Lithia Motors Inc (NYSE:LAD) Q1 2018 Earnings Conference Call - Preliminary Transcript
Apr 25, 2018 • 11:00 am ET
Good morning and welcome to the Lithia Motors First Quarter 2018 Conference Call. Management may make statements about future events, including financial projections and expectations about the company's products, markets and growth. Such statements are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from the statements made.
The company discloses material risks and uncertainties in its filings with the Securities and Exchange Commission. The company urges you to carefully consider these disclosures and not to place undue reliance on forward-looking statements. Management undertakes no duty to update any forward-looking statements, which are made as of the date of this release.
Management may also discuss non-GAAP financial measures. Please refer to the text of the earnings release for a reconciliation to comparable GAAP measures. Management will provide prepared remarks and then open the call for questions.I will now introduce Bryan DeBoer, President and CEO. Mr. DeBoer, you may begin.
Bryan B. DeBoer
Good morning and thank you for joining us today. On the call with me are Chris Holzshu, our Executive Vice President; and John North, Senior Vice President and CFO. Earlier today, we reported first quarter earnings of $2.07 per share, which marks our 30th consecutive quarter of record performance.
We increased quarterly revenue 19% and earnings 16% over our adjusted 2017 results, primarily driven by our proven greenfield growth strategy of acquiring strong franchises that are underperforming to their potential and then improving them. Vehicle sales improved sequentially each month of the quarter. January and February were softer than expected, and we experienced more severe weather than typical in the Northeast throughout the quarter.
Despite the slower start, we finished strong with a record March, which generated over 70% of our earnings in the quarter. We expect this momentum to continue throughout 2018 and beyond. From an operational perspective, on a same-store basis, total sales were flat. New vehicle sales decreased 2%, offset by solid results in all other business lines, with retail used vehicles up 5%, F&I increasing 5%, and service and parts growing 3%.
Fixed operations remain strong as we continue to focus on customer retention through the creation of personalized service experiences with each customer. Sales shortfalls in January and February created an urgent call to action for our leaders to more aggressively pursue the over $200 million in unrealized earnings potential available to us.
Aside from cost savings opportunities in personnel, advertising and interest expense, much of this earnings improvement will come from expanding sales and margin, which Chris will be elaborating on further in a moment. Our stores continue a variety of online buying and home delivery models tailored to their markets, the hallmark of our entrepreneurial spirit.
Our service and delivery network reaches 81% of the US population as measured by vehicle sales registrations. Online initiatives are pacing 24% ahead of last year, resulting in 80% of our total first quarter vehicle sales originating online or approximately 64,000 new and used vehicles sold. Our goal of selling 85 vehicles per