Lithia Motors reports best year since 2007

On the same day Lithia Motors reported its best annual performance since 2007, geopolitical tensions in the Middle East pushed oil prices back to the $100 range.

Publicly traded auto retailing groups took a hit during Wednesday trading, but at least some Wall Street investors liked what Lithia had to say in its quarterly earnings report, causing a brief spike in after-hours trading.

Lithia Motors capped a strong 2010 comeback with adjusted net earnings of $5.6 million, or 21 cents per share, in the fourth quarter. Revenue jumped 30.8 percent to $555.6 million. For all of 2010, the Medford-based auto retailer earned $13.72 million, nearly 50 percent more than its $9.15 million 2009 profit.

Revenue for 2010 grew 19.7 percent to $2.13 billion from $1.78 billion in 2009.

"The economic recovery continued to accelerate through the fourth quarter," Lithia Motors Chairman and Chief Executive Officer Sid DeBoer said. "All states we operate in posted double-digit increases in same-store sales. For the full year, our adjusted earnings per share from continuing operations increased 71 percent. This improvement is a testament to the earnings potential Lithia can realize as we increase our market share in an improving economy."

Still, uncertainty over fuel costs has auto makers, dealers and consumers peering down a curvy road at 70 mph. Shares that closed at $14.32 just before the earnings release soared to $16 before retreating in the early evening.

DeBoer remains unfazed about 2011 prospects — both because of his company's performance during the first seven-plus weeks of the year and a projection that 12.75 million new vehicles will be sold nationally.

The company now forecasts it will have sales ranging between $2.3 billion to $2.45 billion, with same-store, new-vehicle sales rising 16 percent and used-vehicle sales climbing 10 percent.

Even if fuel prices edge up for several months, DeBoer is confident Lithia will handle the challenge.

"We've taken a completely different approach from when gas prices accelerated in '08," DeBoer said. "We've managed inventories better and the consumer is more used to gradual increases. As long as the increases are gradual, we won't have issues. Thankfully, most domestic brands have more economy cars than ever before. We are very flexible in terms meeting demands of our customers. Anything that happens over a 90-day period we can respond to."

If a gallon of gas jumps two dollars in three weeks, he said, "then it will be hard to adjust."

Although the company acquired new dealerships in just two cities last year, it remains on the hunt.

"We are still finding lots of acquisition opportunities," DeBoer said. "We're being fussy about the brand mix and how we can improve that. But it remains a buyer's market. We're not going to overwhelm anyone with an immediate surge, but it will be steady."

During the fourth quarter, Lithia said, its new-vehicle, same-store sales increased 34.4 percent, used-vehicle retail, same-store sales increased 21.1 percent and service-related revenue grew 5.4 percent.

Lithia also announced it would pay a 5 cents per share dividend March 25 to shareholders of record March 11.

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