Lithia signals profit surge ahead of third-quarter earnings

Lithia Motors Inc. said it anticipates third-quarter net income to surge and announced plans to raise more than $1 billion through debt and equity offerings.

The Medford, Ore., retailer said Tuesday that net income per diluted share will be between $6.10 to $6.40, an increase of 68 percent and 76 percent, respectively, compared with $3.64 per share recorded last year. Assuming Lithia retains about 23 million outstanding shares it reported in the second quarter, that would translate to a net income of $140 million to $147 million. That compares with a net income of $78 million in the second quarter in 2019 and $85 million in the third quarter.

Lithia also said it expects to report revenue rising “in the mid- to high single-digit range” compared with 2019’s reported $3.3 billion for the third quarter.

Separately, Lithia announced plans to raise $1.2 billion in capital through debt and equity offerings. The company expects $500 million to come from a senior note and at least $700 million through a common stock offering, though that figure could increase an additional $105 million through a separate stock sale.

Lithia executives did not respond to requests for comment.

At the onset of the coronavirus pandemic, Lithia said it would defer closing on acquisitions until the second half of the year. Since the second quarter, Lithia has announced four acquisitions for a total of 12 new dealerships. Together, the dealerships are expected to generate more than $1.4 billion in annual revenue.

Driveway, Lithia’s nationally branded digital retailing and scheduling solution, formally launched this month, the dealership group said in a statement. Used-vehicle inventory is first to be added to the site on a national scale, which analysts say is expected in the next week. New-car sales through Driveway are planned for the fourth quarter.