LAD

A month has gone by since the last earnings report for Lithia Motors (LAD). Shares have lost about 8.4% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is Lithia Motors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts. Lithia posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. Improved used-vehicle profitability, aftersales growth and record Financing Operations income supported the results. Driveway Finance Corporation generated record originations of $884 million. New-vehicle revenues rose 2.7% year over year to $4,829.2 million, while used-vehicle revenues increased 1.4% to $3,528.3 million. Aftersales revenues advanced 3.9% to $1,067.4 million. Finance and insurance revenues declined 2% to $366.4 million. Same-store new-vehicle revenues fell 1.5%, while same-store used-vehicle revenues decreased 2.2%, showing that acquisitions contributed to the consolidated growth in both categories. New-vehicle unit sales increased 2.7% to 104,089 units. Used retail unit sales declined 2.7% to 106,114 units, but the used retail average selling price rose 4.3% to $29,593. Used-vehicle gross profit increased 4.2% to $214 million. Used retail gross profit per unit climbed 5.4% to $2,014, and the used-vehicle gross margin expanded 20 basis points to 6.1%. By contrast, new-vehicle gross profit per unit fell 11.8% to $2,728 as the new-vehicle margin contracted 80 basis points to 5.9%. Aftersales gross profit increased 6.8% year over year to $633 million. Its gross margin expanded 160 basis points to 59.3%, reinforcing the importance of recurring service and repair activity to overall profitability. Aftersales accounted for 42.2% of total gross profit, up from 39.9% a year earlier. Total gross profit increased 0.8% to $1,497.4 million, although the consolidated gross margin narrowed 20 basis points to 15.3%. Selling, general and administrative expenses were unchanged year over year at $1,014.7 million. Lower personnel and other costs offset higher advertising, rent and facility expenses. Reported SG&A as a percentage of gross profit improved 50 basis points to 67.8%. Income from operations increased 5.4% to $448.3 million, while depreciation and amortization rose 8.7% to $70.9 million. Floor plan interest expense increased 26.7% to $69.7 million, partly tempering the operating improvement. Financing Operations income surged 81.6% to $36.5 million. Interest and fee income increased to $116.4 million from $98.8 million, while the total interest margin expanded to 4.8% from 4.5%. DFC’s penetration rate was 17.5%, and the average FICO score on originated loans was 749. Managed finance receivables reached nearly $5.3 billion, up 23% year over year, supporting a larger stream of interest income. More than 99% of the portfolio was less than 60 days past due. As of June 30, 2026, cash, restricted cash and cash equivalents totaled $363.9 million, up from $341.8 million as of Dec. 31, 2025. Inventories increased to $6,516.8 million from $6,119.6 million at year-end 2025, while total floor plan debt rose to $6,387.4 million from $5,008.9 million. For the first six months of 2026, net cash used in operating activities was $174.1 million, reflecting increases in inventories and finance receivables. Capital expenditures totaled $153.4 million, and cash paid for acquisitions was $221.7 million. Available liquidity was approximately $1.3 billion. During the quarter, LAD repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. Approximately $620 million remained under the authorization at quarter-end. The board increased the quarterly dividend 23% to 70 cents per share. In the past month, investors have witnessed a upward trend in estimates revision. The consensus estimate has shifted 8.7% due to these changes. Currently, Lithia Motors has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the top 40% for value investors. Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Lithia Motors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. 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

Lithia Motors stock has produced a 23.7% return over the past three years, while several valuation checks currently point to the shares trading below an estimate of intrinsic value. The Discounted Cash Flow (DCF) and earnings multiple views both lean toward the stock being undervalued relative to its recent performance. A 23.7% three year return suggests Lithia Motors has already rewarded patient holders. This makes the current value gap more interesting for anyone looking at the next phase. The recent appointment of Scott Cooke as Operations President can support execution on growth plans. Integration and execution risks across store operations and finance activities may affect how much of that potential value is realised. The broader checks lean cheap, with a high value score of 5 out of 6 hinting at a margin between the current share price and conservative valuation work. The issue now is whether Lithia Motors’ current US$371.89 share price already reflects these positive signals or if the stock still trades at a discount that matters to long term investors. Spot potential peers to Lithia Motors by scanning a curated list of value candidates in the 49 high quality undervalued stocks that also screen well on quality. The Discounted Cash Flow (DCF) approach values Lithia Motors by projecting future free cash flows and discounting them back to today. The latest twelve month free cash flow is a loss of about $493.5 million, and the model assumes cash flows recover and grow over time based on analyst and internal projections. Based on those assumptions, the 2 Stage Free Cash Flow to Equity model points to an estimated intrinsic value of about $440 per share, compared with the current share price of around $372. That difference implies the stock screens as roughly 15.4% undervalued on this cash flow view. Because the recent appointment of Scott Cooke as Operations President focuses on store operations and finance activities, the market may still be waiting to see how effectively those areas support the cash flow recovery that underpins this valuation. On this DCF setup, Lithia Motors stock appears undervalued relative to the cash flows the model is pricing in. Our Discounted Cash Flow (DCF) analysis suggests Lithia Motors is undervalued by 15.4%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Lithia Motors. The P/E ratio suits Lithia Motors because earnings are a key focus for many investors in established retailers. Lithia Motors trades on a P/E of about 11.4x, which is below both the Specialty Retail industry average of roughly 18.8x and a peer group average near 26.5x. That already hints at a sizeable gap between what the market is paying for each dollar of Lithia Motors earnings and what it pays across the wider group. A fair P/E ratio for Lithia Motors is estimated at about 18.2x, based on factors such as its sector, profitability profile, size and risk. Compared with the current 11.4x multiple, this suggests the market is assigning a lower earnings value than this framework implies, even after accounting for those risk and quality adjustments. On this earnings yardstick, Lithia Motors stock appears undervalued relative to both the industry and its modelled fair multiple. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Lithia Motors pick up where the valuation puzzle leaves off and explain which paths on growth, margins and earnings would need to play out for the stock to be worth materially more or less than today’s price. Each narrative links a fair value estimate to a clear story about Lithia Motors' possible catalysts and risks so you can later judge which version is closest to reality. One of the top community narratives on Lithia Motors: 16% undervalued Read one of the top narratives on Lithia Motors Do you think there's more to the story for Lithia Motors? Head over to our Community to see what others are saying! The valuation work on Lithia Motors points in the same direction. Both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings multiple view suggest the stock screens as undervalued rather than fully priced. The key question from here is whether management can deliver on cash flow recovery and execution across store operations so that the market gains confidence and closes some of that discount, or whether current concerns about those risks prove justified and the gap persists. 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]

AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Results benefited from record After-Sales gross profit and stronger Customer Financial Services profitability. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%. AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit. Customer-pay revenues increased 7% year over year, while wholesale parts revenues advanced 16%. Customer-pay repair orders rose 5% and warranty repair orders increased 8%. Parts and service gross margin declined to 48.1% from 49%, mainly reflecting a higher mix of lower-margin wholesale parts. Customer Financial Services gross profit totaled $357.6 million, down 2.7% from $367.7 million a year earlier as lower retail vehicle volumes offset stronger per-unit profitability. CFS gross profit per vehicle retailed climbed 3.2% to $2,799 from $2,712. The improvement came despite an approximately 2% drag from higher AutoNation Finance originations. AutoNation Finance, meanwhile, generated income of $10.7 million, up from $2 million a year ago. The portfolio reached $2.67 billion, increasing about 52% from $1.76 billion, while quarterly originations totaled $485 million. AN Finance accounted for 11% of total vehicle sales and 18% of financed vehicle sales, highlighting the growing contribution of the captive finance platform. New vehicle revenues declined 3.1% to $3.29 billion as retail unit sales fell 4% to 63,240. New vehicle gross profit per unit dropped 14.5% to $2,381, reflecting higher vehicle costs. Much of the volume decline was due to weaker battery-electric vehicle sales and difficult comparisons against tariff-related demand pull-forward in 2025. Used vehicle revenues increased 1.3% to $2.01 billion despite a 7.5% decline in retail unit sales to 64,521. Retail used vehicle revenue per unit increased 8.4% to $28,674, while gross profit per unit slipped 2.5% to $1,582. Total gross profit fell 3.5% year over year to $1.23 billion, with gross margin narrowing to 17.8% from 18.3%. Adjusted operating income declined 7% to $343.1 million from $369.3 million. Adjusted SG&A expenses represented 68.2% of gross profit, improving sequentially from 69.8% in the first quarter but remaining above 66.2% a year ago. Management expects the ratio to reach its 66%-67% target range on a run-rate basis by year-end. Adjusted free cash flow totaled $439.2 million in the first half of 2026, representing 125% of adjusted net income. AutoNation spent $316.5 million on acquisitions and $126 million on capital expenditures during the period. The company also repurchased 2.3 million shares for $457 million in the first half.  As of June 30, 2026, cash and cash equivalents were $53.3 million. Non-vehicle debt was $4.43 billion. AutoNation had about $1 billion of liquidity, including $0.9 billion available under its revolving credit facility, net of commercial paper borrowings. Management expects after-sales customer-pay gross profit to maintain mid-single-digit growth, supported by customer retention and technician capacity. With stable vehicle unit profitability, continued CFS and After-Sales growth, AutoNation Finance expansion and a lower share count, management expects adjusted earnings per share to grow year over year in the second half of 2026. AN stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Penske’s revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, Penske’s liquidity was about $1.4 billion, including $69.5 million in cash. Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share, down 17% year over year. Earnings beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The company raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. Sonic’s EchoPark unit is still expected to deliver 12%-15% retail used-unit growth this year. Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025. During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. 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 AutoNation, Inc. (AN) : Free Stock Analysis Report Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share. Earnings declined 17% year over year but beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. The quarter benefited from higher retail new and used vehicle volumes and growth across EchoPark and Powersports segments. At the consolidated level, gross profit rose 2% to $616.2 million. Adjusted SG&A expenses increased 6% to $443.4 million. Adjusted SG&A, as a percentage of gross profit, was 72.0% compared with 69.2% a year earlier. Adjusted net income fell 23% to $58.3 million. Sonic Automotive, Inc. price-consensus-eps-surprise-chart | Sonic Automotive, Inc. Quote Franchised Dealerships segment revenues increased 6% year over year to $3.28 billion. New-vehicle revenues rose 5% to $1.76 billion, while used-vehicle revenues increased 9% to $814.3 million. Parts, service and collision repair revenues advanced 6% to $515.5 million, while finance, insurance and other revenues increased 2% to $147.9 million. Retail new-vehicle unit volume rose 1%, and used-vehicle volume advanced 6%. Profit per vehicle remained under pressure. Reported retail new-vehicle gross profit per unit fell 11% to $3,024, while used-vehicle gross profit per unit declined 12% to $1,399. Segment income was $70.7 million, down 23% from the year-ago period. Management cited difficult comparisons tied to pre-tariff consumer demand pull-forward in the second quarter of 2025. EchoPark revenues increased 15% to $582.9 million, while gross profit rose 4% to a second-quarter record $64.3 million. Retail used-vehicle sales volume increased 17% as Sonic carried more affordable inventory and expanded its non-auction sourcing mix. Wholesale vehicle volumes increased 12%. That volume growth came with lower per-unit economics. Total used-vehicle and F&I gross profit per unit fell 12% to $3,292. Segment income dropped 38% to $7.2 million, while adjusted EBITDA declined 15% to $13.9 million. Powersports revenues surged 53% to a second-quarter record $73.5 million. Gross profit increased 58% to $19.7 million. New retail unit volume rose 27% to 1,775 units, while used retail volume jumped 61% to 1,317 units. Finance and insurance revenues climbed 75% to $3.5 million, with F&I gross profit per unit up 27% to $1,125. Segment income improved to $2.3 million from breakeven, and adjusted EBITDA increased 145% to $4.9 million. The five Harley-Davidson dealerships acquired in April are expected to add about $100 million in annualized revenue. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The board approved a quarterly dividend of 41 cents per share, to be paid out on Oct. 15, 2026, to stockholders of record as of Sept. 15. Management raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. EchoPark is still expected to deliver 12%-15% retail used-unit growth, total gross profit per unit of $3,100-$3,300 and adjusted EBITDA of $35-$40 million. Sonic also expects $8-$12 million of incremental EchoPark brand marketing expense in the fourth quarter and plans to open an Orlando location during the quarter. Sonic currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Penske’s revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, Penske’s liquidity was about $1.4 billion, including $69.5 million in cash. Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025.During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%. Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit. As of June 30, 2026, AutoNation had cash and cash equivalents of $53.3 million. Non-vehicle debt was $4.43 billion. 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 Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report AutoNation, Inc. (AN) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. Retail automotive same-store new and used units increased 5%, while same-store service and parts gross margin improved 80 basis points to 59.5%. Penske currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Penske Automotive Group, Inc. price-consensus-eps-surprise-chart | Penske Automotive Group, Inc. Quote Retail automotive revenues increased 6% year over year to $7.3 billion. New vehicle revenues rose 5.9% to $3.38 billion, used vehicle revenues advanced 9.4% to $2.47 billion and finance and insurance revenues increased 1.3% to $211 million. Service and parts revenues rose 1.6% to $867.1 million, while fleet and wholesale revenues declined 0.8% to $375.6 million. Same-store revenues grew 5.7% to $7.12 billion. Retail automotive gross profit slipped 0.7% to $1.16 billion, with gross margin contracting to 15.8% from 16.9%. New vehicle gross profit per retail unit fell 10.4% to $4,782, while used vehicle gross profit per unit declined 8.8% to $2,095. Service and parts gross profit increased 3.1% to $517 million. Retail commercial truck revenues declined 1.7% year over year to $927.8 million. Total new and used truck units retailed increased 1.7% to 5,431, as a 64.8% jump in used units offset a 7.8% decline in new units. Retail commercial truck gross profit slipped 0.6% to $142.8 million, while gross margin improved 20 basis points to 15.4%. Class 8 market orders increased 170% in the second quarter. Premier Truck Group's backlog was about 10,400 units, with the majority expected to convert into retail sales in the second half of 2026. Used truck demand also strengthened as freight conditions improved. Commercial Vehicle Distribution and Other revenues jumped 41.1% year over year to $283.9 million. Gross profit rose 30.5% to $57.7 million, although gross margin declined to 20.3% from 22%. Australia's off-highway business was a key contributor, with revenues increasing 63% in the quarter. The company secured more than $300 million of orders during the period, bringing its 2026 secured order book to nearly $660 million, supported by energy solutions, mining and defense demand. Penske Transportation Solutions contributed $57.4 million in earnings to PAG, up 7% year over year. The improvement reflected growth in full-service leasing, better fleet utilization, lower operating expenses and lower interest costs. PTS managed more than 379,200 trucks, tractors and trailers. Continued weakness in the rental market and a lower gain on used-truck sales partly offset the benefits from improved freight conditions and fleet-rightsizing actions. Consolidated gross profit edged up 0.4% to $1.36 billion, but gross margin narrowed to 15.9% from 16.8%. Selling, general and administrative expenses increased 3.2% to $974 million, and operating income declined 7.6% to $337.6 million. Operating margin fell to 4% from 4.5%. Adjusted EBITDA was $401.8 million, up 0.3%, while other interest expense rose 53.2% to $33.1 million, reflecting higher borrowing costs associated with acquisitions. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, liquidity was about $1.4 billion, including $69.5 million in cash. PAG repurchased 265,104 shares for $42.5 million in the first half, leaving $221.2 million available under its repurchase authorization. The board also raised the quarterly dividend 1.4% to $1.44 per share, marking the company's 23rd consecutive quarterly increase. Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share, which fell 17% year over year but beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The company raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. Sonic’s EchoPark unit is still expected to deliver 12%-15% retail used-unit growth this year. Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025.During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%. Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit. As of June 30, 2026, AutoNation had cash and cash equivalents of $53.3 million. Non-vehicle debt was $4.43 billion. 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 Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report AutoNation, Inc. (AN) : Free Stock Analysis Report Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, July 29, 2026 at 10 a.m. ET President and Chief Executive Officer - Bryan DeBoer Senior Vice President and Chief Financial Officer - Tina Miller Senior Vice President of Driveway Finance Corporation - Charles Lietz Director of Finance - Jardon Jaramillo Operator: Greetings. Welcome to Lithia Motors & Driveway Second Quarter 2026 Results Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Jardon Jaramillo, Director of Finance. Thank you. You may begin. Jardon Jaramillo: Good morning. Thank you for joining us for our second quarter earnings call. With me today are Bryan DeBoer, President and CEO; Tina Miller, Senior Vice President and CFO; and Chuck Lietz, Senior Vice President of Driveway Finance Corporation. 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 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 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 second quarter results. With that, I would like to turn the call over to Bryan. Bryan DeBoer: Thank you, Jardon. Good morning, and welcome to our quarterly earnings call. The second quarter was another record for Lithia & Driveway. We delivered revenues of $9.8 billion and adjusted diluted EPS of $10.03, up 9% from last year as our leaders continue to demonstrate the earnings power of our diversified model in a somewhat dynamic environment. The quality of these earnings is what really stands out to me. New vehicle margins continue to be stable. Used vehicle profitability strengthened considerably, and we drove meaningful sequential improvements in SG&A as a percentage of gross profit. Driveway Finance Corporation delivered another quarter of record originations, growing income more than 70% over last year. Our ecosystem is built so that each business line reinforces the others. And this quarter, every part of the engine contributed. Our growth is powered by our people and winning share in our local markets alongside improved pricing and cost efficiencies that flow straight to the bottom line. What's so special is that each of those relationships compounds, the customer we finance through DFC today becomes tomorrow's service visit and eventually the trade-ins for our used inventory. During the quarter, same-store revenues declined 1.6% and total gross profit declined 2.7%. This was quite resilient performance against our toughest comparison of the year as we lapped an exceptionally strong second quarter of 2025. Total vehicle GPUs rose to $4,119, up nearly $200 sequentially from the first quarter, giving us real momentum. As a reminder, all vehicle operations results from this point forward are on a same-store basis. Our diversified earnings mix again provided balance with used vehicle gross profit up 1.2% and aftersales gross profit up 3.1%, both on the strength of improved margins. New vehicle revenue declined 1.5% on 2.2% lower units, solid performance against a demanding comparison to last year's Q2 tariff pull-forward. New vehicle GPU of $2,718 was essentially flat with the first quarter, making it the third consecutive quarter of stability. Looking at brand mix, imports grew 5%, while domestic declined 7% and luxury declined 4%. We view these conditions as cyclical. And with the most difficult comparison now behind us, our teams carry the momentum into the second half of the year. In used vehicles, our profitability strategy is delivering and a real testament to our ecosystem, AI and people all working closely together. Used GPU of $2,019 improved $339 sequentially from the first quarter and total gross profit grew 1.2%. The work on dynamic pricing we discussed earlier this year is taking hold and used is one of the highest return areas of our business and a stable anchor through new vehicle cycles. It is also a key entry point into our ecosystem for all affordability levels and a feeder to grow F&I, aftersales and DFC over time. F&I was consistent at $1,811, showing strong product attachment and total financing penetration rising 140 basis points. Keep in mind that DFC's growing penetration intentionally moves a portion of the finance gross profit out of F&I and into our captive platform, where it converts into recurring countercyclical income that is 3x more profitable over the life of each loan. Adjusted for this shift, F&I continued to build momentum and grow. Aftersales continues to be a source of resiliency, high-quality earnings and substantial and predictable gross profit that converts into considerable operating profits. Gross profit grew 3.1% on revenue growth of 1% with margins expanding 120 basis points year-over-year to 59.2% and customer paid gross profit growing 2.6% and warranty up 5.4%. Aftersales earns its margin on every vehicle in operations, not just every vehicle sold by us, giving us a dependable earnings base through every phase of the cycle, creating consistency through intentional design. Aftersales continues to be our largest business line, contributing 42.2% of our gross profit with significantly lower SG&A than retail vehicles and driving the majority of our operating profit. Adjusted SG&A as a percentage of gross profit was 68.6%, a 290 basis point improvement from the first quarter. More importantly, the costs were completed thus far is now visible in absolute dollars with same-store SG&A declining year-over-year, led by nearly a 3% reduction in personnel costs, and June's SG&A percentage improved versus the prior year. This is exactly the exit rate we wanted heading into the second half of '26. These results reflect real structural changes, not onetime cuts. Our sales departments are rearchitecting how they operate with combined roles removing layers, remote functions and extending leaders across multiple stores and departments. Our back office continues to get leaner through automation and vendor consolidation as we prepare for a simpler technology future, led by the early contributions from AI tools in the U.K. Each quarter of this execution moves us closer to our sub-60% SG&A target. And as vehicle margins stabilize and volumes improve, that leverage flows straight to earnings. In the U.K., the momentum keeps building. Gross profit grew 12% and adjusted pretax income rose 78%, while SG&A as a percentage of gross improved 200 basis points year-over-year. Used vehicles led the way with gross profit up nearly 33% and new vehicle units grew 16%, driven by a strong execution and expanding Chinese OEM partnerships. The past few focused years of network optimization is translating into consistent and profitable growth globally. On the digital front, we keep making it simpler, faster and more transparent for our customers to shop finance and service with us in whatever channel they choose. The centerpieces today are Lithia, DFC, Driveway and GreenCars and beginning to be amplified by our partnership with Pinewood.AI. Its industry-leading DMS and AI solutions are in full swing in the United Kingdom with the North American rollout just around the corner later this year. The power of Pinewood's technology and AI bring a potential 10x scale multiplier to Lithia & Driveway's global cost savings. We are pleased that Ridgeview Partners is acquiring Pinewood.AI and our strategic alignment is unchanged. We continue to build an even stronger technology future on the same platform with the same shared priorities. Ridgeview arrives with the conviction to accelerate what Pinewood.AI has built, and we expect the transaction to generate a meaningful valuation gain on our investment. By moving our team members on to the same AI native environment, cost and complexity is taken out of the business, deepens retention and strengthens the connective tissue of our ecosystem, all while empowering both our team members and customers to create unique and trusted relationships. Driveway Finance Corporation continues to scale exponentially and profitably. Financing operations income reached $37 million for the quarter with DFC more than doubling its profitability. This growth was driven by record originations of $884 million, net interest margin expansion of 20 basis points to 4.8% and continued strong credit experience from a captive high-quality portfolio. With managed receivables now above $5 billion and penetration climbing towards our target of 20% or more, DFC is doing exactly what we built it to do, converting vehicle sales into recurring countercyclical income with considerably greater customer impressions and earnings power. Turning to capital allocation. Our philosophy is consistent and simple, deploy capital where it generates the highest returns for our shareholders. With our shares trading well below intrinsic value, repurchases remain our top priority. We bought back $242 million of stock in the quarter, retiring approximately 4% of our outstanding shares, and our share count is now 17% less than it was just 1 year ago. Our strong cash generation allows us to both return meaningful capital to shareholders and grow our network when the opportunity is right. In the first half of the year, we made strategic acquisitions of $765 million in revenue and divested $120 million of underperforming revenue that also generated extra capital to put to work more efficiently in other places. We continue to diversify our U.K. portfolio with emerging Chinese OEMs and expanding our presence with existing brands. These early Chinese OEM partnerships capture growth and position us to both learn and become larger partners if we choose as these manufacturers expand their presence internationally. This growth is always underwritten with discipline and consistent execution. We target purchase prices of 15% to 30% of revenue or 3 to 6x normalized EBITDA. This framework has delivered returns of more than 25% for more than a decade, well above our stated 15% after-tax hurdle rate. That's pretty good in an unconsolidated industry. Looking ahead, we will keep balancing share repurchases, acquisitions, organic investment and our balance sheet strength, strategically generating the highest returns for our shareholders. Our confidence is reinforced by this quarter's results all nicely coming together with sequential SG&A improvement, record DFC income, a used vehicle engine gaining momentum and strength in aftersales, all creating improved earnings quality. As these levers compound alongside opportunistic capital allocation, they keep us squarely on the path to our longer-term target of $2 of EPS for every $1 billion of revenue. Our teams are building that future one customer at a time as our differentiated and highly diversified model shifts into high gear. With that, I'll turn the call over to Tina. Tina Miller: Thank you, Bryan. Our second quarter showed strong sequential improvement in earnings with year-over-year comparisons reflecting the margin normalization and impact of prior year demand pull forward. Beneath these comps, the model performed exactly as designed. Resilient cash generation funded meaningful capital returns and continued growth, all while maintaining balance. This optionality to return capital, invest in the business and protect the balance sheet at the same time comes from our scale and our diversified earnings streams. These strengths run throughout the company where our leaders are focused on performance through our people. As Bryan mentioned, adjusted SG&A as a percentage of gross profit was 68.6% for the quarter on a same-store and consolidated basis. This year-over-year trend reflects the impact of top line pressure in the comparison. This quarter's results demonstrate our ability to maintain cost structure discipline while increasing top line profitability in GPUs and after sales. Importantly, personnel, our largest cost category, improved 30 basis points as a percentage of gross profit. And on a same-store basis, total SG&A dollars declined. Our stores, especially in the sales departments, are gaining momentum in rebalancing their cost structures, improving the comp plans to reward profitable growth, aligning staff with throughput and consolidating roles where technology allows, all while strengthening the customer experience. Beyond the sales departments, we continue to advance structural improvements across the business, lifting store and back-office productivity through performance management, consolidating our technology footprint as we retire legacy systems, improving vendor economics at our scale and removing manual work from the back office through automation. The early savings are visible in this quarter's results, and they build with each initiative we complete. Pinewood.AI is an important part of that trajectory, and we are deliberately pacing the rollout so that the gains we capture endure and never disrupt operational success. Moving on to financing operations. As Bryan mentioned, DFC delivered another exceptional quarter. Originations reached a record $884 million, and net interest margin was 4.8%, up 20 basis points from a year ago, reflecting a business that continues to mature and a cost of funds that improves as we scale. North American penetration reached 18%, continuing its steady climb toward our long-term target. Credit performance continues to reflect our disciplined underwriting. Origination FICO scores averaged 748. Front-end LTVs held steady at 96%, and our provisioning needs continue to decline as our conservative lending approach pays off. These results demonstrate the advantage of underwriting at the top of the funnel. Our portfolio crossed the $5 billion mark this quarter and scale is compounding our advantages, deeper access to the securitization markets, stronger funding execution and fixed costs spread across a larger earnings base. With penetration still below our 20% plus target, we have significant runway ahead and expect margins to keep building. DFC is delivering on its potential, adding a second engine of durable, high-quality earnings to our ecosystem. Next, I'll discuss the strength of our cash flows and balance sheet. We reported adjusted EBITDA of $445 million in the second quarter, down a modest 2% year-over-year. Adjusted cash flow from operations, our representation of free cash flow was $228 million for the quarter, up 76% from a year ago, bringing our first half total to $609 million after adjusting for the onetime benefit related to our used vehicle floor plan in Q1. This regenerative cash engine is what funds our flexibility. In the quarter, it supported our share repurchases and dividends, along with our continued investment in the network. Repurchases were executed at an average price of $284, a meaningful discount to our view of intrinsic value. We also raised our dividend 23% to $0.70 per share, a reflection of our confidence in the durability and trajectory of our cash generation. Through the first half of the year, we have returned more than $560 million to shareholders across buybacks and dividends. As we move through the second half of the year, our approach remains disciplined and opportunistic. With growing free cash flow and ample liquidity, we will keep directing capital to repurchases when relative valuations are attractive and to acquisitions that clear our return hurdles and further leverage our ecosystem, including DFC. That flexibility lets us create value through buybacks while strengthening and diversifying our network. Over the past several quarters, we have been laying the foundation for the growth ahead. Our share repurchases mean our share count now stands meaningfully below where it was a year ago, compounding earnings growth and improving cost structure, new vehicle margins finding their footing, strengthening used vehicle performance and DFC scaling means that as volumes build through the second half, the earnings leverage in our model flows through amplified. We are confident this combination of durable cash flow, prudent capital deployment and the compounding power of our ecosystem will continue creating long-term value for shareholders. This concludes our prepared remarks. With that, I'll turn the call over to the operator for questions. Operator? Operator: [Operator Instructions] Our first question is from Michael Ward with Citi Research. Michael Ward: Bryan, you mentioned 200 basis point improvement in SG&A in the U.K. To what extent and how much did Pinewood contribute to that? And is that what we can expect as you roll it out throughout the U.S.? Bryan DeBoer: Mike, this is Bryan. The 200 basis points that we mentioned in the U.K. is about half driven off of the new Pinewood.AI solutions. I'm very happy to report that the integration of that product a couple of years ago into the entire 150-store platform in the United Kingdom was extremely smooth and is the pathway into the United States. The AI solutions that we've talked about now for the last few quarters, a couple of quarters ago, we had almost 150 different edits that needed to be completed to be able to get the agentics to work properly, the other benefits of the AI to work properly. And I'm proud to report that it's less than a dozen today and that the teams in the U.K. are ecstatic about what's happening and can see the pathway to the original numbers that we provided, which I believe was 447,000 hours on an annualized basis, which they should be able to realize at least half of those through the end of the year. So big numbers. And I think the important part to remember, Mike, and you obviously know this is the read-through into the United States of having 10x the expense and cost structure means that, that those benefits from the progress that we're making in the U.K. are pretty easy readthroughs into the United States, which will be one of the catalysts and the engines to drive us to a sub-60% SG&A. Michael Ward: That's what it sounds like. Chuck, on the DFC side, that was stronger than expected. Are we at a new level just because of some of the things Tina pointed out as far as scale, cost, those sorts of things. What type -- is this the new benchmark for a quarter, this $35 million to $40 million? Charles Lietz: Mike, this is Chuck. Thanks for your question. I would say we're very pleased with the DFC results. And yes, this was definitely an improvement and really just validated a lot of what we've been talking about in prior quarters about the strength of being top of funnel and getting preferential selection from a credit quality performance and just some of the economies of scale that you brought out. With regards to your question or your point about is this sort of the new normal, I would say the second half, while we still are very optimistic that we can achieve similar types of profitability, I would say that there is seasonality that we will have to deal with that just happens as a normal matter, of course, in the second half of the year. But again, we still very confident about our forward-looking growth trajectory for DFC, and we're well on our way toward our path towards our long-term goals. Operator: Our next question is from Ryan Sigdahl with Craig-Hallum Capital Group. Ryan Sigdahl: Kudos on the conviction and timing of your buybacks with the stock at all-time highs today. GPUs on the used side, really strong, I guess, incrementally relative to expectations and kind of that build with the dynamic pricing starting to layer in. I guess how do you think about the strategy? How do you think about the second half of the year? Help us kind of with the cadence of that GPU improvement this quarter relative to go forward? Bryan DeBoer: Sure, Ryan, this is Bryan again. I think on the past few calls, we've talked about our looking at price to market and knowing that those value auto vehicles, we've been selling them for way under market value as well as the low miles for the vintage of the model. We've been selling for under. And I think our AI is alongside our people in the field are repricing cars at the appropriate level. And I think -- when we think about moving forward, I think this quarter really highlights how we're thinking about it looking forward that we are finding the balance between volume and margins to ensure that we realize our '26 goal, which we've made very clear within our global store footprint that it's about nothing but net, okay? And that nothing but net is becoming a reality because that net is what shows the benefits of the entire ecosystem that we've built and the differentiation between other models. So I'm pretty excited about it. I'm really proud of our team, and I'd like to congratulate our general managers and each of them for finding that balance between both volume and margin. Ryan Sigdahl: And just following up on DFC. You raised the midterm target for, remind us what that time -- midterm time frame is? And then secondly, just on the Q2 specifically, there was a much lower provision. Was there a onetime benefit from a reserve release? Or I guess, is there a structural change in the underlying credit profile go-forward assumptions as you go forward with that business? Charles Lietz: Yes, Ryan, this is Chuck again. So with regards to the provision, this is just a testament to DFC's credit performance, and I'll give you some further stats. Our 30-plus delinquency up and down the credit bucket actually improved on a year-over-year basis. And that improvement was from between 12% and 20-plus percent. Now if you look at what Equifax provided for year-over-year performance, it was essentially flat. So we feel very confident that our provision expense, there was a small fairly immaterial adjustment on that, but we feel very confident that our portfolio is strong, that our credit quality underwriting is disciplined and consistent. And all of that will continue to allow us to see consistent, predictable and repeatable earnings as we go forward for DFC. With regards to the midterm target, I think we're getting much closer to line of sight to that. It's still probably a couple of years out, but a lot of that has to do with how quickly we look to grow the portfolio and get to that 20% pen rate because we will have that front-end loaded CECL reserves. So to some extent, we see that's very achievable in the near term. But how much and when we choose to grow the portfolio could be a headwind towards that, Ryan. Operator: Our next question is from Rajat Gupta with JPMorgan. Rajat Gupta: Congrats on the good execution. I wanted to double click a little bit on the SG&A performance just broadly for the company overall in the second quarter. Obviously, used car GPUs were strong. U.K. had some progress. But you also saw a pretty nice seasonal lift in the volumes 1Q to 2Q. I think in the past, when you haven't seen like a good enough volume lift quarter-to-quarter, SG&A has typically underperformed. I'm curious if you could unpack some of the sequential pickup between how much was it driven by volume leverage? How much was it GPUs, just so that we can get comfortable with the sustainability of these levels in the back half? And I have a quick follow-up. Bryan DeBoer: Great, Raja. Let me dig into SG&A just a little bit deeper. I think we've spoke about our ability to drive down costs, whether it's through U.K. AI and the future of North American AI, but the most important driver is driving performance through people. And that's coming through reductions in a lot of different areas. We talked about job combinations in the past. That's starting to take hold. We've talked about multifunctions where you may have a service manager and a parts manager that now is a combined position. You may have used car managers and new car managers that's now a combined position. And then lastly, our remote F&I is gaining traction in about a dozen of our stores. That's a big cost savings in the future. And again, it's a massive time savings and convenience to not only our customers, but allows our F&I people to be doing F&I wherever they really choose. Alongside that, our procurement at a high level is starting to gain traction with contract renegotiations. We haven't done a ton on that and the scale that we've now reached, there's some pretty big cost savings that we're looking at there. The last thing that I would say is that it appears, and though we haven't seen the rest of the peer group results, our North American SG&A was 66.2%. And that, we believe, will be the first time that Lithia & Driveway returns to the #1 position in prominence as the lowest SG&A in North America. It's been almost a decade gain. So it's a lot of heavy lifting and a lot of hard work. And I'm proud to also report that June, we had our first year-over-year quarter with lower SG&A in the month by almost 60 basis points. And just to look at the trends, if you remember 2 quarters ago, we were almost 500 basis points up year-over-year. Last quarter, we were 330-ish basis points. This quarter at 140 basis points, that's massive sequential improvement, also knowing that SG&A in June was actually down. So we're pretty excited about that. In terms of the volume that you mentioned, Rajat, our volumes are actually down, okay, slightly in both new and used on a same-store basis. And ultimately, that is what drives the volume. So it is truly cost savings combined with the $339 increase in used car GPU. This is truly finding the balance between volume and margin, while most importantly, balancing and finding the benefits of everything that we've done in the ecosystem, whether it's DFC that Chuck talked about or whether it's utilizing the driveway.com and the MyDriveway consumer portal or whether it's GreenCars or whether it's our investments in Pinewood.AI or Wheels Fleet Management. These are all things that are really defining a difference in a diversified model of who Lithia & Driveway really are. Rajat Gupta: Understood. Yes, the volume comment I was making was more like on a sequential basis, but I would appreciate like all that details on the cost. And just a follow-up on the used car side. Very strong GPUs. Obviously, U.K. looks like was a benefit to that number. Typically, when we see like new car volumes on a same-store basis being down, we see that flowing through in the used car business as well. It was a bit more disconnected this quarter in terms of the same-store volume weakness on the used car side. And I'm curious if there were some sort of strategic shift in prioritizing GPU over volume this quarter? And if that is how we should think about how you're going to manage in the near term? Bryan DeBoer: Great, Raja. I think it is important that we find the balance between volume and gross profit because that is an easier and more predictable way to look at your SG&A and cost structure. And you'll see us continue to do that, and that is the message that our operational leaders and myself are promoting. I think on top of that, on a year-to-date basis, it's important to note that retail SAAR as a country is down 4%. We're down 1% year-to-date, okay? So we were 3% better, meaning we picked up about 3% market share on new cars. On the used car side, on that same number, the market was down about 1%. We were actually flat, which means we were up 1% in market share. So the fact that we still gained a touch of market share on used. But most importantly, we gained sequentially a massive amount in GPU, and that's easy flow-through and helps us be able to manage our cost structures a little bit better. Thanks for the question. Operator: Our next question is from Alex Perry with Bank of America. Alexander Perry: Congrats on a strong quarter here. I guess just on the used side, more shifting towards volumes. How should we be thinking about sort of used unit comps in the back half, especially with some of the increased off-lease supply that the industry is talking about? And then maybe within used, can you maybe talk to us about the performance by sort of CPO core versus value auto and what your expectations are there? Bryan DeBoer: Sure, Alex. I think when we look forward into the year, I think flat to up mid-single digits is where we're really forecasting things. I think the advantages of Driveway that are growing year-over-year at almost -- it's a high teens growth rate, which makes it really nice. So the stores, we're looking at a 3% to 5% growth rate in terms of used car volume. If we look at where our volume is coming from relative to the marketplace, let's remember that the over 9-year-old vehicles makes up 63% of the total used cars sold in our country. okay? Right now, we're only selling 17% of our mix is over 9 years old. So it's a huge opportunity for our stores and those younger stores that have been with us are now starting to continue to test and keep those cars and understand that you've got to get those cars through trade-in, and that means paying the money to be able to get those cars. So for us, our growth more recently has come from certified. Our certified breached over 40% in the quarter. And I think when we think about our profitability model, it doesn't help our profitability model a lot. But it helps us gain more customers because that's where we've taken our trade-ins, and that's usually a very -- an easy financiable car that's usually back-of-book and allows us to cover up disequity and those type of things that are big winners. So we're going to go wherever the market is to be able to increase our volume with a focus understanding that a lot of our GPU is in the value auto cars, and our team needs to continue to focus on those and price those vehicles at market to be able to realize that extra possible 10% that's sitting out there, okay? And that's about what it is today that we're still selling those vehicles for under market. We picked up about 3% from where we were last quarter, okay, which would imply on an average of about a $17,000 car that there's another $1,700 on that bulk of our business. So whatever we need to do to create that waterfall effect, our people in the stores are doing that and understand that this is a multifaceted business that allows you to continue to grow used cars. Alexander Perry: Yes. That makes a lot of sense. Really helpful. I guess next, just shifting to new vehicle GPUs. So continue to compress a bit, not by much. But I guess what's sort of driving that? When do we find a floor in new GPUs? And then how should we think about new GPUs sort of into the back half of this year? Bryan DeBoer: Great question, Alex. And I think I can confidently say that it feels like that new GPUs have stabilized. This is our third quarter in a row that things are sitting around $2,700, $2,800 without F&I on front-end on GPUs for new. This is the first time we've seen that in 6 years. So it feels like this is a new normal, which is wonderful. I would caveat it that I think the greater macro environment has influences on this more than anything. And I think it was only 2 quarters ago that we weren't sure what was going to happen this summer, and we're feeling a lot more confident with what's happening this summer than we did 4, 5 months ago when we went through November, December and January that were a little softer than expected. So I think the end result is good stability in front-end GPU on new vehicles. Operator: Our next question is from Jeff Lick with Stephens Inc. Jeffrey Lick: Congrats on a great quarter. Bryan, I was hoping can we break down a little bit more into service and parts. Same-store sales up 1%, but that was up against an 8.5% comp. So it's a nice 2-year -- comps get a little easier in Q3, a little harder in Q4. Can you just break that down how sustainable that is? And then maybe in terms of customer pay warranty dynamics and any other area that you're seeing benefits from? And then just building on that, gross margin percent up 160 bps to 59.3%. What's driving that? And how sustainable is that going forward? Bryan DeBoer: Yes. Great. Maybe I'll start with the end there, Jeff, and I think that's the big highlight is as we as we start to have a more diversified mix of new vehicle propulsion systems, whether it's hybrids, whether it's plug-in hybrids or whether it's BEVs, we're finding that a lot of our service and parts work is a bigger portion of labor, okay? And again, our driving to over a 59% when we've been really giving guidance that it's more like a 56%, 57% is really driven off of that labor. Now we're very fortunate that our warranty periods are now longer, which is adding to our ability to continue to grow that business, okay? But when we look at the mix of customer pay to warranty, we're looking pretty good. Our customer pay was up 2.6% in gross profit. Our warranty was up a little more at 5.4%. We are fortunate that some franchise laws in the Eastern -- some of the Eastern states have helped us a little bit on warranty labor rates. I'm not sure it has helped our relationship with our manufacturer partners because ultimately, they're paying more, but we appreciate what's happening there, and that's been a little bit of a catalyst, and that wave seems to be happening through franchise laws in a lot of parts of the country. So I really believe that the stability of our aftersales business going forward is only getting better. And that's really driven off longer warranty periods, more tied to propulsion in those vehicles in that first model years of that 5 to 7 years, there's things that break. And fortunately, as a dealer, we're the ones that benefit from that. Okay. One other cool little sidebar, Jeff, and I don't know if this is something that we watch closely, especially through our GreenCars strategies. We actually had the first quarter ever in our history where our new vehicle sales were made up over 50% by electrified vehicles, okay? We were almost 55% electrified vehicles in our new vehicle sales. So big move there, which was neat. We were 46.5% of our total new vehicles were hybrid, okay? So the advent of hybrid vehicles, whether it's Toyota, Honda, Hyundai or some of the domestics is really making a difference and I think helps drive the affordability of our consumers in a time where gas prices are astronomical in ways that are really benefiting us. And ultimately, that's going to pay in aftersales in the long run because a lot of those are new hybrid technology as well. Jeffrey Lick: Just a quick follow-up. It's not really a follow-up, but it's a separate thread because you brought up franchise laws. You're uniquely qualified given your experience in the industry. Could you give any comments about the Stellantis situation and how they're handling the -- not necessarily the franchise laws, but the franchise agreement with one of the upstart larger used car competitors? I'm sure you have an opinion on that. Bryan DeBoer: I don't really have much of an opinion on that. I do know that out of the 3 domestic manufacturers that Stellantis actually performed the best on a same-store basis. So whether or not we're getting some benefits out of that as well with our Driveway performance or whether our Dodge and Jeep guys are doing a great job there. We're not really seeing a big impact from that. And we don't -- I think I could safely say that I think consumers are looking for more transparent and simple and convenient ways to transact. And I think that is right on target with how we think about our Driveway experiences or how we think about our in-store experiences. And I know that our team is up for the challenge and are looking for any option for consumers to have what they're looking for in whatever capacity and whatever affordability range they're looking -- they're needing. So we're pretty excited about being able to compete head-to-head with those solutions by having a strong e-commerce presence in both new and used through our Driveway platforms as well as our over 500 local brand names. Jeffrey Lick: You know I had to take a shot on that one. Congratulations on a great quarter. Operator: Our next question is from John Babcock with Barclays. John Babcock: First one just on Pinewood. You're going to start rolling that out later this year in North America. Is there anything you can share in terms of how you're thinking about how that's going to disrupt the different dealers or rather at the store level into next year? Obviously, we've seen pretty decent disruptions at Asbury. And I'm just kind of curious if there's any way you can frame that for us with Pinewood. Bryan DeBoer: Yes. And hopefully, this doesn't come across as backhanded in any way to our peers because I'm sure they had great strategies of why they partnered with who they chose to partner with. I think when we reflect on our strategies, we spent almost 5 years looking for a partner, and we were fortunate to find it embedded in a retailer in the United Kingdom, Pendragon, and that's Pinewood.AI. So the ideas and the pathway of what we've done are being preempted by the U.K. business. I mean, we have 150 of our stores or 1/3 of our footprint globally that's already on the Pinewood.AI solutions, okay? They're now getting the second generation of the product that has AI embedded in it, which is where we're getting a lot of the cost savings. That will come to the United States. But I think most importantly, all of the enterprise-level functionality, all of the SaaS level control environment as well as the customer-facing operational environments have been tested in the U.K. and the U.K. teams are catalyzing and communicating with the U.S. teams. The idea of transitioning a DMS system sounds like a big project. It's not, okay? Lithia was the first to decide to move to one platform over 25 years ago and did that with CDK, okay? This move to Pinewood.AI was constructive with the help of the CEO of Pinewood, Bill Berman, who spent many years alongside myself and others in the industry to build solutions that put our consumers and our team members into the same environment. So the idea of having disruption in our stores, we don't believe is a big thing because our teams are used to doing the same things. They're bought off on it. They know that we own a large portion of it, and we will even as it goes private. But the idea of those transitions, we've been doing it for decades. We moved everyone to CDK. And typically, our transitions take somewhere around 3 days with a tail of approximately 3 weeks to be able to convert people to the DMS and be up and running, okay? We are very clear that the transitions of a DMS system that in the U.S. will also come with some transition away from certain vendors to reduce cost structures is going to be smooth. It's going to be efficient, and it's going to be a nonevent to us as an organization. And that's because we're not having a vendor come in and help our people transition, we're already transitioning them. So for us, we don't see it as disruptive. We see it as constructive to be able to drive our SG&A costs down through the embedded AI and having our customers and our team members in the same environment. Lastly, the costs on an overall tech stack portfolio on the DMS system of Pinewood.AI as well as the other vendor savings that we're looking toward are somewhere between a 20% and 50% reduction in overall costs. Now we'll have some redundancies for some period of time, okay? But ultimately, it's a lower cost solution that brings us the ability to find that sub-60% SG&A. So we're pretty excited about it. John, great question. I'm glad you teed me up on that. We could talk about that probably for hours, but I'll leave it at that. John Babcock: Okay. That's super helpful. And then just as a quick follow-on to that, and I'll then pass it on. Have you shared in the past, I can't remember any efficiency metrics that typically occur after you've implemented Pinewood? Bryan DeBoer: Well, what I've shared on the Pinewood.AI, which is the second generation Pinewood.AI. I should say second modern generation. They're on their fourth version of the DMS solution that they've rewritten it since 1990 multiple times, and now it's a cloud-based solution, was 447,000 hours in the United Kingdom, which is an equivalent of about USD 10 million to USD 11 million, okay? I would also note that, that 447,000 hours and it's translated U.S. dollars, is about 80% just on the service side, okay? That's really all we've really spent a lot of time on, but the sales functionality and the agentic that come with the customer interactions on sales could be massive as well, okay? The U.K. should be able to provide us numbers on that early in 2027 because now that their punchlist on the service elements are pretty much behind them and the Pinewood teams are now moving on to the coding for AI on the sales side, we should get some pretty good numbers. I would say this, and this is the total -- I'll call it a swag, okay? I'm going to guess that half of the cost savings to get us to a sub-60% level are going to come from AI solutions. The other half are going to come from job combinations, multiple functions, scale-level improvements on procurement, okay, as well as other vendors as well as these remote functions as we move into a world that is looking towards convenience, simplicity and empowerment from the consumers. Our consumers are wanting to be more in control of what they do. They feel more comfortable. Trust is built easier, and that keeps the Lithia & Driveway consumer in our ecosystem longer and more profitably. So anyway, some fun times, John, that we're really looking forward to the future. Operator: Our next question is from Bret Jordan with Jefferies. Bret Jordan: On the fixed ops parts and service business, I guess, could you talk about price versus traffic contribution to growth? And obviously, one of your peers talked about with the rollout of Tekion sort of evaluating and adjusting price potentially downwards. Is there more, I guess, competition in the space, affordability pressures, independent aftermarket challenges? Do you see anything dynamically changing on parts and service this year? Bryan DeBoer: Yes. I think parts and service looks pretty stable, Bret. I'm not seeing massive changes. Our improvements are coming a little bit from price and a little bit from volume, about 50-50. So we're feeling pretty good about that. I think when we think about affordability, I think it is top of mind with our people. We do sell non-OEM parts post warranty period for those that are feeling pricing pressures. And I think I would probably encourage all of our teams. We've got to continue to push that and ensure that we don't get defection after the warranty period from our consumers, and it is a big area. And I'm imagining that was our Asbury friends, but they are exactly right that it's easy to get caught up and that our warranty rates are growing. So that means our customer pay rates can grow and lose sight of the fact that if we can service our customers' car for 10 years rather than 3 to 5 years, we all win a lot more. And I think that's the advantage of a new car retailer being top of funnel is it's our easiest way that if we can delight on the service side, then most likely they're going to come back and buy a new car or buy a used car for their child or someone else that they know, and it's just a perpetual cycle that is quite special as a top-of-funnel new car retailer. So we've got some inherent advantages that I think we've rested on our laurels as an industry. And I think Lithia & Driveway figured out, the secret sauce is figuring out how to delight our customers and do it in ways throughout the life cycle of that relationship so we can have multiple touch points each month rather than once every 3 to 5 years. And that's really what the MyDriveway portal does. And it's what Chuck is doing in DFC that we can chat with the customer every time they make a payment, and we can give an update on what the valuation of their trade-in is and what their equity position is or disequity position, and we can help them in all these different ways. And we've got Driveway that if they want to sit on their couch and buy a car or they want to sell us their car, we can do that, too. And AI is powering all of that. And it's a fun time to be part of Lithia & Driveway. Bret Jordan: Great. And a quick follow-up. On U.K., new units up 16%. And you mentioned sort of a Chinese brand expansion. Could you talk maybe about what particular brands you're seeing that success with and how the Chinese product GPU stacks up versus legacy U.K. product? Bryan DeBoer: Sure, Bret. Hopefully, you'll all let me caveat this a little bit that the readthrough into the North American markets may not be a straight line, okay? It does allow us in the U.K. to create the relationship, but there's a fundamental difference between the U.K. and the North American markets as we're seeing them today is that in the United Kingdom, our advantage is that we can dual those Chinese brands with U.S. brands or French brands or German brands -- not so much German brands other than some of the lower-end Volkswagen stuff. So -- but outside of that, we are getting about half our lift from the Chinese brands, which is beneficial. But remember, in terms of profitability, they're helping very little when it comes to after-sales business because there's no units in operation, okay? They're not helping a lot in used cars because there's no certified sales because they're new. We are pleased, though, with the relationships. They're decent product, okay? They're priced competitively, which helps with affordability in the United Kingdom, which is great. And we will continue to grow with those brands in the United Kingdom and possibly in North America, depending on what their structure looks like. The other key thing in the United Kingdom is what we're seeing is that the teams there are quite nimble, okay? And the way that we're able to go to market, we can add these brands in 60 days and be up and running and the capital cost is somewhere less than $100,000, okay? When we think about the North American market, they're talking about specific exclusive dealerships that could cost $5 million, $10 million, $20 million to sell that brand with no aftersales business. That's probably something that we're not going to be an early adopter as a dealer, okay? Because as a dealer, I've got nothing that can cover my fixed cost in aftersales, which, as we know, our absorption rate in aftersales is the majority of our fixed costs in North America. So lots of moving parts there. We are excited about the partnership, and it does give us some global relationships, which is helpful, and we'll have to take a wait-and-see approach as to where that leads us in the North American market. Operator: Our next question is from Daniela Haigian with Morgan Stanley. Daniela Haigian: Bryan, some really good color on this call with Pinewood and SG&A. I wanted to pivot and ask one on capital allocation. You just raised the dividend. You added to the share buyback authorization. You repurchased 4% of shares this quarter. How are you sequencing or thinking about capital return versus M&A appetite? You did provide some helpful framework on target multiple ranges. Second part of my question goes into how do you characterize the kinds of stores, brands or geographies that you're looking to add to your portfolio? Bryan DeBoer: Great questions, Daniela. And I think it'd be easy for me to sit on the call and Jardon has been showing us our stock price hitting an all-time high, and Bret mentioned that as well. I think it's easy to think that we're going to transition now into full acquisition mode. I think Lithia Motors & Driveway will take a balanced approach on capital allocation. And we still believe that at $450, $500, we still have intrinsic undervalue in terms of what we've built and the dry powder that exists within our stores when we start to talk about a sub-60% SG&A or the idea of growing our same-store sales at a consistent 5% and having $1.5 billion to $2 billion in free cash flows a year. We still look at share buybacks as a major source of our utilization. So sitting here today, we believe that we'll probably spend 1/3 on buybacks. We can probably spend 1/3 on M&A, and the rest goes to dividends and internal investments to continue to build for our future because I don't -- I think we can sit here today and say this is what automotive retail looks like, but Lithia Motors & Driveway is sitting here today going, what does the future look like? And how do we invest in what's going to yield high returns at low costs and create wonderful customer experiences and opportunities for our team members to continue to grow in the future, it's reinvestment, okay? And it's a neat time to be able to see all the different legs of our portfolio and the design that we did back in '15, '16, '17 and '18 are now coming through with DFC going to push way beyond $100 million, which was our initial target in earnings. We've got massive earnings coming in with Wheels and now some synergies with that relationship. We know what's happening with Pinewood.AI as an investment, let alone what it's going to do for us on a foundational aspect to our cost controls. And most importantly, I've got my people in the field. They are amped up, okay? Our operational leaders from our department leaders all the way up to our presidents are focused on cost management. They're focused on gaining market share and leveraging the ecosystem to be able to drive results. So for us, there's not a big change in how we're thinking about our capital allocation and that's about what we said last quarter, and we'll keep our head down and continue to drive results in the future. Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to Bryan for closing remarks. Bryan DeBoer: Thank you, everyone, for joining us today. We had a great time. We're excited to see the power of our ecosystem and the quality of our earnings all align in the quarter and look forward to doing the same in Q3 and talking to you in October. All the best. 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 $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* Now, it’s worth noting Stock Advisor’s total average return is 953% — a market-crushing outperformance compared to 214% 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 August 7, 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) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. Lithia Motors (LAD) is back in focus after its second quarter 2026 earnings report, which included higher diluted EPS from continuing operations, a higher quarterly dividend, and continued share repurchases. See our latest analysis for Lithia Motors. The strong second quarter update, including earnings ahead of expectations, a higher dividend and ongoing buybacks, has coincided with a sharp acceleration in momentum for Lithia Motors, with a 47.35% 90 day share price return and a 50.61% 1 year total shareholder return. If Lithia Motors’ recent surge has you thinking about where else momentum and fundamentals are lining up, it could be a good time to scan 19 top founder-led companies After a move this sharp on earnings, buybacks and a higher dividend, the key issue for Lithia Motors is whether recent gains already reflect the story or if the current valuation still leaves meaningful upside potential. The most followed narrative currently sees fair value for Lithia Motors at $371.73, which sits below the latest close of $427.48. That gap rests on a detailed view of earnings power, margins and buybacks that extends well beyond the latest quarter. Read the complete narrative. Want to see what sits behind that confidence in Lithia Motors? The narrative leans on a specific path for revenue, margins and shrinking share count. Curious which earnings profile and future P/E multiple line up with that $371.73 fair value. Result: Fair Value of $371.73 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Lithia Motors also faces pressure from high SG&A costs and underperforming same store sales, which could limit margin progress and put acquisition driven growth under scrutiny. Find out about the key risks to this Lithia Motors narrative. The first narrative for Lithia Motors leans on detailed earnings forecasts and a fair value of $371.73, which points to the stock being 15% overvalued against that model. Market ratios tell a different story. Lithia Motors currently trades on a P/E of 13.7x. That is well below the US market at 19.3x, the US Specialty Retail industry at 21.1x, and also below an estimated fair ratio of 17.6x. For investors, that gap can signal either valuation support or the risk that earnings quality, growth or balance sheet concerns are weighing on the multiple. The key question is whether the market is being too cautious or the narrative model is too generous. To see what the numbers say about this price, find out in our valuation breakdown See what the numbers say about this price — find out in our valuation breakdown. With that mix of optimism and concern around Lithia Motors, it makes sense to move quickly, review the underlying numbers, and decide where you stand. To see both sides laid out in one place, start with these 3 key rewards and 1 important warning sign If Lithia Motors has sharpened your focus, do not stop here. Broader opportunity often sits in overlooked corners, and a quick screen could surface your next strong idea. Spot potential value stories early by scanning companies that our research flags as screener containing 21 high quality undiscovered gems Prioritize resilience by checking stocks highlighted in the 85 resilient stocks with low risk scores Focus on financial strength by reviewing companies featured in the solid balance sheet and fundamentals stocks screener (48 results) 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. Record Q2 revenue reached $9.8 billion, while adjusted diluted EPS rose 9% year over year to $10.03 despite a 1.6% same-store revenue decline and a difficult comparison with Q2 2025. Used-vehicle profitability improved, with gross profit per unit rising to $2,019, while after-sales remained the largest profit contributor as gross profit increased 3.1% and margins expanded to 59.2%. Driveway Finance more than doubled financing-operations income to $37 million, and Lithia returned over $560 million to shareholders in the first half through buybacks and dividends; the company also plans a North American rollout of Pinewood.AI to reduce technology costs. These 4 Mid-Caps Just Announced Big Buyback Plans Lithia Motors (NYSE:LAD) reported record second-quarter revenue of $9.8 billion and adjusted diluted earnings per share of $10.03, up 9% from a year earlier, as used-vehicle profitability, after-sales margins and Driveway Finance Corporation income supported results in what management characterized as a dynamic market environment. President and Chief Executive Officer Bryan DeBoer said the company’s diversified operating model contributed across its businesses during the quarter. Same-store revenue declined 1.6% and total gross profit fell 2.7% against what he described as the company’s toughest comparison of the year, following an exceptionally strong second quarter of 2025. However, total vehicle gross profit per unit rose to $4,119, an increase of nearly $200 from the first quarter. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Ladder Corporation: Climbing Higher And Paying 9% Yield Used-vehicle gross profit increased 1.2% year over year, helped by a $339 sequential increase in used-vehicle gross profit per unit to $2,019. DeBoer attributed the improvement in part to the company’s dynamic-pricing efforts and said Lithia was working to balance sales volume and margins. Management said it expects used-vehicle volumes to range from flat to up mid-single digits during the second half, with stores targeting 3% to 5% growth. DeBoer noted that certified pre-owned vehicles accounted for more than 40% of the company’s used-vehicle sales mix during the quarter. He also identified older vehicles as an opportunity, saying vehicles more than nine years old represent 63% of U.S. used-vehicle sales, while only 17% of Lithia’s mix falls in that category. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now 3 Undervalued Consumer Stocks to Stock Up On New-vehicle revenue declined 1.5% as unit sales fell 2.2% on a same-store basis. New-vehicle gross profit per unit was $2,718, essentially flat from the first quarter and marking the third straight quarter of stability, according to DeBoer. Imports posted 5% growth, while domestic and luxury sales declined 7% and 4%, respectively. After-sales remained the company’s largest gross-profit contributor, accounting for 42.2% of gross profit. After-sales gross profit increased 3.1% on revenue growth of 1%, while margins expanded 120 basis points to 59.2%. Customer-pay gross profit grew 2.6% and warranty gross profit rose 5.4%. → AMD’s AI Bubble Could Burst Into Explosive Upside DeBoer said the margin gains reflected a greater labor mix as vehicle propulsion systems diversify, along with longer warranty periods. He added that electrified vehicles represented nearly 55% of Lithia’s new-vehicle sales in the quarter, including hybrids that accounted for 46.5% of total new-vehicle sales. Adjusted selling, general and administrative expense as a percentage of gross profit was 68.6%, an improvement of 290 basis points from the first quarter. Chief Financial Officer Tina Miller said same-store SG&A dollars declined year over year, while personnel expense, the company’s largest cost category, improved by 30 basis points as a percentage of gross profit. DeBoer said the improvement reflected structural cost changes rather than one-time cuts. Those actions include combining roles, extending leaders across multiple locations and departments, consolidating back-office functions, automating work and renegotiating vendor contracts. North American SG&A was 66.2%, and DeBoer said June marked the company’s first month in which SG&A declined year over year, improving by nearly 60 basis points. Lithia continues to target SG&A below 60% of gross profit. In the United Kingdom, gross profit rose 12% and adjusted pretax income increased 78%. SG&A as a percentage of gross profit improved 200 basis points, with about half of that improvement driven by Pinewood.AI solutions, DeBoer said. Used-vehicle gross profit in the U.K. rose nearly 33%, while new-vehicle units increased 16%. The company plans to begin rolling out Pinewood.AI in North America later this year. DeBoer said the technology and related vendor changes could reduce overall technology-stack costs by 20% to 50%, although the transition will involve a period of redundant systems. He said the company does not expect material operational disruption, citing its experience implementing the platform across 150 U.K. stores. Management previously estimated that Pinewood.AI could save 447,000 annualized hours in the U.K., equivalent to roughly $10 million to $11 million. DeBoer said the company expects to realize at least half of those hours by year-end and sees a potentially larger opportunity in North America because its expense base there is substantially larger. Driveway Finance Corporation, Lithia’s captive financing operation, reported financing-operations income of $37 million, more than doubling its profitability from the prior year. Record originations totaled $884 million, while net interest margin expanded 20 basis points to 4.8%. Managed receivables surpassed $5 billion, and North American financing penetration reached 18%, moving toward the company’s long-term target of at least 20%. Miller said average origination FICO scores were 748 and front-end loan-to-value ratios held at 96%. Senior Vice President of Driveway Finance Corporation Chuck Lietz said provisioning needs declined as credit performance remained strong. He cited improvements in 30-plus-day delinquencies across credit categories, while noting that a small adjustment to provisions during the quarter was immaterial. Lietz said DFC expects to maintain similar profitability in the second half, though seasonality could affect quarterly results. Adjusted EBITDA totaled $445 million, down 2% year over year. Adjusted cash flow from operations was $228 million, up 76% from the prior year. For the first half, adjusted cash flow from operations reached $609 million after accounting for a one-time used-vehicle floor-plan benefit in the first quarter. Lithia repurchased $242 million of stock during the quarter at an average price of $284 per share, retiring about 4% of shares outstanding. Its share count was 17% lower than a year earlier. The company also raised its quarterly dividend 23% to $0.70 per share, and said it returned more than $560 million to shareholders through repurchases and dividends during the first half. Management said it acquired businesses representing $765 million in annual revenue during the first half and divested $120 million of underperforming revenue. DeBoer said the company expects to maintain a balanced capital-allocation approach, potentially directing roughly one-third of capital toward buybacks, one-third toward acquisitions, and the remainder toward dividends and internal investment. The company continues to target acquisition prices of 15% to 30% of revenue, or three to six times normalized EBITDA. DeBoer reiterated Lithia’s longer-term objective of generating $2 in earnings per share for every $1 billion of revenue. Lithia Motors, Inc is an American automotive retailer headquartered in Medford, Oregon. Founded in 1946 as a small auto body and glass shop, the company has grown through organic expansion and strategic acquisitions to become one of the largest automotive retail networks in North America. Lithia operates dealerships across the United States and Canada, offering a broad portfolio of new and pre-owned vehicles from more than 40 different manufacturers. The company's core business activities include vehicle sales, financing, insurance, parts and service. 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 "Lithia Motors Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%.Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. Improved used-vehicle profitability, aftersales growth and record Financing Operations income supported the results. Driveway Finance Corporation generated record originations of $884 million. Lithia Motors, Inc. price-consensus-eps-surprise-chart | Lithia Motors, Inc. Quote New-vehicle revenues rose 2.7% year over year to $4,829.2 million, while used-vehicle revenues increased 1.4% to $3,528.3 million. Aftersales revenues advanced 3.9% to $1,067.4 million.Finance and insurance revenues declined 2% to $366.4 million. Same-store new-vehicle revenues fell 1.5%, while same-store used-vehicle revenues decreased 2.2%, showing that acquisitions contributed to the consolidated growth in both categories. New-vehicle unit sales increased 2.7% to 104,089 units. Used retail unit sales declined 2.7% to 106,114 units, but the used retail average selling price rose 4.3% to $29,593.Used-vehicle gross profit increased 4.2% to $214 million. Used retail gross profit per unit climbed 5.4% to $2,014, and the used-vehicle gross margin expanded 20 basis points to 6.1%. By contrast, new-vehicle gross profit per unit fell 11.8% to $2,728 as the new-vehicle margin contracted 80 basis points to 5.9%. Aftersales gross profit increased 6.8% year over year to $633 million. Its gross margin expanded 160 basis points to 59.3%, reinforcing the importance of recurring service and repair activity to overall profitability.Aftersales accounted for 42.2% of total gross profit, up from 39.9% a year earlier. Total gross profit increased 0.8% to $1,497.4 million, although the consolidated gross margin narrowed 20 basis points to 15.3%. Selling, general and administrative expenses were unchanged year over year at $1,014.7 million. Lower personnel and other costs offset higher advertising, rent and facility expenses.Reported SG&A as a percentage of gross profit improved 50 basis points to 67.8%. Income from operations increased 5.4% to $448.3 million, while depreciation and amortization rose 8.7% to $70.9 million. Floor plan interest expense increased 26.7% to $69.7 million, partly tempering the operating improvement. Financing Operations income surged 81.6% to $36.5 million. Interest and fee income increased to $116.4 million from $98.8 million, while the total interest margin expanded to 4.8% from 4.5%.DFC’s penetration rate was 17.5%, and the average FICO score on originated loans was 749. Managed finance receivables reached nearly $5.3 billion, up 23% year over year, supporting a larger stream of interest income. More than 99% of the portfolio was less than 60 days past due. As of June 30, 2026, cash, restricted cash and cash equivalents totaled $363.9 million, up from $341.8 million as of Dec. 31, 2025. Inventories increased to $6,516.8 million from $6,119.6 million at year-end 2025, while total floor plan debt rose to $6,387.4 million from $5,008.9 million.For the first six months of 2026, net cash used in operating activities was $174.1 million, reflecting increases in inventories and finance receivables. Capital expenditures totaled $153.4 million, and cash paid for acquisitions was $221.7 million. Available liquidity was approximately $1.3 billion. During the quarter, LAD repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. Approximately $620 million remained under the authorization at quarter-end.The board increased the quarterly dividend 23% to 70 cents per share. Lithia also acquired five stores expected to generate $340 million in annualized revenues and divested three stores representing $120 million in annualized revenues.LAD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. General Motors Company GM reported second-quarter 2026 adjusted earnings of $3.57 per share, up 41.3% year over year. The figure beat the Zacks Consensus Estimate of $3.13 by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate of $46.56 billion by 3.15%. Strong pricing, lower costs and disciplined incentives supported results. General Motors raised its full-year adjusted EBIT guidance to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected at $12-$14 per share, up from the prior range of $11.50-$13.50.Tesla, Inc. TSLA reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%. Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. Genuine Parts GPC reported second-quarter 2026 adjusted earnings of $2.15 per share, beating the Zacks Consensus Estimate of $2.10 by 2.38%. The bottom line increased 2.4% from $2.10 in the year-ago quarter. Revenues rose 6% year over year to $6.54 billion and surpassed the consensus estimate of $6.39 billion by 2.36%. Genuine Parts reaffirmed its 2026 adjusted earnings guidance of $7.50-$8 per share and total sales growth outlook of 3-5.5%. Genuine Parts ended June with $2.3 billion of liquidity, including $559 million in cash. 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 Genuine Parts Company (GPC) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Lithia Motors Inc (NYSE:LAD) reported record revenues of $9.8 billion and an adjusted diluted EPS of $10.03, up 9% from the previous year. Driveway Finance Corporation achieved record originations, growing income by more than 70% year-over-year. The company demonstrated significant improvements in SG&A as a percentage of gross profit, with a 290 basis point improvement from the first quarter. Lithia Motors Inc (NYSE:LAD) successfully executed strategic acquisitions worth $765 million in revenue while divesting $120 million of underperforming revenue. The company repurchased $242 million of stock, reducing the share count by approximately 4%, and increased its dividend by 23% to $0.70 per share. Same store revenues declined by 1.6% and total gross profit decreased by 2.7%, reflecting challenges in maintaining growth. New vehicle revenue declined by 1.5% due to a 2.2% drop in units sold, indicating potential market challenges. Despite improvements, the company still faces a challenging environment with cyclical conditions affecting brand mix, with domestic and luxury brands declining. The company is still working towards achieving its sub-60% SG&A target, indicating ongoing cost management challenges. There is uncertainty regarding the impact of Pinewood AI's rollout in North America, with potential disruptions at the store level. Warning! GuruFocus has detected 13 Warning Signs with LAD. Is LAD fairly valued? Test your thesis with our free DCF calculator. Q: Brian, you mentioned a 200 basis point improvement in SG&A in the UK. How much did Pinewood AI contribute to that, and can we expect similar results in the US? A: Brian De Boer, President and CEO: The 200 basis points improvement in the UK was about half driven by Pinewood AI solutions. The integration in the UK was smooth, and we expect similar benefits in the US, which will help us achieve our sub-60% SG&A target. Q: Chuck, the DFC results were stronger than expected. Is this the new benchmark for quarterly performance? A: Chuck Leetz, Senior Vice President of Driveway Finance Corporation: We are pleased with the DFC results, which validate our strategy. While we expect similar profitability, seasonality in the second half may affect results. However, we remain confident in our growth trajectory. Q: How do you view the strategy for GPU improvement in the second half of the year? A: Brian De Boer, President and CEO: We are finding a balance between volume and margins to achieve our 2026 goals. Our AI and field teams are repricing cars appropriately, and we are focused on realizing our "nothing but net" strategy. Q: Can you unpack the SG&A performance in Q2 and its sustainability? A: Brian De Boer, President and CEO: Our SG&A improvements are driven by job combinations, remote functions, and procurement efficiencies. We achieved a 66.2% SG&A in North America, and June marked our first year-over-year SG&A decline in a decade. Q: How should we think about used vehicle volumes and performance in the second half? A: Brian De Boer, President and CEO: We expect flat to mid-single-digit growth in used car volumes. Our focus is on certified pre-owned vehicles and value autos, with a strategy to price vehicles at market to realize potential gains. Q: What are your expectations for new vehicle GPU in the back half of the year? A: Brian De Boer, President and CEO: New vehicle GPUs have stabilized around $2,700 to $2,800 for three consecutive quarters. We feel confident about this stability, although macroeconomic factors could influence it. Q: Can you discuss the impact of Pinewood AI on your operations and cost savings? A: Brian De Boer, President and CEO: Pinewood AI has led to significant cost savings in the UK, and we expect similar results in the US. The transition to Pinewood AI is expected to be smooth, with a potential 20-50% reduction in overall tech stack costs. Q: How are you balancing capital allocation between share buybacks and acquisitions? A: Brian De Boer, President and CEO: We plan to allocate a third of our capital to buybacks, a third to M&A, and the rest to dividends and internal investments. We believe our shares are still undervalued, and we will continue to focus on high-return investments. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Lithia Motors stock has delivered a strong 50.6% return over the past year, and the current valuation picture is no longer a straightforward bargain story. The Discounted Cash Flow (DCF) intrinsic value estimate now sits close to the market price, while earnings based multiples still screen the stock as undervalued. Over the past 1 year, Lithia Motors has returned 50.6%, which puts more focus on whether the current share price already reflects much of the good news that investors expect. For a dealer focused business like Lithia Motors, expectations around vehicle volumes and margins can support the current valuation. Any pressure on used vehicle pricing or financing conditions may weigh on what investors are willing to pay. The stock scores 3 out of 6 on our valuation checks, which is a mixed picture rather than a clear bargain or clear overvaluation, and you can see the breakdown at 3 out of 6. The issue now is whether Lithia Motors shares still offer enough value after this strong run, or if the intrinsic value estimate and recent rally suggest most of the upside is already priced in. Lithia Motors delivered 50.6% returns over the last year. See how this stacks up to the rest of the Specialty Retail industry. The Discounted Cash Flow (DCF) model estimates what Lithia Motors could be worth based on its projected future cash generation. For the latest twelve months, Lithia Motors reported free cash flow of about $423 million outflow, so the model leans on an assumption that cash flows recover and grow from this base over time. Using those cash flow projections, the 2 Stage Free Cash Flow to Equity model arrives at an intrinsic value of about $418 per share. That sits slightly below the current share price, implying the stock is around 2.2% overvalued on this approach. The gap is small, so the DCF is effectively indicating that, on these assumptions, most of the value in Lithia Motors now appears reflected in the market price. On the DCF numbers, Lithia Motors currently screens as roughly fairly valued with only a small degree of overvaluation. Lithia Motors is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Lithia Motors. The P/E ratio is a useful way to compare what the market is paying for each dollar of Lithia Motors earnings with similar companies. Lithia Motors currently trades on a P/E of about 13.7x, which is below the Specialty Retail industry average of roughly 21.1x and also below the wider peer group average of about 27.7x. The fair P/E multiple implied by the model is around 17.6x, based on factors such as Lithia Motors market position, risk profile and growth expectations. That is higher than the current 13.7x, which points to a discount relative to what investors might typically pay for a business with similar characteristics. On this earnings based view, the market is pricing Lithia Motors below both sector norms and the modelled fair multiple. On the P/E multiple, Lithia Motors stock appears undervalued compared with both the industry and the modelled fair level. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the valuation puzzle for Lithia Motors leaves off. They set out the specific paths for growth, margins and earnings that would need to play out for Lithia Motors' stock to be worth materially more or less than today. Rather than giving a single number, they describe the future that number relies on, so you can check over time whether that story still fits. These Narratives sit within Simply Wall St's Community page. Community views on Lithia Motors now sit on two very different paths, even though both are working from the same set of reported fundamentals. Bull case: roughly fairly valued Read the full Bull Case to see why Lithia Motors could be undervalued Bear case: 15% overvalued Read the full Bear Case to see why Lithia Motors could be overvalued Do you think there's more to the story for Lithia Motors? Head over to our Community to see what others are saying! For Lithia Motors, the Discounted Cash Flow (DCF) work suggests the stock now sits close to intrinsic value, so it is no longer a clear bargain on that lens. The earnings multiple still screens as undervalued compared with peers, which keeps the valuation case alive but with a more balanced risk and reward profile. The tension between these views comes down to how confidently you see cash flows improving versus the market eventually paying a higher P/E. The key question from here is whether Lithia Motors can sustain margins and volumes enough to justify a richer earnings multiple without stretching the intrinsic value story. 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]