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Lithia (LAD) Q3 Earnings Beat Estimates, Sales Surge 70.4% Y/Y

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Lithia Motors (LAD - Free Report) reported third-quarter adjusted earnings of $11.21 per share, beating the Zacks Consensus Estimate of $9.82. Higher-than-expected revenues from used-vehicle (retail and wholesale), service, body and parts, F&I (Finance & Insurance) and fleet and others segments led to this outperformance. The bottom line increased 63% from the prior-year quarter’s $6.89 per share.

Total revenues jumped 70.4% year over year to $6,169.8 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $6,086 million. In fact, for the reported quarter, Lithia Motors claims to have reported the highest quarterly earnings and revenues in its history.

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Lithia Motors, Inc. price-consensus-eps-surprise-chart | Lithia Motors, Inc. Quote

Segmental Performance

New vehicle retail revenues increased 53.9% year over year to $2,898.2 million, but lagged the Zacks Consensus Estimate of $3,008 million. New vehicle units sold climbed 39.6% from the prior-year quarter to 66,894. The average selling price of new-vehicle retail rose 10.2% from the year-ago quarter to $43,325.

The used-vehicle retail revenues surged 90.2% year over year to $2,079.5 million and beat the Zacks Consensus Estimate of $1,906 million. The used-vehicle retail units sold grew 54.7% from the year-ago quarter to 76,362. The average selling price of used-vehicle retail improved 23% to $27,233 from the year-ago figure of $22,145. Revenues from used-vehicle wholesale skyrocketed 164.1% year over year to $260.9 million and surpassed the consensus mark of $218 million.

Revenues from service, body and parts were up 60.9% from the prior-year period to $578.3 million, and outpaced the Zacks Consensus Estimate of $533 million. The company’s F&I business recorded 85% year-over-year growth in revenues to $297 million, topping the consensus estimate of $273 million. Revenues from fleet and others were $55.9 million, jumping 124.5% year over year and exceeding the consensus mark of $42.65 million.

While the same-store new vehicle sales dropped 3.2% year over year, the same-store used vehicle retail sales increased 39.9%. While the same-store revenues from the F&I business climbed 22.1%, that of the service, body and parts unit grew 7.2% from the prior-year quarter.

Financial Tidbits

Cost of sales jumped 67.8% year over year for third-quarter 2021. SG&A expenses — as a percentage of gross profit — expanded 380 basis points, from the 59.6% recorded in the prior-year quarter to 55.8% during the reported quarter. Encouragingly, pretax and net profit margins improved from the year-ago levels.

A quarterly dividend of 35 cents a share will be payable on Nov 19 to shareholders of record as of Nov 12, 2021.

Lithia had cash and cash equivalents of $137.8 million as of Sep 30, 2021. Long-term debt was $2,586.1 million, marking an increase from $2,064.7 million as of Dec 31, 2020.

Lithia — which shares space with other auto retailers like Asbury Automotive Group Inc. (ABG - Free Report) , Americas CarMart Inc. (CRMT - Free Report) and Group 1 Automotive Inc. (GPI - Free Report) in the same industry — currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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