Lithia Motors Inc.'s net income soared in the third quarter, driven largely by gains from tax changes and store divestitures. Profits in the finance and insurance, fixed operations and used-vehicle businesses were up. Revenue also rose in the quarter.
The Medford, Ore., dealership group reported net income of $93.1 million in the third quarter, a 79 percent increase over last year. That increase reflected gains related to the sale of dealerships and tax benefits in 2018's third quarter, as well as charges related to store acquisitions and storm insurance reserves in the year-ago quarter. On an adjusted basis, net income rose 25 percent to $68.7 million.
Lithia reported revenue of $3.09 billion, a 15 percent increase over the year-ago figure of $2.68 billion.
Cooling off from a spate of acquisitions earlier in the year, Lithia has now divested nine of twelve stores planned for the year, including seven in the third quarter.
"We've divested the majority of our lowest quality assets, which we're very excited about," CEO Bryan DeBoer told reporters on a call Wednesday.
Lithia's stock price surged on the earnings news, rising 13.2 percent to close at $86.16 despite the Dow Jones industrial average falling 2.4 percent to 24,583.
Sales: Overall new-vehicle retail sales rose 7.3 percent to 48,790. Used-vehicle sales jumped 15 percent to 39,751.
Same-store sales: New-vehicle retail sales dropped 5.1 percent to 40,974. That compares with an industrywide drop in light-vehicle sales of 2.5 percent during the quarter. Used-vehicle retail sales rose 2.8 percent to 34,434.
Records: Revenue was the highest for any third quarter in company history.
Same-store gross profit: Up 2.4 percent to $129.7 million for parts and service; up 8.7 percent to $105.5 million for F&I down 1.1 percent to $82.6 million for new-vehicle retail; up 1.1 percent to $77.7 million for used-vehicle retail.
Lithia is ranked No. 4 on Automotive News' list of the top 150 dealership groups based in the U.S., with annual new-vehicle retail sales of 167,146 in 2017.
