Lithia Motors Inc.'s third-quarter net income declined 4 percent from a year earlier to $51.9 million on rising costs and comparison with a strong year-earlier quarter.
Revenue rose 19 percent to $2.69 billion, largely on the company's aggressive acquisition pace. Through September, Lithia has bought 15 stores and opened one store it expects to deliver more than $1.5 billion in annualized revenue.
"We grew same-store sales in all departments, outpacing a plateauing new vehicle sales environment," CEO Bryan DeBoer said in a statement. "We remain focused on integrating acquisitions while continuing to unlock the substantial opportunity to improve performance across our broader store base."
But Lithia faced higher than expected "depreciation and floorplan interest expense" in the quarter as well as higher personnel and advertising expenses, CFO John North said in the statement.
A year ago, third-quarter net was bolstered by a pretax extraordinary gain from an equity investment of $3.5 million. This year, third-quarter net was trimmed by $5.2 million in acquisition expenses and storm-insurance reserves.
Still, gross profit in the quarter rose 19 percent to $403 million, as revenue grew in all business operations. The gain came even though average profit per unit sold declined in new- and used-vehicle retail sales and finance and insurance.
Lithia's new-vehicle retail sales in the quarter rose 19 percent to 45,570 units. Its used-vehicle retail sales rose 17 percent to 34,737 units.
On a same-store basis, revenue rose 1 percent to $2.26 billion. Lithia's new-vehicle retail sales declined 0.1 percent to 37,819 units, better than the industrywide decline of 1 percent in the third quarter. Lithia's same-store used retail sales rose 3.3 percent to 30,133.
Lithia, of Medford, Ore., ranks No. 4 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 145,772 new vehicles in 2016. a