MEDFORD, Ore. -

From a loss of nearly $1 million to an adjusted net income level surpassing $5 million: That’s what Lithia Motors accomplished during the fourth quarter thanks to significant gains in both used- and new-vehicle sales.

Lithia officials this week announced fourth-quarter adjusted net income from continuing operations came in at $5.6 million or 21 cents per diluted share. During the same quarter last year, the company suffered a $0.7 million loss or 3 cents per share.

The company arrived at that net income level courtesy of a 30.8-percent climb in fourth-quarter revenue, moving up to $555.6 million from $424.9 million in the year-ago period.

Officials indicated that revenue came from increases in three segments:

—New-vehicle same-store sales jumped 34.4 percent.

—Used-vehicle retail same-store sales climbed 21.1 percent.

—Service, body and parts same-store sales rose 5.4 percent.

Lithia pointed out the 2010 and 2009 fourth-quarter adjusted results from continuing operations excluded non-core charges of 5 cents and 4 cents per share, respectively, on asset impairments, disposal gains and reserve adjustments. The company added unadjusted net income for 2010 and unadjusted net loss in 2009 from fourth-quarter continuing operations was $4.4 million or 16 cents per diluted share last year and $1.8 million or 7 cents per diluted share in the previous year. 

“The economic recovery continued to accelerate through the fourth quarter,” stressed Sid DeBoer, Lithia’s chairman and chief executive officer.

“All states we operate in posted double digit increases in same store sales,” DeBoer continued.

Lithia Reports Full-Year Performance

Turning next to how Lithia did through last year, the company calculated revenue from continuing operations shot up 19.7 percent to $2.1 billion as compared to $1.8 billion in 2009.

Officials noted same-store new-vehicle sales increased 19.5 percent while used-vehicle retail same-store sales climbed 19.3 percent. They also pointed out service, body and parts same-store sales edged up by 0.4 percent.

Moving along with other 2010 results, Lithia determined adjusted net income from continuing operations rose to 94 cents per share as compared with 55 cents per share in 2009. The company’s unadjusted, full-year net income from continuing operations was 53 cents per diluted share, compared to net income from continuing operations of 31 cents per diluted share for 2009. 

“For the full year, our adjusted earnings per share from continuing operations increased 71 percent," DeBoer specified.

“This improvement is a testament to the earnings potential Lithia can realize as we increase our market share in an improving economy,” he added.

Balance Sheet Update & Dividend Decision

Lithia mentioned that it ended the fourth quarter with $98.2 million in immediately available funds, including $9.3 million in cash, $23.3 million in availability on its revolving credit facility, and $65.6 million in unfinanced new-vehicle inventory.

The company also announced that its board of directors approved a dividend of 5 cents per share for the fourth quarter. Management intends to pay the dividend March 25 to shareholders of record as of March 11.

Lithia Increases Outlook for 2011

With so much positive momentum, Lithia projected its first-quarter earnings guidance within a range of 19 cents to 21 cents per diluted share.

The company said its full-year 2011 earnings guidance is projected within a range of $1.20 to $1.28 per diluted share.

Officials stressed that both projections are based on the following annual assumptions:

—Total revenues in range of $2.3 to $2.45 billion.

—New-vehicle same-store sales increasing 16 percent.

—New-vehicle gross margin ranging from 7.9 percent to 8.1 percent.

—Used-vehicle same-store sales increasing 10 percent.

—Used-vehicle gross margin ranging from 13.7 percent to 14.0 percent.

—Service body and parts same-store sales increasing 2 percent.

—Service body and parts gross margin ranging from 48.3 percent to 48.6 percent.

—Finance and insurance gross profit of $970 per unit.

—Tax rate of 40 percent.

—Estimated average diluted shares outstanding of 26.9 million.

—Capital expenditures of approximately $26 million.

“This guidance excludes the impact of future acquisitions, dispositions and any potential non-core items,” Lithia concluded.