Lithia Motors (LAD) Q4 2023 earnings summary

Executive summary

• FY2023 revenue reached a record $31.042B, up 10%; reported net income attributable to LAD was $1.001B and adjusted diluted EPS was $36.86.

• Strategy focuses on expanding the retail network and omnichannel ecosystem, adding adjacent businesses, and pursuing long-term revenue of $75–100B.

Financial highlights

• Q4 revenue was $7.674B, up 10.5% YoY, and gross profit was $1.261B, up 4.3%.

• Q4 reported operating income was $372.5M and net income attributable to LAD was $213.5M, versus $399.9M and $247.7M in Q4 2022.

• Q4 adjusted EBITDA was $399.5M versus $420.5M; reported diluted EPS was $7.74 and adjusted EPS was $8.24 versus $9.04 adjusted a year earlier.

• FY2023 operating income was $1.692B; reported net income attributable to LAD was $1.001B and adjusted net income was $1.016B.

• Reported and adjusted FY diluted EPS were $36.29 and $36.86, respectively; unrealized foreign currency gains added $0.14 to FY EPS and $0.21 to Q4 EPS.

Outlook and guidance

• Strategic target: $50B revenue and $55–60 EPS, with SG&A at 55–65% of gross profit and operating margin of 4.5–5%.

• Longer-term target: $75–100B revenue, $1.75–$2 EPS per $1B revenue, SG&A below 50% of gross profit, and operating margin above 7%.

• Near-term same-store sales growth expected in the low- to mid-single digits as new and used vehicle margins continue normalizing.

• Management cited 2024 execution as a priority, with continued shareholder returns as an objective; improved SAAR and lower rates were expected to support results in coming quarters.