Yahoo Finance Lithia Motors Inc (LAD) Q1 2024 Earnings Call Transcript Highlights: Mixed Financial ...
Revenue: $8.6 billion, up 23% from Q1 of the previous year.
Adjusted Diluted EPS: $6.11, a decrease of 28% from Q1 of the previous year.
Same-Store Sales Revenue: Down 2%.
New Vehicle Revenue: Up 2%, gross profit declined 27%.
Used Vehicle Revenue: Down 5%, units down 2%, ASPs declining 3%.
Aftersales Revenue: Increased 3%, gross profit increased 7%.
Financing Operations Loss: Reduced to less than $2 million from $21 million last year.
Acquisitions: Added $5.4 billion in annualized revenues in 2024.
Free Cash Flow: $218 million.
Net Leverage: Approximately 2.25x.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: What are the current trends in new vehicle GPUs and expectations for the upcoming quarters? A: Bryan B. DeBoer, CEO of Lithia Motors, noted a slight acceleration in GPU decline to around $150 per unit this quarter. He mentioned that the normalization of GPUs is still about $1,000 higher than expected, with some regional differences. DeBoer anticipates further normalization in the coming months.
Q: How is the F&I performance trending, and what are the future expectations? A: Bryan B. DeBoer explained that F&I per unit was down due to better incentives on fleet and finance, impacting profitability. He anticipates a normalized state around $1,900 per unit, influenced by lower ASPs but sees a stable trend towards this normalization.
Q: Can you discuss the performance trends in the U.K. market this quarter? A: Christopher S. Holzshu, COO, described the U.K. market's first quarter as having a typical pattern with a strong performance in March due to plate changeovers. The focus is on achieving more consistent performance across the quarters.
Q: What impact do you expect from the reduction in headcount in the U.K., and how does it fit into the broader strategy? A: Bryan B. DeBoer mentioned that the U.K. is undergoing structured headcount reductions, which are part of the integration and optimization efforts. The goal is to align the U.K. operations more closely with Lithia & Driveway's performance standards and culture.
Q: How is the Driveway finance book progressing towards profitability? A: Charles Lietz, SVP of Finance, stated that the finance book is on a clear path to profitability at its current level of $3.3 billion. He highlighted the predictability and consistency of the business, expecting profitability within the year.
Q: What are the strategic plans for handling the current inventory levels and the expected changes in used vehicle supply? A: Bryan B. DeBoer discussed strategies for managing inventory, focusing on procuring used cars efficiently despite lower off-lease volumes. He emphasized the importance of sourcing vehicles through various channels and leveraging Lithia's position as a top funnel dealer.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
