Fueled in part by its used-vehicle performance, Lithia Motors posted its 27th consecutive quarter of record results, including the highest second quarter revenue and earnings per share in company history.
Helping Lithia to those achievements were used-vehicle retail same-store sales increasing by 4 percent. All told, the dealer group retailed a total of 32,171 used vehicles, up from 27,716 units in Q2 of last year.
While Lithia moved much more used metal, its average gross profit per unit on those used-vehicle deliveries softened by $109 year-over-year as the Q2 figure settled at $2,316.
Also providing support to Lithia’s overall performance was how the dealer group’s F&I gross profit per unit nearly reached $1,300. A $27 lift from last year’s second quarter left the metric at $1,298.
The company’s Q2 net income per diluted share increased 5 percent to $2.12 from $2.01 in the year-ago span. Adjusted net income per diluted share increased 16 percent to $2.28 from $1.96 for the same period in 2016.
Second quarter net income increased 3 percent year-over-year to $53.2 million from $51.4 million. Adjusted net income rose 14 percent to $57.2 million, up from $50.2 million.
Lithia pointed out that the Q2 adjusted results exclude $0.16 per share in non-core charges related to acquisition expenses and a hail storm insurance reserve. The 2016 Q2 non-core adjustments exclude a $0.05 benefit associated with an equity investment.
The dealer group added that Q2 revenue increased 16 percent to $2.5 billion from $2.1 billion.
At the halfway point of the year, Lithia highlighted its revenues have increased 14 percent to $4.7 billion. Net income for the first six months of the year came in at $4.13 per diluted share, compared to $3.56 per diluted share for the similar period in 2016.
“We continue to execute our strategy of acquiring strong franchises that underperform their potential and improving earnings as they season,” Lithia president and chief executive officer Bryan DeBoer said when the company released its results on Friday. “We increased quarterly revenues 16 percent and adjusted earnings 14 percent over last year, driven by our significant acquisition cadence.
“On a same-store basis, we grew new-vehicle sales slightly, increased used-vehicle sales over 4 percent, and grew service and parts over 7 percent,” DeBoer continued. “We recently raised $300 million in senior notes and anticipate deploying the capital for acquisition growth in the future.
“As we integrate acquisitions and seek to improve their earnings, we increase future cash flow and produce greenfield-like returns,” he went on to say.
Looking ahead, Lithia is projecting full-year earnings of $8.35 to $8.50 per diluted share. This projection is based on the following annual assumptions:
—Total revenue of $9.6 billion to $9.9 billion
—New-vehicle same store sales increasing 1.0 percent
—New-vehicle gross margin of 5.6 percent to 5.8 percent
—Used-vehicle same store sales increasing 5.0 percent
—Used vehicle gross margin of 11.5 percent to 11.7 percent
—Service body and parts same store sales increasing 7.0 percent
—Service body and parts gross margin of 48.5 percent to 49.0 percent
—Finance and insurance same store gross profit of $1,325 to $1,350 per unit
—Tax rate of 39.5 percent
—Average diluted shares outstanding of 25.1 million