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Lithia's 1Q Earnings Improve 42.4% - Analyst Blog

By: Zacks.com
Posted: 4/25/2013 5:11:00 PM
Referenced Stocks: ABG;AN;KMX;LAD

Lithia Motors Inc. ( LAD ) posted a 42.4% increase in earnings per share to 84 cents in the first quarter of 2013 from 59 cents in the corresponding quarter last year. Reported earnings also surpassed the Zacks Consensus Estimate by 12 cents. Net income shot up 40.4% to $21.9 million from $15.6 million in the year-ago quarter.

Revenues for the quarter increased 22.3% to $903.1 million from $738.2 million in the year-ago quarter, beating the Zacks Consensus Estimate of $835 million. The improvement in revenues was driven by better performance across all the segments, with finance and insurance business, new vehicle and used vehicle sales being the bright spots.

Revenues from new vehicle sales improved 25.6% to $493.4 million in the quarter. New vehicle retail sales increased 21.3% to 14,720 units. Revenues per vehicle increased 3.5% to $33,522. On a same-store basis, revenues from new vehicle sales went up 22% to $474.0 million.

Revenues from used vehicle retail climbed 25.5% to $239.2 million in the quarter. Revenues from used vehicle wholesale went up 18.4% to $39.5 million. Used vehicle retail sales improved 21.9% to 13,661 units with revenues per vehicle increasing 3% to $17,512. Same-store revenues from used vehicle sales went up 21.5% to $227.8 million.

Revenues from service body and parts went up 8.3% to $90.4 million. Meanwhile, the company's finance and insurance business witnessed a 27.3% rise in revenues to $31.7 million. Revenues from Fleet and other declined 31.8% to $8.8 million.

Gross profit increased 17.8% to $146.4 million from $124.3 million in the year-ago quarter. Operating income improved 28.3% to $40.6 million from $31.6 million in the first quarter of 2012.

Financial Details

Lithia Motors had cash and cash equivalents of $15.0 million as of Mar 31, 2013, down from $42.8 million as of Dec 31, 2012. Total debt was $229.7 million as of Mar 31, 2013 compared with $295.1 million as of Dec 31, 2012.

In the first three months of 2013, the company had an operating cash flow of $49.8 million compared with a cash outflow of $41.0 million in the corresponding period of 2012.

Share Repurchase & Dividend

During the first quarter of 2013, Lithia Motors repurchased 127,900 shares of Class A common stock at a weighted average price of $40.76. As of Mar 31, 2013, the company had 1,726,953 shares remaining under its repurchase program.

For the first quarter of 2013, the Board of Directors of Lithia Motors has authorized an increased dividend of 13 cents per share. The dividend is payable on May 24, 2013 to shareholders of the record of May 10, 2013.

Outlook

Lithia Motors expects earnings in the range of 86 cents to 88 cents per share for the second quarter of 2013 and $3.48 to $3.55 for the full year 2013. The company expects revenues between $3.8 billion and $3.9 billion for 2013, with a 15.5% increase in new vehicle same-store sales and a 13% rise in used vehicle same-store sales. Same-store sales from service body and parts are expected to improve 7%. The company also expects capital expenditures of $55.0 million and a tax rate of 39.5% for 2013.

Our Take

Lithia Motors is the ninth largest automotive retailer in U.S. With 88 stores in 11 states, the company provides 27 new vehicle brands along with all brands of used vehicle. Currently, it retains a Zacks Rank #3 (Buy).

Some other stocks that are performing well in the industry where Lithia Motors operates include Asbury Automotive Group, Inc. ( ABG ), AutoNation Inc. ( AN ) and CarMax Inc. ( KMX ). All these companies carry a Zacks Rank #2 (Buy).



ASBURY AUTO GRP (ABG): Free Stock Analysis Report

AUTONATION INC (AN): Free Stock Analysis Report

CARMAX GP (CC) (KMX): Free Stock Analysis Report

LITHIA MOTORS (LAD): Free Stock Analysis Report

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