Lithia Motors Inc (LAD) Q3 2024 Earnings Call Highlights: Record Revenue Growth Amidst Market ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $9.2 billion, an 11% increase from Q3 of last year.

  • Adjusted Diluted Earnings Per Share (EPS): $8.21.

  • Adjusted SG&A as a Percentage of Gross Profit: Decreased from 67.9% in Q2 to 66% in Q3.

  • Annualized Cost Savings: $200 million, primarily from personnel-related reductions.

  • Total Unit Sales: Decreased 4% in the quarter.

  • Total Vehicle Gross Profit: $4,631, consistent with the prior sequential quarter, down $589 year-over-year.

  • New Vehicle Units: Increased 2% year-over-year.

  • Used Vehicle Units: Down 9.6% year-over-year.

  • Aftersales Revenue: Increased 5.1% compared to the prior year.

  • Aftersales Gross Profit Margin: 56%.

  • Financing Operations Profitability: $1 million this quarter, compared to a loss of $4 million in the same quarter last year.

  • Adjusted EBITDA: $421 million in the third quarter.

  • Free Cash Flows: $273 million generated during the quarter.

  • Share Repurchases: $54 million or 0.7% of outstanding shares.

  • Net Leverage: 2.7 times, below the bank covenant requirement of 5.75 times.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Lithia Motors Inc (NYSE:LAD) achieved record revenues of $9.2 billion in Q3 2024, marking an 11% increase from the previous year.

  • The company successfully implemented cost-saving measures, achieving $200 million in annualized savings, primarily from personnel-related reductions.

  • Lithia Motors Inc (NYSE:LAD) reported strong performance in its aftersales business, with revenues up 5.1% year-over-year and a gross profit margin of 56%.

  • The financing operations segment, primarily driven by Driveway Financial Corporation (DFC), turned profitable with $1 million in earnings this quarter, compared to a loss in the same quarter last year.

  • The company continues to expand its digital ecosystem, with Driveway and GreenCars contributing to 3 million monthly unique visitors, enhancing its omnichannel strategy.

Negative Points

  • Used vehicle units were down 9.6% year-over-year, with declines focused on certified and core units, indicating challenges in the used vehicle market.

  • Total revenues declined by 6% and gross profit declined 8% on a same-store basis, highlighting some operational challenges.

  • The company experienced a sequential increase in used inventory days supply, indicating inefficiencies in inventory management.

  • Lithia Motors Inc (NYSE:LAD) faces challenges with certain manufacturers, particularly Stellantis, which has underperformed compared to other domestic brands.

  • Interest expenses have increased, impacting free cash flows, and the company faces headwinds from higher floor plan interest expenses.

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