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Lithia Motors (LAD) Q4 Earnings & Revenues Beat, Up Y/Y

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Lithia Motors, Inc. (LAD - Free Report) reported adjusted earnings per share of $2.57 in fourth-quarter 2018, increasing from $2.15 in the prior-year quarter. Further, the bottom line beat the Zacks Consensus Estimate of $2.42.

Reportedly, in the quarter under review, adjusted net income rose 12% year over year to $61 million. Total revenues in the quarter increased 10% year over year to $2.97 billion, beating the Zacks Consensus Estimate of $2.94 billion.

Gross profit increased over 11.6% to $441.9 million in the quarter under review from $396.1 million in the year-ago quarter.

Lithia Motors, Inc. Price, Consensus and EPS Surprise

 

2018 Results

In 2018, the company’s adjusted net income increased 16% year over year to $244 million and adjusted earnings per share rose 19% to $9.98.

Revenues for the year went up 17% year over year to $11.8 billion.

Quarter in Detail

Revenues from new-vehicle retail rose 4.5% year over year to $1.7 billion in the reported quarter. New-vehicle retail sales volume expanded 0.2% to 45,287 units. The average selling price of new-vehicle retail sales rose 4.3% to $ 37,281 from the year-ago figure.

Used-vehicle retail revenues increased 19.7% year over year to $753.4 million in the quarter under review while revenues from used-vehicle wholesale rose 9.8% to $78.1 million. Used-vehicle retail sales volume improved 12.5% to 36,273 units. The average selling price of used-vehicle retail sales gained 6.4% to $ 20,771 million from the year-ago figure.

Revenues from service body and parts went up 15.6% to $314 million. The company’s finance and insurance business recorded 9.3% rise in revenues to $112.8     million. Revenues from fleet and others were $26.7 million compared with the year-ago figure of $12.2 million.

Acquisitions & Divestments

In 2018, the company added net $1.2 billion in estimated annualized revenues through acquisition and divestiture activities.

During the year, Lithia Motors acquired two large platforms in Northeast, made two small complementary acquisitions and added a new point in Texas. Further, it divested eight locations that generated gain of $15 million.

The company expects the nationwide expansion through acquisition to continue in 2019 as well. It targets platforms that are good assets but are performing below their potential.

Financial Details

Lithia Motors had cash and cash equivalents of $31.6 million as of Dec 31, 2018, down from $57.3 million as of Dec 31, 2017. Long-term debt was $1.36 billion as of Dec 31, 2018, marking an increase from $1.03 billion recorded in the prior-year period.

Dividend & Share Repurchases

Lithia Motors’ board approved a quarterly dividend of 29 cents per share for fourth-quarter 2018. The amount will be payable on Mar 22, 2019, to shareholders of record as of Mar 8, 2019.

Between Oct 24 and Dec 31, the company repurchased around 489,000 shares at an average price of $70.96 per share. In 2018, Lithia Motors repurchased roughly 2.1 million shares or 8.5% of outstanding shares.

Further, the company is left with $234 million under its share-repurchase authorization.

Zacks Rank & Stocks to Consider

Lithia Motors currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are General Motors Company (GM - Free Report) , Allison Transmission Holdings, Inc. (ALSN - Free Report) , and Oshkosh Corporation (OSK - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Motors has an expected long-term growth rate of 8.5%. Share price of the company has increased 10.7% in the past three months.

Allison has an expected long-term growth rate of 10%. Over the past three months, shares of the company have gained 4%.

Oshkosh has an expected long-term growth rate of 11.3%. Shares of the company have gained 18.9% in the past three months.

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