Lithia Motors(US:LAD)2025-10-22 15:00Financial 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]