MEDFORD, Ore. — Sharing some preliminary results from the fourth quarter, Lithia Motors said Wednesday that it is expecting improvement in its adjusted earnings per share, but also noted that the company was downwardly impacted by product shortage and low inventory levels.

Specifically, Lithia expects adjusted fourth-quarter diluted earnings per share to be between $0 and $0.02 per share, up from an adjusted quarterly diluted loss per share of $0.16 in the prior-year period.

Excluded from the most recent results are non-cash charges on asset impairments and expenses related to reserves in a range of $0.08 to $0.10 per share.

Meanwhile, excluded from the fourth-quarter 2008 results is a one-time gain of $0.11 per share related to debt extinguishment, net of certain asset impairment charges.

"The production shutdowns associated with the Chrysler reorganization earlier this year continued to affect the availability of inventory at our Chrysler locations in the fourth quarter," explained Sid DeBoer, Lithia's chairman and chief executive officer.

"This shortage of product, coupled with historically low inventory levels at the end of the third quarter due to the CARS program, impacted our results in the fourth quarter," he added. "The inventory shortage should not affect the first quarter of 2010."

Looking at results in more detail, same-store new-car sales showed an increase of roughly 1.2 percent. However, when the impact from Chrysler sales is taken out, quarterly same-store new-car sales jumped about 18.5 percent.

As far as full-year 2009 results, Lithia expects adjusted diluted earnings per share from continuing operations to reach between $0.49 and $0.51, compared with $0.01 per share in 2008.

Some Stores No Longer Discontinued

Next, Lithia announced that 10 of its stores are being reclassified from discontinued operations to continuing operations in the fourth quarter. These dealerships are no longer slated for divestiture.

The impact from the reclassification is included in the aforementioned results.

After this change, there are only two stores left in discontinued operations, both of which are General Motors dealerships.

"Current market conditions, including lack of available credit for prospective buyers, have impacted our ability to sell these stores," shared Jeff DeBoer, chief financial officer.

"Additionally, we have improved their operational results over the past 18 months. Based on these factors, we intend to retain and operate these stores going forward," he added.

2010 Forecast 

Looking ahead to the rest of 2010, Lithia is expecting first quarter earnings at $0.04 to $0.06 per diluted share and anticipates full-year 2010 earnings will be in a range of $0.55 to $0.63 per diluted share.

The forecasts are based on the following assumptions: 

—Total revenues at $1.8 billion to $1.85 billion.

—New-vehicle same-store sales increasing 3.5 percent.

—New-vehicle gross margin from 8.1 percent to 8.3 percent 

—Used-vehicle same-store sales increasing 7.2 percent. 

—Used-vehicle gross margin from 14.2 percent to 14.5 percent.

—Service body and parts same-store sales decreasing 1 percent. 

—Service body and parts gross margin from 47.5 percent to 47.7 percent. 

—Finance and insurance gross profit of $955 per unit.

—Tax rate of 40 percent.

—Estimated average diluted shares outstanding of 26.2 million, including approximately 18 percent more shares outstanding related to the stock offering completed in October 2009.

—Capital expenditures of approximately $2.7 million.

—Chrysler market share consistent with full year 2009 levels.

—Guidance excludes the impact of future acquisitions, dispositions, and any potential one-time items.

Lithia is planning to release its official fourth quarter 2009 earnings on Feb. 24.

Stay tuned to AutoRemarketing.com for more details.