On July 22 before the market opened, Lithia Motors (LAD, Financial), the U.S.’s leading provider of personal transportation solutions, released its second-quarter 2020 results. While earnings exceeded projections, revenue fell short.
By the numbers
The Medford, Oregon-based company posted diluted earnings per share of $3.38 in the second quarter, which reflected a growth of 29% over the prior-year quarter. Revenue of $2.8 billion declined 14.37% on a year-over-year basis. Analysts had predicted EPS of $1.54 on $2.4 billion in revenue.
The company’s President and CEO Bryan DeBoer had the following to say on the earnings report:
"The strong sequential improvements throughout the quarter, coupled with our stores' responsiveness to the current environment, led us to the highest quarterly adjusted earnings per share in our company's history. This record performance illustrates the massive opportunity that exists within our $2 trillion industry that we are unlocking through continued growth and the activation of our ecommerce digital home solutions."
While same-store new vehicle sales tumbled 23.5%, same-store used vehicle sales rose 0.5% during the quarter.
Key developments
In July, Lithia Motors announced it would purchase Smolich CJDR and Nissan, both of which are located in Bend city, Oregon. Additionally, it would acquire Ladin Subaru in Thousand Oaks, California.
The acquisitions are expected to make $160 million in yearly steady states revenue. The automotive retailer said that the acquisition market is “robust and we are accelerating the build out of our coast-to-coast network enabling us to serve customers wherever, whenever, and however they desire."
Financials
At the end of the quarter, the company’s balance of total cash and available credit stood at a combined $750 million. The balance rose to over $1 billion after the company closed on a $255 million syndicated real estate revolving line of credit earlier this month:
"Our balance sheet is in the strongest position in our company's history and we are well positioned to accelerate our plan to reach 5% national market share."
The Board of Directors of the company approved a dividend of 31 cents per share, which will be payable on Aug. 28.
Guidance
The company did not issue any financial forecast for 2020.
Disclosure: I do not hold any positions in the stocks mentioned.
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