Lithia Motors Cuts Q3 Profit Forecast - Update

(RTTNews) - Automotive retailer Lithia Motors, Inc. (LAD) Monday said third-quarter earnings are expected to increase from the prior year, but are now estimated to be below its previous forecast. The company also revised its fourth-quarter and full year projections downwards. The stock fell over 3 percent in pre-market activity.

Adjusted net income from continuing operations is estimated in a range of $34.0 to $34.8 million, or $1.30 to $1.32 per share, compared to adjusted net income from continuing operations of $29.6 million or $1.13 per share in 2013.

This is the highest third-quarter earnings per share in company history, but is slightly below guidance of $1.36 to $1.38.

On average, 10 analysts polled by Thomson Reuters expect earnings of $1.38 per share for the quarter. Analysts' estimates typically exclude special items.

Unadjusted net income from continuing operations is estimated in a range of $33.7 million to $34.5 million, or $1.29 to $1.31 per share, compared to $30.9 million or $1.18 per share for the prior-year period.

The preliminary results exclude estimated expenses of $0.01 per share related to the DCH acquisition partially offset by a non-core tax attribute. The 2013 results exclude a $0.05 per share benefit related to a non-core tax attribute.

Revenue from continuing operations for the quarter increased 21 percent to $1.3 billion from $1.1 billion for the third quarter of 2013. Analysts expected revenues of $1.28 billion.

Total same store sales increased 12 percent in the quarter, new vehicle same store sales increased 11 percent and Used vehicle retail same store sales climbed 13 percent.

Bryan DeBoer, President and CEO, said, "Used vehicle margins were approximately 130 basis points lower than anticipated primarily due to declining used vehicle values. Used car same store sales grew 13%, but lower gross profit coupled with modestly higher selling costs impacted operating income."

Lithia projects fourth-quarter earnings guidance within a range of $1.17 to $1.19 per share, including the impact of the DCH acquisition. The previous forecast was in a range of $1.23 to $1.26 per share for the combined Lithia / DCH organization. Analysts look for earnings of $1.29 per share.

Full-year 2014 earnings guidance is projected within a range of $4.86 to $4.88 per share, compared to the previous forecast of from the prior guidance of $4.95 to $5.00 per share, on revenues of $5.2 billion to $5.4 billion. Wall Street expects earnings of $5.06 per share on revenues of $5.24 billion.

Lithia projects 2015 first quarter earnings guidance in a range of $1.18 to $1.21 per share, and 2015 full year earnings guidance in a range of $5.60 to $5.80 per share.

Total annual revenues are expected in the range of $7.4 to $7.6 billion. Analysts project 2015 earnings of $6.33 per share on revenues of $7.48 billion.

The stock closed up 1.4 percent at $80.86, but fell 3.4 percent in pre-market activity.