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]

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]

Core Insights - Carvana Co. is transforming the used car buying and selling process through a focus on selection, pricing, quality assurance, transparency, and a pressure-free experience [1] - The company leverages proprietary technology and a vertically integrated model to maintain a lower variable cost structure compared to traditional dealerships, enhancing customer value [1] E-commerce Trends - E-commerce has grown to approximately 18% of non-automotive retail transactions in 2023, with the automotive sector expected to increase its digital penetration as consumer comfort with online purchases rises [2] Market Opportunities - The fragmented used vehicle market presents significant growth opportunities for Carvana, which plans to utilize its e-commerce and logistics infrastructure to expand monetization through additional products and services [3] - The company aims to address various points in the car buying and ownership cycle, including vehicle service contracts and auto insurance, supported by its technological capabilities [3] Competitive Landscape - Unlike Carvana's exclusive online model, competitors like Group 1 Automotive and Lithia Motors integrate digital features into their traditional dealership networks [4] - Group 1's AcceleRide platform allows customers to purchase vehicles entirely online, while Lithia's Driveway platform offers a comprehensive vehicle ownership experience [5][6] Financial Performance - Carvana's stock has outperformed the Zacks Internet – Commerce industry, with a year-to-date share price increase of 63.3%, compared to the industry's 11.4% growth [7] - The company is currently trading at a forward price/sales ratio of 3.42, which is higher than the industry's 2.17, indicating a potentially overvalued position [10] Earnings Estimates - The Zacks Consensus Estimate for Carvana's EPS has increased by 5 cents for 2025 and 8 cents for 2026 over the past week, reflecting positive revisions in earnings expectations [11]

Core Insights - Lithia Motors, Inc. (LAD) reported strong preliminary financial results for Q2 2025, with expected earnings per diluted share between $9.70 and $10.00, reflecting a year-over-year increase of 23-27% [1][9] - The company's revenue is projected to be between $9.4 billion and $9.6 billion, driven by a same-store total revenue growth of 3.5% to 4.0% [2][9] - Lithia's financing operations showed significant year-on-year growth of 110-155%, contributing income between $15 million and $18 million [2] Business Strategy and Performance - Lithia's integrated business model, including diverse revenue streams, has demonstrated earnings growth and scalability, outperforming peers with flat results [3] - The company has effectively created synergies through its diversified lines, including Driveway, GreenCars, and Driveway Finance Corporation, enabling growth across various customer channels [3] - Lithia has repurchased 3% of its outstanding shares this year, with 1.5% repurchased in the latest quarter, indicating a disciplined approach to capital allocation [4] Acquisitions and Growth - In 2025, Lithia has acquired $400 million in annualized revenues, including two Mercedes-Benz dealerships in Tennessee and Mississippi, contributing to its growth strategy [4][9] - The company is on a path of acquisitions to secure steady revenues, benefiting from a varied product mix [4] Market Performance - Lithia's shares have increased by 25.3% over the past year, outperforming the industry average growth of 15.5% [6]