Lithia Motors' Q4 net income falls as quarterly, full-year revenues climb

Lithia Motors Inc.'s profit fell in the fourth quarter, but the dealership group's revenue and vehicle sales increased for both the quarter and full-year 2022 as it continued to add stores through acquisitions.

Lithia reported Wednesday that its net income dropped 15 percent to $249.9 million as revenue rose 11 percent to $6.99 billion in the fourth quarter. Net income for the full year jumped 19 percent to $1.26 billion while full-year revenue rose 24 percent to $28.23 billion — a record, according to the Medford, Ore., public retailer. While revenue and vehicle sales rose for both the quarter and the year, same-store vehicle sales were down.

"Our balance sheet is well capitalized and we're executing on the growth initiatives across our segments," Lithia CEO Bryan DeBoer said in a statement Wednesday. "With the significant capital engine we have built, we are well positioned for further consolidation in our sector."

Average gross profit per new vehicle fell 13 percent to $5,344 in the quarter, Lithia said. For the full year, however, average gross profit per new vehicle grew 24 percent to $5,816.

Average gross profit per used vehicle plunged 34 percent to $2,137 in the fourth quarter compared with the fourth quarter of 2021. For the full year, it declined 12 percent to $2,648.

Acquisition activity

Lithia said it acquired nine stores in the fourth quarter; those locations were expected to generate more than $560 million in annual revenue for the retailer. During the same period, Lithia divested four dealerships representing a combined $160 million in annual revenue. In December, Lithia bought Glenn's Freedom Chrysler-Dodge-Jeep-Ram in Lexington, Ky., southeast of Louisville.

The retailer also purchased Ferrari of Denver, a dealership selling luxury and exotic brands, in December. In November, Lithia acquired Meador Chrysler-Dodge-Jeep-Ram, which it said is the second-largest CDJR store in the Dallas-Fort Worth region. In October, it bought Airstream Adventures, a collection of six RV stores on the West Coast.

In 2022 overall, Lithia acquired 31 stores representing a total of $3.5 billion in annual revenue. Lithia said that was offset by 13 sales representing $663 million in revenue.

The retailer noted that it acquired one store in February.

Lithia said it has now acquired dealerships representing $13.9 billion in annual revenue since July 2020, when it disclosed a five-year plan to reach $50 billion in annual revenue by 2025.

Lithia shares slipped 8.2 percent to close at $258.13 on Wednesday.

Q4 revenue: $6.99 billion, up 11 percent from a year earlier

Q4 net income: $249.9 million, down 15 percent

Q4 adjusted net income: $251 million, down 28 percent

Q4 vehicle sales: 143,993 new and used vehicles, up 6.9 percent. Same-store sales of 127,312 new and used vehicles, down 3.2 percent.

2022 revenue: $28.23 billion, up 24 percent

2022 net income: $1.26 billion, up 19 percent

2022 adjusted net income: $1.27 billion, up 9 percent

2022 vehicle sales: 583,360 new and used vehicles, up 8.8 percent. Same-store sales of 472,415 new and used vehicles, down 7.9 percent.

Record: Full-year revenue

Ranking: Lithia ranked No. 2 on Automotive News' most recent list of the top 150 dealership groups based in the U.S., with retail sales of 260,738 new vehicles in 2021.