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The Medford auto retailer said Thursday it is ready to once more acquire auto dealerships after an 18-month stretch in which it closed or sold 20 dealerships, leaving it with 87 stores in 12 states.
Lithia reported a $5.7 million third-quarter profit, or 26 cents per share, on revenue of $458.2 million. That's a substantial turnaround from the same period in 2008, when the company lost $2.4 million on sales of $507 million.
Through the first nine months of 2009, Lithia earned $10.7 million, or 51 cents per share, on $1.2 billion in revenue.
At the same time it reported its third-straight profitable quarter, Lithia announced it obtained a franchise from Korean automaker Kia for Anchorage, Alaska.
"We've removed $65 million in annual fixed costs and now we've shifted the majority of our focus to reducing variable expenses in stores," said Lithia Chairman and Chief Executive Officer Sid DeBoer.
He said more advertising dollars will be put into Internet marketing.
"That's an area where our competitors have pulled back because of the lack of capital," DeBoer said. "There are 15 to 20 stores where we can take advantage of that."
Earlier this month, Lithia raised $43.5 million through a stock offering and extended its line of credit with U.S. Bank to $50 million. That cash will allow Lithia to seek new dealerships in a market it considers ripe for the picking.
DeBoer said there are 114 markets west of the Mississippi where Lithia could sell mass-market brands and larger cities where it could sell luxury vehicles.
"They are franchises that don't typically come up for sale, but the current economic disruption has provided unique opportunities to acquire franchises at a lower price," DeBoer said. "We will not grow purely for the sake of growth, though."
The company anticipates adding four or five auto stores per year and has the resources to pick up as many as 10.
"During the glory times, there were dealers that over-extended and now they need to sell," said Lithia President Brian DeBoer. "They are great stores that are struggling right now."
Sid DeBoer said the government's Cash for Clunkers program, offering a credit of up to $4,500 for people who traded qualifying vehicles for more fuel-efficient ones, provided an incremental boost in revenue.
Still, new vehicle sales declined 14.3 percent, while used vehicle retail sales increased 3.9 percent. Service, body and parts sales declined 2.8 percent compared to the previous year. Brian DeBoer said the shutdown of General Motors and Chrysler plants during the quarter created a shortage of new cars.
Lithia's stock price closed at $9.93 Thursday. Its 52-week range is $1.75 to $12.98.
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