Lithia net jumps 26% in Q1 on strong sales by all departments

on Apr19

Lithia Motors CEO Bryan DeBoer: “A significant number of stores still have ample opportunity to improve.” Photo credit: JOE WILSSENS

Lithia Motors Inc. said net income increased 26 percent to $50.7 million in the first quarter from the year-earlier period, on volume gains in all aspects of the dealership group’s business.

Revenue rose 13 percent to a first-quarter record $2.24 billion, Lithia said. Much of that gain was because of acquisitions; same-store revenue rose 3.3 percent to $2.04 billion.

In a statement on Wednesday, CEO Bryan DeBoer credited a “disciplined acquisition strategy and strong operational execution” for the results. “A significant number of stores still have ample opportunity to improve. Since 2010, we have grown our revenue fourfold and our EPS sevenfold,” he said.

Lithia’s balance sheet and free cash flow will allow it to continue to buy dealerships “at a similar or accelerated cadence in 2017 and beyond,” he said.

Double-digit gains

Lithia, of Medford, Ore., posted double-digit revenue gains from new- and used-vehicle retail sales; finance and insurance; and service, body and parts. Revenue from used-vehicle wholesales rose 9.8 percent, and more than doubled from fleet and other.

In the first quarter, Lithia’s gross profit climbed 11 percent to $341.7 million.

Lithia’s total retail sales in the quarter rose 10 percent, including 35,616 new vehicles, up 8.8 percent, and 30,783 used vehicles, up 12 percent.

Used retail sales climb

On a same-store basis, Lithia’s new-vehicle retail sales dipped 1.4 percent to 32,215, narrowly topping the 1.6 percent industrywide decline in U.S. light-vehicle sales in the quarter. Used-vehicle retail sales rose 4.3 percent to 28,501.

The average gross profit per unit from F&I operations rose 4.8 percent to $1,353, but the average gross profit per unit on new vehicles slid 3 percent to $1,981. The average gross profit for used vehicles retailed declined 2.9 percent to $2,278.

Lithia ranks No. 4 on Automotive News’ list of the top 150 dealership groups based in the U.S., with retail sales of 145,772 new vehicles in 2016.

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