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Lithia (LAD) Reports Breakthrough May Sales, Buys 5 Stores in Texas

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Lithia Motors, Inc. (LAD - Free Report) yesterday reported record revenues of $2.1 billion for the month of May 2021 as well as the acquisition of five dealership locations across Texas.

Following this announcement, shares of the company rallied 2.42% yesterday to close the trading session at $338.95.

Compared with the pre-pandemic 2019 levels, total revenues in May 2021 surged 89% and total same-store sales increased 26%. Compared with the 2020 pandemic-impacted levels, the top line skyrocketed 104% and total same-store sales jumped 42%, this May. Such a stellar performance was driven by Lithia’s advanced technology and team's expertise, combined with continued strength in margins.
In fact, the breakthrough revenues of May, having same-store growth of 20% in new vehicles and more than 40% in used vehicles compared to the pre-pandemic 2019 levels, marks the completion of the first year of the five-year plan laid out by the company to achieve $50 billion in revenues and $50 in earnings per share.

Lithia also announced the acquisition of the Southwest Kia Auto Group, with five dealership stores located in the major metropolitan markets of Austin and Dallas, TX.  These franchises would perfectly supplement the company’s existing product portfolio. The buyout remarkably aligns with Lithia’s plan to fortify the reach and density of its network to serve customers more conveniently.

These stores expand Lithia’s footprint to the Texas market, which provides a diverse selection of products for all customer needs and affordability levels. Moreover, the buyout is anticipated to add $350 million in combined annualized revenues. The take-over also raises the automotive retailer’s total revenues acquired to a whopping $7.5 billion annually, since the roll out of its five-year plan. The transaction has been financed using the existing on-balance sheet capacity.

Lithia is one of the leading automotive retailers of new and used vehicles, and related services in the United States. It offers tailored services complemented through its nationwide network. The buyout of the two dealerships is in sync with the auto retailer’s proven success strategy of acquiring strong, high-performing franchises.

The company's five-year plan has prompted a series of acquisitions in recent months as it seeks to consolidate profitable auto dealerships into its network. Lithia’s expanding network density is essential to conveniently and affordably cater to customer needs throughout the vehicle ownership lifecycle. The company is, in fact, well ahead its schedule of network expansion per management’s five-year plan.

Lithia’s diversified product mix and multiple streams of income reduce the risk profile of the firm. The company generates income from businesses, including used and new vehicle retail, finance, insurance, as well as automotive repair and maintenance. The diversified portfolio positions it well for top- and bottom-line growth.

Last week, Lithia announced the acquisition of two luxury dealerships in Van Nuys, CA, being BMW of Sherman Oaks and Acura of Sherman Oaks, both serving  the greater Los Angeles area.

Lithia, peers of which include Penske Automotive (PAG - Free Report) , Group 1 Automotive (GPI - Free Report) and AutoNation (AN - Free Report) , currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have surged 145% in the past year compared with the industry’s rally of 115.1%.

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