Lithia Motors has exceeded $1 billion in revenue during a single quarter for the first time.
The Medford-based auto retailer Wednesday reported a 22.6 percent revenue increase over the $822.3 million it earned in the second quarter of 2012.
"More than anything, it was a number," President and Chief Executive Officer Bryan DeBoer said. "It was a little elusive, so it felt good to finally hit the billion market and add a digit. But I don't think there is anything magical about it when it comes to the way we do business."
The nation's ninth-largest auto retailer's previous top quarterly revenue was $878.5 million in the third quarter of 2012.
Lithia was expanding rapidly when annual revenue hit $3.22 billion in 2007. Then the credit crunch hit, the Great Recession followed, and as with businesses across the country, Lithia downsized.
The company has rebounded nicely the past couple of years, eclipsing its former revenue record by topping $3.3 billion in 2012. In recent weeks, its shares have sold as high as $62.10, before closing at $59.14 Wednesday.
"We have 90 stores today," DeBoer said. "We were at 108 at one time, and the market was more robust then. To do a billion with fewer stores and in a weaker market is something to be proud of. At the same time, we need to stay humble and find new opportunities so that we can move to 1.2 (billion dollars) and 1.3 and hopefully 1.5 someday."
Lithia said same-store new and used vehicle sales increased 19 percent.
"Based on our results through the first six months of the year, we are well on our way toward the first milestone for growth we established late in 2012, where total revenue increases by 25 percent from full year 2012 results," DeBoer said. "We continue to seek exclusive franchises in the markets we serve and view acquisitions as one of the long-term drivers of growth for Lithia."
During a conference call with analysts, DeBoer said there is opportunity to grow used-car margins by paying more for trade-ins. The company can save money if it doesn't have to go to auction to stock up on used cars, he said.
"Basically, we're teaching our stores about what a car's actual market value is," DeBoer said in a later interview. "You can get into a mindset that cars aren't as valuable as what they should be."
The majority of Lithia dealerships get it, he said, but others are working on the concept.
"We are encouraging them to pay more for the (vehicle) they don't have to go to auction for," he said. "We want them to be more aggressive on trade-ins than the unknown commodity they may get at auction."
While the price me be similar, shipping and reconditioning costs eat into margins.
"With trade-ins, you may even get service records, and service records are a huge part of it," DeBoer said.
Beyond that, the CEO said, trade-ins give the company access to more cars as owners prepare to get rid of vehicles they bought during recession years when auto manufacturers reduced production.
"The supply of vehicles is smaller, and we want to get those into our core auto bucket," DeBoer said. "If we're not willing to pay more for trade-ins, then they are going to show up on Craigslist, eBay, a private party or who knows where else. The easiest way of securing those vehicles is acquiring them from people walking in the door."
The company posted net earnings of $25.3 million, or 97 cents per share, for the second quarter of this year, up from $20 million, or 76 cents per share, in the same quarter in 2012.
The company has $301 million of debt, of which $168 million is from real-estate financing. At the end of June, Lithia had $20 million in cash and $91 million in available credit.
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter @GregMTBusiness.