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Lithia Motors Inc. (LAD - Snapshot Report) posted a 54.2% increase in adjusted earnings per share to 74 cents in the fourth quarter of 2012 from 48 cents in the corresponding quarter last year. The quarterly EPS surpassed the Zacks Consensus Estimate by 7 cents. In absolute terms, profits shot up 52% to $19.3 million from $12.7 million in the year-ago quarter.

Revenues for the quarter increased 26.2% to $877.4 million from $695.3 million in the year-ago quarter. The growth in revenues was driven by better performance across all the segments, with finance and insurance business and new vehicle sales being the bright spots. Revenues were ahead of the Zacks Consensus Estimate of $825.0 million.

Revenues from new vehicle sales improved 32.7% to $506.9 million in the quarter. New vehicle retail sales increased 31.8% to 14,713 units. However, revenues per vehicle increased marginally by 1% to $34,451. On a same-store basis, revenues from new vehicle sales went up 30.8% to $490.0 million.

Revenues from used vehicle retail climbed 22.5% to $208.4 million in the quarter. Revenues from used vehicle wholesale crept up 2.6% to $35.8 million. Used vehicle retail sales improved 21.7% to 11,943 units with revenues per vehicle increasing marginally by 1% to $17,447. Same-store revenues from used vehicle sales went up 20.1% to $200.4 million.

Revenues from service body and parts went up 9.3% to $89.7 million. Meanwhile, the company’s finance and insurance business witnessed a 30.6% rise in revenues to $29.2 million. Revenues from Fleet and other shot up 87.4% to $7.5 million.

Gross profit increased 22.6% to $138.4 million from $112.9 million in the year-ago quarter. Operating income improved 23% to $36.8 million from $29.9 million in the fourth quarter of 2011.

For 2012, Lithia Motors reported adjusted earnings of $2.96 per share, up 51.8% from $1.95 a year ago. Net income surged 48.8% to $77.4 million from $52.0 million in 2011. The company’s revenues for the year increased 26% to $3.3 billion from $2.6 billion in 2011, driven by better performance across all the businesses.

Financial Details

Lithia Motors had cash and cash equivalents of $42.8 million as of Dec 31, 2012, up from $20.9 million as of Dec 31, 2011. Total debt was $295.1 million as of Dec 31, 2012 compared with $286.9 million as of Dec 31, 2011.

The company had an operating cash outflow of $212.5 million in the full year 2012 compared to a cash outflow of $766.0 thousand in the corresponding period of 2011.


Lithia Motors expects earnings in the range of 69 cents to 71 cents per share for the first quarter of 2013 and $3.25 to $3.35 for the full year 2013. The company expects revenues between $3.7 billion and $3.8 billion for 2013, with an 11.5% increase in new vehicle same-store sales and a 9% rise in used vehicle same-store sales. Same-store sales from service body and parts are expected to improve 5%. The company also expects capital expenditures of $55 million and a tax rate of 39.5% for 2013.

Our Take

Lithia Motors is the ninth largest automotive retailer in U.S. With 87 stores in 11 states, the company provides 27 new vehicle brands along with all brands of used vehicle. Currently, it retains a Zacks Rank #2 (Buy).

Besides Lithia, America's Car-Mart Inc. (CRMT - Snapshot Report), Asbury Automotive Group, Inc. (ABG - Snapshot Report) and Penske Automotive Group, Inc. (PAG - Analyst Report) are performing well in the same industry where it operates. All of them hold a Zacks Rank #2 (Buy)

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