average Price Shares Average Price Share Repurchase Authorization — $ — 3,155,095 $ 84.43 |
Schedule of Dividends Declared | We declared and paid dividends on our Class A and Class B Common Stock as follows: Quarter declared Dividend amount per Class A and Class B share Total amount of dividends paid (in millions) 2017 First quarter $ 0.25 $ 6.3 Second quarter 0.27 6.8 Third quarter 0.27 6.7 Fourth quarter 0.27 6.7 2018 First quarter $ 0.27 $ 6.7 Second quarter 0.29 7.2 Third quarter 0.29 7.0 Fourth quarter 0.29 6.8 2019 First quarter $ 0.29 $ 6.7 Second quarter 0.30 7.0 Third quarter 0.30 7.0 Fourth quarter 0.30 6.9 |
401(k) Profit Sharing, Deferr_2
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Postemployment Benefits [Abstract] | |
Schedule of Long-term Incentive Plan | The following is a summary related to our SERP (in millions): Year Ended December 31, 2019 2018 2017 Compensation expense $ 0.9 $ 1.3 $ 1.1 Total discretionary contribution $ 0.3 $ 0.8 $ 1.7 Guaranteed annual return 5.00 % 5.00 % 5.00 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Employee Stock Purchase Plan | Following is information regarding our 2009 ESPP: Year Ended December 31, 2019 Shares purchased pursuant to 2009 ESPP 112,138 Weighted average per share price of shares purchased $ 101.03 Weighted average per share discount from market value for shares purchased $ 17.83 As of December 31, 2019 Shares available for purchase pursuant to 2009 ESPP 1,526,505 |
Schedule of Restricted Stock Units Activity | RSU grants vest over a period of time up to four years from the date of grant. RSU activity was as follows: RSUs Weighted average grant date fair value Balance, December 31, 2018 409,865 $ 99.72 Granted 288,761 75.73 Vested (117,873 ) 92.00 Forfeited (84,071 ) 87.53 Balance, December 31, 2019 496,682 90.00 |
Schedule of Stock-Based Compensation | Certain information regarding our stock-based compensation was as follows: Year Ended December 31, 2019 2018 2017 Per share intrinsic value of non-vested stock granted $ 75.73 $ 86.84 $ 99.24 Weighted average per share discount for compensation expense recognized under the 2009 ESPP 17.83 13.10 15.20 Fair value of non-vested stock that vested during the period (in millions) 92.0 92.0 69.6 Stock-based compensation recognized in Consolidated Statements of Operations, as a component of selling, general and administrative expense (in millions) 16.2 13.4 11.3 Tax benefit recognized in Consolidated Statements of Operations (in millions) 2.7 3.5 3.5 Cash received from options exercised and shares purchased under all share-based arrangements (in millions) 11.3 10.6 7.8 Tax deduction realized related to stock options exercised (in millions) 9.8 9.0 9.0 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease-Related Liabilities Recorded on the Balance Sheet | The table below presents the lease-related liabilities recorded on the balance sheet (in millions): December 31, 2019 December 31, 2018 Operating lease liabilities: Current portion included in accrued liabilities $ 25.2 $ — Noncurrent operating lease liabilities 238.5 — Total operating lease liabilities 263.7 — Finance lease liabilities: Current portion included in current maturities of long-term debt 1.1 2.0 Long-term portion of lease liabilities in long-term debt 29.5 28.8 Total finance lease liabilities 1 30.6 30.8 Total lease liabilities $ 294.3 $ 30.8 Weighted-average remaining lease term: Operating leases 13 years Finance leases 13 years Weighted-average discount rate: Operating leases 5.81 % Finance leases 5.08 % 1 Corresponding finance lease right-of-use assets are not material and are included in property and equipment, net of accumulated depreciation. |
Schedule of Lease Costs | The components of lease costs, which were included in selling, general and administrative in our Consolidated Statements of Operations, were as follows (in millions): Year Ended December 31, 2019 Operating lease cost 1 $ 48.5 Variable lease cost 2 1.4 Sublease income (4.6 ) Total lease costs $ 45.3 1 Includes short-term and month-to-month lease costs, which are immaterial. 2 Variable lease cost generally includes reimbursement for actual costs incurred by our lessors for common area maintenance, property taxes and insurance on leased real estate. |
Schedule of Maturities of Operating Lease Liabilities | As of December 31, 2019 , the maturities of our operating lease liabilities were as follows (in millions): Operating Leases Year Ending December 31, 2020 $ 37.7 2021 35.1 2022 33.1 2023 28.2 2024 25.7 Thereafter 210.3 Total minimum lease payments 370.1 Less: Present value adjustment (106.4 ) Operating lease liabilities $ 263.7 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Long-Lived Assets Measured at Fair Value | Below are our goodwill and franchise value amounts measured at fair value (in millions): Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Measured on a non-recurring basis: Goodwill $ — $ — $ 0.1 Below are our derivative liabilities that are measured at fair value (in millions): Fair Value at December 31, 2019 Level 1 Level 2 Level 3 Measured on a recurring basis: Derivative contract, net $ — $ 1.0 $ — |
Schedule of Aggregate Carrying Values and Fair Values of Long-term Fixed Interest Rate Debt | A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows (in millions): December 31, 2019 2018 Carrying value 5.250% Senior Notes due 2025 $ 300.0 $ 300.0 4.625% Senior Notes due 2027 400.0 — Real Estate Mortgages and Other Debt 466.6 445.8 $ 1,166.6 $ 745.8 Fair value 5.250% Senior Notes due 2025 $ 315.0 $ 278.6 4.625% Senior Notes due 2027 412.0 — Real Estate Mortgages and Other Debt 468.7 448.7 $ 1,195.7 $ 727.3 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | The income tax provision was as follows (in millions): Year Ended December 31, 2019 2018 2017 Current: Federal $ 40.0 $ 30.3 $ 95.1 State 24.0 11.5 16.9 64.0 41.8 112.0 Deferred: Federal 34.7 20.4 (14.2 ) State 5.2 9.6 4.1 39.9 30.0 (10.1 ) Total $ 103.9 $ 71.8 $ 101.9 |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation between amounts computed using the federal income tax rate of 21% in 2019 and 2018, and 35% in 2017 and our income tax provision is shown in the following tabulation (in millions): Year Ended December 31, 2019 2018 2017 Federal tax provision at statutory rate $ 78.8 $ 70.9 $ 121.5 State taxes, net of federal income tax benefit 23.6 16.1 13.3 Non-deductible items 2.6 1.5 1.3 Permanent differences related to stock compensation 0.2 (0.1 ) (0.8 ) Net change in valuation allowance (0.5 ) 0.5 0.3 General business credits (0.9 ) (1.1 ) (0.9 ) Deferred remeasurement for change in statutory tax rate — (15.8 ) (32.9 ) Other 0.1 (0.2 ) 0.1 Income tax provision $ 103.9 $ 71.8 $ 101.9 |
Schedule of Deferred Tax Assets and Liabilities | Individually significant components of the deferred tax assets and (liabilities) are presented below (in millions): December 31, 2019 2018 Deferred tax assets: Deferred revenue and cancellation reserves $ 48.4 $ 47.2 Allowances and accruals, including state tax carryforward amounts 42.1 40.8 Lease Liability 69.7 — Credits and other 0.3 0.3 Valuation allowance (0.6 ) (1.1 ) Total deferred tax assets 159.9 87.2 Deferred tax liabilities: Inventories (40.0 ) (42.0 ) Goodwill (60.7 ) (48.2 ) Property and equipment, principally due to differences in depreciation (113.6 ) (78.0 ) Right of Use Asset (66.6 ) — Prepaid expenses and other (10.1 ) (10.2 ) Total deferred tax liabilities (291.0 ) (178.4 ) Total $ (131.1 ) $ (91.2 ) |
Summary of Open Tax Years | Open tax years at December 31, 2019 included the following: Federal 2016 - 2019 21 states 2015 - 2019 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Pro Forma Summary | Revenue and operating income contributed by the 2019 acquisitions subsequent to the date of acquisition were as follows (in millions): Year Ended December 31, 2019 Revenue $ 232.3 Operating income 3.1 The following unaudited pro forma summary presents consolidated information as if the acquisitions had occurred on January 1 of the previous year (in millions, except for per share amounts): Year Ended December 31, 2019 2018 Revenue $ 13,193.4 $ 12,831.9 Net income 280.2 275.6 Basic net income per share 12.07 11.31 Diluted net income per share 11.98 11.26 |
Summary of Consideration Paid for Acquisitions | The following tables summarize the consideration paid in cash and equity securities for the acquisitions and the preliminary amount of identified assets acquired and liabilities assumed as of the acquisition date (in millions): Consideration paid for the Year Ended December 31, 2019 2018 Cash paid, net of cash acquired $ 366.6 $ 373.8 Debt issued 26.4 125.1 $ 393.0 $ 498.9 Assets acquired and liabilities assumed for the Year Ended December 31, 2019 2018 Trade receivables, net $ — $ 0.7 Inventories 105.2 180.0 Franchise value — 29.8 Property and equipment 124.0 179.7 Other assets 193.1 48.6 Floor plan notes payable — (10.8 ) Other liabilities (29.3 ) (2.3 ) 393.0 425.7 Goodwill — 73.2 $ 393.0 $ 498.9 |
Net Income Per Share of Class_2
Net Income Per Share of Class A and Class B Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Following is a reconciliation of net income and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in millions, except per share amounts ): Year Ended December 31, 2019 2018 2017 (in millions, except per share data) Class A Class B Class A Class B Class A Class B Net income from continuing operations applicable to common stockholders $ 264.5 $ 7.0 $ 254.8 $ 10.9 $ 233.4 $ 11.8 Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding 0.7 — 1.1 — 1.3 — Conversion of Class B common shares into Class A common shares 6.3 — 9.8 — 10.5 — Net income applicable to common stockholders - diluted $ 271.5 $ 7.0 $ 265.7 $ 10.9 $ 245.2 $ 11.8 Weighted average common shares outstanding – basic 22.6 0.6 23.4 1.0 23.9 1.2 Conversion of Class B common shares into Class A common shares 0.6 — 1.0 — 1.2 — Effect of employee stock purchases and restricted stock units on weighted average common shares 0.2 — 0.1 — — — Weighted average common shares outstanding – diluted 23.4 0.6 24.5 1.0 25.1 1.2 Net income per common share - basic $ 11.70 $ 11.70 $ 10.91 $ 10.91 $ 9.78 $ 9.78 Net income per common share - diluted $ 11.60 $ 11.60 $ 10.86 $ 10.86 $ 9.75 $ 9.75 Antidilutive Securities Shares issuable pursuant to employee stock purchases not included since they were antidilutive — — — — — — |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Certain Information on a Segment Basis | Certain financial information on a segment basis is as follows (in millions): Year Ended December 31, 2019 2018 2017 Revenues: Domestic $ 4,382.4 $ 4,215.0 $ 3,845.8 Import 5,267.8 5,038.1 4,432.8 Luxury 2,991.9 2,560.3 1,810.1 12,642.1 11,813.4 10,088.7 Corporate and other 30.6 8.0 (2.2 ) $ 12,672.7 $ 11,821.4 $ 10,086.5 Segment income*: Domestic $ 123.4 $ 97.6 $ 105.2 Import 153.9 116.2 117.8 Luxury 57.1 43.9 37.0 334.4 257.7 260.0 Corporate and other 170.2 202.4 167.4 Depreciation and amortization (82.4 ) (75.4 ) (57.7 ) Other interest expense (60.6 ) (56.0 ) (34.8 ) Other income, net 13.8 8.8 12.2 Income before income taxes $ 375.4 $ 337.5 $ 347.1 *Segment income for each of the segments is defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other income, net. Year Ended December 31, 2019 2018 2017 Floor plan interest expense: Domestic $ 53.6 $ 52.4 $ 37.2 Import 44.1 41.6 29.0 Luxury 30.2 25.6 15.8 127.9 119.6 82.0 Corporate and other (55.1 ) (57.3 ) (42.7 ) $ 72.8 $ 62.3 $ 39.3 |
Reconciliation of Assets from Segment to Consolidated | December 31, 2019 2018 Total assets: Domestic $ 1,467.6 $ 1,488.0 Import 1,306.5 1,224.2 Luxury 945.2 934.6 Corporate and other 2,364.6 1,737.2 $ 6,083.9 $ 5,384.0 |
Changes in Accounting Policies
Changes in Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact of adopting Topic 842 on the accompanying Condensed Consolidated Balance Sheet as of January 1, 2019 was as follows (in millions): Impact on Consolidated Balance Sheets December 31, 2018 Adjustments January 1, 2019 Operating lease right-of-use assets $ — $ 259.7 $ 259.7 Total Assets 5,384.0 259.7 5,643.7 Operating lease liabilities: Accrued liabilities 283.6 26.6 310.2 Deferred revenue 121.7 (1.3 ) 120.4 Noncurrent operating lease liabilities — 243.9 243.9 Other long-term liabilities 122.2 (10.3 ) 111.9 Total Liabilities 4,186.8 258.8 4,445.6 Retained earnings 1,162.1 0.9 1,163.0 Total Liabilities and Stockholders’ Equity 5,384.0 259.7 5,643.7 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)financial_institutionstatesegmentstorebrandfinance_companies | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Number of stores | store | 187 | ||
Number of new vehicle brands | brand | 30 | ||
Number of states | state | 19 | ||
Debt Instrument [Line Items] | |||
Threshold period for interest to bear on receivables | 60 days | ||
Interest costs capitalized | $ 2.3 | $ 1.3 | $ 0.5 |
Accrued warranty balance | 0.6 | 0.5 | |
Contract liability | 171.5 | 149.6 | |
Contract liability, revenue recognized | 25.9 | 21.9 | |
Contract asset | $ 8.9 | $ 9.2 | |
Number of reportable segments | segment | 3 | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Period that contracts in transit are outstanding | 5 days | ||
Maximum | |||
Debt Instrument [Line Items] | |||
Period that contracts in transit are outstanding | 10 days | ||
Credit Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Number of financial institutions | financial_institution | 19 | ||
Number of manufacturer affiliated finance companies | finance_companies | 7 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property and Equipment Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Minimum | Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Minimum | Service equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Minimum | Furniture, office equipment, signs and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Maximum | Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Maximum | Service equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 15 years |
Maximum | Furniture, office equipment, signs and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Advertising Expense and Manufacturing Cooperative Advertising Credits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Advertising expense, gross | $ 139.8 | $ 134.2 | $ 116.1 |
Manufacturer cooperative advertising credits | (27.9) | (25.5) | (22.8) |
Advertising expense, net | $ 111.9 | $ 108.7 | $ 93.3 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | $ 567.4 | $ 573.7 |
Less: Allowance for doubtful accounts | (7.3) | (7.2) |
Less: Long-term portion of accounts receivable, net | (55.1) | (37.1) |
Total accounts receivable, net | 505 | 529.4 |
Contracts in transit | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | 269.7 | 294 |
Trade receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | 52.8 | 54.3 |
Vehicle receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | 50.9 | 51.6 |
Manufacturer receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | 112.4 | 105.5 |
Auto loan receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | 62.2 | 61.5 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable gross | $ 19.4 | $ 6.8 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory [Line Items] | ||
Inventories, net | $ 2,433.7 | $ 2,365.3 |
New vehicles | ||
Inventory [Line Items] | ||
Inventories, net | 1,704.1 | 1,700.1 |
Used vehicles | ||
Inventory [Line Items] | ||
Inventories, net | 638.1 | 576.8 |
Parts and accessories | ||
Inventory [Line Items] | ||
Inventories, net | $ 91.5 | $ 88.4 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross, excluding construction in progress | $ 1,861.3 | $ 1,631.1 |
Less accumulated depreciation | (284.3) | (240.5) |
Property and equipment, net before construction in progress | 1,577 | 1,390.6 |
Construction in progress | 34.7 | 57.4 |
Property and equipment, net | 1,611.7 | 1,448 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross, excluding construction in progress | 473 | 419.7 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross, excluding construction in progress | 948 | 821.6 |
Service equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross, excluding construction in progress | 113.3 | 106.3 |
Furniture, office equipment, signs and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross, excluding construction in progress | $ 327 | $ 283.5 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Asset impairments | $ 500,000 | $ 1,300,000 | $ 0 |
Goodwill and Franchise Value -
Goodwill and Franchise Value - Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2008 | |
Goodwill [Roll Forward] | |||
Balance | $ 434.9 | $ 256.3 | |
Adjustments to purchase price allocations | 5.1 | 180.7 | |
Additions through acquisitions | 17.4 | ||
Reductions from impairments | (1.7) | ||
Reductions through divestitures | (1.1) | (2.1) | |
Balance | 454.6 | 434.9 | |
Accumulated impairment losses | $ 299.3 | ||
Goodwill acquired including purchase accounting adjustments | 22.5 | ||
Domestic | |||
Goodwill [Roll Forward] | |||
Balance | 164.5 | 114 | |
Adjustments to purchase price allocations | 1.6 | 51.4 | |
Additions through acquisitions | 6.2 | ||
Reductions from impairments | (0.3) | ||
Reductions through divestitures | (0.2) | (0.9) | |
Balance | 171.8 | 164.5 | |
Import | |||
Goodwill [Roll Forward] | |||
Balance | 188.9 | 104.3 | |
Adjustments to purchase price allocations | 1.6 | 85.8 | |
Additions through acquisitions | 9 | ||
Reductions from impairments | (1.3) | ||
Reductions through divestitures | (0.9) | (1.2) | |
Balance | 197.3 | 188.9 | |
Luxury | |||
Goodwill [Roll Forward] | |||
Balance | 81.5 | 38 | |
Adjustments to purchase price allocations | 1.9 | 43.5 | |
Additions through acquisitions | 2.2 | ||
Reductions from impairments | (0.1) | ||
Reductions through divestitures | 0 | 0 | |
Balance | $ 85.5 | $ 81.5 |
Goodwill and Franchise Value _2
Goodwill and Franchise Value - Franchise Value (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Indefinite-lived Intangible Assets [Roll Forward] | ||
Balance | $ 288.7 | $ 187 |
Additions through acquisitions | 20.9 | 103.5 |
Adjustments to purchase price allocations | 3.5 | (1.8) |
Reductions through divestitures | (6) | |
Reductions from impairments | (0.4) | |
Balance | 306.7 | $ 288.7 |
Franchise value acquired, including purchase accounting adjustments | $ 24.4 |
Credit Facilities and Long-te_3
Credit Facilities and Long-term Debt - Schedule of Credit Facilities and Long-term Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 09, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jul. 24, 2017 |
Debt Instrument [Line Items] | |||||
Floor plan notes payable: non-trade | $ 1,642.4 | $ 1,600 | $ 1,733.3 | ||
Floor plan notes payable | 425.2 | 324.4 | |||
Total floor plan debt | 2,067.6 | 2,057.7 | |||
Total long-term debt outstanding | 1,480.3 | 1,390.1 | |||
Less: unamortized debt issuance costs | (10.4) | (6) | |||
Less: current maturities (net of current debt issuance costs) | (39.3) | (25.9) | |||
Long-term debt, less current maturities | 1,430.6 | 1,358.2 | |||
Line of Credit | Used vehicle inventory financing facility | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | 149 | 332 | |||
Line of Credit | Revolving lines of credit | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | 0 | 131.6 | |||
Real estate mortgages | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | 597.7 | 592.3 | |||
Other debt | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | 33.6 | 34.2 | |||
5.250% Senior notes due 2025 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | $ 300 | 300 | |||
Interest rate, stated percentage | 5.25% | 5.25% | |||
4.625% Senior notes due 2027 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt outstanding | $ 400 | $ 0 | |||
Interest rate, stated percentage | 4.625% | 4.625% |
Credit Facilities and Long-te_4
Credit Facilities and Long-term Debt - Narrative (Details) | Dec. 09, 2019USD ($) | Jul. 24, 2017USD ($) | Dec. 31, 2019USD ($)financial_institutionfinance_companies | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | ||||
Floor plan notes payable | $ 425,200,000 | $ 324,400,000 | ||
Total long-term debt outstanding | $ 1,480,300,000 | 1,390,100,000 | ||
Floor Plan Notes Payable | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 6.25% | |||
Line of Credit | Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total financing commitment | $ 2,800,000,000 | |||
Number of financial institutions | financial_institution | 19 | |||
Number of manufacturer affiliated finance companies | finance_companies | 7 | |||
Higher borrowing capacity option | $ 3,200,000,000 | |||
Other debt | ||||
Debt Instrument [Line Items] | ||||
Total long-term debt outstanding | $ 33,600,000 | 34,200,000 | ||
Real Estate Mortgages | ||||
Debt Instrument [Line Items] | ||||
Percent of total mortgage debt that is fixed | 72.50% | |||
Total long-term debt outstanding | $ 597,700,000 | 592,300,000 | ||
Real Estate Mortgages | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 3.00% | |||
Real Estate Mortgages | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 5.30% | |||
Capital Lease Obligations | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 2.50% | |||
Capital Lease Obligations | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 8.50% | |||
Senior Notes | 5.250% Senior notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 5.25% | 5.25% | ||
Aggregate principal amount | $ 300,000,000 | |||
Total long-term debt outstanding | $ 300,000,000 | 300,000,000 | ||
Redemption percentage price | 100.00% | |||
Percentage of principal amount redeemable | 101.00% | |||
Senior Notes | 4.625% Senior notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 4.625% | 4.625% | ||
Aggregate principal amount | $ 400,000,000 | |||
Total long-term debt outstanding | $ 400,000,000 | 0 | ||
Percentage of principal amount redeemable | 101.00% | |||
Senior Notes | Option One | 4.625% Senior notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Redemption percentage price | 100.00% | |||
Senior Notes | Option Two | 4.625% Senior notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Redemption percentage price | 40.00% | |||
Used Vehicle Inventory Financing Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Annual interest rate (in percent) | 3.18% | |||
Total long-term debt outstanding | $ 149,000,000 | 332,000,000 | ||
Used Vehicle Inventory Financing Facility | Line of Credit | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in percent) | 1.40% | |||
Used Vehicle Inventory Financing Facility | Line of Credit | Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Option to reallocate commitment, maximum aggregate commitment threshold percentage | 16.50% | |||
Revolving Lines of Credit | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Annual interest rate (in percent) | 3.28% | |||
Total long-term debt outstanding | $ 0 | $ 131,600,000 | ||
Revolving Lines of Credit | Line of Credit | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in percent) | 1.00% | |||
Revolving Lines of Credit | Line of Credit | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in percent) | 2.00% | |||
Revolving Lines of Credit | Line of Credit | Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Option to reallocate commitment, maximum aggregate commitment threshold percentage | 18.75% | |||
Service Loaner Floor Plan | Line of Credit | Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Total financing commitment | $ 100,000,000 | |||
New Vehicle Floor Plan | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Annual interest rate (in percent) | 2.88% | |||
New Vehicle Floor Plan | Line of Credit | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in percent) | 1.10% | |||
New Vehicle Floor Plan | Line of Credit | Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Accordion feature, increase limit | $ 400,000,000 | |||
Other Lines of Credit | ||||
Debt Instrument [Line Items] | ||||
Total financing commitment | $ 80,000,000 | |||
Long-term line of credit | $ 0 | |||
Other Lines of Credit | Maximum | ||||
Debt Instrument [Line Items] | ||||
Annual interest rate (in percent) | 7.33% | |||
Ford Motor Credit Company | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Total financing commitment | $ 20,000,000 | |||
Ford Motor Credit Company | Secured Debt | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in percent) | 1.50% |
Credit Facilities and Long-te_5
Credit Facilities and Long-term Debt - Details of Financial Covenants (Details) | Dec. 31, 2019 |
Debt Disclosure [Abstract] | |
Current ratio, requirement | 1.10 |
Current ratio | 1.31 |
Fixed charge coverage ratio, requirement | 1.20 |
Fixed charge coverage ratio | 2.88 |
Leverage ratio, requirement | 5.75 |
Leverage ratio | 2.62 |
Credit Facilities and Long-te_6
Credit Facilities and Long-term Debt - Future Principal Payments on Long-term Debt (Details) $ in Millions | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 41.9 |
2021 | 49.5 |
2022 | 65.8 |
2023 | 60.4 |
2024 | 77.6 |
Thereafter | 1,036.1 |
Total principal payments | $ 1,331.3 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Charge-back liability | $ 57 | |
Contract liability balance | 172 | |
Deferred revenue reserve | 2.9 | |
Self insurance program liabilities | $ 34.4 | $ 39.9 |
Commitments and Contingencies_2
Commitments and Contingencies - Charge-backs for Various Contracts (Details) $ in Millions | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2020 | $ 31.2 |
2021 | 16.3 |
2022 | 6.8 |
2023 | 2.2 |
2024 | 0.5 |
Thereafter | 0 |
Total | $ 57 |
Commitments and Contingencies_3
Commitments and Contingencies - Lifetime Lube, Oil and Filter Contracts Acquired (Details) $ in Millions | Dec. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 172 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 34.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 27.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 21.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 18.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 15.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Commitments and Contingencies Disclosure [Abstract] | |
Revenue, remaining performance obligation, amount | $ 54.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Millions | Jan. 21, 2019shares | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($)vote$ / sharesshares | Dec. 31, 2018shares | Dec. 31, 2017shares | Oct. 22, 2018shares |
Class of Stock [Line Items] | ||||||
Shares repurchased in association with tax withholdings on the vesting of RSUs (in shares) | 40,356 | 30,119 | 32,457 | |||
Payments for repurchase of capped call options | $ | $ 36.5 | |||||
Proceeds received from capped call options expirations | $ | $ 38.9 | |||||
Class A common stock | ||||||
Class of Stock [Line Items] | ||||||
Conversion of common stock (in shares) | 1 | |||||
Common stock number of votes | vote | 1 | |||||
Additional amount authorized to be repurchased | 250,000,000 | |||||
Class A common stock | Restricted Stock Units (RSUs) | ||||||
Class of Stock [Line Items] | ||||||
Treasury stock acquired, average cost (in dollars per share) | $ / shares | $ 80.39 | |||||
Adjustments related to tax withholding for share-based compensation | $ | $ 3.2 | |||||
Class A common stock | The 2016 Stock Repurchase Authorization | ||||||
Class of Stock [Line Items] | ||||||
Remaining authorized repurchase amount | $ | $ 233.6 | |||||
Class B common stock | ||||||
Class of Stock [Line Items] | ||||||
Percentage of Class B common to total common stock subject to automatic conversion | 1.00% | |||||
Common stock number of votes | vote | 10 | |||||
Number of shares that were agreed to be converted (in shares) | 1,000,000 | |||||
Percent of shares required to be converted by the end of every two years | 15.00% | |||||
Stock conversion, term | 2 years | |||||
Percent of shares required to be converted by December 31, 2020 | 15.00% | |||||
Percent of shares required to be converted by December 31, 2022 | 30.00% | |||||
Percent of shares required to be converted by December 31, 2024 | 45.00% | |||||
Number of shares issued in transaction | 600,000 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | 47 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | |
Equity, Class of Treasury Stock [Line Items] | ||||
Shares repurchased in association with tax withholdings on the vesting of RSUs | 40,356 | 30,119 | 32,457 | |
Class A common stock | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Shares repurchased pursuant to repurchase authorizations | 0 | 2,112,370 | 329,000 | 3,155,095 |
Total purchase price (in millions) | $ 0 | $ 179 | $ 30.5 | |
Average purchase price per share (in dollars per share) | $ 0 | $ 84.72 | $ 92.79 | $ 84.43 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | |
Equity [Abstract] | ||||||||||||
Dividend amount per Class A and Class B share (in dollars per share) | $ 0.30 | $ 0.30 | $ 0.30 | $ 0.29 | $ 0.29 | $ 0.29 | $ 0.29 | $ 0.27 | $ 0.27 | $ 0.27 | $ 0.27 | $ 0.25 |
Total amount of dividends paid (in millions) | $ 6.9 | $ 7 | $ 7 | $ 6.7 | $ 6.8 | $ 7 | $ 7.2 | $ 6.7 | $ 6.7 | $ 6.7 | $ 6.8 | $ 6.3 |
401(k) Profit Sharing, Deferr_3
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Postemployment Benefits [Abstract] | |||
Contributions | $ 9.8 | $ 5.7 | $ 5.8 |
Other Noncurrent Liabilities | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Balance due to participants | $ 37.9 | $ 32.9 | |
Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Discretionary contributions vesting period | 7 years |
401(k) Profit Sharing, Deferr_4
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans - Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Postemployment Benefits [Abstract] | |||
Compensation expense | $ 0.9 | $ 1.3 | $ 1.1 |
Total discretionary contribution | $ 0.3 | $ 0.8 | $ 1.7 |
Guaranteed annual return (in percent) | 5.00% | 5.00% | 5.00% |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) | 12 Months Ended |
Dec. 31, 2019USD ($)shares | |
The 2009 ESPP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of additional shares authorized | 1,500,000 |
Number of shares authorized | 3,000,000 |
Maximum employee subscription rate (in percent) | 10.00% |
Maximum amount of stock per employee | $ | $ 25,000 |
Purchase price of common stock (in percent) | 85.00% |
Discount from market price, offering date (in percent) | 15.00% |
Shares available for purchase | 1,526,505 |
2013 Stock Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized | 3,800,000 |
Shares available for purchase | 1,100,660 |
Shares outstanding | 0 |
2013 Stock Incentive Plan | Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 4 years |
Weighted average attainment level for performance and time vesting RSUs (in percent) | 75.70% |
Unvested RSUs | $ | $ 14,200,000 |
Weighted average vesting period | 2 years 2 months 12 days |
2013 Stock Incentive Plan | Restricted Stock Units (RSUs) | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 4 years |
2013 Stock Incentive Plan | Time Vesting RSU | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issuance of restricted stock to employees (in shares) | 67,152 |
2013 Stock Incentive Plan | Performance and Time Vesting RSU's | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issuance of restricted stock to employees (in shares) | 221,609 |
2013 Stock Incentive Plan | Performance RSU | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issuance of restricted stock to employees (in shares) | 167,808 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of 2009 ESPP (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average per share discount from market value for shares purchased (in dollars per share) | $ 17.83 | $ 13.10 | $ 15.20 |
The 2009 ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares purchased pursuant to 2009 ESPP | 112,138 | ||
Weighted average per share price of shares purchased (in dollars per share) | $ 101.03 | ||
Weighted average per share discount from market value for shares purchased (in dollars per share) | $ 17.83 | ||
Shares available for purchase pursuant to 2009 ESPP | 1,526,505 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Incentive Plan Activity, Restricted Stock (Details) - Restricted Stock Units (RSUs) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
RSUs | |
Beginning Balance (in shares) | shares | 409,865 |
Granted (in shares) | shares | 288,761 |
Vested (in shares) | shares | (117,873) |
Forfeited (in shares) | shares | (84,071) |
Ending Balance (in shares) | shares | 496,682 |
Weighted average grant date fair value | |
Beginning Balance (in dollars per share) | $ / shares | $ 99.72 |
Granted (in dollars per share) | $ / shares | 75.73 |
Vested (in dollars per share) | $ / shares | 92 |
Forfeited (in dollars per share) | $ / shares | 87.53 |
Ending Balance (in dollars per share) | $ / shares | $ 90 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-Based Compensation Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Per share intrinsic value of non-vested stock granted (in dollars per share) | $ 75.73 | $ 86.84 | $ 99.24 |
Weighted average per share discount for compensation expense recognized under the 2009 ESPP (in dollars per share) | $ 17.83 | $ 13.10 | $ 15.20 |
Fair value of non-vested stock that vested during the period (in millions) | $ 92 | $ 92 | $ 69.6 |
Tax benefit recognized in Consolidated Statements of Operations (in millions) | 2.7 | 3.5 | 3.5 |
Cash received from options exercised and shares purchased under all share-based arrangements (in millions) | 11.3 | 10.6 | 7.8 |
Tax deduction realized related to stock options exercised (in millions) | 9.8 | 9 | 9 |
Selling, General and Administrative Expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation recognized in Consolidated Statements of Operations, as a component of selling, general and administrative expense (in millions) | $ 16.2 | $ 13.4 | $ 11.3 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | |
Lessor, Lease, Description [Line Items] | |||
Rent expense, net of sublease income operating leases | $ 43.3 | $ 33.4 | |
Minimum | |||
Lessor, Lease, Description [Line Items] | |||
Lease renewal term | 1 year | ||
Maximum | |||
Lessor, Lease, Description [Line Items] | |||
Lease renewal term | 26 years |
Leases - Schedule of Lease-Rela
Leases - Schedule of Lease-Related Liabilities Recorded on the Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating lease liabilities: | |||
Current portion included in accrued liabilities | $ 25.2 | ||
Noncurrent operating lease liabilities | 238.5 | $ 243.9 | |
Total operating lease liabilities | 263.7 | ||
Finance lease liabilities: | |||
Current portion included in current maturities of long-term debt | 1.1 | $ 2 | |
Long-term portion of lease liabilities in long-term debt | 29.5 | 28.8 | |
Total financing lease liabilities | 30.6 | 30.8 | |
Total lease liabilities | $ 294.3 | $ 30.8 | |
Weighted-average remaining lease term: | |||
Weighted-average remaining lease term, operating leases | 13 years | ||
Weighted-average remaining lease term, finance leases | 13 years | ||
Weighted-average discount rate: | |||
Weighted-average discount rate, operating leases | 5.81% | ||
Weighted-average discount rate, finance leases | 5.08% |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Costs (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 48.5 |
Variable lease cost | 1.4 |
Sublease income | (4.6) |
Total lease costs | $ 45.3 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liability (Details) $ in Millions | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 37.7 |
2021 | 35.1 |
2022 | 33.1 |
2023 | 28.2 |
2024 | 25.7 |
Thereafter | 210.3 |
Total minimum lease payments | 370.1 |
Present value adjustment | (106.4) |
Operating lease liabilities | $ 263.7 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Details) - USD ($) | 3 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative financial instrument period | 5 years | ||
Aggregate notional amount | $ 300,000,000 | ||
Non-trade floor plan notes payable | $ 1,600,000,000 | $ 1,642,400,000 | $ 1,733,300,000 |
Loss associated with fair value of derivative instruments | $ 1,000,000 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets Measured at Fair Value on a Non-recurring Basis (Details) $ in Millions | Dec. 31, 2019USD ($) |
Fair Value, Recurring | Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative contract, net | $ 0 |
Fair Value, Recurring | Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative contract, net | 1 |
Fair Value, Recurring | Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative contract, net | 0 |
Fair Value, Measurements, Nonrecurring | Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Goodwill | 0 |
Fair Value, Measurements, Nonrecurring | Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Goodwill | 0 |
Fair Value, Measurements, Nonrecurring | Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Goodwill | $ 0.1 |
Fair Value Measurements - Long-
Fair Value Measurements - Long-term Fixed Interest Rate Debt (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 09, 2019 | Dec. 31, 2018 | Jul. 24, 2017 |
Carrying value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 1,166.6 | $ 745.8 | ||
Fair value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | 1,195.7 | 727.3 | ||
Real Estate Mortgages and Other Debt | Carrying value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | 466.6 | 445.8 | ||
Real Estate Mortgages and Other Debt | Fair value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 468.7 | 448.7 | ||
5.250% Senior notes due 2025 | Senior Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Interest rate, stated percentage | 5.25% | 5.25% | ||
5.250% Senior notes due 2025 | Senior Notes | Carrying value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 300 | 300 | ||
5.250% Senior notes due 2025 | Senior Notes | Fair value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 315 | 278.6 | ||
4.625% Senior notes due 2027 | Senior Notes | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Interest rate, stated percentage | 4.625% | 4.625% | ||
4.625% Senior notes due 2027 | Senior Notes | Carrying value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 400 | 0 | ||
4.625% Senior notes due 2027 | Senior Notes | Fair value | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Long-term debt | $ 412 | $ 0 |
Fair Value Measurements - (Narr
Fair Value Measurements - (Narrative) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Fair Value Disclosures [Abstract] | |
Non-cash impairment charges | $ 1.7 |
Franchise value, impairment | $ 0.4 |
Income Taxes - Income Tax Provi
Income Taxes - Income Tax Provision (Benefit) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
Federal | $ 40 | $ 30.3 | $ 95.1 |
State | 24 | 11.5 | 16.9 |
Current income tax expense (benefit) | 64 | 41.8 | 112 |
Deferred: | |||
Federal | 34.7 | 20.4 | (14.2) |
State | 5.2 | 9.6 | 4.1 |
Deferred income tax expense (benefit) | 39.9 | 30 | (10.1) |
Total | $ 103.9 | $ 71.8 | $ 101.9 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Income taxes payable | $ 10,100,000 | ||
Income taxes receivable | $ 17,100,000 | ||
Valuation allowance | 600,000 | 1,100,000 | |
Decrease of valuation allowance | 500,000 | ||
Operating Loss Carryforwards [Line Items] | |||
State operating loss carryforwards | 2,200,000 | ||
Unrecognized tax benefits | 0 | $ 0 | $ 0 |
State and Local Jurisdiction | |||
Operating Loss Carryforwards [Line Items] | |||
Valuation allowance, state net operating loss carryforwards | 600,000 | ||
State tax credit carryforward | $ 200,000 |
Income Taxes - Tax Rate Reconci
Income Taxes - Tax Rate Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Federal tax provision at statutory rate | $ 78.8 | $ 70.9 | $ 121.5 |
State taxes, net of federal income tax benefit | 23.6 | 16.1 | 13.3 |
Non-deductible items | 2.6 | 1.5 | 1.3 |
Permanent differences related to stock compensation | 0.2 | (0.1) | (0.8) |
Net change in valuation allowance | (0.5) | 0.5 | 0.3 |
General business credits | (0.9) | (1.1) | (0.9) |
Deferred remeasurement for change in statutory tax rate | 0 | (15.8) | (32.9) |
Other | 0.1 | (0.2) | 0.1 |
Total | $ 103.9 | $ 71.8 | $ 101.9 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Deferred revenue and cancellation reserves | $ 48.4 | $ 47.2 |
Allowances and accruals, including state tax carryforward amounts | 42.1 | 40.8 |
Lease Liability | 69.7 | 0 |
Credits and other | 0.3 | 0.3 |
Valuation allowance | (0.6) | (1.1) |
Total deferred tax assets | 159.9 | 87.2 |
Deferred tax liabilities: | ||
Inventories | (40) | (42) |
Goodwill | (60.7) | (48.2) |
Property and equipment, principally due to differences in depreciation | (113.6) | (78) |
Right of Use Asset | (66.6) | |
Prepaid expenses and other | (10.1) | (10.2) |
Total deferred tax liabilities | (291) | (178.4) |
Total | $ (131.1) | $ (91.2) |
Acquisitions - Revenue and Oper
Acquisitions - Revenue and Operating Income from Acquisitions (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Business Combinations [Abstract] | |
Revenue | $ 232.3 |
Operating income | $ 3.1 |
Acquisitions - Summary of Acqui
Acquisitions - Summary of Acquisitions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | |||
Cash paid, net of cash acquired | $ 366.6 | $ 373.8 | $ 460.4 |
Debt issued | 125.1 | ||
Total | 393 | 498.9 | |
Goodwill | 454.6 | 434.9 | $ 256.3 |
Acquisitions 2019 | |||
Business Acquisition [Line Items] | |||
Trade receivables, net | 0 | ||
Inventories | 105.2 | ||
Franchise value | 0 | ||
Property and equipment | 124 | ||
Other assets | 193.1 | ||
Floor plan notes payable | 0 | ||
Other liabilities | (29.3) | ||
Assets acquired and liabilities assumed, excluding goodwill | 393 | ||
Goodwill | 0 | ||
Assets acquired and liabilities assumed, net | $ 393 | ||
Acquisitions 2018 | |||
Business Acquisition [Line Items] | |||
Trade receivables, net | 0.7 | ||
Inventories | 180 | ||
Franchise value | 29.8 | ||
Property and equipment | 179.7 | ||
Other assets | 48.6 | ||
Floor plan notes payable | (10.8) | ||
Other liabilities | (2.3) | ||
Assets acquired and liabilities assumed, excluding goodwill | 425.7 | ||
Goodwill | 73.2 | ||
Assets acquired and liabilities assumed, net | $ 498.9 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Acquisition expenses | $ 2.5 | $ 4.3 |
Acquisitions - Pro Forma Summar
Acquisitions - Pro Forma Summary of All Acquisitions (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Revenue | $ 13,193.4 | $ 12,831.9 |
Net income | $ 280.2 | $ 275.6 |
Basic net income per share (in dollars per share) | $ 12.07 | $ 11.31 |
Diluted net income per share (in dollars per share) | $ 11.98 | $ 11.26 |
Related Party Transactions (Det
Related Party Transactions (Details) - Executive Chairman - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||
Charge to selling, general and administrative expense | $ 18.3 | ||
Accrued Liabilities and Other Long Term Liabilities | |||
Related Party Transaction [Line Items] | |||
Balance due to related parties | $ 14.8 | $ 15.7 |
Net Income Per Share of Class_3
Net Income Per Share of Class A and Class B Common Stock (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Weighted average common shares outstanding – basic | 23.2 | 24.4 | 25.1 |
Weighted average common shares outstanding – diluted | 23.4 | 24.5 | 25.1 |
Net income per common share - basic (in dollars per share) | $ 11.70 | $ 10.91 | $ 9.78 |
Net income per common share - diluted (in dollars per share) | $ 11.60 | $ 10.86 | $ 9.75 |
Class A common stock | |||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Net income from continuing operations applicable to common stockholders | $ 264.5 | $ 254.8 | $ 233.4 |
Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding | 0.7 | 1.1 | 1.3 |
Conversion of Class B common shares into Class A common shares | 6.3 | 9.8 | 10.5 |
Net income applicable to common stockholders - diluted | $ 271.5 | $ 265.7 | $ 245.2 |
Weighted average common shares outstanding – basic | 22.6 | 23.4 | 23.9 |
Conversion of Class B common shares into Class A common shares | 0.6 | 1 | 1.2 |
Effect of employee stock purchases and restricted stock units on weighted average common shares | 0.2 | 0.1 | 0 |
Weighted average common shares outstanding – diluted | 23.4 | 24.5 | 25.1 |
Net income per common share - basic (in dollars per share) | $ 11.70 | $ 10.91 | $ 9.78 |
Net income per common share - diluted (in dollars per share) | $ 11.60 | $ 10.86 | $ 9.75 |
Class A common stock | Employee Stock Option | |||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Shares issuable pursuant to employee stock purchases not included since they were antidilutive | 0 | 0 | 0 |
Class B common stock | |||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Net income from continuing operations applicable to common stockholders | $ 7 | $ 10.9 | $ 11.8 |
Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding | 0 | 0 | 0 |
Conversion of Class B common shares into Class A common shares | 0 | 0 | 0 |
Net income applicable to common stockholders - diluted | $ 7 | $ 10.9 | $ 11.8 |
Weighted average common shares outstanding – basic | 0.6 | 1 | 1.2 |
Conversion of Class B common shares into Class A common shares | 0 | 0 | 0 |
Effect of employee stock purchases and restricted stock units on weighted average common shares | 0 | 0 | 0 |
Weighted average common shares outstanding – diluted | 0.6 | 1 | 1.2 |
Net income per common share - basic (in dollars per share) | $ 11.70 | $ 10.91 | $ 9.78 |
Net income per common share - diluted (in dollars per share) | $ 11.60 | $ 10.86 | $ 9.75 |
Class B common stock | Employee Stock Option | |||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||
Shares issuable pursuant to employee stock purchases not included since they were antidilutive | 0 | 0 | 0 |
Segments - Certain Segment Fina
Segments - Certain Segment Financial Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Total revenues | $ 12,672.7 | $ 11,821.4 | $ 10,086.5 |
Income before income taxes | 375.4 | 337.5 | 347.1 |
Depreciation and amortization | (82.4) | (75.4) | (57.7) |
Other interest expense | (60.6) | (56) | (34.8) |
Other income, net | 13.8 | 8.8 | 12.2 |
Floor plan interest expense: | |||
Floor plan interest expense | 72.8 | 62.3 | 39.3 |
Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 12,642.1 | 11,813.4 | 10,088.7 |
Income before income taxes | 334.4 | 257.7 | 260 |
Floor plan interest expense: | |||
Floor plan interest expense | 127.9 | 119.6 | 82 |
Operating Segments | Domestic | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 4,382.4 | 4,215 | 3,845.8 |
Income before income taxes | 123.4 | 97.6 | 105.2 |
Floor plan interest expense: | |||
Floor plan interest expense | 53.6 | 52.4 | 37.2 |
Operating Segments | Import | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 5,267.8 | 5,038.1 | 4,432.8 |
Income before income taxes | 153.9 | 116.2 | 117.8 |
Floor plan interest expense: | |||
Floor plan interest expense | 44.1 | 41.6 | 29 |
Operating Segments | Luxury | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 2,991.9 | 2,560.3 | 1,810.1 |
Income before income taxes | 57.1 | 43.9 | 37 |
Floor plan interest expense: | |||
Floor plan interest expense | 30.2 | 25.6 | 15.8 |
Corporate and other | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 30.6 | 8 | (2.2) |
Income before income taxes | 170.2 | 202.4 | 167.4 |
Floor plan interest expense: | |||
Floor plan interest expense | (55.1) | (57.3) | (42.7) |
Segment Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | (82.4) | (75.4) | (57.7) |
Other interest expense | (60.6) | (56) | (34.8) |
Other income, net | $ 13.8 | $ 8.8 | $ 12.2 |
Segments - Segment Assets (Deta
Segments - Segment Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Segment Reporting Information [Line Items] | |||
Total assets | $ 6,083.9 | $ 5,643.7 | $ 5,384 |
Operating Segments | Domestic | |||
Segment Reporting Information [Line Items] | |||
Total assets | 1,467.6 | 1,488 | |
Operating Segments | Import | |||
Segment Reporting Information [Line Items] | |||
Total assets | 1,306.5 | 1,224.2 | |
Operating Segments | Luxury | |||
Segment Reporting Information [Line Items] | |||
Total assets | 945.2 | 934.6 | |
Corporate and other | |||
Segment Reporting Information [Line Items] | |||
Total assets | $ 2,364.6 | $ 1,737.2 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - ASU 2016-13 - Forecast - Subsequent Event $ in Millions | Jan. 01, 2020USD ($) |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Increase in allowance for loan losses | $ 5 |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Increase in allowance for loan losses | $ 8 |
Investments (Details)
Investments (Details) $ in Millions | Dec. 31, 2019USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Investments in various companies | $ 66.1 |
Changes in Accounting Policie_2
Changes in Accounting Policies - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase in retained earnings | $ 1,401.8 | $ 1,163 | $ 1,162.1 |
Adjustments | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Increase in retained earnings | $ 0.9 |
Changes in Accounting Policie_3
Changes in Accounting Policies - Schedule of New Accounting Pronouncements and Changes in Accounting Principles (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 251.9 | $ 259.7 | |
Total Assets | 6,083.9 | 5,643.7 | $ 5,384 |
Accrued liabilities | 336.9 | 310.2 | 283.6 |
Deferred revenue | 137.9 | 120.4 | 121.7 |
Noncurrent operating lease liabilities | 238.5 | 243.9 | |
Other long-term liabilities | 109 | 111.9 | 122.2 |
Total Liabilities | 4,616.2 | 4,445.6 | 4,186.8 |
Retained earnings | 1,401.8 | 1,163 | 1,162.1 |
Total Liabilities and Stockholders' Equity | $ 6,083.9 | 5,643.7 | $ 5,384 |
Adjustments | Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | 259.7 | ||
Total Assets | 259.7 | ||
Accrued liabilities | 26.6 | ||
Deferred revenue | (1.3) | ||
Noncurrent operating lease liabilities | 243.9 | ||
Other long-term liabilities | (10.3) | ||
Total Liabilities | 258.8 | ||
Retained earnings | 0.9 | ||
Total Liabilities and Stockholders' Equity | $ 259.7 |
Uncategorized Items - lad2019-q
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,400,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 900,000 |
Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (200,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 200,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 900,000 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,400,000 |