MEDFORD, Ore., Sept. 3, 2025 /PRNewswire/ -- Lithia & Driveway (NYSE: LAD) today announced the pricing of $600 million in aggregate principal amount of its 5.500% senior notes due 2030 (the "Notes") in a private offering (the "Private Offering"), which represents an increase of $100 million from the offering size previously announced. The Private Offering is expected to close on September 10, 2025, subject to customary closing conditions. Lithia intends to use the net proceeds of the Private Offering to rep ...

It has been about a month since the last earnings report for Lithia Motors (LAD) . Shares have added about 18.9% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Lithia Motors due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Lithia Motors, Inc. before we dive into how investors and analysts ...

Core Viewpoint - Lithia & Driveway has increased its share repurchase authorization by $750 million, raising the total repurchase capacity to $1.08 billion, reflecting confidence in the company's strategy and cash generation capabilities [1][2]. Company Overview - Lithia & Driveway (NYSE: LAD) is the largest global automotive retailer, offering a wide range of products and services throughout the vehicle ownership lifecycle, including physical locations, e-commerce platforms, and finance solutions [3]. Share Repurchase Program - The company has invested $242 million to repurchase approximately 812,000 shares at a weighted average price of $298 per share in the third quarter to date [2]. - Total repurchases in 2025 amount to $492 million, representing 6.1% of shares outstanding [2]. Strategic Focus - The increase in share repurchase underscores the company's long-term conviction in its strategy and the attractiveness of repurchases as a value-accretive complement to ongoing growth investments [2]. - The company emphasizes disciplined return on invested capital and a commitment to maximizing shareholder returns [2].

Core Viewpoint - Lithia Motors, Inc. (NYSE: LAD) has reported increased earnings in the second quarter of 2025, which may attract both growth and value investors despite a generally depressed share price [1] Company Summary - Lithia Motors, Inc. has shown a positive trend in earnings for the second quarter of 2025, indicating potential for growth [1] - The current share price is described as mostly depressed, suggesting a possible undervaluation that could appeal to value investors [1] Investor Profile - Robert F. Abbott, a seasoned investor since 1995, has experience in managing family accounts and has incorporated options trading into his strategy since 2010 [1] - Abbott's background includes a Bachelor of Arts and an MBA, highlighting a solid educational foundation in business and finance [1]

[GLOSSARY](index=2&type=section&id=GLOSSARY) [PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited consolidated financial statements detailing the company's financial position and performance [Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets increased to **$24,161.0 million** and total equity rose to **$7,011.0 million** as of June 30, 2025 **Consolidated Balance Sheets (In millions; Unaudited)** | Assets | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, restricted cash, and cash equivalents | $404.4 | $402.2 | | Accounts receivable, net | $1,235.3 | $1,237.0 | | Inventories, net | $6,061.9 | $5,911.7 | | Other current assets | $240.2 | $223.0 | | **Total current assets** | **$7,941.8** | **$7,773.9** | | Property and equipment, net | $4,727.7 | $4,629.9 | | Operating lease right-of-use assets | $671.1 | $658.7 | | Finance receivables, net | $4,309.5 | $3,868.2 | | Goodwill | $2,453.3 | $2,115.5 | | Franchise value | $2,788.5 | $2,550.3 | | Other non-current assets | $1,269.1 | $1,526.1 | | **Total assets** | **$24,161.0** | **$23,122.6** | **Consolidated Balance Sheets (In millions; Unaudited)** | Liabilities and equity | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Floor plan notes payable | $2,163.3 | $2,055.1 | | Floor plan notes payable: non-trade | $2,724.7 | $2,848.0 | | Current maturities of long-term debt | $70.9 | $134.0 | | Current maturities of non-recourse notes payable | $6.4 | $58.1 | | Trade payables | $371.4 | $333.7 | | Accrued liabilities | $1,176.8 | $1,122.2 | | **Total current liabilities** | **$6,513.5** | **$6,551.1** | | Long-term debt, less current maturities | $6,689.3 | $6,119.3 | | Non-recourse notes payable, less current maturities | $2,035.6 | $2,051.2 | | Deferred revenue | $446.9 | $414.2 | | Deferred income taxes | $491.2 | $397.1 | | Non-current operating lease liabilities | $609.7 | $596.5 | | Other long-term liabilities | $363.8 | $319.1 | | **Total liabilities** | **$17,150.0** | **$16,448.5** | | Total stockholders' equity - Lithia Motors, Inc | $6,986.5 | $6,650.2 | | Non-controlling interest | $24.5 | $23.9 | | **Total equity** | **$7,011.0** | **$6,674.1** | | **Total liabilities, non-controlling interest, and equity** | **$24,161.0** | **$23,122.6** | [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) Total revenues and net income increased for the three and six months ended June 30, 2025, driving higher earnings per share **Consolidated Statements of Operations (In millions; Unaudited)** | Revenues | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | New vehicle retail | $4,498.4 | $4,403.7 | $8,878.6 | $8,417.8 | | Used vehicle retail | $3,094.8 | $2,986.0 | $6,013.9 | $5,786.8 | | Used vehicle wholesale | $383.1 | $289.5 | $714.1 | $627.2 | | Finance and insurance | $373.8 | $360.9 | $738.1 | $701.5 | | Aftersales | $1,023.4 | $950.7 | $2,002.5 | $1,863.5 | | Fleet and other | $209.5 | $241.0 | $414.0 | $396.8 | | **Total revenues** | **$9,583.0** | **$9,231.8** | **$18,761.2** | **$17,793.6** | | **Gross profit** | **$1,485.1** | **$1,423.9** | **$2,895.4** | **$2,759.1** | | Finance operations income | $20.1 | $7.2 | $32.6 | $5.4 | | Selling, general and administrative | $1,014.7 | $975.2 | $1,967.4 | $1,909.5 | | Depreciation and amortization | $65.2 | $62.3 | $129.0 | $120.0 | | **Operating profit** | **$425.3** | **$393.6** | **$831.6** | **$735.0** | **Consolidated Statements of Operations (In millions, except per share amounts; Unaudited)** | Income Statement Items | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income before income taxes | $352.1 | $282.8 | $636.7 | $503.3 | | Income tax provision | $(93.9) | $(66.2) | $(167.3) | $(121.8) | | **Net income** | **$258.2** | **$216.6** | **$469.4** | **$381.5** | | Net income attributable to Lithia Motors, Inc | $256.1 | $214.2 | $465.6 | $376.7 | | Basic earnings per share attributable to Lithia Motors, Inc common stockholders | $9.89 | $7.88 | $17.83 | $13.77 | | Diluted earnings per share attributable to Lithia Motors, Inc common stockholders | $9.87 | $7.87 | $17.80 | $13.75 | | Cash dividends paid per share | $0.55 | $0.53 | $1.08 | $1.03 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Comprehensive income significantly increased due to a substantial positive foreign currency translation adjustment **Consolidated Statements of Comprehensive Income (In millions; Unaudited)** | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $258.2 | $216.6 | $469.4 | $381.5 | | Foreign currency translation adjustment | $83.4 | $(0.9) | $119.4 | $(17.1) | | Unrealized gain (loss) on debt securities, net of tax | $0.2 | $(0.2) | $0.5 | $(0.4) | | (Loss) gain on cash flow hedges, net of tax | $(0.5) | $— | $0.3 | $— | | **Total other comprehensive income (loss), net of tax** | **$83.1** | **$(1.1)** | **$120.2** | **$(17.5)** | | **Comprehensive income** | **$341.3** | **$215.5** | **$589.6** | **$364.0** | | Comprehensive income attributable to Lithia Motors, Inc | $339.2 | $213.1 | $585.8 | $359.2 | [Consolidated Statements of Equity and Redeemable Non-controlling Interest (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Equity%20and%20Redeemable%20Non-controlling%20Interest%20(Unaudited)) Total equity increased to **$7,011.0 million** by June 30, 2025, driven by net income and positive currency adjustments **Consolidated Statements of Equity and Redeemable Non-controlling Interest (In millions; Unaudited)** | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total equity, beginning balances | $6,674.1 | $6,238.9 | | Common stock, beginning balances | $793.1 | $1,100.6 | | Repurchase of common stock, including excise tax | $(265.9) | $(218.7) | | Common stock, ending balances | $568.8 | $924.0 | | Accumulated other comprehensive income (loss), beginning balances | $(3.6) | $20.1 | | Foreign currency translation adjustment | $119.4 | $(17.1) | | Accumulated other comprehensive income, ending balances | $116.6 | $2.6 | | Retained earnings, beginning balances | $5,753.5 | $5,013.3 | | Net income attributable to Lithia Motors, Inc | $465.6 | $376.7 | | Dividends paid | $(28.2) | $(28.2) | | Retained earnings, ending balances | $6,190.9 | $5,361.8 | | **Total equity, ending balances** | **$7,011.0** | **$6,392.4** | [Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Net cash from operating activities increased significantly, while investing cash use decreased due to lower acquisition spending **Consolidated Statements of Cash Flows (In millions; Unaudited)** | Cash Flow Activities | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $469.4 | $381.5 | | **Net cash provided by operating activities** | **$331.4** | **$144.0** | | **Net cash used in investing activities** | **$(315.5)** | **$(1,515.1)** | | **Net cash (used in) provided by financing activities** | **$(13.5)** | **$1,117.6** | | Effect of exchange rate changes on cash, restricted cash, and cash equivalents | $7.4 | $(3.1) | | Increase (decrease) in cash, restricted cash, and cash equivalents | $9.8 | $(256.6) | | Cash, restricted cash, and cash equivalents at end of period | $455.6 | $715.4 | **Supplemental Disclosures of Cash Flow Information (In millions)** | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $202.8 | $516.4 | | Restricted cash from collections on auto loans receivable and customer deposits | $201.6 | $158.4 | | Cash, restricted cash, and cash equivalents | $404.4 | $674.8 | | Restricted cash on deposit in reserve accounts, included in other non-current assets | $51.2 | $40.6 | | **Total cash, restricted cash, and cash equivalents reported in the Consolidated Statements of Cash Flows** | **$455.6** | **$715.4** | | Cash paid during the period for interest | $351.2 | $357.2 | | Cash paid during the period for income taxes, net | $66.8 | $113.9 | | Debt assumed in connection with acquisitions | $— | $868.1 | | Right-of-use assets obtained in exchange for lease liabilities | $27.7 | $304.0 | [Condensed Notes to Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) The condensed notes provide detailed explanations for accounts and activities presented in the financial statements [Interim Financial Statements](index=9&type=section&id=NOTE%201.%20INTERIM%20FINANCIAL%20STATEMENTS) The unaudited interim statements reflect normal recurring adjustments and a retrospective restatement for an immaterial error - An immaterial error related to interest and fee income recognition in the previously issued financial statements for the year ended December 31, 2024, was retrospectively restated, impacting **retained earnings** and **finance receivables**[24](index=24&type=chunk) **Impact of Error Correction on Consolidated Balance Sheet (December 31, 2024, In millions)** | (In millions) | As Previously Reported | Adjustment | As Restated | | :--- | :--- | :--- | :--- | | Other current assets | $221.3 | $1.7 | $223.0 | | Total current assets | $7,772.2 | $1.7 | $7,773.9 | | Finance receivables, net | $3,875.2 | $(7.0) | $3,868.2 | | Total assets | $23,127.9 | $(5.3) | $23,122.6 | | Retained earnings | $5,758.8 | $(5.3) | $5,753.5 | | Total stockholders' equity - Lithia Motors, Inc | $6,655.5 | $(5.3) | $6,650.2 | | Total equity | $6,679.4 | $(5.3) | $6,674.1 | | Total liabilities, non-controlling interest, and equity | $23,127.9 | $(5.3) | $23,122.6 | [Accounts Receivable](index=10&type=section&id=NOTE%202.%20ACCOUNTS%20RECEIVABLE) Net accounts receivable remained stable at **$1,235.3 million** as of June 30, 2025 **Accounts Receivable, Net (In millions)** | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contracts in transit | $481.7 | $497.4 | | Trade receivables | $158.1 | $166.5 | | Vehicle receivables | $269.1 | $243.7 | | Manufacturer receivables | $299.1 | $306.3 | | Other receivables, current | $33.3 | $25.4 | | Total accounts receivable | $1,241.3 | $1,239.3 | | Less: Allowance for doubtful accounts | $(6.0) | $(2.3) | | **Total accounts receivable, net** | **$1,235.3** | **$1,237.0** | [Inventories and Floor Plan Notes Payable](index=10&type=section&id=NOTE%203.%20INVENTORIES%20AND%20FLOOR%20PLAN%20NOTES%20PAYABLE) Total inventories increased to **$6,061.9 million** as of June 30, 2025, driven by an increase in used vehicles **Components of Inventories, Net (In millions)** | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | New vehicles | $3,477.7 | $3,555.3 | | Used vehicles | $2,314.9 | $2,085.6 | | Parts and accessories | $269.3 | $270.8 | | **Total inventories** | **$6,061.9** | **$5,911.7** | **Floor Plan Notes Payable (In millions)** | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Floor plan notes payable | $2,163.3 | $2,055.1 | | Floor plan notes payable: non-trade | $2,724.7 | $2,848.0 | | **Total floor plan debt** | **$4,888.0** | **$4,903.1** | [Finance Receivables](index=10&type=section&id=NOTE%204.%20FINANCE%20RECEIVABLES) Net finance receivables increased to **$4,309.5 million** as of June 30, 2025, primarily due to growth in warehouse facilities - More than **99% of the finance receivables portfolio** is aged less than 60 days past due, with less than 1% on non-accrual status[31](index=31&type=chunk) **Finance Receivables, Net (In millions)** | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Asset-backed term funding | $2,553.0 | $2,604.9 | | Warehouse facilities | $1,522.7 | $1,052.0 | | Other managed receivables | $346.4 | $314.2 | | **Total finance receivables** | **$4,422.1** | **$3,971.1** | | Accrued interest and fees | $22.5 | $20.5 | | Less: Allowance for credit losses | $(135.1) | $(123.4) | | **Finance receivables, net** | **$4,309.5** | **$3,868.2** | **Rollforward of Allowance for Credit Losses on Finance Receivables (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Allowance at beginning of period | $123.4 | $106.4 | | Charge-offs | $(79.2) | $(65.6) | | Recoveries | $44.6 | $30.1 | | Provision expense | $46.7 | $45.2 | | Currency translation | $(0.4) | $— | | **Allowance at end of period** | **$135.1** | **$115.8** | [Goodwill and Franchise Value](index=11&type=section&id=NOTE%205.%20GOODWILL%20AND%20FRANCHISE%20VALUE) Goodwill and franchise value increased as of June 30, 2025, primarily due to additions from acquisitions - Purchase price allocations for a portion of 2024 acquisitions were finalized in 2025, adding **$347.9 million of goodwill** and **$218.0 million of franchise value**[39](index=39&type=chunk)[40](index=40&type=chunk)[43](index=43&type=chunk) **Changes in Goodwill (In millions)** | (In millions) | Vehicle Operations | Financing Operations | Consolidated | | :--- | :--- | :--- | :--- | | Balance as of December 31, 2024 | $2,099.3 | $16.2 | $2,115.5 | | Additions through acquisitions | $347.9 | $— | $347.9 | | Reductions through disposals | $(31.8) | $— | $(31.8) | | Currency translation | $20.8 | $0.9 | $21.7 | | **Balance as of June 30, 2025** | **$2,436.2** | **$17.1** | **$2,453.3** | **Changes in Franchise Value (In millions)** | (In millions) | Franchise Value | | :--- | :--- | | Balance as of December 31, 2024 | $2,550.3 | | Additions through acquisitions | $218.0 | | Reductions through divestitures | $(8.1) | | Currency translation | $28.3 | | **Balance as of June 30, 2025** | **$2,788.5** | [Investments](index=12&type=section&id=NOTE%206.%20INVESTMENTS) Marketable equity securities remained stable at **$2.2 million**, while marketable debt securities totaled **$49.8 million** - Marketable equity securities were **$2.2 million** as of June 30, 2025, with net unrealized gains of **$0.3 million** recognized during the six months ended June 30, 2025[41](index=41&type=chunk) **Marketable Debt Securities (AFS) as of June 30, 2025 (In millions)** | (In millions) | Amortized Cost | Total Net Gains | Total Net Losses | Fair Value | | :--- | :--- | :--- | :--- | :--- | | U.S. Treasury | $18.5 | $0.1 | $— | $18.6 | | Municipal securities | $8.6 | $0.1 | $— | $8.7 | | Corporate debt | $22.3 | $0.2 | $— | $22.5 | | **Total** | **$49.4** | **$0.4** | **$—** | **$49.8** | [Commitments and Contingencies](index=13&type=section&id=NOTE%207.%20COMMITMENTS%20AND%20CONTINGENCIES) Contract liabilities increased to **$440.1 million**, and various legal proceedings are not expected to have a material effect - Contract liability balances for lifetime oil and at-home valet contracts were **$440.1 million** as of June 30, 2025, up from $410.4 million at December 31, 2024[45](index=45&type=chunk) - **$78.7 million of revenue** was recognized in the six months ended June 30, 2025, related to contract liabilities[45](index=45&type=chunk) - The company is involved in numerous legal proceedings in the normal course of business, which are **not anticipated to have a material adverse effect** on its financial condition or results of operations[46](index=46&type=chunk) [Debt](index=13&type=section&id=NOTE%208.%20DEBT) The company issued **$564.0 million** in non-recourse notes payable, bringing the total outstanding to **$2,042.0 million** - In 2025, **$564.0 million** in non-recourse notes payable were issued related to asset-backed term funding transactions[48](index=48&type=chunk)[49](index=49&type=chunk) **Summary of Outstanding Non-Recourse Notes Payable Issued (as of June 30, 2025, In millions)** | ($ in millions) | Balance as of June 30, 2025 | Initial Principal Amount | Issuance Date | Interest Rate Range | Final Distribution Date | | :--- | :--- | :--- | :--- | :--- | :--- | | LAD Auto Receivables Trust 2021-1 Class A-D | $24.1 | $344.4 | 11/24/21 | 2.35% to 3.99% | Nov 2029 | | LAD Auto Receivables Trust 2022-1 Class A-C | $52.9 | $298.1 | 08/17/22 | 5.21% to 6.85% | Apr 2030 | | LAD Auto Receivables Trust 2023-1 Class A-D | $119.4 | $479.7 | 02/14/23 | 5.48% to 7.30% | Jun 2030 | | LAD Auto Receivables Trust 2023-2 Class A-D | $174.3 | $556.7 | 05/24/23 | 5.42% to 6.30% | Feb 2031 | | LAD Auto Receivables Trust 2023-3 Class A-D | $162.0 | $415.4 | 08/23/23 | 5.95% to 6.92% | Dec 2030 | | LAD Auto Receivables Trust 2023-4 Class A-D | $184.8 | $421.2 | 11/15/23 | 6.10% to 7.37% | Apr 2031 | | LAD Auto Receivables Trust 2024-1 Class A-D | $167.5 | $329.4 | 02/14/24 | 5.17% to 6.15% | Jun 2031 | | LAD Auto Receivables Trust 2024-2 Class A-D | $250.9 | $409.6 | 06/20/24 | 5.46% to 6.37% | Oct 2031 | | LAD Auto Receivables Trust 2024-3 Class A-D | $438.3 | $614.9 | 11/15/24 | 4.52% to 5.18% | Feb 2032 | | LAD Auto Receivables Trust 2025-1 Class A-D | $467.8 | $564.0 | 02/12/25 | 4.51% to 5.52% | May 2032 | | **Total non-recourse notes payable** | **$2,042.0** | **$4,433.4** | | | | [Retirement Plans and Postretirement Benefits](index=14&type=section&id=NOTE%209.%20RETIREMENT%20PLANS%20AND%20POSTRETIREMENT%20BENEFITS) Defined benefit pension plans reported a net periodic benefit of **$(4.9) million** for the first six months of 2025 **Net Periodic (Benefit) Cost (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Interest cost | $16.8 | $13.2 | | Expected return on plan assets | $(21.7) | $(14.4) | | **Net periodic benefit** | **$(4.9)** | **$(1.2)** | - Funding of pension plans was **$7.9 million** during the six months ended June 30, 2025, with an estimated **$4.0 million** of cash contributions for the remainder of 2025[53](index=53&type=chunk) [Equity](index=14&type=section&id=NOTE%2010.%20EQUITY) An additional **$350 million** share repurchase authorization was approved, bringing the total available to **$568.8 million** - On March 4, 2025, the Board approved an additional **$350 million** repurchase authorization of common stock[56](index=56&type=chunk) - As of June 30, 2025, **$568.8 million** was available for repurchases pursuant to share repurchase authorizations[57](index=57&type=chunk) **Share Repurchase Authorization (Cumulative Repurchases as of June 30, 2025)** | | Shares | Average Price | | :--- | :--- | :--- | | Share Repurchase Authorization | 9,067,788 | $201.95 | | *Price excludes excise taxes imposed under the Inflation Reduction Act of $1.4 million for the six months ended June 30, 2025* | | | [Fair Value Measurements](index=14&type=section&id=NOTE%2011.%20FAIR%20VALUE%20MEASUREMENTS) Financial assets and liabilities are categorized into three levels based on the observability of valuation inputs - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (other significant observable inputs), and **Level 3** (significant unobservable inputs)[61](index=61&type=chunk) **Assets and Liabilities Measured at Fair Value (As of June 30, 2025, In millions)** | (In millions) | Carrying Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Restricted cash - collections | $100.7 | $100.7 | $— | $— | | Restricted cash - reserve | $33.7 | $33.7 | $— | $— | | Equity securities | $2.2 | $2.2 | $— | $— | | U.S. Treasury | $18.6 | $18.6 | $— | $— | | Municipal debt | $8.7 | $— | $8.7 | $— | | Corporate debt | $22.5 | $— | $22.5 | $— | | PINE.L (Equity Method Investment) | $135.9 | $135.9 | $— | $— | | Derivative assets | $2.2 | $— | $2.2 | $— | | Derivative liabilities | $2.2 | $— | $2.2 | $— | **Fixed Rate Debt (Recorded at historical value, As of June 30, 2025, In millions)** | (In millions) | Carrying Value | Fair Value | | :--- | :--- | :--- | | 4.625% Senior notes due 2027 | $400.0 | $395.0 | | 4.375% Senior notes due 2031 | $550.0 | $522.5 | | 3.875% Senior notes due 2029 | $800.0 | $762.0 | | Non-recourse notes payable | $2,042.0 | $2,052.9 | | Real estate mortgages and other debt | $670.5 | $660.3 | | *Excluding unamortized debt issuance costs* | | | [Acquisitions](index=16&type=section&id=NOTE%2012.%20ACQUISITIONS) Four acquisitions were completed in the first six months of 2025 for a total consideration of **$278.6 million** - Four acquisitions were completed in the first six months of 2025: Stohlman Subaru (VA), Elk Grove Subaru (CA), Collierville Mercedes-Benz (TN), and Jackson Mercedes-Benz (MS)[73](index=73&type=chunk) **Revenue and Operating Income from 2025 Acquisitions (Six Months Ended June 30, 2025, In millions)** | | 2025 | | :--- | :--- | | Revenue | $61.9 | | Operating income | $3.5 | **Unaudited Pro Forma Summary (Six Months Ended June 30, In millions, except per share amounts)** | (In millions, except per share amounts) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $18,868.7 | $17,960.8 | | Net income attributable to Lithia Motors, Inc | $473.5 | $387.0 | | Basic EPS attributable to Lithia Motors, Inc common stockholders | $18.13 | $14.14 | | Diluted EPS attributable to Lithia Motors, Inc common stockholders | $18.10 | $14.12 | [Earnings Per Share](index=17&type=section&id=NOTE%2013.%20EARNINGS%20PER%20SHARE) Basic EPS increased to **$17.83** for the six months ended June 30, 2025, from $13.77 in the prior year **Reconciliation of Net Income and Weighted Average Shares for EPS (Six Months Ended June 30, In millions, except per share amounts)** | (In millions, except per share amounts) | 2025 | 2024 | | :--- | :--- | :--- | | Net income attributable to Lithia Motors, Inc | $465.6 | $376.7 | | Weighted average common shares outstanding – basic | 26.1 | 27.4 | | Weighted average common shares outstanding – diluted | 26.2 | 27.4 | | Basic EPS attributable to Lithia Motors, Inc common stockholders | $17.83 | $13.77 | | Diluted EPS attributable to Lithia Motors, Inc common stockholders | $17.80 | $13.75 | [Segments](index=17&type=section&id=NOTE%2014.%20SEGMENTS) Both Vehicle Operations and Financing Operations segments reported increased income for the first six months of 2025 - The company operates in two reportable segments: **Vehicle Operations** and **Financing Operations**[77](index=77&type=chunk) **Segment Financial Information (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | **Vehicle operations** | | | | Total revenue | $18,761.2 | $17,793.6 | | Total gross profit | $2,895.4 | $2,759.1 | | Vehicle operations income | $661.9 | $579.0 | | **Financing Operations** | | | | Interest and fee income | $193.2 | $161.1 | | Total interest margin | $95.3 | $66.3 | | Lease income, net | $8.8 | $6.1 | | Financing operations income | $32.6 | $5.4 | | **Total segment income for reportable segments** | **$694.4** | **$584.4** | **Revenue from External Customers by Geographic Area (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | United States | $14,560.9 | $13,866.8 | | United Kingdom | $3,599.5 | $3,360.8 | | Canada | $600.8 | $566.0 | | **Total revenue from external customers** | **$18,761.2** | **$17,793.6** | [Recent Accounting Pronouncements](index=19&type=section&id=NOTE%2015.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company plans to adopt new ASUs related to income tax and income statement expense disclosures - **ASU 2023-09** (improvements to income tax disclosures) is effective for annual periods beginning after December 15, 2024, and will be adopted for the year ending December 31, 2025[86](index=86&type=chunk) - **ASU 2024-03** (disaggregation of certain income statement expenses) is effective for fiscal years beginning after December 15, 2026, and will be adopted for the year ending December 31, 2027[87](index=87&type=chunk) - Neither pronouncement is expected to have a **material effect** on the financial statements, aside from disclosure changes[86](index=86&type=chunk)[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial condition and results of operations, covering performance, expenses, and liquidity [Forward-Looking Statements and Risk Factors](index=20&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The report contains forward-looking statements subject to risks and uncertainties that may cause actual results to differ - The Form 10-Q contains **forward-looking statements** that involve known and unknown risks, uncertainties, and situations that may cause actual results to differ materially[89](index=89&type=chunk) - Readers should not place undue reliance on these statements, and the company assumes **no obligation to update** or revise any forward-looking statement[90](index=90&type=chunk) [Overview](index=20&type=section&id=Overview) Lithia Motors is the largest global automotive retailer, operating 448 locations with a diversified, omnichannel strategy - Lithia and Driveway (LAD) is the **largest global automotive retailer**, operating 448 locations representing 52 brands in the United States, United Kingdom, and Canada as of June 30, 2025[91](index=91&type=chunk) - The company offers a wide array of products and services fulfilling the **entire vehicle ownership lifecycle**, including new and used vehicles, financing and insurance products, and aftersales services, with a focus on diversification[92](index=92&type=chunk)[93](index=93&type=chunk) - The long-term strategy includes driving **operational excellence**, innovation, diversification, growth through acquisition and network optimization, and thoughtful capital allocation[95](index=95&type=chunk)[102](index=102&type=chunk)[105](index=105&type=chunk) [Financial Performance](index=21&type=section&id=Financial%20Performance) Revenue, gross profit, and net income grew in 2025, while SG&A as a percentage of gross profit decreased - **Revenue and total gross profit grew** in 2025 compared to 2024, primarily driven by increases in volume related to acquisitions and supported by same-store increases in aftersales and F&I[108](index=108&type=chunk) - **Net income grew** in 2025, and total **SG&A as a percentage of gross profit decreased** due to diligent cost management[108](index=108&type=chunk) - New vehicle retail gross profit decreased compared to 2024 due to **continued normalization of margins**[108](index=108&type=chunk) [Vehicle Operations](index=22&type=section&id=Vehicle%20Operations) Vehicle Operations revenue and gross profit grew in Q2 and YTD 2025, driven by acquisitions and same-store performance **Vehicle Operations Key Performance Metrics (Three Months Ended June 30, In millions, except per unit values)** | | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Revenues** | | | | | New vehicle retail | $4,498.4 | $4,403.7 | 2.2% | | Used vehicle retail | $3,094.8 | $2,986.0 | 3.6% | | Finance and insurance | $373.8 | $360.9 | 3.6% | | Aftersales | $1,023.4 | $950.7 | 7.6% | | **Total revenues** | **$9,583.0** | **$9,231.8** | **3.8%** | | **Gross profit** | | | | | New vehicle retail | $299.5 | $320.8 | (6.6)% | | Used vehicle retail | $208.4 | $195.6 | 6.5% | | Finance and insurance | $373.8 | $360.9 | 3.6% | | Aftersales | $590.3 | $529.4 | 11.5% | | **Total gross profit** | **$1,485.1** | **$1,423.9** | **4.3%** | | **Gross profit margins** | | | | | New vehicle retail | 6.7% | 7.3% | (60) bps | | Used vehicle retail | 6.7% | 6.5% | 20 bps | | Aftersales | 57.7% | 55.7% | 200 bps | **Vehicle Operations Key Performance Metrics (Six Months Ended June 30, In millions, except per unit values)** | | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Revenues** | | | | | New vehicle retail | $8,878.6 | $8,417.8 | 5.5% | | Used vehicle retail | $6,013.9 | $5,786.8 | 3.9% | | Finance and insurance | $738.1 | $701.5 | 5.2% | | Aftersales | $2,002.5 | $1,863.5 | 7.5% | | **Total revenues** | **$18,761.2** | **$17,793.6** | **5.4%** | | **Gross profit** | | | | | New vehicle retail | $576.9 | $616.1 | (6.4)% | | Used vehicle retail | $398.2 | $378.2 | 5.3% | | Finance and insurance | $738.1 | $701.5 | 5.2% | | Aftersales | $1,151.8 | $1,031.4 | 11.7% | | **Total gross profit** | **$2,895.4** | **$2,759.1** | **4.9%** | | **Gross profit margins** | | | | | New vehicle retail | 6.5% | 7.3% | (80) bps | | Used vehicle retail | 6.6% | 6.5% | 10 bps | | Aftersales | 57.5% | 55.3% | 220 bps | [New Retail Vehicles](index=24&type=section&id=New%20Retail%20Vehicles) New vehicle retail revenue increased due to higher volumes, though gross profit per unit declined from margin normalization - New vehicle revenue for Q2 2025 **increased 2.2%** (same store up 2.0% due to unit volume increase of 2.0%)[118](index=118&type=chunk) - Same store new vehicle gross profit per unit **decreased 8.1%** in Q2 2025, driven by a 50 bps decrease in new vehicle gross profit margins[119](index=119&type=chunk) - New vehicle retail revenue for YTD 2025 **increased 5.5%** (same store up 3.6% due to unit volume increase of 2.5% and average selling prices up 1.0%)[120](index=120&type=chunk) [Used Retail Vehicles](index=24&type=section&id=Used%20Retail%20Vehicles) Used vehicle retail revenue increased due to same-store performance, including higher unit volumes and selling prices - Used vehicle revenue for Q2 2025 **increased 3.6%** (same store up 6.5% due to unit volume increase of 3.9% and average selling prices up 2.5%)[123](index=123&type=chunk) - Total same store used vehicle gross profit per unit **decreased $18 to $3,486** in Q2 2025[124](index=124&type=chunk) - Used vehicle retail revenue for YTD 2025 **increased 3.9%** (same store up 2.7% due to unit volume increase of 1.7% and average selling prices up 1.1%)[125](index=125&type=chunk) [Finance and Insurance](index=24&type=section&id=Finance%20and%20Insurance) Finance and insurance income increased, driven by same-store performance and higher revenue per retail unit - Total finance and insurance income **increased 3.6%** in Q2 2025 (same store up 4.5%)[128](index=128&type=chunk) - Total finance and insurance income **increased 5.2%** in YTD 2025 (same store up 3.8%)[129](index=129&type=chunk) [Aftersales](index=25&type=section&id=Aftersales) Aftersales revenue and gross profit increased significantly, driven by strong same-store performance and margin improvement - Aftersales revenue **increased 7.6%** in Q2 2025, driven by same store performance[131](index=131&type=chunk) - Same store aftersales gross profit **increased 11.9%** in Q2 2025, with gross margins up 180 bps, primarily from increased customer pay gross margin (260 bps)[132](index=132&type=chunk) - Aftersales revenue **increased 7.5%** in YTD 2025, with same store warranty revenues seeing a 20.0% increase[133](index=133&type=chunk)[134](index=134&type=chunk) [Financing Operations](index=25&type=section&id=Financing%20Operations) Financing Operations income increased significantly, driven by portfolio growth and a decreased cost of funds - Financing operations income **increased to $20.1 million** in Q2 2025 (from $7.2 million in Q2 2024) and **$32.6 million** YTD 2025 (from $5.4 million in YTD 2024)[137](index=137&type=chunk) - This growth was primarily due to increased interest income from portfolio growth and a decreased cost of funds, expanding **total interest margin to 4.6%** for both Q2 and YTD 2025[141](index=141&type=chunk)[144](index=144&type=chunk) **Selected Financing Operations Financial Information (Three Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Interest and fee income | $98.8 | $83.8 | | Interest expense | $(49.8) | $(47.0) | | **Total interest margin** | **$49.0** | **$36.8** | | Lease income, net | $5.1 | $1.7 | | Provision expense | $(21.2) | $(20.2) | | **Finance operations income** | **$20.1** | **$7.2** | | Total average managed finance receivables | $4,287.6 | $3,632.0 | [Operating Expenses](index=27&type=section&id=Operating%20Expenses) Total SG&A expense increased due to acquisitions, but SG&A as a percentage of gross profit decreased [Selling, General and Administrative Expense](index=27&type=section&id=Selling%2C%20General%20and%20Administrative%20Expense) SG&A as a percentage of gross profit decreased, driven by improved efficiency in personnel and advertising costs **Total SG&A (Three Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Personnel | $641.0 | $623.5 | $17.5 | 2.8% | | Rent and facility costs | $99.5 | $93.8 | $5.7 | 6.1% | | Advertising | $64.0 | $62.7 | $1.3 | 2.1% | | Other | $210.2 | $195.2 | $15.0 | 7.7% | | **Total SG&A** | **$1,014.7** | **$975.2** | **$39.5** | **4.1%** | **Total SG&A as a % of Gross Profit (Three Months Ended June 30)** | | 2025 | 2024 | Increase (Decrease) (bps) | | :--- | :--- | :--- | :--- | | Personnel | 43.2% | 43.8% | (60) | | Rent and facility costs | 6.7% | 6.6% | 10 | | Advertising | 4.3% | 4.4% | (10) | | Other | 14.1% | 13.7% | 40 | | **Total SG&A** | **68.3%** | **68.5%** | **(20)** | **Total SG&A (Six Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Personnel | $1,248.4 | $1,225.9 | $22.5 | 1.8% | | Rent and facility costs | $198.6 | $182.9 | $15.7 | 8.6% | | Advertising | $125.3 | $126.1 | $(0.8) | (0.6)% | | Other | $395.1 | $374.6 | $20.5 | 5.5% | | **Total SG&A** | **$1,967.4** | **$1,909.5** | **$57.9** | **3.0%** | [Floor Plan Interest Expense and Floor Plan Assistance](index=29&type=section&id=Floor%20Plan%20Interest%20Expense%20and%20Floor%20Plan%20Assistance) Net vehicle carrying costs decreased significantly due to lower floor plan interest expense **Net Vehicle Carrying Costs (Three Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | Floor plan interest expense | $55.0 | $76.6 | $(21.6) | (28.2)% | | Floor plan assistance | $(43.5) | $(42.8) | $(0.7) | (1.6)% | | **Net vehicle carrying costs** | **$11.5** | **$33.8** | **$(22.3)** | **(66.0)%** | **Net Vehicle Carrying Costs (Six Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | Floor plan interest expense | $112.0 | $137.3 | $(25.3) | (18.4)% | | Floor plan assistance | $(82.5) | $(83.2) | $0.7 | 0.8% | | **Net vehicle carrying costs** | **$29.5** | **$54.1** | **$(24.6)** | **(45.5)%** | - The decrease in floor plan interest expense was due to a **decrease in interest rates** and average new inventory levels[160](index=160&type=chunk)[161](index=161&type=chunk) [Depreciation and Amortization](index=29&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expense increased, primarily driven by acquisition activity and capital expenditures **Depreciation and Amortization (Three Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Depreciation and amortization | $65.2 | $62.3 | $2.9 | 4.7% | **Depreciation and Amortization (Six Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Depreciation and amortization | $129.0 | $120.0 | $9.0 | 7.5% | - Acquisition activity contributed to the increases, with **$79.4 million** of depreciable property acquired over the trailing twelve months ended June 30, 2025[164](index=164&type=chunk) [Operating Income](index=29&type=section&id=Operating%20Income) Operating margin increased, driven by higher gross profit and improved profitability of Financing Operations **Operating Margin (Three Months Ended June 30)** | | 2025 | 2024 | | :--- | :--- | :--- | | Operating margin | 4.4% | 4.3% | **Operating Margin (Six Months Ended June 30)** | | 2025 | 2024 | | :--- | :--- | :--- | | Operating margin | 4.4% | 4.1% | - The increase in operating margin was primarily due to **increased gross profit** and improved profitability of Financing Operations, partially offset by increased SG&A[166](index=166&type=chunk)[167](index=167&type=chunk) [Non-Operating Expenses](index=30&type=section&id=Non-Operating%20Expenses) Other interest expense increased, but this was offset by a significant increase in other income [Other Interest Expense](index=30&type=section&id=Other%20Interest%20Expense) Other interest expense increased due to higher borrowings on warehouse facilities **Total Other Interest Expense (Three Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Senior notes interest | $19.0 | $19.0 | $— | —% | | Mortgage interest | $14.1 | $12.2 | $1.9 | 15.6% | | Other interest | $36.1 | $31.0 | $5.1 | 16.5% | | Capitalized interest | $(2.5) | $(1.0) | $1.5 | NM | | **Total other interest expense** | **$66.7** | **$61.2** | **$5.5** | **9.0%** | **Total Other Interest Expense (Six Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Senior notes interest | $38.0 | $38.0 | $— | —% | | Mortgage interest | $28.5 | $23.5 | $5.0 | 21.3% | | Other interest | $70.1 | $65.5 | $4.6 | 7.0% | | Capitalized interest | $(4.4) | $(2.2) | $2.2 | NM | | **Total other interest expense** | **$132.2** | **$124.8** | **$7.4** | **5.9%** | - The increase in other interest expense was related to **increased borrowings on warehouse facilities**[169](index=169&type=chunk)[170](index=170&type=chunk) [Other Income, net](index=30&type=section&id=Other%20Income%2C%20net) Other income increased significantly, driven by investment income and foreign currency gains **Other Income, Net (Three Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Pinewood Investment | $37.1 | $29.7 | $7.4 | 24.9% | | Foreign currency remeasurement | $5.3 | $(2.0) | $7.3 | NM | | Net pension benefit | $2.4 | $0.6 | $1.8 | 300.0% | | Miscellaneous | $6.1 | $(0.7) | $6.8 | NM | | **Other income, net** | **$48.5** | **$27.0** | **$21.5** | **79.6%** | **Other Income, Net (Six Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | Increase ($) | % Increase | | :--- | :--- | :--- | :--- | :--- | | Foreign currency remeasurement | $5.1 | $(7.5) | $12.6 | NM | | Net pension benefit | $4.6 | $1.2 | $3.4 | 283.3% | | Miscellaneous | $8.7 | $7.0 | $1.7 | 24.3% | | **Other income, net** | **$49.3** | **$30.4** | **$18.9** | **62.2%** | - The increase in other income, net, was primarily a result of **equity method investment income** from Pinewood Technologies Group PLC and **foreign currency exchange gains**[171](index=171&type=chunk)[173](index=173&type=chunk) [Income Tax Provision](index=31&type=section&id=Income%20Tax%20Provision) The effective income tax rate increased to **26.3%** for the first six months of 2025 **Effective Income Tax Rate (Six Months Ended June 30)** | | 2025 | 2024 | | :--- | :--- | :--- | | Effective income tax rate | 26.3% | 24.2% | | Effective income tax rate excluding non-core items | 26.0% | 25.3% | - The effective income tax rate was negatively affected by a **decrease in general business credits**, tax basis differences on divested assets, and an increase in valuation allowance[175](index=175&type=chunk) - Excluding non-core charges and acquired general business credits, the estimated annual effective income tax rate is **26.6%**[175](index=175&type=chunk) [Non-GAAP Reconciliations](index=31&type=section&id=Non-GAAP%20Reconciliations) Non-GAAP financial measures are provided to enhance transparency and show core business operations - **Non-GAAP financial measures** are used to improve the transparency of disclosures and provide a meaningful presentation of results from core business operations[177](index=177&type=chunk) - These measures are used in conjunction with GAAP financial measures to **assess the business**, including compliance with covenants in credit facilities[177](index=177&type=chunk) **Non-GAAP Reconciliations (Six Months Ended June 30, 2025, In millions, except per share amounts)** | ($ in millions, except per share amounts) | As reported | Net gain on disposal of stores | Insurance reserves | Acquisition expenses | Tax attribute | Adjusted | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Selling, general and administrative | $1,967.4 | $2.2 | $(2.8) | $(0.3) | $— | $1,966.5 | | Operating income (loss) | $831.6 | $(2.2) | $2.8 | $0.3 | $— | $832.5 | | Income (loss) before income taxes | $636.7 | $(2.2) | $2.8 | $0.3 | $— | $637.6 | | Net income (loss) attributable to Lithia Motors, Inc | $465.6 | $2.1 | $2.1 | $0.2 | $(2.3) | $467.7 | | Diluted earnings (loss) per share attributable to Lithia Motors, Inc | $17.80 | $0.08 | $0.08 | $0.01 | $(0.09) | $17.88 | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with **$1.3 billion** in available funds as of June 30, 2025 [Available Sources](index=33&type=section&id=Available%20Sources) Total current available funds decreased by 4.8% to **$1,289.3 million** as of June 30, 2025 **Summary of Immediately Available Funds (In millions)** | ($ in millions) | June 30, 2025 | December 31, 2024 | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $202.8 | $225.1 | $(22.3) | (9.9)% | | Marketable securities | $52.1 | $53.4 | $(1.3) | (2.4)% | | Available credit on credit facilities | $1,034.4 | $1,075.3 | $(40.9) | (3.8)% | | **Total current available funds** | **$1,289.3** | **$1,353.8** | **$(64.5)** | **(4.8)%** | [Operating Activities](index=33&type=section&id=Operating%20Activities) Net cash provided by operating activities increased significantly to **$331.4 million** for the first six months of 2025 - Net cash provided by operating activities for the six months ended June 30, 2025, **increased $187.4 million to $331.4 million** compared to the same period of 2024[185](index=185&type=chunk) - This increase was primarily related to changes in **inventories**, **net income**, and other long-term liabilities and deferred revenue[185](index=185&type=chunk) **Adjusted Net Cash Provided by Operating Activities (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | Change in Cash Flow | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities – as reported | $331.4 | $144.0 | $187.4 | | Adjust: Net (repayments) borrowings on floor plan notes payable, non-trade | $(141.2) | $444.5 | $(585.7) | | Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory | $(45.6) | $(22.7) | $(22.9) | | Adjust: Financing receivables activity | $432.1 | $386.9 | $45.2 | | **Net cash provided by operating activities – adjusted** | **$576.7** | **$952.7** | **$(376.0)** | [Investing Activities](index=33&type=section&id=Investing%20Activities) Net cash used in investing activities decreased significantly due to lower cash paid for acquisitions **Highlights of Significant Investing Activity (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | Change in Cash Flow | | :--- | :--- | :--- | :--- | | Capital expenditures | $(148.8) | $(209.7) | $60.9 | | Cash paid for acquisitions, net of cash acquired | $(278.6) | $(1,169.5) | $890.9 | | Net cash for other investments | $(10.4) | $(146.8) | $136.4 | | Proceeds from sales of stores | $104.4 | $6.9 | $97.5 | - Net cash used in investing activities totaled **$315.5 million** for the six months ended June 30, 2025, a significant decrease from $1,515.1 million in 2024[187](index=187&type=chunk)[188](index=188&type=chunk) [Capital Expenditures](index=34&type=section&id=Capital%20Expenditures) Capital expenditures were **$148.8 million** for the first six months of 2025, lower than the prior year - Capital expenditures for the six months ended June 30, 2025, were **$148.8 million**, lower than the same period of 2024[188](index=188&type=chunk)[193](index=193&type=chunk) - Capital expenditures were lower for existing facility purchases, maintenance, new operations purchases and improvements, and information technology, but higher in existing operations improvements[193](index=193&type=chunk) - The company expects to use a portion of future capital expenditures to **upgrade facilities**, which may generate additional manufacturer incentive payments[191](index=191&type=chunk)[192](index=192&type=chunk) [Acquisitions](index=34&type=section&id=Acquisitions%20(under%20Liquidity)) The company acquired 4 locations in the first six months of 2025, paying **$278.6 million** net of cash acquired - **4 locations were acquired** in the first six months of 2025, compared to 142 in the same period of 2024[196](index=196&type=chunk) - Cash paid for acquisitions, net of cash acquired, was **$278.6 million** for the six months ended June 30, 2025, a significant decrease from $1,169.5 million in 2024[188](index=188&type=chunk)[196](index=196&type=chunk) **Adjusted Net Cash Paid for Acquisitions (Six Months Ended June 30, In millions)** | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Cash paid for acquisitions, net of cash acquired | $(278.6) | $(1,169.5) | | Add: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory | $45.6 | $22.7 | | **Cash paid for acquisitions, net of cash acquired – adjusted** | **$(233.0)** | **$(1,146.8)** | [Financing Activities](index=35&type=section&id=Financing%20Activities) Financing activities shifted to a net cash outflow, driven by debt repayments and share repurchases - Net cash used in financing activities was **$13.5 million** for the six months ended June 30, 2025, a significant shift from $1,117.6 million provided in the prior year[184](index=184&type=chunk) **Adjusted Net Cash Provided by Financing Activities (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | Change in Cash Flow | | :--- | :--- | :--- | :--- | | Cash (used in) provided by financing activities, as reported | $(13.5) | $1,117.6 | $(1,131.1) | | Less: Net repayments (borrowings) on floor plan notes payable: non-trade | $141.2 | $(444.5) | $585.7 | | Less: Net repayments (borrowings) on non-recourse notes payable | $67.4 | $(320.2) | $387.6 | | **Cash provided by financing activities, as adjusted** | **$195.1** | **$352.9** | **$(157.8)** | **Highlights of Significant Financing Activity (Six Months Ended June 30, In millions)** | (In millions) | 2025 | 2024 | Change in Cash Flow | | :--- | :--- | :--- | :--- | | Net borrowings on lines of credit | $587.6 | $458.7 | $128.9 | | Proceeds from issuance of long-term debt | $— | $179.8 | $(179.8) | | Principal payments on non-recourse notes payable | $(631.4) | $(418.8) | $(212.6) | | Proceeds from the issuance of non-recourse notes payable | $564.0 | $739.0 | $(175.0) | | Repurchase of common stock | $(263.3) | $(217.2) | $(46.1) | [Equity Transactions](index=35&type=section&id=Equity%20Transactions) The company repurchased **827,241 shares** for **$263.3 million** in the first six months of 2025 - The company repurchased a total of **827,241 shares** of common stock at an average price of **$318.24** in the first six months of 2025[200](index=200&type=chunk) - As of June 30, 2025, **$568.8 million** remained available for repurchases under Board authorizations[200](index=200&type=chunk) **Dividends Paid on Common Stock (First Six Months of 2025)** | Dividend paid: | Dividend amount per share | Total amount of dividend (in millions) | | :--- | :--- | :--- | | March 2025 | $0.53 | $13.9 | | May 2025 | $0.55 | $14.3 | [Summary of Outstanding Balances on Credit Facilities and Long-Term Debt](index=36&type=section&id=Summary%20of%20Outstanding%20Balances%20on%20Credit%20Facilities%20and%20Long-Term%20Debt) Total debt, net, was **$13,690.2 million** as of June 30, 2025, with **$1,034.4 million** available on credit facilities **Summary of Outstanding Balances on Credit Facilities and Long-Term Debt (As of June 30, 2025, In millions)** | (In millions) | Outstanding | Remaining Available | | :--- | :--- | :--- | | Floor plan notes payable | $2,163.3 | $— | | Used and service loaner vehicle inventory financing commitments | $1,011.3 | $29.9 | | Revolving lines of credit | $1,792.1 | $978.1 | | Warehouse facilities | $1,241.0 | $26.4 | | Non-recourse notes payable | $2,042.0 | $— | | 4.625% Senior notes due 2027 | $400.0 | $— | | 4.375% Senior notes due 2031 | $550.0 | $— | | 3.875% Senior notes due 2029 | $800.0 | $— | | Real estate mortgages, finance lease obligations, and other debt | $986.4 | $— | | Unamortized debt issuance costs | $(20.6) | $— | | **Total debt, net** | **$13,690.2** | **$1,034.4** | [Financial Covenants](index=36&type=section&id=Financial%20Covenants) The company's credit facilities and debt instruments include customary representations, warranties, and covenants - The company's credit facilities, non-recourse notes payable, and senior notes contain **customary representations and warranties**, conditions and covenants for transactions of these types[205](index=205&type=chunk) [Recent Accounting Pronouncements](index=36&type=section&id=Recent%20Accounting%20Pronouncements%20(under%20MD&A)) This section refers to Note 15 for details on recent accounting pronouncements - Refer to **Note 15 – Recent Accounting Pronouncements** for discussion[206](index=206&type=chunk) [Critical Accounting Policies and Use of Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) There have been no material changes to critical accounting policies since the 2024 Annual Report - There have been **no material changes** in the critical accounting policies and use of estimates described in the 2024 Annual Report on Form 10-K[207](index=207&type=chunk) [Seasonality and Quarterly Fluctuations](index=36&type=section&id=Seasonality%20and%20Quarterly%20Fluctuations) Operations experience seasonality, with lower volumes in Q1 for North America and higher volumes in Q1 and Q3 for the UK - North American operations generally experience **lower volumes in the first quarter** due to consumer purchasing patterns and inclement weather[208](index=208&type=chunk) - U.K. operations generally experience **higher volumes in the first and third quarters** due to new vehicle registration practices[208](index=208&type=chunk) - Financial performance is influenced by interest rates, levels of consumer debt, consumer confidence, manufacturer sales incentives, and general economic conditions[208](index=208&type=chunk) [Off-Balance Sheet Arrangements](index=36&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not have any off-balance sheet arrangements reasonably likely to have a material effect - The company **does not have any off-balance sheet arrangements** that have or are reasonably likely to have a material current or future effect on its financial condition[209](index=209&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in reported market risks since the 2024 Annual Report - There have been **no material changes** in the company's reported market risks or risk management policies since the filing of its 2024 Annual Report on Form 10-K[210](index=210&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective as of June 30, 2025**[212](index=212&type=chunk) [Changes in Internal Control Over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the most recent fiscal quarter - There was **no change in internal control over financial reporting** that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting[213](index=213&type=chunk)[214](index=214&type=chunk) [PART II OTHER INFORMATION](index=37&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings not expected to have a material adverse effect - The company is party to numerous legal proceedings arising in the **normal course of its business**[215](index=215&type=chunk) - The resolution of these legal proceedings is **not anticipated to have a material adverse effect** on the company's business, results of operations, financial condition, or cash flows[215](index=215&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the risk factors disclosed in the 2024 Annual Report on Form 10-K - Readers should refer to the risk factors and information disclosed in the **2024 Annual Report on Form 10-K** for the primary risks related to the company's business and securities[216](index=216&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **387,443 shares** of common stock during the second quarter of 2025 **Common Stock Repurchases (Second Quarter of 2025)** | For the full calendar month of | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans | Maximum dollar value of shares that may yet be purchased under publicly announced plans (in thousands) | | :--- | :--- | :--- | :--- | :--- | | April | 122,008 | $282.14 | 122,008 | $652,891 | | May | 181,167 | $312.39 | 181,079 | $596,322 | | June | 84,268 | $326.80 | 84,268 | $568,783 | | **Total** | **387,443** | **$306.00** | **387,355** | | | *88 shares repurchased in the second quarter of 2025 were related to tax withholding upon the vesting of RSUs* | | | | | - The Board approved additional **$350 million** repurchase authorizations in June 2024 and March 2025, which do not have expiration dates[217](index=217&type=chunk) [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated any **Rule 10b5-1 plan** or any non-Rule 10b5-1 trading arrangement during the second quarter of 2025[219](index=219&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents **List of Exhibits** | Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 3.1 | Restated Articles of Incorporation of Lithia Motors, Inc | 10-Q | 001-14733 | 3.1 | 07/28/21 | | | 3.2 | Bylaws of Lithia Motors, Inc as of July 25, 2024 | 8-K | 001-14733 | 3.1 | 07/30/24 | | | 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | | | | | X | | 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | | | | | X | | 32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C Section 1350 | | | | | X | | 32.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C Section 1350 | | | | | X | | 101 | Inline XBRL Document Set for the consolidated financial statements and accompanying notes to consolidated financial statements | | | | | X | | 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 | | | | | X | [SIGNATURE](index=38&type=section&id=SIGNATURE) - The report was signed by Tina Miller, Chief Financial Officer, Senior Vice President, and Principal Accounting Officer, on **July 30, 2025**[223](index=223&type=chunk)

Core Insights - Lithia Motors (LAD) reported second-quarter 2025 adjusted earnings per share of $10.24, an increase from $7.87 in the prior-year quarter, exceeding the Zacks Consensus Estimate of $9.78 [1] - The company's revenues reached $9.58 billion, marking a 3.7% year-over-year increase and surpassing the Zacks Consensus Estimate of $9.53 billion [1] Segmental Performance - New vehicle retail revenues rose 2.2% year over year to $4.5 billion, although it fell short of the estimate of $4.75 billion; new vehicle units sold increased 1.8% to 94,144 units, missing the estimate of 100,205 units [2] - The average selling price (ASP) of new vehicles increased to $47,782 from $47,603 in the prior-year quarter, exceeding the estimate of $47,431; gross margin in this segment contracted by 60 basis points to 6.7% due to a 2.8% rise in cost of sales to $4.2 billion [2] - Used vehicle retail revenues grew 3.6% year over year to $3.1 billion, surpassing the estimate of $2.9 billion, driven by a higher-than-expected ASP; used vehicle units sold declined 0.2% to 109,053 units, missing the expectation of 111,328 units [3] - The ASP of used vehicles increased by 3.8% year over year to $28,379, exceeding the estimate of $26,135; gross margin in this segment increased by 20 basis points to 6.7% [3] - Revenues from used vehicle wholesale surged 32.3% to $383 million, outpacing the estimate of $340 million; finance and insurance revenues rose 3.6% to $373.8 million but fell short of the estimate of $398.9 million [4] - Aftersales revenues reached $1.02 billion, a 7.6% year-over-year increase, surpassing the estimate of $985 million; revenues from fleet and others contracted 13.1% year over year to $209.5 million, missing the expectation of $244 million [4] Financial Highlights - Cost of sales increased by 3.7% year over year in Q2 2025; SG&A expenses were reported at $1.01 billion, with adjusted SG&A as a percentage of gross profit decreasing to 67.7% from 67.9% in the prior-year quarter [6] - Both pretax and net profit margins improved compared to the previous year [6] Shareholder Actions - The company announced a dividend of 55 cents to be paid on August 22, 2025, to shareholders of record as of August 8, 2025; in Q2 2025, LAD repurchased nearly 387,000 shares at an average price of $306 [7] - Lithia has approximately $568.8 million shares remaining under its buyback authorization [7] Cash and Debt Position - As of June 30, 2025, Lithia had cash and cash equivalents of $404.4 million, up from $402.2 million as of December 31, 2024; long-term debt increased to $6.7 billion from $6.1 billion during the same period [8]

Financial Data and Key Metrics Changes - The company reported record revenue of $9.6 billion for the second quarter, reflecting a 4% year-over-year same-store revenue increase [7][8] - Diluted earnings per share (EPS) increased by 29% year-over-year to $9.87, with an adjusted EPS of $10.24, marking a 2530% increase [6][7] - Adjusted SG&A as a percentage of gross profit decreased to 67.7% from 67.9% a year ago, while same-store SG&A increased to 67.4% from 66.4% [25][26] Business Line Data and Key Metrics Changes - Same-store aftersales gross profit grew by 8.5% year-over-year, with gross profit margin widening to 57.8%, a 180 basis point increase from last year [21][22] - Financing operations income more than doubled year-over-year from CAD7 million to $20 million, supported by a 50 basis point expansion in net interest margin to 4.6% [26][27] - New vehicle units increased by 2% year-over-year, while used vehicle units increased by 4% year-over-year [19][20] Market Data and Key Metrics Changes - The company noted a 50% same-store sales improvement in value auto sales compared to last year [20] - The UK market showed a 3% year-over-year increase in profitability, indicating stable performance despite challenging industry conditions [39][40] Company Strategy and Development Direction - The company aims to grow U.S. market share from 1.1% to 5% and finance up to 20% of units through scaling DFC [17] - Strategic acquisitions remain a core pillar of growth, targeting annual revenues of $2 to $4 billion from acquisitions [14][73] - The focus is on expanding high-margin adjacencies, deepening customer relationships, and deploying capital effectively to enhance shareholder value [9][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to grow profitably and take market share, despite pressures from lower gross profit per unit (GPU) [9][10] - The company is monitoring the evolving tariff landscape and broader consumer trends, indicating a proactive approach to potential challenges [9][10] - Management highlighted the importance of operational efficiency and cost control to maintain profitability amid changing market conditions [25][26] Other Important Information - The company repurchased 3% of its outstanding shares in the first half of the year, with plans to accelerate buybacks due to perceived undervaluation [17][30] - The integration of AI technology is expected to enhance operational efficiency and reduce costs, particularly in sales and service departments [93][94] Q&A Session Summary Question: Can you discuss SG&A to gross profit leverage and its implications for the income statement? - Management acknowledged the need for operational improvements and emphasized the importance of driving top-line growth to manage SG&A effectively [36][38] Question: How is the UK market performing amid industry challenges? - Management reported a 3% year-over-year increase in profitability in the UK, indicating strong cost management and growth strategies [39][40] Question: What is the outlook for the U.S. SG&A performance? - Management confirmed that the U.S. business continues to perform well on the SG&A front, with ongoing efforts to drive down costs [46][47] Question: What is the expected run rate for Driveway Finance? - Management indicated that Driveway Finance is on a growth trajectory, expecting to maintain a strong run rate moving forward [54][55] Question: How does the company view the M&A environment? - Management expressed confidence in achieving the low end of the acquisition revenue target by year-end, while maintaining a disciplined approach to pricing [72][73]

For the quarter ended June 2025, Lithia Motors (LAD) reported revenue of $9.58 billion, up 3.8% over the same period last year. EPS came in at $10.24, compared to $7.87 in the year-ago quarter. The reported revenue represents a surprise of +0.52% over the Zacks Consensus Estimate of $9.53 billion. With the consensus EPS estimate being $9.78, the EPS surprise was +4.7%. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expe ...

Company Strategy & Performance - Lithia & Driveway (LAD) aims for 100% national coverage and high profitability, targeting $2 EPS per $1 billion of revenue[10] - The company's 10-year Revenue CAGR is 16%, and Adjusted EPS CAGR is also 16%[10] - LAD's platform expands access to a 70% larger market compared to traditional franchise auto dealers[17] Financial Highlights & Capital Allocation - In the first six months of 2025, LAD allocated $266 million to share repurchases at an average price of $316 per share[35] - LAD targets leverage ratios in the range of 2-3X, aiming for an investment-grade rating over time[35] - LAD's EBITDA for YTD 2025 is $11078 million, and Adjusted EBITDA is $8913 million[88] Driveway Finance Corporation (DFC) - DFC targets a portfolio size of $7 billion in 2025E and $17 billion in the mid-term[49] - DFC aims for finance operations income of $50-$60 million in 2025E and $150-$200 million in the mid-term[49] - DFC's originations in Q2 2025 reached $731 million with an APR of 87%[54] Operational Efficiency & Growth - Larger stores operate more efficiently, with the smallest 3rd of stores having SG&A as a % of Gross Profit at 88%, compared to 56% for the largest 3rd[26] - The company's M&A strategy targets a 5-year return of 15% CAGR[41] - Driveway generated an average of 13 million unique visitors per month in Q2 2025[82]

Financial Data and Key Metrics Changes - The company reported record revenue of $9.6 billion for the second quarter, reflecting a 4% year-over-year same-store revenue increase [6][12] - Diluted earnings per share (EPS) increased by 29% year-over-year, reaching $9.87, with an adjusted EPS of $10.24, marking a 2530% increase year-over-year [5][6] - Adjusted EBITDA for the second quarter was $489 million, a 20% increase year-over-year [26] Business Line Data and Key Metrics Changes - Same-store aftersales gross profit grew by 8.5% year-over-year, with gross profit margin widening to 57.8%, a 180 basis point increase from last year [20][21] - Financing operations income more than doubled year-over-year from $7 million to $20 million, supported by a 50 basis point expansion in net interest margin to 4.6% [24][25] - New vehicle units increased by 2% year-over-year, while used vehicle units increased by 4% year-over-year [18][19] Market Data and Key Metrics Changes - The company noted a 50% same-store sales improvement in value auto sales compared to last year [19] - The UK market showed a 3% year-over-year profitability increase, indicating resilience despite challenging industry conditions [36] Company Strategy and Development Direction - The company aims to scale high-margin adjacencies and deepen customer relationships while maintaining capital discipline [7][12] - Strategic acquisitions remain a core pillar of growth, targeting $2 to $4 billion in annual revenue from acquisitions [14][70] - The company is focused on improving store performance and expanding its digital reach to grow U.S. market share from 1.1% to 5% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to grow profitably and take market share, despite pressures from lower gross profit units (GPUs) [7][12] - The evolving tariff landscape and broader consumer trends are being monitored closely [7] - Management highlighted the importance of operational efficiency and cost control in navigating current market conditions [23][24] Other Important Information - Over 60% of the company's net profit comes from aftersales operations, indicating a diversified earnings stream [8][21] - The company repurchased 3% of its outstanding shares in the first half of the year, with plans to continue aggressive buybacks [15][28] Q&A Session Summary Question: Can you discuss SG&A to gross profit leverage? - Management acknowledged the need for operational improvements and emphasized the focus on driving growth and productivity [34][35] Question: How is the UK market performing? - The UK operations showed a 3% year-over-year profitability increase, with effective cost management in place [36][37] Question: How does the U.S. SG&A look? - The U.S. business continues to perform well on the SG&A front, with ongoing focus on cost control [41][42] Question: What is the outlook for DFC growth? - DFC is on a growth trajectory, with expectations for continued strong performance in the coming quarters [48][49] Question: How much of the aftersales growth is due to last year's issues? - Over 50% of the stronger same-store sales growth in aftersales can be attributed to lapping last year's CDK issues [75] Question: How will tariffs impact pricing? - Management indicated that manufacturers are already adapting to mitigate tariff impacts, and the company is well-positioned to manage these changes [98][100]