Lithia Motors Inc. (LAD) announced that it has increased its five-year revolving syndicated credit facility by $150 million to $800 million with ten institutions. The credit facility is expected to mature in April 2017.
The institutions include four auto manufacturing related finance companies and six commercial banks. The manufacturing-related companies include Mercedes-Benz Financial Services of Daimler AG (DDAIF); Toyota Motor Credit Corporation of Toyota Motor Corporation. (TM); BMW Financial Services of BMW; and Nissan Motor Acceptance Corporation of Nissan Motor Co. (NSANY). The commercial banks include U.S. Bank, JP Morgan Chase Bank, Bank of America, Wells Fargo Bank, Bank of the West; and Key Bank.
The credit facility will be used for new vehicle inventory floorplan financing ($575 million) and used vehicle inventory floorplan financing ($80 million). The remaining $145 million will be used for general corporate purposes, including working capital and acquisitions.
The company has recently acquired Connell Chevrolet in Killeen, Texas, Chevrolet Cadillac store in Bellingham, Washington, GMC and Buick franchises in Fairbanks, Alaska, and new Dodge and Ram franchises in Las Cruces, New Mexico. The acquisitions and improved vehicle sales have led to an increase in inventory requirements. The additional credit facility will support this move and lead to growth opportunities for the company.
Lithia Motors recorded a 47.5% increase in profits to 90 cents per share in the third quarter of 2012, compared with 61 cents per share in the corresponding quarter last year. The profit surpassed the Zacks Consensus Estimate by 13 cents per share. Revenues in the quarter rose 24.2% to $888.4 million. The company's debt to capitalization ratio was 38.97% as of September 30, 2012 compared with 36.86% as of June 30, 2012.
Lithia Motors, Inc. is the ninth largest automotive retailer in the U.S. With 87 stores in operation in 11 states, the company supplies 29 brands of new and used vehicles. It also provides finance, warranty, and credit insurance contracts.
Lithia Motors competes with AutoNation Inc. (AN) and Penske Automotive Group Inc. (PAG). Currently, it retains a Zacks #1 Rank, which translates into a short-term (1 to 3 months) Strong Buy rating.