Lithia Motors Inc. said Wednesday it posted a record-high quarterly net income in the third quarter, driven largely by used-vehicle sales and its service, body and parts business.
Cost-saving measures Lithia undertook earlier in the year also played a role, the company said.
Net income for the Medford, Ore., retailer surged 86 percent to $158.8 million.
Third-quarter revenue reached $3.62 billion, up 9 percent from the prior-year quarter. New-vehicle retail sales slipped slightly in the quarter, while used-vehicle retail sales rose in the double digits.
"This record performance and profitability demonstrate the high performance being achieved at our existing stores and only the very beginning of the benefits to be realized through the activation of Driveway, our ecommerce digital home solution," Lithia CEO Bryan DeBoer said in a statement.
Driveway, Lithia's nationally branded digital retailing and scheduling solution, formally launched in the third quarter. The channel currently supports used-vehicle inventory of 20,000 vehicles. Driveway is meant to represent $9 billion of the retailer's revenue by the year 2025, as part of the company's ambitious plan to quadruple its revenue in five years.
Lithia acquired 12 dealerships in the third quarter: San Francisco BMW, the John Eagle Auto Group in Texas and a Chrysler-Dodge-Jeep-Ram store in Knoxville, Tenn. The dealership group also completed the purchase of Latham Ford in the Albany, N.Y., area this month. Together, the acquisitions are anticipated to accrue $1.46 billion in annualized revenue.
"For the year, this brings our total anticipated annualized revenue from acquired locations to $1.75 billion and expands our density in key geographic areas," the statement said.
Lithia has purchased 17 dealerships in 2020, bringing the retailer closer to its goal to grow annualized revenues $20 billion from acquisitions by 2025.
Shares of Lithia closed Wednesday's trading up a fraction to $260.09.
Lithia provided an update on its fundraising efforts, which it launched in the third quarter. Through a combination of cash on hand, selling shares and equity offerings, Lithia has more than $2 billion total in cash and available credit. The retailer's unfinanced real estate could also provide additional liquidity of about $225 million, Lithia said.
Lithia closed the quarter with more than $694 million in cash and leeway on its revolving credit lines, the company said Wednesday. In October, the retailer raised $805 million through the sale of 3.6 million shares of common stock. The company also issued $550 million in equity offerings through a senior note in a private offering that will come due in 2031.
Lithia said the money is earmarked for "general corporate purposes, which may include financing acquisitions, capital expenditures, working capital and repaying or refinancing debt."
"With the significant amount of capital raised in October, we continue to accelerate the build out of our coast-to-coast network, expanding our ability to provide consumers with convenient, affordable solutions throughout their vehicle ownership lifecycle," said DeBoer. "Together, with our Driveway digital home channel, we are providing the most transparent and comprehensive offerings wherever, whenever and however consumers desire."
Sales: New-vehicle retail sales dipped 1.2 percent to 47,923 in the quarter, while used-vehicle retail sales rose 12 percent to 49,363. Overall sales totaled 97,286 vehicles, a 5 percent bump from a year earlier.
Same-store sales: On a same-store basis, new-vehicle retail sales fell 9.5 percent to 43,029, mirroring the 9.5 percent drop in U.S. light-vehicle sales across the industry in the third quarter, according to the Automotive News Data Center. Used-vehicle retail sales inched up 4.4 percent to 45,066 on a same-store basis.
Lithia is No. 3 on Automotive News' list of the top 150 dealership groups based in the U.S., with new-vehicle retail sales of 180,532 in 2019.