Lithia Motors (LAD) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 revenue of $9.2B, up 11% year-over-year, and YTD 2024 revenue of $27.0B, with aftersales and acquisitions driving growth.

• Net income for Q3 was $223M, down 16% year-over-year; YTD net income was $585.8M, down 25.6%, reflecting margin normalization and higher expenses.

• Diluted EPS for Q3 was $7.80, adjusted diluted EPS $8.21; YTD adjusted diluted EPS was $22.17.

• Continued expansion through acquisitions, including Pendragon and Duval stores, adding nearly $6B in annualized revenue in 2024.

• Digital platforms and omnichannel solutions, such as Driveway and GreenCars, contributed to digital sales and ecosystem growth.

Financial highlights

• Q3 2024 revenue: $9.2B (+11% YoY); YTD 2024 revenue: $27.0B (+15.6% YoY); YTD net income: $585.8M.

• Q3 adjusted EBITDA: $421M; YTD adjusted EBITDA: $1.20B; Q3 free cash flow: $273M.

• Gross profit YTD: $4.19B; Q3 gross margin: 15.5% (down 110 bps YoY); operating income YTD: $1.16B.

• SG&A as a percentage of gross profit: 66% in Q3; YTD SG&A expense: $2.85B, or 68.1% of gross profit.

• Net leverage at 2.7x, with total debt of $13.4B and net debt of $4.28B.

Outlook and guidance

• Long-term revenue target: $75–100B, with EPS per $1B revenue of $1.75–$2 and SG&A in the mid-50% range.

• Free cash flow deployment: 50–60% for acquisitions, 25% for capex/innovation, 15–25% for shareholder returns.

• Management expects aftersales to remain resilient, with continued cost savings, productivity improvements, and inventory reductions into 2025.

• Combined vehicle GPU expected to normalize to $4,200–$4,500, with new vehicle GPU likely to decline $400–$600.

• Annual effective tax rate excluding non-core items estimated at 25.5%.