Core Insights - Lithia & Driveway (LAD) announced significant growth milestones, including strategic acquisitions and recognition for workplace culture [1][5] Acquisition and Revenue Growth - LAD acquired Anaheim Hyundai, Huntington Beach Hyundai, and Garden Grove Hyundai, enhancing its dealership network density and increasing its import mix in Southern California, projected to generate approximately $440 million in annualized revenue [2] - The total expected annualized U.S. revenue acquired by LAD year-to-date is now $1.16 billion, with the recent acquisition financed through existing on-balance sheet capacity and purchased for less than 10% of revenues [3] Electrification Strategy - The new stores align with LAD's electrification strategy in California, leveraging Hyundai's expanding EV and hybrid lineup to meet customer demand [4] - In the third quarter, battery electric vehicles (BEVs) accounted for 10% of LAD's new retail sales, an increase from 8% in previous quarters, attributed to the expiration of EV tax credits [4] Workplace Recognition - Eight of LAD's Canadian dealerships were recognized in Automotive News' 2025 Canada Best Dealerships To Work For list, representing 20% of the total recognized dealerships [5] - The recognition highlights the strong team culture and commitment to customer care within LAD's Canadian operations [6] Company Overview - Lithia & Driveway is the largest global automotive retailer, offering a wide range of products and services throughout the vehicle ownership lifecycle, emphasizing simple, convenient, and transparent experiences [7]

Financial Performance - Total revenues for Q3 2025 reached $9,675.8 million, a 4.9% increase compared to $9,221.0 million in Q3 2024[118] - Gross profit for Q3 2025 was $1,466.0 million, up 2.5% from $1,430.4 million in Q3 2024[118] - Total revenues for Q3 2025 increased by 7.7% to $9,453.4 million compared to Q3 2024, driven by growth in new and used vehicle retail sales[121] - Total gross profit for Q3 2025 was $1,433.5 million, a 3.2% increase compared to Q3 2024[121] - The company achieved a net income growth in 2025, primarily driven by increased total gross profit and financing operations, while managing SG&A costs effectively[116] - For the nine months ended September 30, 2025, net income attributable to Lithia Motors, Inc. was $239.4 million, with diluted earnings per share of $9.50[194] - For the nine months ended September 30, 2025, net income attributable to Lithia Motors, Inc. was $682.7 million, a decrease of $6.1 million compared to the same period in 2024[196] - Diluted earnings per share for Lithia Motors, Inc. for the nine months ended September 30, 2025, was $26.42, down from $26.66 in 2024, reflecting a decrease of 0.24[196] Vehicle Sales and Profitability - New vehicle retail gross profit decreased by 9.7% to $276.7 million in Q3 2025, while used vehicle retail gross profit increased by 2.4% to $193.4 million[118] - The average selling price for new vehicles rose by 2.7% to $47,913 in Q3 2025, compared to $46,649 in Q3 2024[118] - Same store new vehicle retail revenue increased by 5.5% in Q3 2025, supported by a 3.0% increase in average selling prices and a 2.5% increase in unit volume[123] - Used vehicle revenue for Q3 2025 increased by 8.9%, with same store performance showing an 11.8% increase due to a 6.3% rise in unit volume and a 5.1% increase in average selling prices[128] - New vehicle retail gross profit per unit decreased by 10.8% in Q3 2025, resulting in a total same store gross profit per unit of $4,916[124] - Used vehicle retail gross profit per unit decreased by $22 to $3,435 in Q3 2025, reflecting the impact of market conditions[129] Financing Operations - Financing Operations income for Q3 2025 included interest and fee income of $104.9 million, up from $88.8 million in Q3 2024[143] - Net loans originated in Q3 2025 reached $731.6 million, up from $518.1 million in Q3 2024, representing a 41.1% increase[146] - The total penetration rate for vehicle units financed increased to 14.5% in Q3 2025 from 11.6% in Q3 2024[146] - Financing operations recorded an interest margin expansion to 4.6% in Q3 2025, driven by increased interest income and decreased cost of funds[149] - Annualized net credit losses as a percentage of total average managed receivables decreased to 1.9% in Q3 2025 from 3.0% in Q3 2024, indicating improved credit quality[146] Expenses and Margins - Total SG&A expenses for Q3 2025 were $998.0 million, a 5.8% increase from $943.6 million in Q3 2024[158] - SG&A as a percentage of gross profit increased to 68.1% in Q3 2025 from 66.0% in Q3 2024, reflecting growth in SG&A outpacing gross profit growth[158] - Operating margin decreased by 20 basis points to 4.4% in Q3 2025 compared to Q3 2024, primarily due to a 5.8% increase in SG&A expenses[178] Capital Expenditures and Investments - During the first nine months of 2025, the company utilized $257.7 million for capital expenditures and $662.3 million for share repurchases[114] - The company invested $257.7 million in capital expenditures for the nine months ended September 30, 2025, contributing to increased depreciation expense[176] - Capital expenditures for the nine months ended September 30, 2025, were $257.7 million, a decrease of $14.2 million compared to $271.9 million in 2024[205] Liquidity and Cash Flow - As of September 30, 2025, available liquidity was approximately $1.9 billion, including $206.5 million in unrestricted cash and $1.6 billion in credit facilities[114] - Total current available funds as of September 30, 2025, amounted to $1,901.2 million, an increase of 40.4% from $1,353.8 million at December 31, 2024[199] - Cash provided by operating activities for the nine months ended September 30, 2025, decreased by $130.3 million to $233.0 million compared to $363.3 million in 2024[201] - Net cash used in investing activities was $479.4 million for the nine months ended September 30, 2025, a significant decrease from $1.8 billion in 2024[204] - The company reported a net cash provided by financing activities of $264.5 million for the nine months ended September 30, 2025, down from $880.2 million in 2024, a decrease of $615.7 million[201] Shareholder Returns - The company repurchased a total of 2,139,114 shares at an average price of $314.16, with $910.1 million remaining available for repurchases as of September 30, 2025[213] - Dividends paid in 2025 included $0.53 per share in March, $0.55 in May, and $0.55 in August, totaling approximately $42.1 million[214] Strategic Initiatives - The company targets an annual after-tax return of over 15% for acquisitions, averaging over 25% return by the third year of ownership[110] - The company expects to utilize future capital expenditures for facility upgrades associated with recent acquisitions, indicating a focus on enhancing operational efficiency[209] - The company anticipates that certain facility upgrades will generate additional manufacturer incentive payments, which may positively impact future cash flows[209] - The number of locations acquired decreased from 145 in 2024 to 6 in 2025, indicating a strategic shift in acquisition strategy[209]

Core Insights - Lithia Motors (LAD) reported third-quarter 2025 adjusted earnings per share of $9.50, an increase from $8.21 in the prior-year quarter, exceeding the Zacks Consensus Estimate of $8.53. Revenues reached $9.67 billion, a 5% year-over-year increase, also surpassing the Zacks Consensus Estimate of $9.61 billion [1][10]. Segmental Performance - New vehicle retail revenues rose 4.5% year over year to $4.63 billion, exceeding the estimate of $4.5 billion, driven by higher unit sales and average selling price (ASP). New vehicle units sold increased by 1.8% to 96,639 units, surpassing the estimate of 95,276 units. The ASP for new vehicles increased to $47,913 from $46,649 in the prior-year quarter, above the estimate of $47,213. However, the gross margin in this segment contracted by 90 basis points to 6% due to a 5.6% rise in cost of sales to $4.35 billion [2]. - Used vehicle retail revenues increased by 8.9% year over year to $3.1 billion, surpassing the estimate of $3.08 billion, attributed to higher-than-expected ASP. Used vehicle retail units sold rose by 4% to 109,097 units, though below the expectation of 114,047 units. The ASP for used vehicles was $28,381, up 4.7% year over year, exceeding the estimate of $27,016. The gross margin in this segment decreased by 40 basis points to 6.2% [3]. - Revenues from used vehicle wholesale fell by 6.1% to $367 million, missing the estimate of $455.9 million. Finance and insurance revenues rose by 5% to $378.6 million but fell short of the estimate of $384.7 million. Aftersales revenues were $1.04 billion, a 2.4% year-over-year increase, but missed the estimate of $1.07 billion. Revenues from fleet and others contracted by 9.3% year over year to $166.5 million, although it exceeded the expectation of $163.5 million [4]. - Same-store new vehicle revenues increased by 5.5% year over year, while same-store used vehicle retail sales rose by 11.8%. Same-store revenues from finance and insurance rose by 5.7%, and aftersales unit revenues increased by 3.9% [5]. Financial Overview - Cost of sales increased by 5.4% year over year in the third quarter of 2025. SG&A expenses were $998 million, up 5.8% year over year. Adjusted SG&A as a percentage of gross profit was 67.9%, up from 66% in the prior-year quarter. Both pretax and net profit margins improved compared to the previous year [6]. - The company announced a dividend of 55 cents to be paid on November 21, 2025, to shareholders of record as of November 7, 2025. In the third quarter of 2025, Lithia repurchased nearly 1,312,000 shares at an average price of $312, with approximately $889.3 million remaining under its buyback authorization [7]. - As of September 30, 2025, Lithia had cash and cash equivalents of $417.1 million, up from $402.2 million as of December 31, 2024. Long-term debt increased to $6.97 billion from $6.12 billion as of December 31, 2024 [8].

Financial Data and Key Metrics Changes - Quarterly revenue was $9.7 billion, up 4.9% year-over-year, and adjusted diluted EPS was $9.50, up 17% [5][17] - Same-store revenues for the quarter increased 7.7%, driven by growth in every business line [7] - Total gross profit increased 3.2%, with total vehicle GPU at $4,109, down $216 year-over-year [7][9] Business Line Data and Key Metrics Changes - New retail revenue grew 5.5%, with units up 2.5%, while new GPU was $2,867, down $348 sequentially [7] - Used retail revenue increased by 11.8% over last year, driven by a 6.3% increase in unit growth and higher average selling prices [7] - After-sales revenue increased 3.9%, with gross profit rising 9.1% and margins expanding to 58.4%, up 280 basis points year-over-year [9] Market Data and Key Metrics Changes - North America's adjusted SG&A was flat sequentially at 64.8%, reflecting cost discipline despite normalization of GPUs [10][17] - In the UK, SG&A was in the high 80% range, with macro and mixed headwinds pressuring margins and labor costs [28][19] Company Strategy and Development Direction - The company aims to capture market share and increase customer loyalty, focusing on high ROI used vehicles and after-sales services [6][12] - Strategic acquisitions remain a core pillar, with a target of $2 billion acquisition revenue estimate for 2025 [13][14] - The company is prioritizing share repurchases, buying back 5.1% of outstanding shares at prices that will drive long-term accretion [12][22] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong top-line growth across all business lines, with a focus on execution and cost control [5][6] - The company is optimistic about its ability to convert momentum into share gains and sustained cost efficiency [6][12] - Management noted that the UK market is challenging but is responding with specific initiatives to improve productivity and profitability [19][29] Other Important Information - Vehicle inventory and carrying costs improved, with new day supply at 52 days, a decrease of 11 days sequentially [9] - Financing operations income was $19 million in the quarter, with a net interest margin of 4.6%, up 70 basis points year-over-year [20] Q&A Session Summary Question: Can you talk about EVs and their impact on sales and GPU? - Management noted that electrified vehicles made up 43% of total new car mix, with significant sales driven by federal credits and manufacturer incentives [24][25] Question: What is the outlook for the UK market given the labor challenges? - Management acknowledged the impact of labor costs and minimum wage increases but highlighted improvements in operational net profit in parts and service [28][29] Question: How is the used market performing amid subprime turmoil? - Management indicated that the used car market presents opportunities, particularly in the value auto segment, which is driven by higher credit quality customers [36][38] Question: What is the company's strategy regarding acquisitions and buybacks? - Management confirmed a hard target of $2 billion for acquisitions, with excess cash flow likely directed towards buybacks if acquisition opportunities do not meet return thresholds [73][76] Question: Can you elaborate on the used performance and what drove the growth? - Management attributed the growth in used car sales to a focused strategy and improved messaging, with a significant increase in self-sourcing from consumers [79][82]

Financial Data and Key Metrics Changes - Quarterly revenue was USD 9.7 billion, up 4.9% year-over-year, and adjusted diluted EPS was USD 9.50, up 17% [5][17] - Same-store revenues for the quarter increased 7.7%, with total gross profit increasing 3.2% despite normalization of front-end gross profit units (GPUs) [6][7] - Adjusted SG&A as a percentage of gross profit was 67.9% compared to 66% a year ago, with North America's adjusted SG&A flat sequentially at 64.8% [17][18] Business Line Data and Key Metrics Changes - New retail revenue grew 5.5%, with units up 2.5%, while new GPU was USD 2,867, down USD 348 sequentially [7] - Used retail revenue increased by 11.8% year-over-year, driven by a 6.3% increase in unit growth and higher average selling prices [7][8] - After-sales revenue increased 3.9%, with gross profit rising 9.1% and margins expanding to 58.4%, up 280 basis points year-over-year [9] Market Data and Key Metrics Changes - Vehicle inventory and carrying costs improved, with new day supply at 52 days, a decrease of 11 days sequentially [9] - Financing operations income was USD 19 million in the quarter, with a net interest margin of 4.6%, up 70 basis points year-over-year [19] - The used car market showed strong performance, with value segments delivering a 22.3% unit increase year-over-year [8][36] Company Strategy and Development Direction - The company aims to capture market share and increase customer loyalty, focusing on high ROI used vehicles and after-sales services [6][12] - Strategic acquisitions remain a core pillar, with a target of USD 2 billion in acquisition revenue for 2025 [13][14] - The company is simplifying its tech stack and increasing sales efficiency through digital platforms, enhancing customer experience [10][12] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong top-line growth across all business lines, with a focus on execution and cost control [5][6] - The company is optimistic about future performance, expecting to convert momentum into share gains and sustained cost efficiency [6][12] - Management acknowledged challenges in the UK market but emphasized ongoing improvements in productivity and cost management [18][30] Other Important Information - The company repurchased 5.1% of outstanding shares at an average price of USD 312, prioritizing share buybacks due to stock trading at a discount [12][21] - Driveway Finance Corporation continues to build a stable earnings base with healthy spreads and disciplined underwriting [11][19] Q&A Session Summary Question: Discussion on EV inventory and sales - Management noted that electrified vehicles constituted 43% of total new car mix, with significant sales driven by federal credits and manufacturer incentives [24][25] Question: UK market conditions and cost efficiencies - Management discussed labor cost impacts and ongoing initiatives to improve productivity and market share in the UK [27][28] Question: Overview of the used market and subprime impact - Management highlighted opportunities in the used car market, particularly in the value auto segment, which is less affected by subprime issues [34][35] Question: UK regulatory environment for EVs - Management indicated that growth in the UK is currently driven by ICE vehicles rather than electrified ones, with expectations of more regulations in the future [40][41] Question: U.S. EV sales and profitability - Management acknowledged that margins on EVs are lighter, but emphasized strong customer loyalty and repeat purchases in the EV segment [49][52] Question: M&A opportunities and targets - Management confirmed a hard target of USD 2 billion in acquisitions for the year, with a focus on maintaining return thresholds [70][71] Question: Used performance and future expectations - Management expressed confidence in continued positive comps in used vehicle sales, citing a strong focus on quality and customer experience [78][81]

Financial Data and Key Metrics Changes - Quarterly revenue was $9.7 billion, up 4.9% year over year, and adjusted diluted EPS was $9.5, up 17% [5][6] - Same store revenues for the quarter increased 7.7%, driven by growth in every business line [7] - Total gross profit increased 3.2%, with total vehicle GPU at $4,109, down $216 year over year [8][6] Business Line Data and Key Metrics Changes - New retail revenue grew 5.5% with units up 2.5%, while used retail revenue increased 11.8% driven by a 6.3% increase in unit growth [9][10] - Aftersales revenue increased 3.9%, with gross profit rising 9.1% and margins expanding to 58.4%, up 280 basis points year over year [13] - F and I revenue was up 5.7%, with F and I per retail unit reaching $18.47, up $20 year over year [12] Market Data and Key Metrics Changes - Domestic brand performance improved, while luxury brands performed the weakest year over year [9] - The UK market faced challenges with increased labor costs and regulatory pressures, but the company is improving productivity [14][37] Company Strategy and Development Direction - The company is focused on capturing market share and increasing customer loyalty, with a strategic emphasis on used vehicles and aftersales [6][11] - The acquisition strategy remains disciplined, targeting $2 billion in acquisition revenue for 2025, with a focus on high ROI opportunities [18][19] - The company aims to leverage its omnichannel platform to enhance customer experience and operational efficiency [14][28] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of cost control and productivity gains in navigating a mixed customer backdrop [6][22] - The company expects to finish strong in 2025 and continue building value through its ecosystem [6][21] - Management expressed confidence in the long-term growth potential, emphasizing the flexibility of their cash engine and acquisition strategy [18][28] Other Important Information - The company repurchased 5.1% of its outstanding shares this quarter, prioritizing share buybacks due to stock trading at a discount [16][27] - Driveway Finance Corporation reported $19 million in financing operations income for the quarter, with a net interest margin of 4.6% [25][26] Q&A Session Summary Question: EV sales and inventory management - Management noted that electrified vehicles made up 43% of total new car mix, with significant sales driven by manufacturer incentives [30][31] Question: UK market conditions and labor costs - Management discussed the impact of increased labor costs and regulatory changes, emphasizing self-help initiatives to improve productivity [36][37] Question: Used car market dynamics - Management highlighted opportunities in the used car market, particularly in the value auto segment, with a focus on sourcing directly from consumers [44][46] Question: M&A strategy and targets - Management reiterated the $2 billion acquisition target for the year, emphasizing a disciplined approach to acquisitions [81][82]

Financial Data and Key Metrics Changes - Quarterly revenue was $9.7 billion, up 4.9% year-over-year, and adjusted diluted EPS was $9.50, up 17% [4][17] - Same-store revenues for the quarter increased 7.7%, driven by growth in every business line [6] - Total gross profit increased 3.2%, with total vehicle GPU at $4,109, down $216 year-over-year [6][8] Business Line Data and Key Metrics Changes - New retail revenue grew 5.5%, with units up 2.5%, while new GPU was $2,867, down $348 sequentially [6] - Used retail revenue increased by 11.8% over last year, driven by a 6.3% increase in unit growth and higher average selling prices [6][7] - After-sales revenue increased 3.9%, with gross profit rising 9.1% and margins expanding to 58.4%, up 280 basis points year-over-year [8] Market Data and Key Metrics Changes - The used vehicle performance outperformed the industry, with value segments delivering a 22.3% unit increase year-over-year [7] - In the UK, SG&A as a percentage of gross profit was high, reflecting market challenges and labor costs [9][18] Company Strategy and Development Direction - The company aims to capture market share and increase customer loyalty, focusing on high ROI used vehicles and after-sales services [5][11] - Strategic acquisitions remain a core pillar, with a target of $2 billion acquisition revenue estimate for 2025 [12][13] - The company is focused on investing where it can create the most shareholder value, prioritizing share repurchases and selective acquisitions [11][21] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong top-line growth across all business lines and emphasized the importance of cost control and operational efficiency [4][5] - The company is optimistic about its ability to convert momentum into share gains and sustained cost efficiency [5][20] - Management acknowledged challenges in the UK market but expressed confidence in the team's ability to respond effectively [18][27] Other Important Information - The company reported adjusted SG&A as a percentage of gross profit at 67.9%, reflecting cost discipline despite normalization of GPUs [17] - Financing operations income was $19 million in the quarter, with a net interest margin of 4.6%, up 70 basis points year-over-year [19] Q&A Session Summary Question: Discussion on EV inventory and sales - Management noted that electrified vehicles constituted 43% of total new car mix, with significant sales driven by federal incentives and manufacturer support [23][24] Question: Overview of the used market and subprime impact - Management indicated that the used car market presents opportunities, particularly in the value auto segment, which is driven by higher credit quality customers [30][31] Question: UK market performance and regulatory environment - Management discussed challenges in the UK, including labor costs and market conditions, but highlighted improvements in parts and service profitability [26][27] Question: U.S. versus UK performance comparison - Management reported strong performance in the U.S. with significant growth in used cars, while UK profitability was only slightly down year-over-year [49][50] Question: M&A opportunities and targets - Management confirmed a hard target of $2 billion in acquisitions for the year, emphasizing a disciplined approach to capital allocation [53][56]

Financial Performance & Growth - Lithia & Driveway (LAD) achieved a 10-year Revenue Compound Annual Growth Rate (CAGR) of 16%[10, 14] - LAD's Adjusted Earnings Per Share (EPS) increased by 494% from 2015 to YTD 2025[10] - Revenue per share grew by 507% from 2015 to YTD 2025[10] - Total Shareholder Return increased by 273% from 2015 to YTD 2025[12] - The company aims for $2 EPS per $1 billion of Revenue[15] Strategic Goals & Market Position - LAD targets 100% national coverage[11] - The company operates within a $3 trillion+ market[14, 21] - LAD's platform provides access to a 70% larger market than traditional franchise auto dealers[22] - Driveway Finance Corporation (DFC) portfolio size is projected to reach $17 billion in the long-term[50] Operational Efficiency & Capital Allocation - LAD is improving operating efficiency, targeting SG&A as a percentage of gross profit in the mid-50% range in the long term[17, 27] - In the first nine months of 2025, the company allocated $662 million to share repurchases at an average price of $313 per share[36] - LAD's capital allocation strategy directs capital towards growth and expansion[36]

Core Insights - Lithia Motors exceeded Q3 revenue and EPS estimates, indicating strong performance in the automotive sector [1] Group 1: Financial Performance - The company reported robust used vehicle sales, contributing significantly to revenue growth [1] - There was an expansion in high-margin after-sales growth, further enhancing profitability [1] Group 2: Market Position - The strong performance in Q3 positions Lithia Motors favorably within the competitive automotive market [1]

Lithia & Driveway (LAD) Reports Record Third Quarter Revenue of $9.7 billion, Achieves 11% Increase in Diluted Earnings Per Share, 17% Increase in Adjusted Diluted Earnings Per Share ________________________________________________ Announces Dividend of $0.55 per Share for Third Quarter Medford, Oregon, October 22, 2025 - Lithia & Driveway (NYSE: LAD) today reported the highest third quarter revenue in company history, and a 11% increase in diluted earnings per share compared to the same period in 2024. Thi ...