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Lithia Motors reports 3Q sales of $2.7 billion Ricardo Madrigal, a service technician at Lithia Motors in Medford, works on a SUV. [Mail Tribune file photo] Wednesday Oct 25, 2017 at 7:33 AM Oct 26, 2017 at 6:54 AM Greg Stiles Mail Tribune @GregMTBusiness No matter the external influences, second-generation Lithia Motors leadership is confident the company will grow for years to come. The Medford auto retailer's executives even had the audacity to tell stock analysts Wednesday there is more to running a $10 billion company than trying to look good for investors every 90 days. In the world of publicly traded companies, quarterly earnings reports are the Holy Grail for profit-chasing investors. With an eye on earnings beyond the next quarter, or even next year, Lithia Motors still delivered record revenue of $2.7 billion and a solid third-quarter profit of $51.9 million. The company also declared a 27 cent per-share dividend. Still, the analysts were in a cranky mood despite a 19 percent year-over-year revenue jump, the 28th consecutive quarter of record revenue. Perhaps it was the 4 percent profit decline from $54 million in 2016, or per-share earnings slipping 3 percent to $2.07 from $2.14. Analysts, after all, had expected $2.26 per share. As analysts tried to ferret out whether Lithia's strategy would lean toward internal organic growth or acquisitions, CFO John North said the auto retailer is looking beyond short-term gains.  "We want to communicate what we're trying to build in terms of a dynamic company that's delivering growth in a relatively stable economic environment," North said. Increased medical and repossession costs related to acquisitions, along with depreciation and interest expense, led the company to increase its reserves by 20 cents per share, North said. "We have some anomalies in the quarter," said Chris Holzshu, Lithia's chief human resources officer. "But broadly speaking, looking forward in 2018, 2019 and 2020, we have lots of opportunity ahead of us." CEO and President Bryan DeBoer, who has led the company since 2012, said neither organic growth nor gains made through acquisition follow a linear path. "We manage our business dynamically, and those things change," DeBoer said in an interview. "We have multiple levers to hit our growth targets, whether internal or external. If everything goes right, we achieve both." DeBoer said the increased revenue came from recent acquisitions. The most recent acquisition was the Downtown Los Angeles Auto Group, which includes Audi, Mercedes-Benz, Nissan, Porsche, Toyota and Volkswagen dealerships, and a Nissan store in Carson, California. All told, Lithia has picked up 15 dealerships in the year with projected annual revenue of $1.5 billion. "We continue to see a significant number of stores available," said DeBoer. "Given the annual cash flow from our existing base of business, ample liquidity and availability of capital, we anticipate a future cadence similar to what we have experienced in the prior three years."  National sales figures indicate what kind of opportunities lie ahead. If demand rises, it may be at the store level, if outlooks diminish dealers might be more willing to sell at an agreeable price. Lithia's acquisition matrix involves under-performing dealerships with entrepreneurial management capable of melding into Lithia's long-term outlook. "Fundamentally, our foot is on the accelerator at all times," DeBoer said. "Individual market economies drive things in ways you can't predict, so we're always pushing on both sides, and you could have both things happen at once. If that happens, we're able to grow faster." Lithia, No. 318 on the Fortune 500 in 2017, operates 166 stores in 18 states. "We're building a culture that creates and energizes," DeBoer said. "We have 13,000 people trying new things, challenging each other to become better and find new ways to interrelate with our customers. We've developed a strong, bottom-up culture where decisions are made closest to our customer." Lithia expects total 2017 same-store sales to advance 3 percent, with revenue running between $10 billion and $10.2 billion. In 2018, the company projects revenue growing to $11 billion to $11.5 billion and per-share earnings rising to $9.25, from the anticipated $8.30 to $8.35 this year. During the quarter, Lithia's same-store sales and new-vehicle sales increased 1 percent, while nationally sales were down 1 percent. Used-vehicle same-store sales increased 4 percent, while service, body and parts same-store sales increased 3 percent. For the first nine months of 2017, revenue grew 16 percent to $7.4 billion, up from $6.4 billion in 2016. Net income for the first nine months of the year was $6.19 per share, compared to $5.69. Adjusted net income per diluted share for the first nine months of 2017 increased 12 percent to $6.24 from $5.57 for the first nine months of 2016. The company's bottom line through nine months grew 6.9 percent to $155.8 million from $145.8 million last year. — Reach reporter Greg Stiles at 541-776-4463 or [email protected]. Follow him on Twitter at www.twitter.com/GregMTBusiness, and read his blog at www.mailtribune.com/Economic Edge.