Lithia Motors Inc. will continue to trim costs, streamline store operations and pursue acquisition opportunities this year, CEO Bryan DeBoer said at an investor conference in New York Tuesday.
"My goal is to stay focused, keep capital discipline and continue to grow our business as we have from the ground up," DeBoer said.
DeBoer also said Lithia expects 2012 net profits to range from $2.45 to $2.53 per diluted share. In 2011, Lithia reported net income of $55.8 million, or $2.09 per diluted share.
The company's first-quarter net income rose to $16.8 million from $8.7 million during the same quarter last year. Revenue surged 30 percent to $759 million.
Medford, Ore.-based Lithia ranks No. 9 on the Automotive News list of top dealership groups in the United States, based on 44,537 retail new-vehicle sales in 2011. It has 86 stores in 11 states.
Eye on buys
There are about 80 markets west of the Mississippi River and 160 east of the river in which Lithia wants to snap up new dealerships, said DeBoer.
Lithia is looking to buy dealerships that sell Chevrolet, Ford, Toyota, Honda, Hyundai, Subaru and Nissan franchises.
The company has over $100 million in liquidity to make acquisitions.
"We're a little bit different from other operators in that we operate exclusively in our markets. Meaning, we're the only dealer representing that brand in a market," DeBoer said. "Our areas are typically rural, under 250,000 people."
DeBoer said Lithia is considering more populous markets for luxury import dealership acquisitions. There are some 500 U.S. metro markets serving luxury brands and Lithia is in about 30 of them, he said.
"We have a very good idea which dealers are in those markets, how their stores are performing and what we'd have to pay for them," DeBoer said. "We have brokers in those markets to represent us."
Lithia will continue a campaign started three years ago to flatten the dealership group's organization and management layers, DeBoer said.
Prior to that, Lithia had centralized too much of its operations, which hindered the ability of dealership employees to make customer focused decisions.
"Our executive team is now about half the size it used to be and they are more engaged with our dealerships and regularly visit stores," DeBoer said. "So everything is about what happens in your marketplace, not what happens to Lithia."
DeBoer said same-store sales this year are up about 20 percent but there is still room for growth, especially at stores in the Western region.
"About half our stores are in the West," DeBoer said. "The West is still highly depressed."
But about a quarter of Lithia's business comes from stores in Texas. That market, DeBoer said, has been "fairly unscathed" by the recent recession. The Midwest is also doing well to help offset Lithia's weaker sales in the West.
DeBoer said Lithia's stores can do a better job at acquiring used vehicle inventory over the upcoming months to achieve its goal of selling 60 used vehicles per store per month. It's currently averaging about half that figure. c