Twenty-six hundred stores. As Auto Remarketing reported earlier this year, that is the number of dealerships nationwide that Lithia Motors' president and chief executive officer Bryan DeBoer maintains his company has on his radar as potential acquisitions.

With three third-quarter acquisitions under its belt, one of which includes the only Acura store in Honolulu, DeBoer said the fourth quarter is starting strong – with yet another purchase.

“The fourth quarter is off to a good start with the acquisition of Concord Chrysler Jeep Dodge Ram and Fiat in California,” DeBoer said in the retailer's recent quarterly earnings call. “Thus far in 2015, we have purchased or opened six locations with estimated annual revenues of approximately $220 million.”

Playing into the role of the group’s acquisitions are its earnings milestones. Following a milestone set by the company earlier this year of $7 per share, which the company anticipates exceeding early next year, Lithia’s management team went ahead and raised the bar a bit higher — to $8. What’s needed to reach it? More stores, more sales.

“To get to the milestone eight, we need about a billion dollars in additional acquisitions in revenue,” DeBoer said. “That’s something that we’re going to be looking at. I believe that could come before a recession would ever possibly hit.”

DeBoer mentioned that his company spends about half of its time looking at acquisitions to support its DCH strategy, focused on metropolitan areas.

The CEO says Lithia has looked at roughly 30 deals in the Tri-State area surrounding New York City and in Southern California. He said the retailer is pretty close sealing the deal on a few sizeable deals, which he said are larger in size compared to Lithia’s average-size acquisition.

He said the retailer is pretty close sealing the deal on a few sizeable purchases, which he said are larger in size compared to the average acquisition that Lithia makes.  

When asked if Lithia was focused on larger buys, picking up smaller stores, or some mix in-between, DeBoer appeared open to any possibility.

“I think what we’re seeing is that there is a ton of opportunities, so we’re able to be selective on not only large groups but on our individual groups,” he said. “So far this year, we’ve done six acquisitions or open points. We really believe that the pipeline is full and that was maybe a little bit slower than what we would expect in the future.

“And I think it’s because there is such a vast array of selection. When we look at whether or not there are going to be a stable diet of one or two type of stores, I think we will have a balance of those.”

Chris Holzshu, Lithia’s senior vice president and chief financial officer, focused on making sure the company is prepared to make acquisitions when the timing is right.

“Looking forward, as we keep talking about acquisitions and being in the next phase of our growth plan, I think it’s important for us to make sure that we have a balance sheet that can acquire a significant number of stores if they come to market,” Holzshu said. “Before DCH, our leverage ratio was about 1.3 times.

“So, we’ve still probably got another year to get down there assuming that we don’t do a lot of acquisitions. But I think we feel that the acquisition pipeline is full right now and our leverage ratio will probably at least stay where it’s at or climb a little bit through next year.”

Maintaining a forward-looking approach, DeBoer commented on how even negative economic climates can present opportunities for Lithia to capitalize to continue its growth plans.

“I still think the biggest driver of acquisitions is that we went through a decade, or a half of a generation, of depressed values because of the recession,” DeBoer said. “I think that’s what’s really driving it. I think if there is some type of gloom, to some extent, like what happened a few months ago with the stock market, like what may happen again, that those type of events can be elixirs to creating more acquisitions.

“Right now there is just so many out there that the ability to be selective has been really good from our standpoint. And I think that has a pretty good runway for the next five to 10 years that we’ll continue to see that.”