Lithia Motors 10-Q Report Highlights Growth Strategy

Lithia Motors, Inc. has recently released its 10-Q report, detailing its operations as an automotive retailer with two segments, Vehicle Operations and Financing Operations. The company sells new and used vehicles, provides parts, repair, and maintenance services, vehicle finance, and insurance products. It also offers financing to customers buying and leasing retail vehicles. As of March 31, 2024, Lithia Motors operated 482 locations representing 51 brands in three countries.

In its 10-Q report, Lithia Motors discussed forward-looking statements and risk factors, emphasizing the potential impact of market conditions, business strategy, growth and expansion, financial condition and liquidity, and compliance with financial and restrictive covenants. The report also highlighted the company's focus on driving operational excellence, innovation, and diversification, as well as its growth through acquisition and network optimization. Lithia Motors emphasized its strategic capital allocation, managing liquidity, and available cash to support its long-term plan focused on growth through acquisitions and investments in existing business, technology, and adjacencies.

Financially, the company experienced revenue growth in 2024 compared to 2023, primarily driven by increases in volume related to acquisitions, complemented by organic growth in new vehicle retail sales and service, body, and parts sales. However, gross profit on new and used vehicle retail sales declined compared to 2023 due to continued normalization of margins. Net income decline was primarily driven by this margin normalization, increased interest expense, and increased selling, general, and administrative expenses (SG&A) as a percentage of gross profit.

Key performance metrics for the Vehicle Operations segment for the three months ended March 31, 2024, compared to the same period in 2023, include:

  • Revenues:
  • New vehicle retail: $4,014.1 million, a 22.4% increase
  • Used vehicle retail: $2,800.8 million, a 25.7% increase
  • Finance and insurance: $340.6 million, a 7.0% increase
  • Service, body, and parts: $912.8 million, a 24.0% increase
  • Total revenues: $8,561.8 million, a 22.8% increase

  • Gross profit:

  • New vehicle retail: $295.3 million
  • Used vehicle retail: $182.7 million
  • Finance and insurance: $340.6 million
  • Service, body, and parts: $502.0 million
  • Total gross profit: $1,335.2 million

  • Retail units sold:

  • New vehicles: 85,683, a 26.4% increase
  • Used vehicles: 102,436, a 31.1% increase

  • Average selling price per retail unit:

  • New vehicles: $46,848
  • Used vehicles: $27,342

The report also provided same store operating data, demonstrating the company's ability to grow revenues in its existing locations. For example, the same store new vehicle retail revenue for the three months ended March 31, 2024, increased by 2.3% compared to the same period in 2023. Additionally, the average gross profit per retail unit for new vehicles decreased by 29.7%, while for used vehicles, it decreased by 3.4%.

Today the company's shares have moved 1.9% to a price of $262.72. For more information, read the company's full 10-Q submission here.

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