LAD

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Delivered 9% adjusted EPS growth by leveraging a diversified model where used vehicle and after-sales profitability offset cyclical softness in new vehicle volumes. - Achieved resilient total vehicle GPU of $3,958 through pricing discipline, despite same-store revenue declines as the company lapped high prior-year comparisons. - Used vehicle gross profit grew 9.3%, driven by a 44% GPU increase in the core 3-to-8-year-old vehicle segment, supported by dynamic AI pricing tools. - After-sales margins expanded 100 basis points to 59.5%, anchored by a 200-basis-point increase in lifetime oil contract attachment, enhancing long-term customer retention. - North American same-store SG&A as a percentage of gross profit improved 50 basis points sequentially, reflecting structural changes including role consolidation and automation. - The U.K. platform demonstrated strong execution with 7% gross profit growth, specifically benefiting from expanded partnerships with Chinese OEMs and AI-driven service efficiencies. - Management maintains a long-term target of $2 in EPS for every $1 billion in revenue, supported by the scaling of high-margin captive finance and digital platforms. - The rollout of Pinewood.AI across North American stores is expected to be completed by the end of 2028, with significant SG&A leverage anticipated 12-24 months post-integration. - Driveway Finance Corporation (DFC) is projected to continue its profitable scale, targeting a 20% penetration rate to convert vehicle sales into durable, recurring income. - Capital allocation will remain balanced between opportunistic share repurchases, given current valuation discounts, and disciplined M&A targeting 15%-30% of revenue. - Q4 outlook assumes typical seasonal softness in the U.K. and Snow Belt regions, though management expects momentum from cleaner inventory levels and easing year-over-year comparisons. - Completed the acquisition of four stores in Memphis, Tennessee, adding $250 million in expected annualized revenue to the Southeast region. - Recognized a meaningful valuation gain following the acquisition of Pinewood.AI by Ridgeview Partners, while maintaining strategic alignment for North American software rollout. - Net leverage was reduced to 3.1x, moving closer to the long-term target of below 3.0x to support a pathway toward investment-grade status. - Management noted that while new vehicle affordability remains a cyclical headwind, the impact is partially mitigated by manufacturers attempting to reach lower price points to gain market share, though manufacturer incentives have not yet seen significant improvement and potential lease penetration recovery. - Management expects the drive toward sub-60% SG&A to trail the Pinewood rollout by 12-24 months as efficiencies in service and back-office operations materialize. - Early results in the U.K. show 10-11% additional 'pre-sales' in service departments driven by AI-automated customer interactions. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management views $2,000 as a sustainable floor for used GPU heading into 2027, despite potential sequential softening in Q4. - Lithia currently prices used inventory approximately 5% below one-price retailers like CarMax, representing a 'GPU reserve' as they improve top-of-funnel digital reach. - While successful in the U.K., management is taking a 'wait and see' approach in Canada due to higher real estate costs and exclusive franchise requirements that extend break-even timelines. - Success in the U.K. with Chinese brands was attributed to solving for consumer affordability rather than just sustainability (BEVs). - Management clarified that Lithia was in compliance well before recent enforcement actions, as they have historically maintained full transparency on doc fees. - They expect the enforcement to benefit transparent retailers by forcing less-transparent competitors to disclose their true pricing upfront. - Delinquency rates improved 20% year-over-year across the credit stack, reflecting disciplined underwriting with an average FICO of 752. - Management utilizes a risk-adjusted NPV basis for each contract to balance store support with profitability as funding costs fluctuate.

This article first appeared on GuruFocus. - Revenue: Just shy of $10 billion in Q3 2026. - Adjusted Diluted EPS: $10.34, up 9% year over year. - Same-Store Revenue: Declined 1.4%, lapping ~8% growth in Q3 2025. - Total Vehicle GPU: $3,958, down $63 year over year. - Used Vehicle Gross Profit: Up 9.3% year over year; used GPU of $1,993, up 13% ($234) year over year; core 38-year-old GPU up 44%. - New Vehicle Revenue: Declined 2.6% on 2.7% fewer units; import units +0.8%, domestic -8.8%, luxury -2.9%. - Aftersales Gross Profit: Up 2.4%; margins expanded 100 bps to 59.5%; gross profit grew for eighth consecutive quarter. - F&I Per Unit: $1,736, down 4.7% year over year. - Adjusted SG&A: 68.5% of gross profit, in line with Q2; North America same-store SG&A 65.7% (improved 50 bps sequentially). - DFC Finance Operations Income: $32 million, up nearly 70% year over year; average managed receivables grew 22% to $5 billion. - DFC Originations: $937 million; net interest margin 4.7% (up 10 bps); North American penetration 18.3%; average origination FICO 752; front-end LTV 94.6%; allowance for loan losses 2.8% of receivables (down from 3.1%). - U.K. Performance: Gross profit up 7%; aftersales profit up 13.6%; new vehicle units +10.6% and new vehicle gross profit +8.5%; used retail units +4.6% and used GPUs +4.9%. - Adjusted EBITDA: $443.5 million, up 1.3% year over year. - Adjusted Cash Flow from Operations: $377 million for the quarter, up 12%; year-to-date $987 million. - Share Repurchases: 246,317 shares at average price of $345 ($85 million); share count 11% lower year over year; year-to-date returned over $627 million via buybacks and dividends. - Net Leverage: 3.1x, down from 3.2x in Q2; long-term target below 3x; bank covenant limit 5.75x. - Acquisitions/Divestitures: Acquired four Gossett Hyundai and Kia stores in Memphis (~$250 million expected annualized revenue); year-to-date acquired $1.2 billion in annualized revenue and divested ~$250 million of underperforming revenue. - Warning! GuruFocus has detected 8 Warning Signs with LAD. - Is LAD fairly valued? Test your thesis with our free DCF calculator. Release Date: October 21, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Adjusted diluted EPS of $10.34, up 9% year over year, demonstrating earnings growth in a mixed retail environment. - Used vehicle GPU increased 13% to $1,993, with core 3-8 year old vehicle GPU up 44%, driven by dynamic AI pricing. - Driveway Finance Corporation (DFC) finance operations income rose nearly 70% to $32 million, with managed receivables up 22% and improved credit performance. - Aftersales gross profit grew for the eighth consecutive quarter, with margins expanding 100 basis points to 59.5%. - North America same-store SG&A as a percentage of gross profit improved 50 basis points sequentially to 65.7%, likely sector-leading. - U.K. operations delivered gross profit up 7%, with aftersales profit up 13.6% and new vehicle units up 10.6%. - Adjusted cash flow from operations was $377 million for the quarter, up 12% year over year, supporting share repurchases and acquisitions. - Share count reduced by 11% year over year through buybacks, benefiting EPS. - Net leverage improved to 3.1x from 3.2x, moving toward long-term target of below 3x. - Acquisitions year-to-date added $1.2 billion in annualized revenue, with disciplined purchase price multiples. - Same-store revenues declined 1.4% year over year, reflecting a challenging comparison to prior year's 8% growth. - New vehicle revenues declined 2.6% on 2.7% fewer units, with domestic units down 8.8% and luxury down 2.9%. - F&I per unit declined 4.7% year over year to $1,736, partly due to DFC penetration shifting F&I income. - Adjusted SG&A as a percentage of gross profit was 68.5%, above the long-term target of below 60%. - U.S. aftersales gross profit was roughly flat, with repair orders down slightly, indicating sluggishness in the segment. - Q4 is expected to be the toughest quarter due to seasonal factors and no major registration month in the U.K. - Consumer affordability concerns are creating some drag on F&I product attachment, such as service contracts. - Chinese OEM expansion in Canada faces challenges, including higher real estate costs and a 6-8 year break-even. - Pinewood.AI integration will take until end of 2028, with SG&A benefits trailing by 12-24 months. - Doc fee regulatory changes may impact competitors but not Lithia significantly; however, it adds uncertainty to the market. Q: Michael Ward of Citi asked about the gives and takes of the PAG transaction and how it relates to Lithia's valuation.A: CEO Bryan DeBoer noted PAG was taken private at roughly 12x-13x earnings, while Lithia trades at about 7.5x, leaving significant room for the stock to run. He emphasized that on a goodwill basis, typical dealership acquisitions are done at 3x-6x earnings, well below what the public market was paying for PAG, and highlighted Lithia's own diversification and larger scale as advantages. Q: Michael Ward of Citi followed up on the timing of the Pinewood.AI integration and how it maps to the path toward 65% and sub-60% SG&A targets.A: DeBoer explained that Pinewood is being rolled out manufacturer by manufacturer, with full North American integration expected by the end of 2028. The SG&A benefits typically trail the rollout by 12 to 24 months, as evidenced by the U.K., which has been on the technology for six to nine months and is now seeing meaningful cost efficiencies, particularly in service departments. Q: Rajat Gupta of JPMorgan asked about the sluggishness in U.S. aftersales and when it might recover.A: DeBoer said U.S. aftersales gross profit was up only slightly, a solid result given tough comparisons against two years of recall-driven growth from Korean and Japanese manufacturers. He pointed to AI-driven pre-sales in the U.K. generating 10%-11% additional service attach on every appointment, and said aftersales remains the single biggest opportunity in the business, with the MyDriveway portal (156,000 users) key to improving transparency and customer retention. Q: Rajat Gupta of JPMorgan asked whether capital allocation would prioritize deleveraging given leverage slightly above 3x and a potential rate hike cycle.A: DeBoer said Lithia generates nearly $1.5 billion in annual free cash flow and delevered from 3.2x to 3.1x in the quarter, with a preference for staying below 3x to support an investment-grade pathway. He noted buybacks remain the likely focus given the stock's low multiple versus costly North American acquisitions, while the company stays comfortable operating around the 3x leverage range. Q: Jeffrey Lick of Stephens asked about Q4 dynamics, including easier comparisons and whether model-year changeover inventory could pressure new vehicle GPU.A: DeBoer cautioned that Q4 is historically Lithia's toughest quarter due to Snow Belt seasonality and the lack of a major U.K. registration month, though December and year-end model changeovers help. He said inventory is clean at roughly 60 days' supply and well-positioned, so he does not expect abnormalities in Q4 GPU trends. Q: Jeffrey Lick of Stephens asked about the balance between used vehicle units and profitability, and the pricing gap versus Carvana and CarMax.A: DeBoer said Lithia remains about 5% below Carvana and CarMax on aggregate pricing, representing roughly $1,500 per unit on a $30,000 car, which is the prize of building a larger funnel through Driveway and GreenCars. Core 3- to 7-year-old vehicle GPU rose $500 year-over-year, though certified GPU fell $300-$400, and he noted fewer than a quarter of stores have micro funnels efficient enough to hold pricing at market levels. Q: John Saager of Evercore ISI asked whether roughly $2,000 used vehicle GPU is a new floor heading into 2027.A: DeBoer said that is absolutely accurate for 2027, though Q4 could see modest sequential softening due to normal used market seasonality. He framed the $1,500-per-unit gap to one-price retailers as a roughly $500 million opportunity across 350,000 units, and said many stores still underprice vehicles too early rather than letting core product season in the market. Q: Daniela Haigian of Morgan Stanley asked about agentic AI and its impact on the traditional dealership model.A: DeBoer said agentic AI should let team members focus on building customer relationships while automation handles repetitive tasks like service pre-sales. He expects roughly half of the planned 1,000-basis-point SG&A reduction (from sub-70% to sub-60%) to come from agentics, with the remainder from volume improvements and underperforming stores adopting practices like older used inventory and non-OEM parts post-warranty. Q: Daniela Haigian of Morgan Stanley asked whether DFC has seen any consumer behavior changes amid higher rates.A: SVP of Finance Chuck Lietz said DFC has seen no change in consumer behavior, with the book maintaining high credit quality and delinquency rates running about 20% better year-over-year across the credit stack. He attributed this to preferential selection on a risk-adjusted return basis and said DFC expects that performance to continue. Q: Mark Jordan of Goldman Sachs asked what drove the second consecutive raise in the midterm outlook for financing operations income.A: Lietz cited two drivers: consistent preferential selection of high-quality portfolio assets with market outperformance on charge-offs and delinquencies, and strong growth with originations approaching $1 billion in the quarter as penetration nears the 20% target. He said DFC should remain consistent, predictable, and repeatable in its growth, absent seasonal charge-off adjustments. Q: Robert Saltzman of UBS asked how DFC balances passing through higher funding costs to customers versus absorbing them to drive sales.A: Lietz acknowledged a time lag between rising cost of funds and what the market will bear, but said DFC underwrites each contract individually on a fully risk-adjusted NPV basis to ensure profitability for Lithia and Driveway. He said this approach lets DFC support store volumes and customer needs while remaining profitable on a risk-adjusted basis. Q: Bret Jordan of Jefferies asked about the U.K. business, including the Chinese OEM contribution to growth and whether more Chinese brands could be added.A: DeBoer said about half of the U.K.'s growth is coming from Chinese brands, alongside strong luxury franchise performance (BMW, Porsche, Mercedes, Land Rover) and exceptional used vehicle execution in mainstream brands. He noted the first seven For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Lithia Motors stock just dropped 10% today, yet the fresh Q3 2026 release shows a very different story. The auto retailer delivered about US$9.9b in revenue and basic earnings per share of US$13.23, alongside record income from its in house Driveway Finance Corporation. Traders focused on the headline price hit. Long term investors will likely zero in on a different angle: the growing weight of interest costs on a balance sheet that already carries higher leverage and now has to support a larger, finance heavy ecosystem. Like the scale of Lithia Motors' earnings but uneasy about the rising leverage and financing exposure on that balance sheet? Scan the list of solid balance sheet and fundamentals stocks (25 results) to compare LAD against businesses that pair lending activity with sturdier debt profiles. - Revenue (Q3 2026 vs. Q3 2025): US$9.95b vs. US$9.68b (top line edged higher year on year) - Net Income, excl. extra items (Q3 2026 vs. Q3 2025): US$291.1m vs. US$217.1m (profit rose on a like for like basis) - Basic EPS (Q3 2026 vs. Q3 2025): US$13.23 vs. US$8.62 (earnings per share increased strongly) - Trailing 12 month Net Income, excl. extra items (Q3 2026 vs. Q3 2025): US$788.4m vs. US$895.4m (full year run rate earnings declined over the past year) Earnings tell you how Lithia Motors performed this quarter, but the cash flowing through the business is what valuation focused investors tend to watch most closely. Look at Lithia Motors' cash generation alongside its debt load and interest costs, and the stock could be a mild 6% undervalued. Bulls argue Lithia Motors can keep lifting earnings power by tightening costs while scaling its ecosystem around service and finance. "The main thing that has to go right is continued execution on cost reduction, Pinewood.AI rollout and store reorganization so that SG&A efficiency improves while used vehicle and aftersales volumes hold up." Q3 results partially hit that bar. Same store SG&A in North America held at 65.7% of gross profit, which supports the efficiency angle but still sits above the sub 60% long term target. Used vehicle gross profit per unit and aftersales both advanced, backing the volume and mix side of the claim. Pinewood.AI remains early, with most of the future SG&A benefit still to be proved in North America. One Narrative has put a figure on that disagreement. → See the Narrative with its higher Fair Value, assumptions and all. Bears frame Lithia Motors as racing the clock on cost and mix upgrades while legacy dealerships lose steam. "Even as aftersales contributes over 40% of total gross profit with margins near 59% and broad based growth in customer pay and warranty work, the ongoing decline in same store revenues and total gross profit in Q1 and Q2 2026 signals that strength in fixed operations may not fully offset weaker vehicle sales, which could cap future revenue growth and constrain net margin improvement." Q3 same store revenue fell 1.4%, and new vehicle revenues declined 2.6% on fewer units. Aftersales and used GPUs helped earnings; however, adjusted SG&A stayed elevated at 68.5% of gross profit. That mix shift softens the blow but does not fully disprove the worry that weaker dealership throughput and high overhead still limit margin headroom. Lithia Motors recently showed how earnings results and share prices can move differently on the same day. The real opportunity is studying stocks that could be undervalued before changing fundamentals are fully recognized. - Company 1 - 22% below our estimate - ties AI infrastructure, productivity software and developer tools into a single paid workflow embedded in large enterprise processes. - Company 2 - 38% below our estimate - converts a growing advisory pipeline and senior hiring into higher value, complex fee mandates across capital and private markets. - Company 3 - 31% below our estimate - tightens operations and reshapes its portfolio so more aftermarket and nuclear work contributes to a higher margin business mix. Three companies from the same screener. Open the full list of 33 companies trading below our fair value estimates → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LAD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

- Interested in Lithia Motors, Inc.? Here are five stocks we like better. - Q3 revenue was just under $10 billion and adjusted EPS rose 9% to $10.34. Growth in used vehicles, aftersales and financing offset weaker new-vehicle sales, which fell 2.6% on a 2.7% unit decline. - Used-vehicle and aftersales profitability strengthened. Used gross profit per unit increased 13% to $1,993, while aftersales gross profit rose 2.4% and margins expanded to 59.5%; management expects used-vehicle gross profit per unit to remain near $2,000 into 2027. - Driveway Finance Corporation delivered significant growth, while Lithia continued shareholder returns and expansion. Finance operations income rose nearly 70%, managed receivables reached $5 billion, and Lithia repurchased $85 million of shares; the company also acquired four Memphis dealerships expected to add $250 million in annualized revenue. - Lithia's Record Quarter Keeps the Bull Case Alive Lithia Motors (NYSE:LAD) reported third-quarter revenue just below $10 billion and adjusted diluted earnings per share of $10.34, up 9% from a year earlier, as growth in used vehicles, aftersales and financing operations helped offset softer new-vehicle results. Chairman and Chief Executive Officer Bryan DeBoer said same-store revenue declined 1.4% against a comparison period in which revenue rose nearly 8%. Total vehicle gross profit per unit was $3,958, down $63 year over year. Lithia's used-vehicle gross profit increased 9.3%, while aftersales gross profit rose 2.4%. → Tesla's Roadster Reveal Hints at 2 Much Bigger Moves - These 4 Mid-Caps Just Announced Big Buyback Plans New-vehicle revenue declined 2.6% as unit sales fell 2.7%. Import-brand units increased 0.8%, while domestic units fell 8.8% and luxury units declined 2.9%. DeBoer characterized the conditions as cyclical and said comparisons should ease in the fourth quarter. Used-vehicle profitability was a key contributor. Used gross profit per unit increased 13%, or $234, year over year, to $1,993. DeBoer said profitability in the company's core category of three- to eight-year-old vehicles increased 44%, supported by its dynamic AI pricing efforts. → Aurora Rejects Curaleaf's Higher Bid, But the Takeover Fight Isn't Over - Ladder Corporation: Climbing Higher And Paying 9% Yield During the question-and-answer session, DeBoer said Lithia expects used-vehicle gross profit per unit to remain around $2,000 as a baseline into 2027, though he noted that the used-vehicle market typically softens in the fourth quarter and could produce a sequential decline. Aftersales margins expanded by 100 basis points to 59.5%, with the company reporting its eighth consecutive quarter of aftersales gross-profit growth. In North America, nearly one in four customers chose lifetime oil contracts, an increase of more than 200 basis points from the prior year, according to DeBoer. → Could Quantinuum's Breakthrough Make Its Sell-Off a Bargain? Responding to questions on service demand, DeBoer said customer-pay revenue was flat, warranty revenue increased 6.1%, wholesale parts revenue fell 4.3%, and collision revenue declined 1.5%. Customer-pay gross profit was flat, while warranty gross profit rose 10%. He said warranty growth benefited partly from franchise-law changes in Florida, New Jersey and Virginia affecting technician compensation. Driveway Finance Corporation, Lithia's captive finance operation, generated $32 million in finance operations income, an increase of nearly 70% from a year earlier. Average managed receivables rose 22%, reaching $5 billion. Chief Financial Officer Tina Miller said DFC originated $937 million during the quarter and recorded a 4.7% net interest margin, up 10 basis points year over year as funding costs improved with scale. North American penetration reached 18.3%, approaching the company's target of 20% or more. DFC's average origination FICO score was 752 and front-end loan-to-value was 94.6%. Its allowance for loan losses stood at 2.8% of receivables, down from 3.1%. Senior Vice President Chuck Lietz said the finance portfolio continued to perform well, with delinquency rates 20% better across the credit spectrum on both a year-over-year and sequential basis. He said DFC evaluates contracts individually on a risk-adjusted net-present-value basis as it balances potential funding-cost increases with supporting dealership sales. Adjusted selling, general and administrative expense was 68.5% of gross profit, unchanged from the second quarter. In North America, same-store SG&A was 65.7% of gross profit, improving 50 basis points sequentially. Lithia continues to target global SG&A below 60% of gross profit. DeBoer said the rollout of Pinewood.AI across North American stores is expected to be completed by the end of 2028 and that cost benefits could trail the rollout by 12 to 24 months. He said roughly half of the projected 1,000-basis-point reduction to a sub-60% cost structure is expected to come from agentic AI, with the balance coming from volume improvement and operational changes at underperforming stores. The company's U.K. business posted gross-profit growth of 7%, led by a 13.6% increase in aftersales gross profit. New-vehicle unit sales rose 10.6% and new-vehicle gross profit increased 8.5%, aided by partnerships with Chinese manufacturers. Used retail units increased 4.6% and used-vehicle gross profit per unit rose 4.9%. DeBoer said about half of the U.K.'s recent growth was attributable to Chinese brands, while the company also continued to grow luxury franchises including BMW, Porsche, Mercedes and Land Rover. Adjusted EBITDA was $443.5 million, up 1.3% year over year. Adjusted cash flow from operations totaled $377 million for the quarter, a 12% increase from a year earlier, bringing the year-to-date total to $987 million after adjusting for a first-quarter floor-plan-related benefit. Lithia repurchased 246,317 shares for $85 million during the quarter at an average price of $345 per share. The company said it has returned more than $627 million to shareholders through buybacks and dividends year to date, while its share count was 11% lower than a year ago. Net leverage declined to 3.1 times from 3.2 times at the end of the second quarter. Miller said Lithia remains focused on returning below its long-term target of three times leverage while preserving flexibility for repurchases and acquisitions. During the quarter, the company acquired four Gossett Hyundai and Kia stores in Memphis, Tennessee, which Lithia expects to contribute $250 million in annualized revenue. Year to date, Lithia has acquired $1.2 billion in annualized revenue and divested approximately $250 million of underperforming revenue. Lithia Motors, Inc is an automotive retailer headquartered in Medford, Oregon. Operating under the Lithia & Driveway name, the company sells new and used vehicles through a network of franchised dealerships and digital retail channels. Its dealerships represent a broad range of domestic, Asian and European automotive brands. In addition to vehicle sales, Lithia provides related services including vehicle financing and insurance products, parts and maintenance, collision repair, and other after-sales support. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Lithia Motors (LAD) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Lithia Motors (LAD) came out with quarterly earnings of $10.34 per share, beating the Zacks Consensus Estimate of $9.7 per share. This compares to earnings of $9.5 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +6.60%. A quarter ago, it was expected that this auto dealership chain would post earnings of $8.67 per share when it actually produced earnings of $10.03, delivering a surprise of +15.69%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Lithia Motors, which belongs to the Zacks Automotive - Retail and Whole Sales industry, posted revenues of $9.95 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 2.40%. This compares to year-ago revenues of $9.68 billion. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Lithia Motors shares have lost about 11.8% since the beginning of the year versus the S&P 500's gain of 12.4%. While Lithia Motors has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Lithia Motors was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $8.45 on $9.25 billion in revenues for the coming quarter and $35.60 on $38.17 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Retail and Whole Sales is currently in the bottom 1% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Penske Automotive (PAG), another stock in the same industry, has yet to report results for the quarter ended September 2026. This auto dealership chain is expected to post quarterly earnings of $3.44 per share in its upcoming report, which represents a year-over-year change of +6.5%. The consensus EPS estimate for the quarter has been revised 5% lower over the last 30 days to the current level. Penske Automotive's revenues are expected to be $8.04 billion, up 4.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wed, Oct 21, 2026 - Senior Director of Finance and Investor Relations - Jardon Jaramillo - Chairman and Chief Executive Officer - Bryan DeBoer - Senior Vice President and Chief Financial Officer - Tina Miller - Senior Vice President - Chuck Lietz - Operations President - Scott Cooke Operator: Please note this conference is being recorded. I will now turn the conference over to Jardon Jaramillo, Senior Director of Finance. Thank you. You may begin. Jardon Jaramillo: Good morning. Thank you for joining us for our third quarter earnings call. With me today are Bryan DeBoer, Chairman and CEO, Tina Miller, Senior Vice President and CFO, Chuck Lietz, Senior Vice President, and Scott Cooke, Driveway Finance Corporation and Southeast Region Operations President. Today's discussion may include statements about future events, financial projections, and expectations about the company's products, markets, and growth. Such statements are forward-looking and subject to risks and uncertainties that could cause actual results to materially differ from the statements made. We disclose those risks and uncertainties we deem to be material in our filings with the Securities and Exchange Commission. We urge you to carefully consider these disclosures and not to place undue reliance on forward-looking statements. We undertake no duty to update any forward-looking statements that are made as of the date of this release. Our results discussed today include references to non-GAAP financial measures. Please refer to the text of today's press release for a reconciliation of comparable GAAP measures. We have also posted an updated investor presentation on our website, investors.lithiadriveway.com, highlighting our third quarter results. With that, I'll turn the call over to Brian. Bryan DeBoer: Thank you, Jardan. Good morning and welcome to our quarterly earnings call. Our third quarter again demonstrated what makes Lithia and Driveway different. We delivered revenues just shy of $10 billion and adjusted diluted EPS of $10.34, up 9% from last year, growing earnings in a mixed retail environment. Our leaders continued to capture the profitability of our diversified and durable model, delivering quality results in any environment. During the quarter, same-store revenues declined 1.4%, a resilient result as we lapped revenue growth of nearly 8% in the third quarter of 2025. Our gross profit comparison was the best of 2026, and we exited the quarter with good momentum. Total vehicle GPU of $3,958 was down only $63 year over year, reflecting strong pricing discipline. Our teams responded dynamically to the market, and our progress puts us in position to accelerate our growth, diversification, and results going forward. As a reminder, all vehicle operations results from this point forward are on a same-store basis. Used vehicle profitability was strong, with GPU up 13%, or $234 year-over-year. In North America, same-store SG&A as a percentage of gross profit improved 50 basis points sequentially, reflecting our ongoing focus on cost controls. Driveway Finance Corporation continues to grow, delivering finance operations income of $32 million, an increase of nearly 70% over last year, as average managed receivables grew 22% and provision expenses also improved. Our model is designed so each business line reinforces the others, and this quarter demonstrated that dynamic. Our growth starts with our people who are pricing smarter and running leaner stores across our ecosystem. Every customer relationship creates recurring value after the first sale, and a vehicle we sell today brings that customer back to our service drive tomorrow and eventually returns as a trade-in, all accelerating our DFC and Driveway platforms. I want to personally thank our store and support team members for the results they delivered this quarter and the care that they show our customers each and every day. Our diversified mix continued to drive stable earnings, with used vehicle gross profit up 9.3% and after-sales gross profit up 2.4%, offsetting a modest quarter of new vehicles. New vehicle revenues declined 2.6% on 2.7% fewer units against a demanding comparison to last year's third quarter, when new vehicle revenue grew 5.5%. By category, import units grew 0.8%, domestic declined 8.8%, and luxury declined 2.9%. We view these conditions as cyclical, and as comparisons ease in the fourth quarter, our team carry a strong trajectory into year-end and the following year. In used vehicles, our pricing strategy continues to deliver, and it's a great example of our ecosystem, technology, and people all working together as one. Total used gross profit grew 9.3% year-over-year, and used GPU was 1993, led by our core three to eight-year-old vehicle category, where GPUs rose 44%. Our work on dynamic AI pricing supports improved profitability, and used vehicles remain one of our highest return businesses, providing an entry point to our ecosystem for customers at every affordability level. F&I per unit was 1736, a 4.7% decline year-over-year. As a reminder, DFC's growth shifts a portion of our F&I into captive platform, where each loan earns recurring counter-cyclical income that is three times more profitable over its lifetime. Our growing remote F&I program is demonstrating the opportunity to improve F&I attachment and customer experiences at a greatly reduced cost. Aftersales continues to anchor our resiliency with gross profit growing in each of the last eight quarters and margins expanding 100 basis points this quarter to 59.5%. Aftersales earns on every vehicle and operations, not only the ones we sell, and it is where the relationship we build at each sale keeps paying off. Lifetime oil contracts are an example of how we are building customer retention through higher attachment. With nearly one in every four North American customers now choosing to subscribe, up more than 200 basis points over last year. We're building on that improved retention in our service lanes, reaching customers before their next service is due and getting the most value out of each of them on each visit. Adjusted SG&A as a percentage of gross profit was 68.5%, in line with the second quarter. In North America, same-store SG&A was 65.7%, likely sector-leading performance that demonstrates how our scale, diversification, and store leadership is transforming our operations. In our sales departments, we've combined roles, removed layers, and given our strongest leaders responsibilities across multiple stores and departments. Behind the scenes, automation, more efficient vendor relationship, and AI tools are also contributing. Every quarter of progress gets us closer to our global SG&A target of below 60% of gross profit, and as volumes recover, a larger share of each gross profit dollar will drop to earnings. The U.K. delivered another standout quarter with gross profit up 7%. Aftersales led the way, growing profit 13.6%. New vehicle units grew 10.6% and new vehicle gross profit rose 8.5%, helped by our expanding partnership with some Chinese OEMs. In used vehicles, retail units grew 4.6% and GPUs grew 4.9%. These results reflect strong execution by our U.K. teams and the potential of our international platform. Before we jump into finance operations, I'd like to welcome Scott Cooke, who joined us in August as our Operations President after more than 25 years at Toyota Financial Services, most recently as their President and CEO. He brings deep global leadership, industry experience running one of the largest captive finance companies in the world, and is a wonderful cultural fit to Lithia and Driveway. Welcome, Scott. Driveway Finance Corporation continues to scale profitably. With managed receivables now at $5 billion and penetration climbing towards our target of 20% or more, DFC is doing exactly what we built it to do, turning each vehicle sale into durable, stable income, a deeper, longer relationship with our customers, and a clear differentiated advantage. We keep making it easier for customers to shop, finance, and service their vehicles with us, whether in stores or online. Our stores, DFC, Driveway, and GreenCars let us serve customers however, whenever, and wherever they choose, and Pinewood.AI gives us a customer-first platform to truly deliver that experience. Ridgeview Partners' acquisition of Pinewood.AI, completed earlier this month, delivers a meaningful valuation gain on the investment this quarter while leaving our strategic alignment unchanged and providing an even brighter future for our growth. Moving team members onto one AI-native system will take cost and complexity out of the business while freeing up our teams to do what they do best, bond, build trust, and create memorable experiences with each and every customer. Now, turning to capital allocation, our approach remains the same. We put capital where it earns the best returns for our shareholders. After a very active first half, we took a more balanced approach in the third quarter, repurchasing $85 million worth of stock while funding acquisitions and maintaining balance sheet strength. Our share count is 11% lower than a year ago, and that benefit to earnings per share carries forward every quarter. Our regenerative cash flows also gives us room to strategically grow our network. A few days ago, we acquired four Gossett Hyundai and Kia stores in Memphis, Tennessee, adding $250 million in expected annualized revenues and strengthening our presence in the Southeast region. So far this year, we've acquired $1.2 billion in annualized revenue of high-quality stores while divesting a quarter billion dollars of underperforming revenue, freeing up capital to be more efficiently used. These actions make our network more diversified across brands and regions, increases efficiency, provides growth for our people, and better utilizes our capital. This growth is always underwritten with discipline and consistent execution. We target purchase prices of 15%-30% of revenue or three to six times normalized EBITDA. For more than a decade, this framework has delivered returns above 25%, which is well ahead of our 15% after-tax hurdle rate. These returns create a compelling growth opportunity in an unconsolidated industry and the scale necessary to continue to differentiate and leverage our considerable size and scale advantages. That same discipline guides how we deploy cash across the business, whether through share repurchases, acquisitions, or investments in our own operations, always building on our strong balance sheet. We head into the final quarter of the year with confidence in a higher-quality, diversified outcome. Our results came together nicely with North America SG&A improving sequentially, record third quarter DFC income, double-digit growth in used vehicle GPU, and continued after-sales growth, all adding up to high-quality earnings. These gains build on each other as we continue allocating capital prudently and we remain on track to achieving our long-term target of $2 of EPS for every $1 billion of revenue. Our teams are delivering Auto Done Easy every day, demonstrating what makes Lithia and Driveway different. With that, I'll turn the call over to Tina. Tina Miller: Thank you, Brian. Our third quarter showed continued progress, with earnings growing year-over-year and improving from the second quarter. Our cash generation remained strong, letting us invest in growth, return capital to shareholders, and maintain a healthy balance sheet, all in the same quarter. This optionality comes from our scale and the diversity of our earnings and positions us to act on opportunities in the quarters ahead. Behind all of it are leaders across our stores who stay focused on performance and on developing their people while building durable customer loyalty with each experience. As Brian mentioned, our cost discipline is holding, and on a same-store basis, adjusted SG&A was 68.5% of gross profit. The year-over-year increase primarily reflects lower gross profits in the comparison and the structural changes underway across our stores and back-office positions us to capture meaningful operating leverage as gross profit strengthens. In our stores, the sales departments are leading the way. Our leaders are aligning compensation with profitable growth, matching staffing to each store's volume, and combining roles where technology allows. Together, these changes make our teams more efficient while strengthening the experience for our customers. The same focus on efficiency is reshaping how the rest of our business runs. Our back office is getting simpler with fewer systems, fewer vendors, and less manual work. The continued rollout of Pinewood.AI marks the next phase of this transformation. We are bringing it to our North American stores deliberately at a pace that protects the experience our customers and team members count on, so the improvements we make become part of our long-term cost structure. Moving on to financing operations. As Bryan mentioned, DFC delivered another excellent quarter. Originations reached $937 million, with net interest margin of 4.7%, up 10 basis points from a year ago, as our funding costs continue to improve with scale. North American penetration reached 18.3%, continuing its steady climb. Credit performance continues to reflect our disciplined underwriting. Origination FICO scores averaged 752, and front-end LTVs held at 94.6%. Our allowance for loan losses now stand at 2.8% of receivables, down from 3.1% as the conservative approach built into DFC from the start continues to pay off. Our ability to originate at the top of the funnel is building a high-quality portfolio, and as it grows, we gain deeper access to the securitization markets, more efficient funding, and fixed costs spread across a larger earning base. With penetration still growing toward our long-term target, we see significant runway ahead and expect continued year-over-year growth and profitability. DFC is delivering on its promise, adding durable earnings that build with every loan. Next, I will discuss the strength of our cash flow and balance sheet. Reported adjusted EBITDA of $443.5 million in the third quarter, up a modest 1.3% year-over-year. Adjusted cash flow from operations, our representation of free cash flow, was $377 million for the quarter, up 12% from a year ago, bringing our year-to-date total to $987 million after adjusting for the one-time benefit related to our used vehicle floor plan in the first quarter. Cash generation from every part of our business continues to provide flexibility. In the third quarter, it supported our share repurchases, our dividend, and continued investment in our network while maintaining the strength of our balance sheet. We repurchased 246,317 shares at an average price of $345, which remains well below our view of intrinsic value. Year to date, we have returned more than $627 million to shareholders through buybacks and dividends. We ended the quarter with net leverage of 3.1 times, down from 3.2 times at the end of the second quarter, moving back toward our long-term target of below three and well under our bank covenant limit of 5.75 times. This measure excludes floor plan debt, which is secured by our vehicle inventory, unique to our industry, and integral to how we operate. Consistent with industry practice, we treat floor plan interest expense as an operating expense in EBITDA and leave the related debt out of our leverage calculation. We also exclude the ABS warehouse lines and term securitizations that fund DFC. As we finish the year and look ahead to 2027, we maintain a balanced approach to capital allocation. This means we can repurchase shares when undervalued, pursue acquisitions that meet our return hurdles, and extend the reach of our ecosystem and keep the balance sheet ready for opportunity. Our opportunistic strategy lets us create value in any market while continuing to strengthen and diversify our network. With our shares continuing to trade at a deep discount, buybacks remain attractive. Our progress this quarter reflects the continued evolution of our business. Changes in the way our stores operate are increasingly reflected in our cost structure, and as Pinewood.AI comes to North America, the path to our long-term SG&A targets gets clearer. Our ecosystem keeps doing what we designed it to do: strengthen the relationship with our customers at every touch point. Our capital allocation stays disciplined, directing every dollar to its highest return while protecting the strength of our balance sheet. We're confident our teams keep turning this momentum into lasting value for our shareholders. This concludes our prepared remarks. With that, I'll turn the call over to the operator for questions. Operator? Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. Our first question is from Michael Ward with Citi. Please proceed. Michael Ward: Thanks very much. Good morning, everyone. Bryan DeBoer: Morning, Mike. Michael Ward: Brian, I wonder if you could provide some of the gives and takes as you've evaluated the PAG transaction and how it relates to Lithia. Bryan DeBoer: Great question, Mike. It's neat to see that the valuation that they were receiving prior to going private was starting to look respectable at 12 to 13 times earnings. I think one of the big things is, and I don't mean to speak for Roger by any means, but I imagine when you look at the marketplace and look outside the public companies and then look at yourself when you're looking at your actual goodwill multiples of somewhere around three to six times earnings, once you strip out all the equity in the companies, that he bought that company for somewhere much less than what the marketplace's actual goodwill is relative to what typical car guys buy stores for, and obviously with a lot of nice luxury stores and diversification, it looks pretty good. I would also comment that Lithia Motors is quite diversified as well. We obviously are sizably larger than what PAG was. And obviously at 7.5 times multiple, there's a lot of growth for us and gives, I think, a lot of our shareholders some confidence that there's a lot of room for our stock to run. Michael Ward: Yeah, that's certainly what it seems like. Switching to the business at hand, you kind of alluded to the Pinewood integration would be by the end of 2028. Is that kind of a gradual process? When I looked at that chart on page nine in your chart deck, as you get to these 65% and even 60% SG&A levels, is that the type of thing we'll see the progress as Pinewood gets integrated? Is that the right timing that it goes gradual through the next two years with the full integration throughout the North American market? Bryan DeBoer: Yeah, great question, Mike, as well. The Pinewood integration is being rolled out pretty much by manufacturer because the APIs are developed by manufacturer, and should happen by the end of 2028. We're pretty good at that transition, but we would also say that the lowering of SG&A that's driven by AI or by the Pinewood solutions and customers and team members being in the same environment will typically follow that. The U.K. currently is doing a nice job reducing their cost structures, especially in their service departments, and gaining some really nice efficiencies, and it's starting to become pretty effective. They've been on that technology for about six to nine months, and we're just now starting to see some of those nice gains that I mentioned in the script. So all in all, I would say that the drive to a sub 60% SG&A will trail the rollout of the Pinewood stores probably by 12 to 24 months. Michael Ward: Okay. That's the direction that we'll see over the next couple of years, and the Pinewood is a big part of that. Bryan DeBoer: It sure is. Michael Ward: Thank you, Brian. Thank you very much. Bryan DeBoer: Thanks, Mike. Operator: Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group. Please proceed. Ryan Sigdahl: Hey, good morning, Ryan, Tina. Tina Miller: Hi, Ryan. Tina Miller: Morning. Ryan Sigdahl: I want to start on the new GPU side. Heard from one of your peers intra-quarter, they expected a much more significant step down in GPU sequentially. Looking at your numbers, much less of a moderation. Curious how you saw regional performance stack up, company specific performance stack up, and then anything else to call out. Bryan DeBoer: Sure, Ryan. We've had pretty resilient new car GPU, and obviously, part of the reflection of that can also be seen on the used car GPU because you're taking a trade on those new cars and it's reflective on the other side. So we're pretty pleased about our ability to price vehicles and create demand top of funnel to be able to find the right customers that can pay us the appropriate prices for the cars that we're looking at. The market feels pretty good. In terms of regional differences, it could be that greater exposure to The higher doc fee states that some of our peers have may influence their GPUs a little bit more, but ultimately we're seeing pretty good results across the company, and hopefully that will continue. Ryan Sigdahl: Good segue into my next question on doc fees, Brian. FTC enforcement actions, more discussion there, specifically doc fees. Just clear the air on what you guys are hearing. Then you mentioned it, but primarily West Coast, but a lot of Lithia's footprint are in lower doc fee states. Just talk through how that flows through GPUs and from a financial standpoint. Bryan DeBoer: Yeah. Doc fees are part of GPU. They're just embedded in GPU, and I think the important thing to note is the FTC's enforcement rules that were clarified in, I believe it was February and March. Lithia and Driveway was obviously in compliance way before that, years before that, and have typically always disclosed those doc fees across the country. So anything that you saw with us, if there was changes in a few stores, they happened in Q2. So I'd be surprised if there's big differences between Q2 and Q3 because the enforcement action, if there was changes, it had to be there. The biggest thing that it does is with competitors that are a little less transparent on their pricing and how they get to their ultimate pricing, it should make those that were fully transparent and were disclosing a hypothetical $500 to $1,000 doc fee, it should allow them to be more competitive in the long run. In fact, it should have been shown even in Q2. Ryan Sigdahl: Helpful. Thanks, Brian. Good luck, guys. Bryan DeBoer: You bet, Ryan. Thanks. Operator: Our next question is from Rajat Gupta with JPMorgan. Please proceed. Rajat Gupta: Hey, good morning. Thanks for taking the questions. Just wanted to start with parts and services. If I heard correctly, I think you mentioned U.K. was up 14%, which would imply U.S. after sales probably flat, maybe slightly up. I am curious to get your thoughts on what driving some of the sluggishness there. Not just for you guys, but also hearing the same from some of your peers as well. When can we expect the U.S. after sales business to start recovering again? Any outlook comments you can give would be helpful. I have a quick follow-up. Bryan DeBoer: Sure, Raj. I think the U.K., and I'll start with that at the low teens. We're seeing that our AI in the U.K. is generating additional business. It's coming from, and I was on the phone with Neil and Richard and their teams earlier this week, and they shared that the idea of a presale is something that is making a difference in their revenue base. Meaning when the customer books the appointment with the AI, the AI is consistently asking for additional service things to be done, like windshield wipers, like, "Oh, yeah, I probably need my fluids changed." "Oh, yeah, I need this." We're getting around 10%-11% additional presales on every AI. If I had to guess, before the AI went in, I'll bet we had close to zero. Okay? Because most of our upselling is done once we do an inspection. Okay? That's a big difference. So they are getting some pretty good lift, and it's something that we're trying to figure out how to accelerate some of that AI in America, even before all the stores have the Pinewood acquisition. So we'll see how that goes. In terms of, and I think you're probably right, Rajat, that in the U.S., we were probably up slightly in terms of gross profit in aftersales. I think relatively speaking, that's probably a pretty solid number, knowing that we're compounding two years of pretty good same-store sales increases that were mainly driven off some pretty large recalls with a few of the Korean manufacturers and a few of the other Japanese manufacturers. So I think all in all, with what was dealt us, that's a pretty good number, relatively speaking. But again, Rajat, I'll sit here and say that when I look at our business and I look at the opportunities that are afforded us, it's the single biggest area in our business that we have lots of opportunity to delight customers. Okay? We need to do that through creating personalized experience the way each customer individually wants to be treated. Okay? We've got good transparency. We've got great people out there. We just need to open up our ears and our eyes and figure out what they're really asking for and give it to them quicker and less costly than what others can. I think that's when we look forward and look at the MyDriveway portal or look at the network that we've built, that's still our big opportunity, and we'll continue to push on that. Rajat Gupta: Understood. That's helpful color. Then maybe one on just capital allocation. Given where you are from a leverage standpoint, a little above three times, and potentially entering a rate hike cycle here, is it safe to assume that the focus would be on de-levering in the near term to get to below three times and staying there? Just curious how we should think about buybacks or M&A in the near term. Bryan DeBoer: Sure, Rajat. We do produce almost $1.5 billion in free cash flows a year, and we did delever from 3.2 to 3.1 in the quarter. We do like the number of less than three times, because obviously that helps us pathway towards IG and gives us the flexibility to scale if we need to. We will continue to balance capital with a focus still probably on buybacks, knowing that acquisitions are quite costly, especially in North America. That is really the balancing act that we are always doing, is looking at the crazy PE that we trade at relative to what other transactions are at. So, we will stay focused, we will stay disciplined, and we will continue to deploy capital in the right manner and feel comfortable in that 3x leverage range. Rajat Gupta: Understood. Great. Thanks for the questions. Bye-bye. Thank you. Bryan DeBoer: Thanks, Rajat. Operator: Our next question is from Jeff Lick with Stephens Inc. Please proceed. Jeff Lick: Good morning. Thanks for taking my question. Brian, I was just curious, you use the term demanding compares for Q3. It actually kind of flips in Q4 where it has the appearance of being a little easier. I was wondering if you could address how we should think about Q4, maybe caution us about overreacting. Then, maybe building into that, new GPUs were a little weaker sequentially than we've seen in the past. One of the things we've heard is that, potentially the changeover inventory maybe got pushed out a little bit, meaning that there's going to be more 2026s on the lot this far into the quarter. Any thoughts on where GPU trends on the new side could go because of that dynamic? Bryan DeBoer: Yeah, sure. Jeff, was that first part of the question related to after-sales? That Q4 looks a little like- Jeff Lick: No. Well, it's interesting, your news comp was down 8.3 in Q4 last year, which- Bryan DeBoer: Yep Jeff Lick: You completely bucked the trend because your used comp was up 5 or 4.7. So, there's an interesting dynamic there as well. Bryan DeBoer: I gotcha. I understand the question then. I think when we think about Q4, we've basically adjusted our company with diversification of Driveway, of Driveway Finance, of GreenCars, as well as a global footprint that changes how we look at our business. We used to have a Q1 and a Q4 that were our softest quarters by a large amount, like 20%, 25% lower than Q2, Q3. We're fortunate that in the U.K., Q1 is typically a pretty strong quarter for us, just because there's such a disproportionate earnings that occurs in March in the U.K. that it helped balance out Q1. Unfortunately, Q4, and I mentioned this last quarter as well, Q4 is our toughest quarter. We not only have Snow Belt, but we have the U.K. that doesn't have a big registration month in it. We're still looking for ways to be able to strengthen Q4. Now, the good news is that Q4 does have December in it. A lot of times on year-end product or model changeovers, October can be a decent month. It's really November that can be a little bit tougher than normal. The exciting thing for us is when we look at this Q4 versus last Q4, we're starting the quarter with a nicer day supply. If you remember, even though we were up 5+% in used cars last year, we also had pretty good degradation in GPUs. I think that focus on GPUs going into Q4 can help us knowing that our day supply is looking a little better than last year. With that, I'd urge everyone to just look at our relativity of Q4 to Q3, and then you can apply that looking back last year and then looking forward to this year and maybe get some indication of what Q4 could turn out to be. Jeff Lick: Any thoughts on the GPU dynamics with the 2026s and 2027s? Is that going to have any impact on Q4 GPU? Bryan DeBoer: I would not expect so because our inventory looks pretty clean. I think we're sitting at close to 60 days. Okay? It's sitting in the right places, so I don't expect any abnormalities there. Jeff Lick: Then, a quick follow-up on your used unit comp, down 3, but your used GPU dollars up 9. So, you guys you've been talking in the last few calls about trying to find that balance of units versus profitability. It appears like you're doing a pretty good job on profitability. Any more thoughts on just kind of the fine-tuning and where this is going to settle out? Bryan DeBoer: Sure, Jeff. I think it's important to remember we're at the infancy of this, and though we're getting traction, we're getting a couple hundred bucks in GPU, many of our stores are still not adapting to that because I think we think about it as a micro funnel as a store, and then the macro funnel as a Driveway in Lithia. A lot of our micro funnels still haven't figured out that they don't need to sell the car to the first person that walks in because their funnel is small, and they flinch and sell it to the first customer. If we can help the macro funnel feed into the micro funnel better, they get more customers sooner and hopefully can hold on price to be able to drive that. We're really seeing it grow in our core product. We try to teach our stores about scarcity, and scarcity starts in that core product. We were up $500 in GPU year-over-year on core product, which is 3- to 7-year-old vehicles. Now, on the opposite side of that, we were down $300, $400 on certified. They're balancing some of those things out, but ultimately the two together get you a lot more trade-ins, and ultimately that GPU is what helps us lever our cost structure, okay? That's how we were able to maintain our SG&A about the same as last quarter, and it should be sector leading, I would imagine. Okay? Which is where we should be as the largest auto retailer in the world, and maybe more importantly, a great team of people that is powered by them, and they know what they're doing, and I trust that they'll continue to do that and find the GPU and bring it to the bottom line. Jeff Lick: One relationship, just real quick, that you've brought up in the past was that, and I think it only pertains to the Driveway business, was that you were priced at one point 10% below Carvana and CarMax, and you've been closing that gap, and you kind of highlighted that as almost like a GPU reserve, that as you get closer and closer to parity, you get back. Can you maybe elaborate on that, explain where you're at in that process? Bryan DeBoer: Sure. We're still 5% below them. The double-digit number was relative to what we call value auto product, which is our lowest priced cars. Those were, we were selling them for about 12% under market. It's improved slightly. Okay? Where we've really improved is on the core product, and I don't have the exact relativity to market, but I'm going to guess we're 97%, 98% now on core product. But you are correct that 5%, as an aggregate on a $30,000 car, is $1,500. I mean, that is the prize of why Lithia built a bigger funnel, okay? And why GreenCars and Driveway exist is to bring more people in so our stores have greater options to be able to stabilize pricing at something closer to what market conditions are. Generally speaking, most new car dealers sell their used cars for way less than what the one price used only retailers are selling cars for. Okay? That's because they focus on new cars, and they're not quite as savvy and don't have as big a top of funnel to be able to find the right customers that are willing to pay or be able to finance that car at a higher price. Jeff Lick: Awesome. Well, thanks very much, and best of luck in Q4. Bryan DeBoer: Thanks. Operator: Our next question is from Alex Perry with Bank of America. Please proceed. Alex Perry: Hi. Thanks for taking our questions here. I guess maybe as a follow-up to that question, and more as it pertains with some of the FTC enforcement actions. How much did you have to raise sort of the advertised price to the consumer in order to comply, and how is it impacting the used vehicle comps and maybe sort of the price competitiveness with the CarMaxes and Carvanas out there? Bryan DeBoer: Yeah, good question, Alex. At Lithia and Driveway, we were in compliance with virtually every store. There wasn't any price adjustments, and we were fully disclosing any additional fees that were charged to customers online, and then when they come into the store, they actually match. I think a lot of the game had been in Florida is a lot of dealers had tendencies to price low and then have a big doc fee when you came into the store. That's not how our dealers ever did it. We've always been full disclosure in every state across the country. So a little bit different. You may ask some of the others, and I think the biggest offenders are typically the private guys, and the guys that aren't groups, that don't have legal departments and don't play by the same rules. Outside of that, I'm going to guess that most of the publics were in compliance back in March when this got announced, and I'm imagining most of the private larger groups were in compliance. Alex Perry: Really helpful. I just wanted to follow up on the aftersales business. Could you just maybe talk to us about pricing there? Are you seeing increased work deferrals with where sort of pricing has gone and given the sort of affordability issues out there? Do you think some of the softness is related to share loss to some of the cheaper independents? Do you think pricing needs to come in at all in aftersales? Bryan DeBoer: Great question, Alex. It's easy to get over our skis and raise prices when inflation was going up so much and everyone was doing it. We really encourage our stores to stay affordable as they can. The simplest way that we do it is we do it with aftermarket parts and non-OEM parts post-warranty period. Now, if a customer doesn't seem to show resistance, we'll continue to replace their parts with OEM parts. If they show pricing resistance, we're pretty good at being able to detect that and move them to an aftersales part and be able to compete in terms of what our pricing is on both labor and parts. Okay? I will say though, Alex, not all of our stores behave the same. It's really easy to get into the mode that we're warranty shops and we're not customer-focused shops. Okay? Again, when I talk about Auto Done Easy or optionality with our customers, I'd encourage many of our team members to think a little broader, that we've got to keep our prices in line. We've got to be able to offer the great service and the great optionality for home pickup or in-store work at affordable prices, and we're very acutely aware of how to do that. Alex, the last thing I would remind everyone, we now have 156,000 users on the My Driveway portal, and that's an area that creates transparency, simplicity, and empowers our customers to be able to choose those things and communicate with their service advisors or their salespeople immediately the way they want, okay? I know that we're still in our infancy, knowing that we have almost 10 million customers. We've got a long ways to go to get full adoption on that. That's an area that customers will be able to opt for affordability a little bit more if they choose to. Hopefully, we'll be able to detect a little quicker as to if they're defecting or they're thinking about defecting, and come back to them with some offers that fit their budgets. Great question, Alex. It's a real opportunity for us as well. Alex Perry: Perfect. That's incredibly helpful. Best of luck going forward. Bryan DeBoer: Thank you. Operator: Our next question is from John Saager with Evercore ISI. Please proceed. John Saager: Hey, guys. Thanks for taking my call. I just wanted to follow up about the sustainability of used GPUs. I think this is obviously strong progress. You've talked about this for a while now. Second quarter in a row, around $2,000. Is this kind of a new floor of what investors can expect? Because I think even with sort of changing macro, the initiatives that you've taken on should be applicable. You're buying and selling in sort of the same market. As we look out into 2027, are you thinking about $2,000 as roughly a new floor? Bryan DeBoer: I would say looking into 2027, that is absolutely accurate. I would remind everyone that the used car market typically does soften in Q4, so we could see a little bit of sequential decline. But overall, we should see a trajectory that GPUs continue to climb above the $2,000 GPU level, okay? Again, the prize and why we designed the entire ecosystem, including DFC and Wheels and all the other componentry that Lithia is a party to, was designed to be able to capture that $1,500 a unit, and you extrapolate that over 350,000 vehicles, and it's a pretty big number of about, what is it? About $500 million, I think, is the possibility, if we can capture that just to get to what the average is for the marketplace of the one-price retailers. John Saager: Makes sense. Okay. How should we think about the sort of the percentage of stores that are already at target relative to the whole group? Is that a way that we can think about the amount of progress that you've made so far towards your end goal here? Bryan DeBoer: John, let me get back to you on that because this is going to be a total swag. I'm going to guess it's less than a quarter of our stores that have a micro funnel that is efficient enough to be able to sell their average car at market, okay? It's a small amount, and a lot of those are the traditional Lithia stores that have been with us for years and understands how to build the right top of funnel and how to finance every type of customer that walks in the door, and to be able to do it in that 15 to 45 days of age, rather than in the 0 to 15 days of age, which is what many of our stores, they underprice vehicles too soon, okay? They don't let the car season in the marketplace, okay? To be able to find the right customer for that seat, and they just turn it. I don't mind doing that if it's a certified car, okay? That I can replace real easy. But I think all of us would say that if it's a scarce car or it's a core product, if you can't replace it, let it sit through three or four customers and generate additional business before you actually spin it and sell it to someone. There's a lot of opportunity here, and I think we'll be able to see it in the coming quarters. John Saager: Okay, thanks so much. Bryan DeBoer: Thanks, John. Operator: Our next question is from John Babcock with Barclays. Please proceed. John Babcock: All right. Good morning. Thanks for taking my questions. Just first one on, you've been working with the Chinese OEMs in the U.K., and they're going to be expanding into Canada over the next year or so. Just kind of curious to the extent that you're doing work with them in Canada, and any sort of discussions you have ongoing. Bryan DeBoer: Sure, John. I think in Canada, I think we're pleased to see that they're choosing to partner with dealers when they move into the marketplace. That's a real positive thing. They are looking for exclusivity in Canada, which is much different than how it is in the United Kingdom, where we're spending $50,000 to $100,000 by buying a small image program and a sign and having the cars on our lot in 60 days. In Canada, they're looking for exclusive franchises and exclusive locations. I would also note that the real estate costs in Canada are about 30% higher than the United States as a whole, which makes it even more cost ineffective to be able to do that. Our numbers are showing somewhere between a six and an eight-year break even because of the lack of service and parts business going into that market, okay? The United Kingdom, remember, most of our franchises in the United Kingdom, they're dueled with American manufacturers or French manufacturers or German manufacturers, not obviously the luxury manufacturers. That's really easy because then I have an after-sales base, and any business that I get on the new car side is plus business. If we circle back now to Canada, I think we probably will be an early adopter, maybe a couple franchises in Canada. But ultimately, we're probably at a wait and see approach, just so we've got our foot in the pond to be able to see what happens in the United States in the event that they eventually come to the United States. John Babcock: Okay. That's helpful. Separately on F&I, there was a little bit of a pullback there in terms of the F&I PBR. Could you just talk about that a little bit? How much of that is driven by consumers pulling back on spending? If that is the case, if you could talk about maybe what products they're deciding to hold off on purchasing now days. Bryan DeBoer: Sure, John. I think on F&I, it's important to note that our F&I is also affected by our DFC penetration, which was pushing 20%, which is great. Good job, Chuck. Good job, Scott. It's nice to see that because that's the main pathway to achieve. Today we're what? $31 billion in revenue domestically, and we say that you should be able to convert that into a 0.1 in terms of profitability, so that's $310 million in profit from Driveway. That does affect our F&I average in the short term, though, in the long term, it gets us three to four times more profitability on each transaction that we do. Back to F&I. I would say, John, that I think affordability does create a little bit of drag on the optionality of buying service contracts or lifetime oil products or those types of things, and we are seeing a little bit of that. Outside of that, we've got lots of opportunities to continue to grow F&I, and I imagine that downward trend should be able to be curbed pretty quickly. John Babcock: Okay, thanks. If you don't mind, just one more question. Just back to parts and service. I know people have already asked about this to some extent, but I was wondering if you could break out the performance across warranty and customer pay in the quarter, and then also just generally, how were volumes in the quarter and how were they last quarter? Bryan DeBoer: Sure. Volumes on service as well? Parts and service? John Babcock: Yeah. Bryan DeBoer: Okay. John Babcock: Yep. Bryan DeBoer: Here, I'll just give you the quick revenue numbers. Customer pay was flat. Warranty was up, okay, my glasses need a fine-tuning here, up 6.1%. Parts wholesale was down 4.3%, which means do-it-yourselfers, and collision was down 1.5%. On gross, customer pay was flat, warranty was up 10%, parts wholesale was flat, and collision center was flat. The warranty is being driven, and I mentioned this last quarter, there's some franchise laws changes that are allowing us to get the full hours that we typically need to pay our mechanics. Manufacturers in Florida, New Jersey, and I believe Virginia, now are required to pay that. A lot of the lift in gross profit, the differential is coming from that 4% difference is coming from just those three states alone. John Babcock: Okay, and then just from a unit perspective, like overall, I assume with the relatively flattish growth on the same store sales basis, we should assume volumes were down during the quarter? Bryan DeBoer: I don't have my, it's technically called repair orders, and I think it was down slightly. John Babcock: Okay. Bryan DeBoer: I think it was down slightly. John Babcock: All right. Appreciate all the detail. Thank you. Bryan DeBoer: You bet. Thanks. Operator: Our next question is from Bret Jordan with Jefferies. Please proceed. Bret Jordan: Hey, Bret. Bryan DeBoer: Hey, Brett. Bret Jordan: Hey, good morning. When you think about customer pay price, it would seem like car counts were down a little bit. What do you think price inflation year-to-date has been sort of on an average repair order? Bryan DeBoer: Ooh. Which would ultimately be the cost of our technician and the- Bret Jordan: Technician parts, yeah. Bryan DeBoer: technician parts. I would probably say 4%-5%. Bret Jordan: Okay. Bryan DeBoer: It's a total swag, Brett, but I'm going to guess it's something like that. Bret Jordan: All right, great. Then I guess on the U.K., you called out the Chinese success story over there. How was the legacy business? I mean, what's the Chinese contribution to that north of 10% growth in the U.K.? Is there an opportunity to sort of keep that above trend growth by adding more Chinese to the footprint? Bryan DeBoer: About half of that success is coming from the Chinese. Fortunately, our market share in our luxury brands have been really good. We've been able to continue to grow our BMW, Porsche, Mercedes, and Land Rover franchises, and that makes up a lot of our business over there. The other thing is, we've got a pretty good footprint in our mainstream brands as well, that have done a pretty good job. If you look a little deeper into that, our used car successes in our non-luxury is exceptional. Our leader, Gary, over there, that runs our mainstream brands, he's exceptional about filling every single parking spot on those lots and then turning those quickly at the right prices, that we think that there's still a lot of opportunity there. Now, is there more opportunities to be able to add Chinese, I think was the second part of the question, Brett. We're actually seeing pretty good saturation of the first 7 that came in 3, 4 years ago. They continue to add points in the U.K. So even though there's growth of the Chinese now pushing 14%, 15% of the entire marketplace, it's starting to taper off. The other thing that I would layer in, there's 5 more new Chinese that have entered the market this year. They're the ones that are actually growing at the faster rate. So there's some adoption that we're looking at adding a few of those in some of the opportune areas. What we basically end up doing is we end up substituting or swapping out like a Renault or a Citroën or a Stellantis or something like that's just not able to compete and perform at the same level where you end up just swapping those brands out. Many of those stores already have 2 or 3 brands sitting in them. Hopefully that gives you a little bit of color on that, Brett. Bret Jordan: Thanks. Does the underlying consumer in the U.K. feel better than they did? It seemed like the end of last year sort of felt like a soft backdrop. Are you seeing that the market feels a little healthier? Bryan DeBoer: I think that if Neil was answering this question, I think they would indicate that it's neutral to positive, but not vastly different. The one thing that the Chinese were able to do was to drop into an affordability bucket, and that's where we've really done a nice job because if the new cars are more affordable, it basically takes away the sale of a used cars. And we have been bucking that trend, which is great to be able to see. So, I think a lot of the confidence is coming from the fact that there is a little bit more affordability in what's coming to marketplace. I would also caveat this since we got so deep into the U.K. market. It's a fallacy to think that the Chinese are taking market share because of BEV. Remember, the first manufacturers that went into Western Europe, that went into the U.K., came with just BEVs. They had less than 1% market share, and they were stagnant for over a year. It wasn't till they started to introduce their other products, plug-in hybrids and even ICE engines, that they began to get traction in market share. Meaning that the whole formula is about solving for affordability, not solving for sustainability. So just a little bit of a caveat, and I think it's the same will hold true in many other parts of the world. Bret Jordan: Great. Appreciate it. Thank you. Bryan DeBoer: You bet, Brett. Operator: Our next question is from Daniela Haigian with Morgan Stanley. Please proceed. Daniela Haigian: Great. Thank you, and good morning. My first question is on the DFC, which had another excellent result. I just wanted to get a sense of, I know it's a very high-quality book. Average FICO is quite high, but have you seen any changes in consumer behavior in the past six weeks or so with the higher rate or oil environment? Chuck Lietz: Hi, Daniela. This is Chuck. Thanks for your question. Yes. In terms of looking at the consumer and any changes in behavior, for us, in our portfolio, we have not seen any change in behavior. If anything, our book continues to maintain its high credit quality, and our delinquency rates are actually 20% better up and down the credit stack on a year-over-year sequential basis. Our consumers are performing well and continue to perform well, and that really leans into our stated strategy of really getting preferential selection on a risk-adjusted return basis, and we expect that to continue as we move forward with DFC. Daniela Haigian: Thank you, Chuck. The next one is for you, Bryan. I wanted to ask about agentic AI. There's been a lot of discussion around the potential for this technology to change how consumers shop for vehicles. How do you think about the impact on the traditional dealership model? Do you see this as an opportunity for Lithia to lean into scale inventory and this kind of full ecosystem that you've built out? Thank you. Bryan DeBoer: Thanks, Daniela, for the question. It's an exciting time for our business, and I'd like to speak to the investors about that just as much as I'd like to speak to our own team members because this is a fearful thing for them at times because they could look at it as making themselves obsolete. I would encourage all of my team members and all of our team members to think about it as you get to do what you do best, and that's create memorable, trusting relationships with our customers. Let the agentics do the stuff that we either forget to do, don't like to do, or it's just too repetitive, okay? So let agentics do the boring stuff. That's what we're seeing in the United Kingdom. We have some of it in the U.S., a lot of it in service and parts, and we're seeing early success. Now, how do I quantify it? We sit at a little bit of a sub 70% SG&A, and we've publicly disclosed that we believe that we can get to sub 60% SG&A. We believe that half of that improvement is going to come from agentics. It will come through simple things like what I just spoke about, pre-sales and service. It's really easy to forget to ask people, "Do you want your windshield wipers done? Do you want me to check your tires?" We get busy in our business, and our people get busy. We don't want to lose business and lose serviceability of our customers because we're busy. Agentics can fill that gap in a nice way so we can spend the time creating attachments with our customers. If we look at where is the other 500 basis points of that thousand-point drop, that's from improvements in volumes and under performance in our stores. It's new stores that have not yet adapted to the idea that I'm going to sell older used vehicles. They haven't adapted to the idea that post-warranty period, I'm going to sell non-OEM parts. They haven't maybe adapted to the ideas that I don't mind going to people's homes to be able to do whatever they want. I think as retailers, it's been really easy to be able to sit on our laurels and make a lot of money. I think those days are behind us, and I would challenge my entire team and challenge the industry to get better at what we do by thinking about what our customers are wanting and giving it to them the way that they want it. Hopefully, that gives you some color on how we see agentics in the future, but that's probably the tip of the iceberg as to how it can help our teams do a better job. Daniela Haigian: Great. Thank you, Bryan DeBoer. Bryan DeBoer: Thanks, Daniela. Operator: Our next question is from Mark Jordan with Goldman Sachs. Please proceed. Mark Jordan: Hey. Thank you very much for fitting me in here. Chuck, this might be a question for you, but it looks like the second quarter in a row here on the slide presentation where we have a higher midterm outlook for income from financing operations. Can you talk about what changed there? Is it just really the pull forward of some of the portfolio growth and the penetration nearing your 20% target, or is it just something else? Chuck Lietz: Mark, great question. This is Chuck again. We're really seeing two main things that are driving our forward-looking profitability growth. The first one is, as you mentioned, just our consistent preferential selection of the quality of the portfolio and our outperformance in the market on our charge-off and delinquency metrics. The second is certainly the growth. We are closing in on almost doing $1 billion in originations in the quarter. Bryan certainly mentioned the higher penetration rate. That's obviously flowing through to our bottom line. I think all of this points towards signs of achieving preferential selections from a risk-adjusted return basis, growing our portfolio. This business will continue to be consistent, predictable, and repeatable in terms of its growth. Otherwise, absence of seasonal adjustments for charge-offs. We're very bullish on DFC's forward-looking outlooks. Mark Jordan: Perfect. Thank you very much. Brian, one for you if I could. Just thinking about new vehicle affordability, obviously kind of been pressured for a while now, but are you seeing any changes in terms of customer behavior in the U.S., any noticeable shifts in behavior over the last few months? Bryan DeBoer: We really haven't. The good news is there's a number of manufacturers that understand that they can gain market share if they can just get into that lower price point as well. I should say, incentives aren't getting much better. I still believe that there's opportunities for our manufacturer partners to be able to provide a little bit better leases, which can affect affordability in big ways. They haven't jumped back in on that fully. We were at 31% lease penetration. Hopefully, we can get back close to 40%, and that really keeps those customers in funnel and in life cycle so we can get them back in 2, 3 years. Anyway, outside of that, Mark, not big, big changes in affordability or in behaviors of our consumers. Mark Jordan: Excellent. Thank you very much. Operator: Our final question is from Rob Sussman with UBS. Please proceed. Rob Sussman: Hey, team. Thanks for squeezing me in here. Just a quick one on DFC. With rates moving higher and funding costs for DFC likely moving higher with it, how do you think about the balance between passing through higher funding costs to customers and absorbing maybe some of that in order to drive sales? How do you think about the balance of that, would be the question. Chuck Lietz: Yeah, Rob, this is Chuck again. Obviously, there is a time lag between how quickly we can sequence through changes in our cost of funds rates as the markets move in an upward direction versus what the market will and our customers will bear. This is really part of our overall strategy where DFC, we're there to support our stores and help drive overall growth and meeting the needs of our customers in conjunction with our stores. However, having said that, we actually look at each contract on an individual basis on a fully risk-adjusted NPV basis to make sure that it is still profitable for Lithia and Driveway and taking that balance between supporting our stores and making sure we're meeting the needs of our customers and still being profitable on a risk-adjusted basis. That's, I believe, how we'll continue to really balance those risks of the higher rates versus supporting our stores. Rob Sussman: Thanks so much, guys. Really appreciate you squeezing me in here. Bryan DeBoer: Thanks, Rob. Operator: There are no further questions. I would like to turn the conference back over to Bryan for closing remarks. Bryan DeBoer: Thanks, Sherry. And thanks everyone for joining us today. We look forward to talking to you again for our fourth quarter and year-end earnings call in February. Bye-bye. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation. Before you buy stock in Lithia Motors, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lithia Motors wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $370,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,330,110!* Now, it's worth noting Stock Advisor's total average return is 924% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 21, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Lithia Motors (LAD) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

For the quarter ended September 2026, Lithia Motors (LAD) reported revenue of $9.95 billion, up 2.8% over the same period last year. EPS came in at $10.34, compared to $9.50 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $9.71 billion, representing a surprise of +2.4%. The company delivered an EPS surprise of +6.6%, with the consensus EPS estimate being $9.70. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Lithia Motors performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: - Unit sales - New vehicle: 105,471 versus the three-analyst average estimate of 101,604. - Unit sales - Used vehicle retail: 109,791 versus 113,169 estimated by three analysts on average. - Average selling price - New vehicle: $46,777.00 versus $47,267.50 estimated by three analysts on average. - Average selling price - Used vehicle retail: $29,499.00 compared to the $29,340.49 average estimate based on three analysts. - Revenues- Finance and insurance: $361.4 million versus $374.14 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a -4.5% change. - Revenues- Used vehicle: $3.63 billion compared to the $3.38 billion average estimate based on four analysts. The reported number represents a change of +17.2% year over year. - Revenues- New vehicle: $4.87 billion versus the four-analyst average estimate of $4.86 billion. The reported number represents a year-over-year change of +5.2%. - Revenues- Aftersales: $1.09 billion compared to the $1.09 billion average estimate based on four analysts. The reported number represents a change of +4.8% year over year. - Same Store Operating- Revenues- Finance and insurance: $345.1 million compared to the $352.02 million average estimate based on two analysts. The reported number represents a change of -7.1% year over year. - Same Store Operating- Revenues- Used vehicle: $3.42 billion compared to the $3.15 billion average estimate based on two analysts. The reported number represents a change of +13.1% year over year. - Same Store Operating- Revenues- New vehicle: $4.61 billion versus the two-analyst average estimate of $4.68 billion. The reported number represents a year-over-year change of +1.9%. - Same Store Operating- Revenues- Aftersales: $1.03 billion compared to the $1.04 billion average estimate based on two analysts. The reported number represents a change of +1.8% year over year. View all Key Company Metrics for Lithia Motors here>>> Shares of Lithia Motors have returned -4.1% over the past month versus the Zacks S&P 500 composite's +1% change. The stock currently has a Zacks Rank #4 (Sell), indicating that it could underperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Key Highlights - Record third quarter revenues of $9.9 billion - Used retail GPUs increased $197, or 11%, year over year - Aftersales gross profit increased by 2.4% and gross margin was 59.5%, a 100-basis point increase, on a same-store basis - Financing Operations income of $32.3 million, a 69% increase year over year, with record originations of $937 million, and a 18.3% penetration rate - Third quarter diluted earnings per share of $13.22, a 54% increase, and adjusted diluted earnings per share of $10.34, a 9% increase - Repurchased $85 million of shares, representing 1.1% of outstanding shares in the quarter, and 8.7% of outstanding shares in 2026 - Announced a 7% increase to quarterly dividend MEDFORD, Ore., Oct. 21, 2026 (GLOBE NEWSWIRE) -- Lithia & Driveway (NYSE: LAD), the largest global automotive retailer, today reported financial results for the third quarter of 2026. "Our people and our ecosystem set Lithia & Driveway apart again this quarter, delivering record quarterly revenues and continued growth in earnings per share. Used vehicle profitability strengthened, aftersales margins expanded, cost discipline continued, and Financing Operations delivered strong income growth on the strength of a high-quality credit portfolio," said Bryan DeBoer, President and CEO. "The capital decisions of the past year are reflected in our financial results, with a meaningfully lower share count magnifying every dollar we earn. With the flexibility of our cash generation and strong balance sheet, the earnings power of our model continues to build as we head into 2027." Third Quarter 2026 Operational Summary Third quarter 2026 revenue increased 3% to $9.9 billion from $9.7 billion in the third quarter of 2025. Third quarter 2026 diluted earnings per share attributable to LAD was $13.22, a 54% increase from $8.61 per share reported in the third quarter of 2025. After adjusting for the unrealized gain on our investment in Pinewood Technologies Group PLC and other non-core items, adjusted diluted earnings per share attributable to LAD for the third quarter of 2026 was $10.34, a 9% increase compared to $9.50 per share in the same period of 2025. Third quarter 2026 net income was $292.9 million, a 34.0% increase compared to net income of $218.6 million in the third quarter of 2025. After adjusting for the unrealized gain on our investment in Pinewood Technologies Group PLC and other non-core items, adjusted net income for the third quarter 2026 was $229.3 million, an 5% decrease compared to adjusted net income of $240.9 million for the same period of 2025. The financial measures discussed in this release include both GAAP and non-GAAP measures. See "Reconciliation of Certain Non-GAAP Measures". For the first nine months of 2026 revenues increased 2% to $29.0 billion, compared to $28.4 billion in 2025. Diluted earnings per share attributable to LAD for the first nine months of 2026 was $28.77, compared to $26.42 per share in 2025, an increase of 9%. Adjusted diluted earnings per share attributable to LAD for the first nine months of 2026 increased 4% to $27.61 from $26.60 in the same period of 2025. Corporate Development In the third quarter of 2026, LAD acquired two stores, which are expected to generate $150 million in annualized revenues, and divested two stores representing $115 million in annualized revenues. In October 2026, LAD continued to expand its network in the Southeast region with the acquisition of two Hyundai and two Kia stores in Memphis, TN. These additions add $250 million of expected annualized revenue. LAD has acquired $1.17 billion in expected annualized revenues year to date. Balance Sheet Update LAD ended the third quarter with approximately $1.4 billion in cash and cash equivalents, marketable securities, and availability on our revolving lines of credit. Dividend Payment and Share Repurchases The Board of Directors approved a dividend of $0.75 per share related to third quarter 2026 financial results. The dividend is expected to be paid on November 20, 2026 to shareholders of record on November 6, 2026. During the third quarter of 2026, we repurchased approximately 246,000 shares at a weighted average price of $345. Under the current share repurchase authorization approximately $535 million remains available as of September 30, 2026. Board of Directors Update The Board of Directors has appointed Bryan B. DeBoer, our President and Chief Executive Officer, as Chairman of the Board, effective October 19, 2026. In this expanded role, Bryan DeBoer will serve as both Chairman and Chief Executive Officer, promoting communication and collaboration between management and the Board. Mr. DeBoer will continue to lead the Company's strategic vision and operations execution. Sidney B. DeBoer will become Vice Chairman and will continue to serve on the Board. Louis P. Miramontes will continue to serve as Lead Independent Director, ensuring strong independent Board leadership and reinforcing its oversight of management and governance. "Sid established Lithia on the belief that earning trust, one customer and one community at a time, creates value that compounds over decades," said Bryan DeBoer, Chairman and Chief Executive Officer. "He took the company public and laid the foundation of Growth Powered by People for the network we operate today across the U.S., Canada and the U.K., and we're grateful his counsel will continue as Vice Chairman. I'm honored by the Board's confidence. Our strategy and priorities are unchanged: earn customers for life, keep growing our network and adjacent businesses, and allocate capital with discipline to drive long-term shareholder value." Third Quarter Earnings Conference Call and Updated Presentation The third quarter 2026 conference call may be accessed at 10:00 a.m. ET today by telephone at 877-407-8029. An updated presentation highlighting third quarter 2026 results has been added to our investor relations website. To listen live on our website or for replay, visit investors.lithiadriveway.com and click on Quarterly Earnings. About Lithia & Driveway (LAD) Lithia & Driveway (NYSE: LAD) is the largest global automotive retailer providing a wide array of products and services throughout the vehicle ownership lifecycle. Simple, convenient, and transparent experiences are offered through our comprehensive network of physical locations, e-commerce platforms, captive finance solutions, fleet management offerings, and other synergistic adjacencies. We deliver consistent, profitable growth in a massive and unconsolidated industry. Our highly diversified and competitively differentiated design provides us the flexibility and scale to pursue our vision to modernize personal transportation solutions wherever, whenever and however consumers desire. Sites www.lithia.com  investors.lithiadriveway.com  www.lithiacareers.com  www.driveway.com  www.greencars.com  www.drivewayfinancecorp.com  Lithia & Driveway on Facebook https://www.facebook.com/LithiaMotors  https://www.facebook.com/DrivewayHQ  Lithia & Driveway on X https://x.com/lithiamotors  https://x.com/DrivewayHQ  https://x.com/GreenCarsHQ  Lithia & Driveway on LinkedIn https://www.linkedin.com/company/lithia-motors/  Lithia & Driveway on YouTube https://www.youtube.com/@Lithia_Motors/featured  Forward-Looking Statements Certain statements in this presentation, and at times made by our officers and representatives, constitute forward-looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Generally, you can identify forward-looking statements by terms such as "project," "outlook," "target," "may," "will," "would," "should," "seek," "expect," "plan," "intend," "forecast," "anticipate," "believe," "estimate," "predict," "potential," "likely," "ensure," "goal," "strategy," "future," "maintain," and "continue" or the negative of these terms or other comparable terms. Examples of forward-looking statements in this presentation include, among others, statements regarding: - The profitability of our strategy and growth - Future market conditions, including anticipated vehicle and other sales, gross profit and inventory supply - Our business strategy and plans, including our achieving our long-term financial targets - The growth, expansion, make-up and success of our network, including our finding accretive acquisitions that meet our target valuations and acquiring additional stores - Annualized revenues from acquired stores or achieving target returns - The growth and performance of our Driveway e-commerce home solution and Driveway Finance Corporation (DFC), their synergies and other impacts on our business and our ability to meet Driveway and DFC-related targets - The impact of sustainable vehicles and other market and regulatory changes on our business, including evolving vehicle distribution models - Our capital allocations and uses and levels of capital expenditures in the future - Expected operating results, such as improved store performance, continued improvement of selling, general and administrative expenses as a percentage of gross profit and any projections - Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit facilities, unfinanced real estate and other financing sources - Our continuing to purchase shares under our share repurchase program - Our compliance with financial and restrictive covenants in our credit facilities and other debt agreements - Our programs and initiatives for team member recruitment, training, and retention - Our strategies and targets for customer retention, growth, market position, operations, financial results and risk management Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Forward-looking statements are not guarantees of future performance, and our actual results of operations, financial condition and liquidity and development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements in this presentation. Therefore, you should not rely on any of these forward-looking statements. The risks and uncertainties that could cause actual results to differ materially from estimated or projected results include, without limitation: - Future national and local economic and financial conditions, including as a result of inflation, interest rates, tariffs, governmental actions, programs and spending, and public health issues - The market for dealerships, including the availability of stores to us for an acceptable price - Changes in customer demand, levels of consumer debt, consumer confidence and manufacturer sales incentives, and the electric vehicle landscape and the impact of evolving digital technologies - Changes in our relationship with, and the financial and operational stability of, OEMs and other suppliers, and vehicle delivery models - Changes in the competitive landscape, including through technology and our ability to deliver new products, services and customer experiences and a portfolio of in-demand and available vehicles - Risks associated with our indebtedness, including available borrowing capacity, interest rates, compliance with financial covenants and ability to refinance or repay indebtedness on favorable terms - The adequacy of our cash flows and other conditions which may affect our ability to fund capital expenditures, obtain favorable financing and pay our quarterly dividend at planned levels - Disruptions to our technology network including computer systems, as well as natural events such as severe weather or man-made or other disruptions of our operating systems, facilities or equipment - Government regulations and legislation - The risks set forth throughout "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in "Part I, Item 1A. Risk Factors" of our most recent Annual Report on Form 10-K, and in "Part II, Item 1A. Risk Factors" of our Quarterly Reports on Form 10-Q, and from time to time in our other filings with the SEC. Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by law, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. Non-GAAP Financial Measures All "adjusted" financial measures in this presentation are non-GAAP financial measures, as are EBITDA and net debt. Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to similarly titled measures used by other companies. We caution you not to place undue reliance on such non-GAAP measures and to consider them together with the most directly comparable GAAP measures. We present cash flows from operations in the attached tables, adjusted to include the change in non-trade floor plan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, we have reconciled these measures to the most directly comparable GAAP measures in the attachments to this release. We believe the non-GAAP financial measures we present improve the transparency of our disclosures; provide a meaningful presentation of our results from core business operations, because they exclude items not related to core business operations and other non-cash items; and improve the period-to-period comparability of our results from core business operations. These presentations should not be considered an alternative to GAAP measures. LAD Consolidated Statements of Operations (Unaudited) (In millions except per share data) | Three months ended | | % | | Nine months ended | | % | September 30, | | Increase | | September 30, | | Increase | | 2026 | | | | 2025 | | | (Decrease) | | | 2026 | | | | 2025 | | | (Decrease) Revenues: | | | | | | | | | | | New vehicle | $ | 4,868.6 | | | $ | 4,792.4 | | | 1.6 | % | | $ | 14,077.1 | | | $ | 14,076.3 | | | — | % Used vehicle | | 3,630.1 | | | | 3,463.3 | | | 4.8 | | | | 10,647.8 | | | | 10,192.3 | | | 4.5 | Finance and insurance | | 361.4 | | | | 378.6 | | | (4.5 | ) | | | 1,087.5 | | | | 1,116.8 | | | (2.6 | ) Aftersales | | 1,086.6 | | | | 1,041.5 | | | 4.3 | | | | 3,197.0 | | | | 3,051.7 | | | 4.8 | Total revenues | | 9,946.7 | | | | 9,675.8 | | | 2.8 | % | | | 29,009.4 | | | | 28,437.1 | | | 2.0 | % Cost of sales: | | | | | | | | | | | New vehicle | | 4,590.7 | | | | 4,501.0 | | | 2.0 | | | | 13,255.7 | | | | 13,178.1 | | | 0.6 | Used vehicle | | 3,419.2 | | | | 3,274.4 | | | 4.4 | | | | 10,035.2 | | | | 9,609.2 | | | 4.4 | Aftersales | | 441.0 | | | | 434.4 | | | 1.5 | | | | 1,303.6 | | | | 1,288.3 | | | 1.2 | Total cost of sales | | 8,450.9 | | | | 8,209.8 | | | 2.9 | | | | 24,594.5 | | | | 24,075.6 | | | 2.2 | Gross profit | | 1,495.8 | | | | 1,466.0 | | | 2.0 | % | | | 4,414.9 | | | | 4,361.5 | | | 1.2 | % | | | | | | | | | | | Finance operations income | | 32.3 | | | | 19.1 | | | 69.1 | % | | | 90.0 | | | | 51.7 | | | 74.1 | % | | | | | | | | | | | SG&A expense | | 1,036.3 | | | | 998.0 | | | 3.8 | | | | 3,088.4 | | | | 2,965.3 | | | 4.2 | Depreciation and amortization | | 71.6 | | | | 65.5 | | | 9.3 | | | | 212.3 | | | | 194.6 | | | 9.1 | Income from operations | | 420.2 | | | | 421.6 | | | (0.3)% | | | 1,204.2 | | | | 1,253.3 | | | (3.9)% Floor plan interest expense | | (70.3 | ) | | | (57.8 | ) | | 21.6 | | | | (195.9 | ) | | | (169.8 | ) | | 15.4 | Other interest expense | | (63.1 | ) | | | (68.3 | ) | | (7.6 | ) | | | (196.0 | ) | | | (200.5 | ) | | (2.2 | ) Other income (expense) | | 104.2 | | | | (13.3 | ) | | 883.5 | | | | 72.7 | | | | 35.9 | | | NM Income before income taxes | | 391.0 | | | | 282.2 | | | 38.6 | % | | | 885.0 | | | | 918.9 | | | (3.7)% Income tax expense | | (98.1 | ) | | | (63.6 | ) | | 54.2 | | | | (228.4 | ) | | | (230.9 | ) | | (1.1 | ) Income tax rate | | 25.1 | % | | | 22.5 | % | | | | | 25.8 | % | | | 25.1 | % | | Net income | $ | 292.9 | | | $ | 218.6 | | | 34.0 | % | | $ | 656.6 | | | $ | 688.0 | | | (4.6)% Net income attributable to non-controlling interests | | (1.8 | ) | | | (1.5 | ) | | 20.0 | % | | | (5.1 | ) | | | (5.3 | ) | | (3.8 | )% Net income attributable to LAD | $ | 291.1 | | | $ | 217.1 | | | 34.1 | % | | $ | 651.5 | | | $ | 682.7 | | | (4.6)% | | | | | | | | | | | Diluted earnings per share attributable to LAD: | | | | | | | | | | | Net income per share | $ | 13.22 | | | $ | 8.61 | | | 53.5 | % | | $ | 28.77 | | | $ | 26.42 | | | 8.9 | % | | | | | | | | | | | Diluted shares outstanding | | 22.0 | | | | 25.2 | | | (12.7)% | | | 22.6 | | | | 25.8 | | | (12.4)% NM - not meaningful LAD Key Performance Metrics (Unaudited) | Three months ended | | % | | Nine months ended | | % | September 30, | | Increase | | September 30, | | Increase | | 2026 | | | | 2025 | | | (Decrease) | | | 2026 | | | | 2025 | | | (Decrease) Gross margin | | | | | | | | | | | New vehicle | | 5.7 | % | | | 6.1 | % | | (40)bps | | | 5.8 | % | | | 6.4 | % | | (60)bps Used vehicle | | 5.8 | | | | 5.5 | | | 30 | | | | 5.8 | | | | 5.7 | | | 10 | Finance and insurance | | 100.0 | | | | 100.0 | | | — | | | | 100.0 | | | | 100.0 | | | — | Aftersales | | 59.4 | | | | 58.3 | | | 110 | | | | 59.2 | | | | 57.8 | | | 140 | Gross profit margin | | 15.0 | | | | 15.2 | | | (20 | ) | | | 15.2 | | | | 15.3 | | | (10 | ) | | | | | | | | | | | Unit sales | | | | | | | | | | | New vehicle | | 105,471 | | | | 104,332 | | | 1.1 | % | | | 304,347 | | | | 305,151 | | | (0.3)% Used vehicle retail | | 109,791 | | | | 109,097 | | | 0.6 | | | | 326,056 | | | | 325,476 | | | 0.2 | | | | | | | | | | | | Average selling price (excluding agency) | | | | | | | | | | | New vehicle | $ | 46,777 | | | $ | 46,804 | | | (0.1)% | | $ | 46,938 | | | $ | 47,165 | | | (0.5)% Used vehicle retail | | 29,499 | | | | 28,381 | | | 3.9 | | | | 29,180 | | | | 27,990 | | | 4.3 | | | | | | | | | | | | Average gross profit per unit | | | | | | | | | | | New vehicle | $ | 2,635 | | | $ | 2,793 | | | (5.7)% | | $ | 2,699 | | | $ | 2,943 | | | (8.3)% Used vehicle retail | | 1,970 | | | | 1,773 | | | 11.1 | | | | 1,889 | | | | 1,818 | | | 3.9 | Finance and insurance | | 1,733 | | | | 1,818 | | | (4.7 | ) | | | 1,782 | | | | 1,814 | | | (1.8 | ) Total vehicle(1) | | 3,949 | | | | 4,025 | | | (1.9 | ) | | | 4,000 | | | | 4,120 | | | (2.9 | ) | | | | | | | | | | | Revenue mix | | | | | | | | | | | New vehicle | | 48.9 | % | | | 49.5 | % | | | | | 48.5 | % | | | 49.5 | % | | Used vehicle | | 36.5 | | | | 35.8 | | | | | | 36.7 | | | | 35.8 | | | Finance and insurance, net | | 3.6 | | | | 3.9 | | | | | | 3.7 | | | | 3.9 | | | Aftersales | | 11.0 | | | | 10.8 | | | | | | 11.1 | | | | 10.8 | | | | | | | | | | | | | | Gross Profit Mix | | | | | | | | | | | New vehicle | | 18.6 | % | | | 19.9 | % | | | | | 18.6 | % | | | 20.6 | % | | Used vehicle | | 14.1 | | | | 12.9 | | | | | | 13.9 | | | | 13.4 | | | Finance and insurance, net | | 24.2 | | | | 25.8 | | | | | | 24.6 | | | | 25.6 | | | Aftersales | | 43.1 | | | | 41.4 | | | | | | 42.9 | | | | 40.4 | | | | Adjusted | | As reported | | Adjusted | | As reported | Three months ended September 30, | | Three months ended September 30, | | Nine months ended September 30, | | Nine months ended September 30, Other metrics | 2026 | | | 2025 | | | 2026 | | | 2025 | | | 2026 | | | 2025 | | | 2026 | | | 2025 | SG&A as a % of revenue | 10.4 | % | | 10.3 | % | | 10.4 | % | | 10.3 | % | | 10.6 | % | | 10.4 | % | | 10.6 | % | | 10.4 | % SG&A as a % of gross profit | 68.8 | | | 67.9 | | | 69.3 | | | 68.1 | | | 69.6 | | | 67.9 | | | 70.0 | | | 68.0 | Operating profit as a % of revenue | 4.3 | | | 4.4 | | | 4.2 | | | 4.4 | | | 4.2 | | | 4.4 | | | 4.2 | | | 4.4 | Operating profit as a % of gross profit | 28.5 | | | 29.0 | | | 28.1 | | | 28.8 | | | 27.6 | | | 28.8 | | | 27.3 | | | 28.7 | Pretax margin | 3.1 | | | 3.2 | | | 3.9 | | | 2.9 | | | 3.0 | | | 3.2 | | | 3.1 | | | 3.2 | Net profit margin | 2.3 | | | 2.5 | | | 2.9 | | | 2.3 | | | 2.2 | | | 2.4 | | | 2.3 | | | 2.4 | (1)   Includes the sales and gross profit related to new, used, and finance and insurance and unit sales for new and used retail LAD Same Store Operating Highlights (Unaudited) | Three months ended | | % | | Nine months ended | | % | September 30, | | Increase | | September 30, | | Increase | | 2026 | | | | 2025 | | | (Decrease) | | | 2026 | | | | 2025 | | | (Decrease) Revenues | | | | | | | | | | | New vehicle | $ | 4,608.3 | | | $ | 4,729.9 | | | (2.6)% | | $ | 13,293.7 | | | $ | 13,784.0 | | | (3.6)% Used vehicle | | 3,419.4 | | | | 3,409.5 | | | 0.3 | | | | 10,023.4 | | | | 9,932.6 | | | 0.9 | Finance and insurance | | 345.1 | | | | 375.6 | | | (8.1 | ) | | | 1,039.6 | | | | 1,102.0 | | | (5.7 | ) Aftersales | | 1,027.9 | | | | 1,021.0 | | | 0.7 | | | | 3,018.5 | | | | 2,964.1 | | | 1.8 | Total revenues | | 9,400.6 | | | | 9,536.0 | | | (1.4 | ) | | | 27,375.2 | | | | 27,782.8 | | | (1.5 | ) | | | | | | | | | | | Gross profit | | | | | | | | | | | New vehicle | $ | 263.9 | | | $ | 288.4 | | | (8.5)% | | $ | 778.0 | | | $ | 881.6 | | | (11.8)% Used vehicle | | 203.1 | | | | 185.8 | | | 9.3 | | | | 586.6 | | | | 575.2 | | | 2.0 | Finance and insurance | | 345.1 | | | | 375.6 | | | (8.1 | ) | | | 1,039.6 | | | | 1,102.0 | | | (5.7 | ) Aftersales | | 611.1 | | | | 596.9 | | | 2.4 | | | | 1,786.0 | | | | 1,721.2 | | | 3.8 | Total gross profit | | 1,423.2 | | | | 1,446.7 | | | (1.6 | ) | | | 4,190.2 | | | | 4,280.1 | | | (2.1 | ) | | | | | | | | | | | Gross margin | | | | | | | | | | | New vehicle | | 5.7 | % | | | 6.1 | % | | (40)bps | | | 5.9 | % | | | 6.4 | % | | (50)bps Used vehicle | | 5.9 | | | | 5.4 | | | 50 | | | | 5.9 | | | | 5.8 | | | 10 | Finance and insurance | | 100.0 | | | | 100.0 | | | — | | | | 100.0 | | | | 100.0 | | | — | Aftersales | | 59.5 | | | | 58.5 | | | 100 | | | | 59.2 | | | | 58.1 | | | 110 | Gross profit margin | | 15.1 | | | | 15.2 | | | (10 | ) | | | 15.3 | | | | 15.4 | | | (10 | ) | | | | | | | | | | | Unit sales | | | | | | | | | | | New vehicle | | 100,559 | | | | 103,318 | | | (2.7)% | | | 289,351 | | | | 300,917 | | | (3.8)% Used vehicle retail | | 104,612 | | | | 108,039 | | | (3.2 | ) | | | 311,741 | | | | 320,566 | | | (2.8 | ) | | | | | | | | | | | Average selling price (excluding agency) | | | | | | | | | | | New vehicle | $ | 46,470 | | | $ | 46,652 | | | (0.4)% | | $ | 46,659 | | | $ | 46,843 | | | (0.4)% Used vehicle retail | | 29,197 | | | | 28,200 | | | 3.5 | | | | 28,770 | | | | 27,703 | | | 3.9 | | | | | | | | | | | | Average gross profit per unit | | | | | | | | | | | New vehicle | $ | 2,624 | | | $ | 2,792 | | | (6.0)% | | $ | 2,689 | | | $ | 2,930 | | | (8.2)% Used vehicle retail | | 1,993 | | | | 1,759 | | | 13.3 | | | | 1,893 | | | | 1,818 | | | 4.1 | Finance and insurance | | 1,736 | | | | 1,821 | | | (4.7 | ) | | | 1,784 | | | | 1,816 | | | (1.8 | ) Total vehicle(1) | | 3,958 | | | | 4,021 | | | (1.6 | ) | | | 4,000 | | | | 4,117 | | | (2.8 | ) (1)   Includes the sales and gross profit related to new, used, and finance and insurance and unit sales for new and used retail LAD Other Highlights (Unaudited) | Three months ended September 30, | | Nine months ended September 30, | 2026 | | | 2026 | Key Performance by Country | Total Revenue | | Total Gross Profit | | Total Revenue | | Total Gross Profit United States | 75.9% | | | 80.8% | | | 76.3% | | | 81.4% | United Kingdom | 20.5% | | | 16.4% | | | 20.2% | | | 15.9% | Canada | 3.6% | | | 2.8% | | | 3.5% | | | 2.7% | | As of | September 30, | | December 31, | | September 30, Days' Supply(1) | 2026 | | 2025 | | 2025 New vehicle inventory | 54 | | 54 | | 52 Used vehicle inventory | 45 | | 48 | | 46 (1) Days' supply in inventory is calculated using on-ground inventory unit levels and a 30-day total unit sales volumes, both at the end of each reporting period. Selected Financing Operations Financial Information | Three months ended September 30, | | Nine months ended September 30, ($ in millions) | | 2026 | | | % (1) | | | 2025 | | | % (1) | | | 2026 | | | % (1) | | | 2025 | | | % (1) Interest and fee income | $ | 122.1 | | | 8.7 | | | $ | 104.9 | | | 9.2 | | | $ | 349.0 | | | 8.8 | | | $ | 298.0 | | | 9.2 | Interest expense | | (56.3 | ) | | (4.0 | ) | | | (52.1 | ) | | (4.6 | ) | | | (161.4 | ) | | (4.1 | ) | | | (150.0 | ) | | (4.6 | ) Total interest margin | $ | 65.8 | | | 4.7 | | | $ | 52.8 | | | 4.6 | | | $ | 187.6 | | | 4.7 | | | $ | 148.0 | | | 4.6 | Lease income | | 29.2 | | | | | | 23.4 | | | | | | 79.5 | | | | | | 67.7 | | | Lease costs | | (25.6 | ) | | | | | (18.6 | ) | | | | | (68.3 | ) | | | | | (54.0 | ) | | Lease income, net | | 3.6 | | | | | | 4.8 | | | | | | 11.2 | | | | | | 13.7 | | | Provision expense | | (22.5 | ) | | (1.6 | ) | | | (25.8 | ) | | (2.3 | ) | | | (64.7 | ) | | (1.6 | ) | | | (72.5 | ) | | (2.2 | ) Other financing operations expenses | | (14.6 | ) | | (1.0 | ) | | | (12.7 | ) | | (1.1 | ) | | | (44.1 | ) | | (1.1 | ) | | | (37.5 | ) | | (1.2 | ) Finance operations income | $ | 32.3 | | | | | $ | 19.1 | | | | | $ | 90.0 | | | | | $ | 51.7 | | | | | | | | | | | | | | | | | | Total average managed finance receivables | $ | 5,558.0 | | | | | $ | 4,541.8 | | | | | $ | 5,290.6 | | | | | $ | 4,316.3 | | | (1)   Annualized percentage of total average managed finance receivables LAD Condensed Consolidated Balance Sheets (Unaudited) (In millions) | September 30, 2026 | | December 31, 2025 Cash, restricted cash, and cash equivalents | $ | 374.0 | | $ | 341.8 Trade receivables, net | | 1,132.9 | | | 1,134.1 Inventories, net | | 6,624.3 | | | 6,119.6 Other current assets | | 261.8 | | | 262.5 Total current assets | $ | 8,393.0 | | $ | 7,858.0 | | | Property and equipment, net | | 5,074.7 | | | 4,936.0 Finance receivables, net | | 5,578.6 | | | 4,755.1 Intangibles | | 5,630.7 | | | 5,254.1 Other non-current assets | | 2,159.0 | | | 2,304.0 Total assets | $ | 26,836.0 | | $ | 25,107.2 | | | Floor plan notes payable | | 6,566.8 | | | 5,008.9 Other current liabilities | | 1,838.5 | | | 1,687.8 Total current liabilities | $ | 8,405.3 | | $ | 6,696.7 | | | Long-term debt, less current maturities | | 6,828.2 | | | 7,274.9 Non-recourse notes payable, less current maturities | | 2,746.3 | | | 2,404.2 Other long-term liabilities and deferred revenue | | 2,215.3 | | | 2,103.0 Total liabilities | $ | 20,195.1 | | $ | 18,478.8 | | | Equity | | 6,640.8 | | | 6,628.4 Total liabilities and equity | $ | 26,836.0 | | $ | 25,107.2 LAD Condensed Consolidated Statements of Cash Flows (Unaudited) (In millions) | Nine months ended September 30, Cash flows from operating activities: | | 2026 | | | | 2025 | Net income | $ | 656.6 | | | $ | 688.0 | Adjustments to reconcile net income to net cash (used in) provided by operating activities | | 391.1 | | | | 428.5 | Changes in: | | | Inventories | | (555.0 | ) | | | 44.8 | Finance receivables | | (831.4 | ) | | | (671.3 | ) Floor plan notes payable | | 87.6 | | | | (151.0 | ) Other operating activities | | 46.2 | | | | (106.0 | ) Net cash (used in) provided by operating activities | | (204.9 | ) | | | 233.0 | Cash flows from investing activities: | | | Capital expenditures | | (252.3 | ) | | | (257.7 | ) Cash paid for acquisitions, net of cash acquired | | (264.8 | ) | | | (417.6 | ) Net proceeds from sales of stores | | 31.9 | | | | 178.1 | Other investing activities | | 4.0 | | | | 17.8 | Net cash used in investing activities | | (481.2 | ) | | | (479.4 | ) Cash flows from financing activities: | | | Net borrowings on floor plan notes payable, non-trade | | 1,542.2 | | | | 73.3 | Net borrowings on non-recourse notes payable | | 291.8 | | | | 136.3 | Net borrowings on other debt and finance lease liabilities | | (456.1 | ) | | | 827.7 | Proceeds from issuance of common stock | | 21.2 | | | | 21.0 | Repurchase of common stock | | (624.5 | ) | | | (662.3 | ) Dividends paid | | (41.1 | ) | | | (42.1 | ) Other financing activity | | (11.2 | ) | | | (89.4 | ) Net cash provided by financing activities | | 722.3 | | | | 264.5 | Effect of exchange rate changes on cash and restricted cash | | (3.5 | ) | | | 4.7 | Change in cash, restricted cash, and cash equivalents | | 32.7 | | | | 22.8 | Cash, restricted cash, and cash equivalents at beginning of period | | 391.3 | | | | 445.8 | Cash, restricted cash, and cash equivalents at end of period | | 424.0 | | | | 468.6 | LAD Reconciliation of Non-GAAP Cash Flow from Operations (Unaudited) (In millions) | Nine months ended September 30, Net cash provided by operating activities | | 2026 | | | | 2025 | As reported | $ | (204.9 | ) | | $ | 233.0 | Floor plan notes payable, non-trade, net(1) | | 1,542.2 | | | | 73.3 | Adjust: finance receivables activity | | 831.4 | | | | 671.3 | Less: Borrowings on floor plan notes payable, non-trade associated with acquired new vehicle inventory | | (43.5 | ) | | | (62.9 | ) Adjusted | $ | 2,125.2 | | | $ | 914.7 | (1) Includes the impact of converting inventory‑secured revolvers to floorplan facilities during 2026, increasing net floorplan borrowings and adjusted operating cash flows $1,138.3 million. LAD Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (In millions, except for per share data) | Three Months Ended September 30, 2026 | As reported | | Net loss on disposal of stores | | Investment gain | | Insurance reserves | | Tax attribute | | Adjusted Selling, general and administrative | | 1,036.3 | | | | (5.8 | ) | | | — | | | | (0.8 | ) | | | — | | | | 1,029.7 | Operating income | | 420.2 | | | | 5.8 | | | | — | | | | 0.8 | | | | — | | | | 426.8 | Other income (expense), net | | 104.2 | | | | — | | | | (88.8 | ) | | | — | | | | — | | | | 15.4 | | | | | | | | | | | | Income before income taxes | | 391.0 | | | | 5.8 | | | | (88.8 | ) | | | 0.8 | | | | — | | | | 308.8 | Income tax (provision) benefit | | (98.1 | ) | | | (1.6 | ) | | | 23.7 | | | | (0.2 | ) | | | (3.3 | ) | | | (79.5 | ) Net income | $ | 292.9 | | | $ | 4.2 | | | $ | (65.1 | ) | | $ | 0.6 | | | $ | (3.3 | ) | | $ | 229.3 | Net income attributable to non-controlling interests | | (1.8 | ) | | | — | | | | — | | | | — | | | | — | | | | (1.8 | ) Net income attributable to LAD | $ | 291.1 | | | $ | 4.2 | | | $ | (65.1 | ) | | $ | 0.6 | | | $ | (3.3 | ) | | $ | 227.5 | | | | | | | | | | | | Diluted earnings per share attributable to LAD | $ | 13.22 | | | $ | 0.19 | | | $ | (2.95 | ) | | $ | 0.03 | | | $ | (0.15 | ) | | $ | 10.34 | Diluted share count | | 22.0 | | | | | | | | | | | | Three Months Ended September 30, 2025 | As reported | | Net gain on disposal of stores | | Investment loss | | Insurance reserves | | Acquisition expenses | | Tax attribute | | Adjusted Selling, general and administrative | $ | 998.0 | | | $ | 15.4 | | | $ | — | | | $ | (2.5 | ) | | $ | (15.9 | ) | | $ | — | | | $ | 995.0 | Operating income | | 421.6 | | | | (15.4 | ) | | | — | | | | 2.5 | | | | 15.9 | | | | — | | | | 424.6 | Other income (expense), net | | (13.3 | ) | | | — | | | | 22.7 | | | | — | | | | — | | | | — | | | | 9.4 | | | | | | | | | | | | | | Income before income taxes | | 282.2 | | | | (15.4 | ) | | | 22.7 | | | | 2.5 | | | | 15.9 | | | | — | | | | 307.9 | Income tax (provision) benefit | | (63.6 | ) | | | 7.2 | | | | (6.0 | ) | | | (0.5 | ) | | | (0.6 | ) | | | (3.5 | ) | | | (67.0 | ) Net income | $ | 218.6 | | | $ | (8.2 | ) | | $ | 16.7 | | | $ | 2.0 | | | $ | 15.3 | | | $ | (3.5 | ) | | $ | 240.9 | Net income attributable to non-controlling interests | $ | (1.5 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (1.5 | ) Net income attributable to LAD | $ | 217.1 | | | $ | (8.2 | ) | | $ | 16.7 | | | $ | 2.0 | | | $ | 15.3 | | | $ | (3.5 | ) | | $ | 239.4 | | | | | | | | | | | | | | Diluted earnings per share attributable to LAD | $ | 8.61 | | | $ | (0.32 | ) | | $ | 0.66 | | | $ | 0.08 | | | $ | 0.61 | | | $ | (0.14 | ) | | $ | 9.50 | Diluted share count | | 25.2 | | | | | | | | | | | | | LAD Reconciliation of Certain Non-GAAP Financial Measures (Unaudited) (In millions, except for per share data) | Nine Months Ended September 30, 2026 | As reported | | Net gain on disposal of stores | | Investment gain | | Insurance reserves | | Acquisition expenses | | Contract buyouts | | Tax attribute | | Adjusted Selling, general and administrative | $ | 3,088.4 | | | $ | 9.2 | | | $ | — | | | $ | (3.2 | ) | | $ | (0.7 | ) | | $ | (20.3 | ) | | $ | — | | | $ | 3,073.4 | Operating income | | 1,204.2 | | | | (9.2 | ) | | | — | | | | 3.2 | | | | 0.7 | | | | 20.3 | | | | — | | | | 1,219.2 | Other income (expense), net | | 72.7 | | | | — | | | | (43.7 | ) | | | — | | | | — | | | | — | | | | — | | | | 29.0 | | | | | | | | | | | | | | | | Income before income taxes | | 885.0 | | | | (9.2 | ) | | | (43.7 | ) | | | 3.2 | | | | 0.7 | | | | 20.3 | | | | — | | | | 856.3 | Income tax (provision) benefit | | (228.4 | ) | | | 2.4 | | | | 11.6 | | | | (0.9 | ) | | | (0.1 | ) | | | (5.1 | ) | | | (5.3 | ) | | | (225.8 | ) Net income | $ | 656.6 | | | $ | (6.8 | ) | | $ | (32.1 | ) | | $ | 2.3 | | | $ | 0.6 | | | $ | 15.2 | | | $ | (5.3 | ) | | $ | 630.5 | Net income attributable to non-controlling interests | | (5.1 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5.1 | ) Net income attributable to LAD | $ | 651.5 | | | $ | (6.8 | ) | | $ | (32.1 | ) | | $ | 2.3 | | | $ | 0.6 | | | $ | 15.2 | | | $ | (5.3 | ) | | $ | 625.4 | | | | | | | | | | | | | | | | Diluted earnings per share attributable to LAD | $ | 28.77 | | | $ | (0.30 | ) | | $ | (1.42 | ) | | $ | 0.10 | | | $ | 0.03 | | | $ | 0.67 | | | $ | (0.24 | ) | | $ | 27.61 | Diluted share count | | 22.6 | | | | | | | | | | | | | | | | Nine Months Ended September 30, 2025 | As reported | | Net gain on disposal of stores | | Investment gain | | Insurance reserves | | Acquisition expenses | | Tax attribute | | Adjusted Selling, general and administrative | $ | 2,965.3 | | | $ | 17.7 | | | $ | — | | | $ | (5.4 | ) | | $ | (16.1 | ) | | $ | — | | | $ | 2,961.5 | Operating income | | 1,253.3 | | | | (17.7 | ) | | | — | | | | 5.4 | | | | 16.1 | | | | — | | | | 1,257.1 | Other income (expense), net | | 35.9 | | | | — | | | | (4.1 | ) | | | — | | | | — | | | | — | | | | 31.8 | | | | | | | | | | | | | | Income before income taxes | | 918.9 | | | | (17.7 | ) | | | (4.1 | ) | | | 5.4 | | | | 16.1 | | | | — | | | | 918.6 | Income tax (provision) benefit | | (230.9 | ) | | | 11.6 | | | | 1.0 | | | | (1.4 | ) | | | (0.6 | ) | | | (5.7 | ) | | | (226.0 | ) Net income | $ | 688.0 | | | $ | (6.1 | ) | | $ | (3.1 | ) | | $ | 4.0 | | | $ | 15.5 | | | $ | (5.7 | ) | | $ | 692.6 | Net income attributable to non-controlling interests | | (5.3 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5.3 | ) Net income attributable to LAD | $ | 682.7 | | | $ | (6.1 | ) | | $ | (3.1 | ) | | $ | 4.0 | | | $ | 15.5 | | | $ | (5.7 | ) | | $ | 687.3 | | | | | | | | | | | | | | Diluted earnings per share attributable to LAD | $ | 26.42 | | | $ | (0.24 | ) | | $ | (0.12 | ) | | $ | 0.16 | | | $ | 0.60 | | | $ | (0.22 | ) | | $ | 26.60 | Diluted share count | | 25.8 | | | | | | | | | | | | | LAD Adjusted EBITDA and Net Debt to Adjusted EBITDA (Unaudited) (In millions) | Three months ended | | % | | Nine months ended | | % | September 30, | | Increase | | September 30, | | Increase | | 2026 | | | | 2025 | | | (Decrease) | | | 2026 | | | | 2025 | | | (Decrease) EBITDA and Adjusted EBITDA | | | | | | | | | | | Net income | $ | 292.9 | | | $ | 218.6 | | | 34.0 | % | | $ | 656.6 | | | $ | 688.0 | | | (4.6)% Flooring interest expense | | 70.3 | | | | 57.8 | | | 21.6 | | | | 195.9 | | | | 169.8 | | | 15.4 | Other interest expense | | 63.1 | | | | 68.3 | | | (7.6 | ) | | | 196.0 | | | | 200.5 | | | (2.2 | ) Financing operations interest expense | | 56.3 | | | | 52.1 | | | 8.1 | | | | 161.4 | | | | 150.0 | | | 7.6 | Income tax expense | | 98.1 | | | | 63.6 | | | 54.2 | | | | 228.4 | | | | 230.9 | | | (1.1 | ) Depreciation and amortization | | 71.6 | | | | 65.5 | | | 9.3 | | | | 212.3 | | | | 194.6 | | | 9.1 | EBITDA | $ | 652.3 | | | $ | 525.9 | | | 24.0 | % | | $ | 1,650.6 | | | $ | 1,633.8 | | | 1.0 | % | | | | | | | | | | | Other adjustments: | | | | | | | | | | | Less: flooring interest expense | $ | (70.3 | ) | | $ | (57.8 | ) | | 21.6 | | | $ | (195.9 | ) | | $ | (169.8 | ) | | 15.4 | Less: financing operations interest expense | | (56.3 | ) | | | (52.1 | ) | | 8.1 | | | | (161.4 | ) | | | (150.0 | ) | | 7.6 | Less: used vehicle line of credit interest | | — | | | | (3.7 | ) | | (100.0 | ) | | | (1.5 | ) | | | (11.2 | ) | | (86.6 | ) Add: acquisition expenses | | — | | | | 15.9 | | | NM | | | 0.7 | | | | 16.1 | | | NM Add: (gain) loss on disposal of stores | | 5.8 | | | | (15.4 | ) | | NM | | | (9.2 | ) | | | (17.7 | ) | | NM Add: investment (gain) loss | | (88.8 | ) | | | 22.7 | | | NM | | | (43.7 | ) | | | (4.1 | ) | | NM Add: insurance reserves | | 0.8 | | | | 2.5 | | | NM | | | 3.2 | | | | 5.4 | | | NM Add: contract buyouts | | — | | | | — | | | NM | | | 20.3 | | | | — | | | NM Adjusted EBITDA | $ | 443.5 | | | $ | 438.0 | | | 1.3 | % | | $ | 1,263.1 | | | $ | 1,302.5 | | | (3.0)% NM - not meaningful | As of | | % | September 30, | | Increase Net Debt to Adjusted EBITDA | | 2026 | | | | 2025 | | | (Decrease) Floor plan notes payable | $ | 6,566.8 | | | $ | 4,869.0 | | | 34.9 | % Used and service loaner vehicle inventory financing facility | | 3.5 | | | | 1,020.8 | | | (99.7 | ) Revolving lines of credit | | 1,736.6 | | | | 1,310.6 | | | 32.5 | Warehouse facilities | | 1,743.5 | | | | 1,252.0 | | | 39.3 | Non-recourse notes payable | | 2,765.7 | | | | 2,245.6 | | | 23.2 | 4.625% Senior notes due 2027 | | 400.0 | | | | 400.0 | | | — | 3.875% Senior notes due 2029 | | 800.0 | | | | 800.0 | | | — | 5.500% Senior notes due 2030 | | 600.0 | | | | 600.0 | | | — | 4.375% Senior notes due 2031 | | 550.0 | | | | 550.0 | | | — | Real estate mortgages, finance lease obligations, and other debt | | 1,114.6 | | | | 1,117.3 | | | (0.2 | ) Unamortized debt issuance costs | | (24.4 | ) | | | (26.7 | ) | | (8.6 | ) Total debt | $ | 16,256.3 | | | $ | 14,138.5 | | | 15.0 | % | | | | | Less: Inventory related debt | $ | (6,570.3 | ) | | $ | (5,889.8 | ) | | 11.6 | % Less: Financing operations related debt | | (4,509.2 | ) | | | (3,497.6 | ) | | 28.9 | Less: Unrestricted cash and cash equivalents | | (108.1 | ) | | | (206.5 | ) | | (47.7 | ) Less: Marketable securities | | (76.1 | ) | | | (54.9 | ) | | 38.6 | Less: Availability on used vehicle and service loaner financing facilities | | (0.4 | ) | | | (18.8 | ) | | (97.9 | ) Net Debt | $ | 4,992.2 | | | $ | 4,470.9 | | | 11.7 | % | | | | | TTM Adjusted EBITDA | $ | 1,627.2 | | | $ | 1,701.9 | | | (4.4)% | | | | | Net debt to Adjusted EBITDA | 3.07        x | | 2.63        x | | NM - not meaningful CONTACT: Contact:Jardon Jaramillo Senior Director - Finance and Investor [email protected] (503) 799-5254