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MEDFORD, Ore. — Though Lithia Motors' net income fell by almost 5 percent in the first quarter, the company said it still saw improvement in adjusted earnings per share and enjoyed a significant lift in quarterly revenue, especially on the used side.

Specifically, Lithia recorded first-quarter net income of $1.27 million, down from $1.33 million in the prior-year period.

The auto retailer is reporting that adjusted first-quarter earnings per diluted share were $0.09, up from a net loss from continuing operations of $0.01 per diluted share.

Lithia noted that there were 5.3 million additional shares  this year due primarily to the company's recent equity offering.

Officials explained that the most recent adjusted results do not include non-core charges of $0.04 per share for asset impairments and expenses dealing with reserves offset by gains from disposing assets.

The adjusted results from 2009 do not include non-core charges of $0.03 on asset impairment offset by a one-time gain related to extinguishing debt.

So, without these respective adjustments, Lithia said its net earnings from continuing operations was $0.05 per diluted share, up from a loss from continuing operations of $0.04 per diluted share in the year-ago period.  

"Strong retail vehicle sales in March, coupled with our disciplined cost controls generated solid EPS growth over the prior year," stated Sid DeBoer, Lithia's chairman and chief executive officer.

"This improvement was achieved including approximately 25 percent more shares outstanding," he added.

Lithia pulled in $463.38 million of revenue, compared with $408.65 million in the first quarter of 2009.

This was pushed up mostly by stronger used sales. In fact, same-store used retail sales were up 22.4 percent, while there was an 11.5-percent increase on the new side.

The same-store sales for Lithia's service, body and parts operation were down 6 percent.


Looking at the company's balance sheet, Lithia said at quarter's end, its immediately available funds were at $90.8 million. The retailer has $11.4 million in cash, $47.2 million available through its revolving credit facility and unfinanced new-vehicle inventory totaling $32.2 million.

The company said, as of the end of the period, it is compliant with all of its debt covenants. Lithia doesn't have any mortgage maturities until January, officials noted.

Update on Operations

Lithia said it has also reclassified two of its stores from discontinued to continuing operations during the quarter, because of "recent events."

"With these reclassifications, we no longer have any operating stores classified within discontinued operations. The right-sizing initiative we began in 2008 is nearly completed," DeBoer added. "We continue to seek accretive acquisitions to achieve our diversification strategy and believe our patience will be rewarded."


Looking forward, Lithia is projecting that its second-quarter earnings guidance will be between $0.19 and $0.21 per diluted share.

Lithia has upped its guidance for full-year 2010 earnings, and is now estimating they will finish in the $0.63 to $0.69 per diluted share range.

Lithia based both of these forecasts on the following revised assumptions:

—Total revenues in range of $1.90 to $1.95 billion.

—New-vehicle same-store sales increasing 5.9 percent. 

—New-vehicle gross margin from 8.3 percent to 8.5 percent. 

—Used-vehicle same-store sales increasing 11.2 percent. 

—Used-vehicle gross margin from 14.2 percent to 14.5 percent.

—Service, body and parts same-store sales decreasing 3 percent. 

—Service, body and parts gross margin from 47.8 percent to 48.1 percent.  

—F&I gross profit of $955 per unit.

—Tax rate of 38.5 percent. 

—Estimated average diluted shares outstanding of 26.2 million.

—Capital expenditures of approximately $2.7 million.

—Chrysler market share consistent with full-year 2009 levels.

—Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items.