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 attributable to the company declined 25.6% year-over-year to $585.8M, with Q3 net income at $223M, reflecting margin normalization and higher expenses.

• Diluted EPS for Q3 was $7.80, down 18% year-over-year; adjusted diluted EPS was $8.21, down 11%.

• Digital platforms and financing operations expanded, with Driveway Finance Corporation originating $518M in loans and a $615M ABS offering.

• Operated 467 locations globally as of September 30, 2024, with continued network expansion through acquisitions.

Financial highlights

• Q3 2024 revenue: $9.2B (+11% YoY); nine-month revenue: $27.0B (+16% YoY); YTD net income: $585.8M.

• Q3 adjusted EBITDA: $421M; nine-month 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 increased to 68.1% YTD, reflecting higher personnel costs and UK growth.

• Floor plan interest expense more than doubled to $214.0M due to higher rates and inventory levels.

Outlook and guidance

• Mid-term revenue target: $40–50B with 5% operating margin and SG&A at 60–65% of gross profit.

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

• Management expects aftersales to remain resilient and ongoing benefits from acquisitions and digital modernization.

• Combined vehicle GPUs expected to normalize to $4,200–$4,500 in coming quarters.

• Ongoing focus on cost savings, productivity, and inventory reductions into 2025.