Booming July and August sales propelled Medford's Lithia Motors to the highest quarterly adjusted profit in company history.
The nation's ninth-largest auto retailer on Wednesday reported earnings of $29.6 million, or $1.13 per share, a 27 percent gain compared with the third quarter of 2012, which had earnings of $23.1 million, or 89 cents per share.
Lithia's third-quarter revenue soared 22 percent to $1.1 billion, up from $878.5 million in the third quarter of 2012. It was the second straight quarter of billion-dollar-plus revenue for the company.
"Our stores delivered another solid quarter of sales growth that outpaced the national rate of recovery," President and Chief Executive Officer Bryan DeBoer told analysts during a conference call.
Vehicle sales jumped 30 percent year-over-year in July and were up 15 percent in August followed by "a definite a slowdown in the cadence," he said. September unit sales were up just 1 percent from a year ago.
"We think it was a reflection of a very robust August that took away some of the inventory, and in a sense, consumer demand in September," said DeBoer in a later interview.
He said Lithia is approaching the first of several goals it began pursuing in early 2012 in a push to double its size.
The goals include 10 to 15 percent internal growth, which is revenue-driven, and 10 to 15 percent external growth, based on acquisitions.
"When they're blended we're looking at around 25 percent growth," DeBoer said.
He said that could double the size of the business in a three- to nine-year period.
The second and third quarters have brought the revenue goal closer to reality, while acquisitions figure to play a bigger role in the months to come.
"We're just shy of achieving that first milestone and we're just a year into it," DeBoer said. "We've achieved the internal portion, but we're lagging in the external portion."
As a result, look for Lithia to add to its holdings at a faster pace during the next 12 to 18 months. The company purchased four stores in Salem and Stockton, Calif., and opened a fifth in Alaska this year. Another acquisition in Lodi, Calif., will close in a few weeks.
With nearly 90 percent of the nation's dealerships remaining in private hands, plenty of targets remain.
"For a while it was harder to get deals done because earnings were depressed," DeBoer said. "Most people who had the ability to survive the recession weren't going to sell their life earnings at their worst multiples."
DeBoer said the greatest obstacle to continued growth is unemployment, which has doggedly remained a factor in many western U.S. markets where Lithia operates.
"As we've seen housing inventory clear out in the western markets we're seeing people go back to work," he said. "They buy trucks and we sell trucks. So it's a good fit for us when most of the western market housing inventories are waning.
"We haven't seen many new starts in areas like Medford in the past five years. But like many areas in the West, they are building houses again."
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org.