Lithia Motors Inc.
) share price rose 4.6% to $94.59 on Jul 23 after the company
reported that its second-quarter 2014 adjusted net income was the
highest in the company's history. Adjusted earnings increased 28%
to $1.34 per share in the second quarter of 2014 compared with
$1.05 earned in the year-ago quarter. Earnings also beat the Zacks
Consensus Estimate of $1.25 by 9 cents.
Adjusted net income augmented 29% to $35.2 million from $27.4
million in the year-ago quarter. Alternatively, unadjusted net
income from continuing operations was $35.2 million or $1.34 per
share, compared to $25.3 million or 97 cents per share in the
Thee second quarter 2014 adjusted results from continuing
operations exclude non-core charges related to acquisition expenses
for the pending DCH combination offset by non-core gains resulting
from a tax attribute. As a result, the adjusted and non-adjusted
figures are the same. Second quarter 2013 adjusted income from
continuing operations excludes 9 cents per share expense for
non-core legal reserve related to a case filed in 2006, partly
offset by a 1 cent per share benefit from a tax
Revenues from continuing operations in the reported quarter
increased 21% to $1.2 billion from $1 billion in the year-ago
quarter. Revenues marginally beat the Zacks Consensus Estimate of
$1.19 billion. The improvement in revenues was driven by better
performance across all segments, with service, body and
parts, and new vehicle and used vehicle sales being the bright
Lithia Motors Inc - Earnings Surprise |
Revenues from new vehicle sales improved 21.9% in the quarter
to $694.5 million. New vehicle retail sales increased 20.1% to
20,446 units. Revenues per new vehicle increased 1.5% to $33,967.
On a same-store basis, revenues from new vehicle sales went up
12% to $632.8 million.
Revenues from used vehicle retail climbed 20.1% to $310.5
million in the quarter. Revenues from used vehicle wholesale went
up 17.5% to $44.3 million. Used vehicle retail sales improved 14.3%
to 16,086 units with revenues per vehicle increasing 5.1% to
$19,301. Used vehicle wholesale sales improved 15.4% to 6,047 units
and revenues per vehicle went up 1.8% to $7,324. Same-store
revenues from used vehicle retail sales went up 11% to $285.5
million. Same-store revenues from used vehicle wholesale gained
11.3% to $41.9 million.
Revenues from service body and parts went up 21% to $114.3
million. Meanwhile, the company's finance and insurance business
witnessed a 28.1% rise in revenues to $43.8 million. However,
revenues from Fleet and others inched up 1.4% to $14.4 million.
Gross profit increased 20.3% to $192.3 million from $159.8
million in the year-ago quarter. Operating income improved 22.6% to
$105.7 million from $86.2 million in the second quarter of
Lithia Motors had cash and cash equivalents of $28.2 million as
of Jun 30, 2014, up from $23.7 million as of Dec 31, 2013. Total
debt was $260.8 million as of Jun 30, 2014 compared with $245.5
million as of Dec 31, 2013.
In the first six months of 2014, the company had an operating
cash outflow of $4.2 million compared with a cash inflow of $24.4
million in the corresponding period of 2013.
In Jun 2014, Lithia entered into an agreement with DCH Auto
Group Limited to acquire total outstanding shares of DCH Auto Group
Inc. The DCH stores are estimated to generate revenues of
approximately $2.3 billion per annum.
In Jun 2014, Lithia also acquired Vic Alfonso Cadillac and
Braley & Graham Buick GMC in Portland, OR. These stores are
expected to generate total annual revenues of $60 million.
In Apr 2014, Lithia acquired Access Ford Lincoln in Corpus
Christi, Texas and opened Lithia Chrysler Jeep Dodge Ram of Wasilla
in Wasilla, AK. These stores are expected to generate $105 million
in estimated total annual revenues.
The company president stated that the acquisition market will
continue to remain strong. Lithia purchased 3 more stores in the
second quarter of 2014, which totals to 8 stores acquired or opened
so far this year.
Dividend and Share Repurchase
The board of directors of the company announced a dividend of 16
cents per share concurrent with the second quarter 2014 financial
results, payable to shareholders on Aug 8, 2014.
Lithia repurchased 30,000 shares in the reported quarter at a
weighted average price of $75.36 per share.
Lithia Motors expects third quarter 2014 earnings in the range
of $1.36-$1.38 per share. The company expects revenues between $1.2
billion and $1.3 billion, with a 13% increase in new vehicle
same-store sales and a 7.5% rise in used vehicle same-store sales.
Same-store sales from service body and parts are expected to
improve 8% in the third quarter of 2014.
For the fourth quarter and full-year 2014, the company expects
earnings for the combined Lithia/DCH organization to be in the
range of $1.23-$1.26 per share and $4.95-$5.00 per share,
Same store total revenue for the fourth quarter is likely to be
in the range of $1.1-$1.2 billion with an 11% rise in new vehicle
same-store sales and a 6% increase in used vehicle same-store
sales. Same-store sales from service body and parts are expected to
improve 8% in the fourth quarter of 2014.
Lithia Motors currently carries a Zacks Rank #1 (Strong
Other stocks performing well in the auto industry include
Asbury Automotive Group, Inc.
Penske Automotive Group, Inc.
Rush Enterprises, Inc.
). All these stocks hold a Zacks Rank #2 (Buy).
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LITHIA MOTORS (LAD): Free Stock Analysis Report
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