Lithia continues to build revenue with increase over 2009

Lithia continues to build revenue with increase over 2009

Lithia Motors continued building steam in the second quarter of 2010 as revenue rose 19 percent to $534 million from $444 million a year earlier.

While the Medford-based auto retailer's vehicle sales numbers improved year-over-year for the fourth-straight quarter, its real estate holdings bit into the bottom line.

Same-store retail sales of new vehicles grew 26 percent and used-vehicle sales increased 15 percent as Lithia's continuing operations netted 27 cents per share, compared to 22 cents a year ago. During the quarter, Lithia sold 8,700 new vehicles and 8,700 used vehicles.

However, real estate issues led to a $1.5 million — or 6 cents per share — loss for the quarter compared with a $2.5 million, or 12 cents per share, profit for the second quarter of 2009.

"Our operational results exceeded our expectations due to a strong April and May, and June came in at expectations," said Sid DeBoer, Lithia's chairman and chief executive officer when releasing the earnings report. "We have focused on maintaining our service, body and parts sales volumes despite fewer units in operation and lower warranty revenues."

Lithia wrote down the value of about 15 property sites it had set aside for its L2 used car initiative or store relocations — as well as shuttered facilities — from $55 million to $41 million.

"We got results by dropping the price, taking the mark down and then moving on," DeBoer said.

Lithia charged off $8 million related to its real estate holdings that the company said reflected continued weakness in local market conditions, increasing vacancy rates and challenges in obtaining lender financing.

Revenue generated from the property sales will be plowed back into future acquisitions, said President and Chief Operating Officer Bryan DeBoer, who told analysts Lithia will buy more dealerships than it will sell in 2011.

The company now projects full-year revenue to be nearly $2 billion. Lithia sales tumbled 15.2 percent in 2009 to $1.7 billion after hitting $2.1 billion in 2008.

Lithia has tried to reduce its Chrysler holdings in recent years, while increasing import and other American franchises.

Bryan DeBoer said the company now operates 23 stand-alone Chrysler stores, down from its peak of 37.

Outgoing Chief Financial Officer Jeff DeBoer said Lithia ended the quarter with $118.2 million in immediately available funds, including $15.4 million in cash and $71.2 million on its line of credit.

For the six-month period ending June 30, Lithia's revenue increased 17 percent to $993 million, compared to $849 million for the same period in 2009.

Reach reporter Greg Stiles at 541-776-4463 or e-mail

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