Andrew Fella on LinkedIn: Lithia Motors (LAD) 1st quarter revenue rose 22.8%, while EPS declined… (2024)

Lithia Motors (LAD) 3rd quarter revenue rose 13.5%, while EPS fell 20.7% or 16.5% if unusual items were accounted for as margins declined 26.7% from a year ago. The tax rate remained unchanged at 27%. Operating income, which removes share buybacks from the equation was 11.1% lower. The balance sheet is leveraged since LAD offers financing to its customers. Debt can be repaid between 6 to 7 years. 5-year score is 75. Shares are at a slightly expensive valuation. LAD shares have been seeing wide swings up and down in the past year. A year end surge in stock indices on the belief Fed rate hikes were done benefitted stocks such as LAD which sells autos. But shares have entered a correction in the new year, down 8%. LAD is returning 9.6% on its market cap + long-term debt before tax. This is forecast to fall slightly to 9.5% in the year ahead. While LAD will continue to grow in a consolidating auto retail industry, it also will see a lower average vehicle profit as selling above the manufacturer list prices disappears with improved auto production and incentives return. LAD is considered to be one of the best run auto retailers and is well positioned for growth. But in the year ahead, expect shares to remain volatile as considerable uncertainty lies ahead on the health of consumers that still face considerably higher borrowing costs. With shares far from cheap and flat earnings likely in the quarters ahead, potential investors should remain patient for better entry points.

Lithia Motors (LAD) Annual revenue rose 10.1%, while EPS declined 18% or 16.1% if unusual items were accounted for as margins declined 25.7% from a year ago. The tax rate fell to 26% from 27% a year earlier. Operating income, which removes tax and share buybacks from the equation was 12.8% lower. The balance sheet is leveraged since LAD acts as a lender and debt requires between 7 to 8 years to pay off. 5-year score is 52. Shares are near a fair valuation. LAD like its peers is seeing their earnings fall as the auto industry returns to normalcy as it moves past the chip shortage that kept supply below demand for several years. Autos sold for premiums – both used and new. Growth in the auto retailing industry will now be more driven by interest rates, the economic health of consumers, and competition between players. LAD is expected to continue to outperform vs its peers. It is expanding internationally having entered the Canadian and British markets. Earnings growth will be somewhat restrained for the next two years. LAD is returning 8.8% on its market cap + long-term debt before tax. This is forecast to fall slightly to 8.6% in the year ahead. With no earnings improvement soon, I expect shares will remain under pressure. This could provide even better entry points to a long-term great growth company.

Euler Motors net loss spikes five-fold in FY23****************************************************Saurav Kumar, founder & CEO, Euler MotorsEuler Motors, which manufactures and sells electric three-wheeler commercial vehicles, saw itsnet loss widen almost five-fold in FY23to Rs 175.44 crore, from Rs 36.33 crore in FY22, according to its financial statements filed with the Registrar of Companies.What’s significant?The company reported a 250% on-year jump in revenue from operations to Rs 61.53 croreIt spent nearly Rs 4 to earn a rupee in operating revenue.The biggest expense head—cost of materials consumed—ballooned to Rs 67.71 crore in FY23, from Rs 9.04 crore in FY22.In April, Euler Motors laid off around 250 people, mostly in the sales and research functions.What changed?During the calendar year 2022, prices of lithium-ion battery packs, a key component for most electric vehicle (EV) makers, witnessed an unprecedented increase as demand for EVs and energy storage units surged.According to data sourced from the government portal Vahan, Euler Motors sold 883 vehicles in FY23, against 341 vehicles in FY22. In the ongoing financial year, the company has sold 1,880 vehicles so far.(L-R) Pilgrim cofounders Gagandeep Makker and Anurag KediaPilgrim FY23 revenues see near four-fold jump:Direct-to-consumer (D2C) personal care brandPilgrim’s operating revenue for 2022-23 jumpedover four times to Rs 76.46 crore from Rs 16.89 crore in FY22. However, its loss more than tripled in the same period.Key numbers:Pilgrim’s net loss more than tripled to Rs 23.06 crore from Rs 7.53 crore in FY23 as expenses ballooned to Rs 99.95 crore in the fiscal from Rs 24.72 crore in FY22, the Fireside Ventures-backed company said in its statutory filing with the Registrar of Companies (RoC).In FY23, the company incurred Rs 52.50 crore of marketing expenses, up from Rs 11.83 crore in FY22. The marketing expense in FY23 was 68% of the Mumbai-based company’s operating revenue.

TATA MOTORS: Q4 CONS NET PROFIT 174.07B RUPEES VS 54.08B (YOY); 73.76B EST || Q4 REVENUE 1.2T RUPEES VS 1.06T (YOY); 1.2T ESTTATA MOTORS: Q4 EBITDA 171.35B RUPEES VS 131.14B (YOY); 177B EST || Q4 EBITDA MARGIN 14.28% VS 12.38% (YOY); 14.7% EST TATA MOTORS: CO HAS RECOMMENDED A FINAL DIVIDEND OF 3 RUPEES PER ORDINARY SHARE AND 3.10 RUPEES PER A ORDINARY SHARE AND A SPECIAL DIVIDEND OF 3 RUPEES PER ORDINARY SHARE AND 3.10 RUPEES PER A ORDINARY SHARETATA MOTORS: CO HAS EXCEPTIONAL ITEM OF 880.9M RUPEESTATA MOTORS: CO SAYS EXPECT JLR EBIT MARGINS IN FY25 TO BE AROUND THE FY24 LEVEL || ANTICIPATE MODEST INCREASE IN JLR INVESTMENT SPEND TO £3.5B BUT STILL EXPECT TO BECOME NET DEBT ZERO DURING FY25TATA MOTORS: CO SAYS REMAIN CAUTIOUSLY OPTIMISTIC ON DOMESTIC DEMAND OVER THE FULL YEAR AND EXPECT H1 TO BE RELATIVELY WEAKER || PREMIUM LUXURY SEGMENT DEMAND IS LIKELY TO REMAIN RESILIENT DESPITE EMERGING CONCERNS ON OVERALL DEMANDTATA MOTORS: CO SAYS EXPECT THE DEMAND FOR PASSENGER CARS TO REMAIN STRONG || CO SAYS DEMAND FOR CV'S IS EXPECTED TO IMPROVE FROM H2 FY25TATA MOTORS: CO SAYS CONFIDENT OF DELIVERING A STRONG PERFORMANCE IN FY25 || REMAIN CAUTIOUSLY OPTIMISTIC ABOUT DOMESTIC DEMAND OF CVSTATA MOTORS: CO SAYS WILL CONTINUE TO DELIVER STRONG EBITDA PERFORMANCE AND FOCUS ON NET CASH WILL CONTINUE FOR CV SEGEMENT || CO SAYS WILL INTENSIFY OUR EFFORTS TO GROW MARKET SHARE, PROFITABLY AND CONSISTENTLY, IN EVERY BUSINESS SEGMENT

Advance Auto Parts (AAP) Annual revenue rose 1.2%, while EPS declined 93.5% as margins dropped 93.7% from a year ago. The tax rate fell to 6% from 23% a year earlier. Operating income, which removes tax and share buybacks from the equation, was 82.8% lower. The balance sheet is leveraged, and debt repayment remains elusive considering the sharp fall in earnings. 5-year score is 6. Shares are at an expensive valuation. AAP is returning 0.8% on its market cap + long-term debt before tax. This is forecast to rise to 6.4% in the year ahead. It should be noted that forecasts by analysts have been far above actual earnings. Investors today are making a bet that AAP’s new management is finally going to improve results after many years of decline. The problem is that AAP’s price reflects success without results. AAP is a high-risk bet. Share buybacks have been suspended, the dividend has been slashed from $6 to $1, and the balance sheet is very leveraged. Add in an uncertain economic environment where consumers are struggling with inflation and higher borrowing costs, while most of AAP’s competitors have been outperforming by a wide margin. AAP’s problems are its on making, as demand for auto parts is strong as the average vehicle age on the road continues to rise.

April is poised to be a heavy month of auto issuance, potentially weighing on spreads, with more than $11 billion of maturities. High grade autos have more than $82 billion of debt maturities remaining in 2024, and we estimate perhaps an additional $15 billion to support asset growth in their captive finance units, with Toyota Motor Credit Corporation, Volkswagen Financial Services, BMW Group each having more than $9 billion before year-end. Funding costs are poised to rise as the debt rolling off has a weighted average coupon of just 2.01%, while the auto index trades at yield of more than 5%. Hyundai Motor America and Nissan Motor Corporation have fewer technical pressures, one reason why their bonds have a favorable relative value compared to other high-grade peers, based on our checklist of seven credit drivers. 1Q will be the heaviest for refinancing in 2024, with over $34 billion coming to maturity. Full details here: https://lnkd.in/e3JZ9bPt

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Ford Gets $9.2 Billion to Help US Catch Up With China’s EV DominanceIt’s one of the biggest loans to a US carmaker in more than a decade – and a watershed moment in Biden’s $400 billion plan to go all in on green technologies.A deep-pocketed US government program designed to finance futuristic energy businesses is issuing a conditional $9.2 billion loan toFord Motor Co.for the construction of three battery factories. The enormous loan — by far the biggest government backing for a US automaker since the bailouts in the 2009 financial crisis — marks a watershed moment for President Joe Biden’s aggressive industrial policy meant to helpAmerican manufacturers catch upto China in green technologies.The new factories that will eventually supply Ford’s expansion into electric vehicles are already under construction in Kentucky and Tennessee through a joint venture calledBlueOval SK, owned by the Michigan automaker and South Korean battery giantSK On Co.Ford plans to make as many as 2 million EVs by 2026, a huge increase from the roughly 132,000 it produced last year.#electricvehicles #china #automotiveindustry #automotivetechnology #batterytechnology #evcharging #evehicles

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Atlas Honda LTD (PSX: ATLH)'s earnings witnessed a substantial boost of around 94% YoY during the year ended March 31, 2024 (MY2023-2024), reporting a profit after tax of Rs9.71 billion [EPS: Rs78.24] compared to a profit of Rs5.01bn [EPS: Rs40.33] in the same year last year.The Board of Directors has also declared a final cash dividend for the year ended March 31, 2024 at Rs30 per share i.e. 300%.This is in addition to the interim dividend already paid at Rs. 17 per share i.e. 170%. This takes the total cash dividend for the year ended March 31, 2024, to Rs47 per share i.e. 470%.Read the full story at: https://lnkd.in/eUUjPFm6

The US government's support for the electric vehicle industry has led to a manufacturing boom, with over 100 battery and electric-vehicle production projects announced or under construction in the US, representing approximately $200 billion in total investments.Ford, for instance, has secured a conditional loan of $9.2 billion from a US government program to support futuristic energy businesses. The loan, the largest government backing for a US automaker since the 2009 financial crisis, will be used to construct three battery factories. Ford Motor Company's joint venture with South Korean battery giant SK On Co., BlueOval SK, is already building new factories in Kentucky and Tennessee. These factories will supply Ford's expansion into electric vehicles, with the company planning to produce up to 2 million EVs by 2026, a significant increase from the 132,000 produced in 2020.Ford's government loan comes at a crucial time, following the company's restructuring last year, which separated its businesses by drivetrain type and committed to a $50 billion investment into EVs over four years. According to Jim Farley, Ford's CEO, battery supply is the biggest challenge in scaling up EV production.The US is investing much money in the green revolution, an excellent decision, but it will not come cheap and might keep inflation higher for longer!I share here below a very interesting article from Bloomberg on the subject.#economy #economics #finance #markets #investing #sourcing #venturecapital LinkedIn

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Genuine Parts (GPC) 3rd quarter revenue rose 2.6%, while EPS increased 13.2% or 12.2% if unusual items were accounted for as margins improved 8.6% from a year ago. The tax rate was unchanged at 25% from a year earlier. Operating income which removes share buybacks from the equation was 8.4% higher. The balance sheet is strong, and debt can be paid off in a bit over 2 years. 5-year score is 49. Shares are at an attractive valuation. GPC shares are 27% lower YTD, but pretax earnings are 6.2% higher from the end of last year. GPC which has been trading at a premium for years is now returning 7.9% on its market cap + long-term debt before tax. It is forecast to rise to 8.7% in the year ahead. Long-term growth prospects remain intact as GPC will continue to participate in the consolidation of the auto parts industry. GPC is paying a 3% dividend and has raised it for 67 consecutive years. Over the past 5 years, it has used about a quarter of its income to buy back shares. Shares are currently under pressure and potential investors may receive even better entry points. But market timing is extremely difficult, and it may be better to buy smaller amounts of shares to dollar cost average. GPC being at a discount is somewhat out of step with the rising average age of vehicles on the road and possible economic headwinds ahead.