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LITHIA MOTORS INC (LAD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered record revenue of $9.68B, +4.9% YoY, with adjusted diluted EPS of $9.50 (+17% YoY). Results beat S&P Global consensus on both revenue (+$0.18B) and adjusted EPS (+$0.89), driven by strong same-store used and aftersales performance. Bold beat on adjusted EPS and revenue ; consensus vs actual shown below.*
  • Same-store revenue rose 7.7%, with used retail revenue +11.8% and aftersales gross profit +9.1%; North America adjusted SG&A to gross profit improved sequentially (64.8%), supporting margin resilience despite normalized GPUs .
  • Capital returns: LAD repurchased ~1.312M shares (5.1% of shares outstanding) at $312 average and declared a $0.55 dividend payable Nov 21; ~$889.3M remains under repurchase authorization .
  • Management reiterated a disciplined M&A pipeline and a 2025 acquisition revenue target of ~$2B; DFC (captive finance) scaled with finance ops income of $19M in Q3 and a 4.6% NIM, achieving a 15% North America penetration milestone earlier than expected .
  • Stock narrative catalysts: outsized buybacks, recurring earnings mix shift (aftersales/DFC), sequential SG&A efficiency, and used vehicle strategy execution; watch EV lease-driven throughput and UK labor/regulatory headwinds discussed on the call .

What Went Well and What Went Wrong

What Went Well

  • Same-store growth broad-based: total +7.7%, used retail +11.8%, aftersales gross profit +9.1%, reflecting strong execution in high-margin, recurring streams .
  • SG&A leverage and efficiency: North America adjusted SG&A-to-gross profit at 64.8% sequentially; “we bent the cost curve, even as GPUs continued to normalize,” said CEO Bryan DeBoer .
  • DFC scaling and profitability: finance operations income $19M in Q3, NIM 4.6%, penetration reached 15% (milestone ahead of plan) with disciplined underwriting and stable credit trends .

Quoted highlights:

  • “Our teams delivered increases in same-store revenue across our business lines… and Driveway Finance Corporation continues to scale profitably.” — Bryan DeBoer .
  • “We achieved our 15% penetration rate milestone a few quarters earlier than expected.” — Bryan DeBoer (DFC) .

What Went Wrong

  • Front-end margin normalization: total vehicle GPU down YoY; new vehicle GPU declined to $2,864 (-11.2% YoY) and gross margin compressed to 15.2% (-30 bps YoY) .
  • UK headwinds: higher labor costs and regulatory changes pressured SG&A and profitability; UK SG&A/gross elevated, with ~$20M cost impact partially mitigated by productivity actions .
  • GAAP net income slightly down YoY: Net income $218.6M (-1.1% YoY) on higher interest expense and other items; adjusted results exclude non-core impacts (Pinewood investment loss, acquisition expenses, insurance reserves) .

Financial Results

Quarterly Results (YoY and sequential context)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$9.18 $9.58 $9.68
Diluted EPS (GAAP) ($)$7.94 $9.87 $8.61
Adjusted Diluted EPS ($)$7.66 $10.24 $9.50
Gross Profit ($USD Billions)$1.41 $1.49 $1.47
Gross Profit Margin (%)15.4% 15.5% 15.2%
Net Income ($USD Millions)$211.2 $258.2 $218.6
Adjusted EBITDA ($USD Millions)$402.1 $489.3 $438.0

Notes:

  • Q3 2025 YoY: Revenue +4.9%, GAAP EPS +11.4%, adjusted EPS +17% .
  • Sequential (Q3 vs Q2): Revenue +1.0%, GAAP EPS -12.8%, adjusted EPS -7.2% .

Actual vs S&P Global Consensus (Quarterly)

MetricQ1 2025 ConsensusQ1 2025 ActualQ2 2025 ConsensusQ2 2025 ActualQ3 2025 ConsensusQ3 2025 Actual
Revenue ($USD Billions)$9.28*$9.18 $9.56*$9.58 $9.49*$9.68
Primary EPS (Adjusted) ($)$7.87*$7.66 $9.81*$10.24 $8.61*$9.50
# of Estimates (Revenue)13*—8*—11*—
# of Estimates (EPS)12*—7*—11*—

Consensus values marked with * retrieved from S&P Global.

Q3 2025 outcomes: Bold beat on revenue (+$0.19B) and adjusted EPS (+$0.89) vs consensus .*

Segment Breakdown (Q3 2025 vs Q3 2024)

Segment Revenue ($USD Millions)Q3 2024Q3 2025YoY %
New vehicle retail$4,430.0 $4,630.3 +4.5%
Used vehicle retail$2,843.3 $3,096.3 +8.9%
Used vehicle wholesale$390.9 $367.0 -6.1%
Finance & insurance$360.4 $378.6 +5.0%
Aftersales$1,012.8 $1,037.1 +2.4%
Fleet & other$183.6 $166.5 -9.3%
Total$9,221.0 $9,675.8 +4.9%

KPIs and Operational Metrics

KPIQ2 2025Q3 2025
New retail units (same-store)91,947 94,480
Used retail units (same-store)106,894 106,637
New ASP ($) (same-store)$47,679 $47,855
Used ASP ($) (same-store)$28,249 $28,362
New GPU ($) (same-store)$3,175 $2,867
Used GPU ($) (same-store)$1,900 $1,767
F&I per retail unit ($) (same-store)$1,841 $1,847
Aftersales gross margin (%)57.8% 58.4%
Days’ supply – New63 52
Days’ supply – Used48 46

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Acquisition revenue targetFY 2025~$2B (reiterated)~$2B (reiterated)Maintained
Dividend per shareQ3 2025$0.55 (Q2 precedent)$0.55; payable Nov 21, record Nov 7Maintained
Share repurchase authorizationCurrent$568.8M remaining (Q2) ~$889.3M remaining (post Q3 buybacks)Raised (capacity increased via new authorization/adjustment)
Tax rate (reported)Q3 2025N/A22.5% (reported)Informational (no forward guide)
SG&A to gross (North America)Q3 2025Light guidance framework64.8% sequential (reported); focus on leverageInformational

Note: LAD did not issue formal numeric revenue/margin guidance; management emphasized long-term “$2 of EPS per $1B revenue” framework and opportunistic capital allocation (M&A vs buybacks) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Used vehicle strategy & sourcingUsed retail units flat to slightly down; focus on ecosystem; self-sourcing growing Aftersales +11.5% YoY; used retail GPU +6.8%; procurement advantage vs peers Same-store used revenue +11.8%; 74% self-sourced; value-auto margins ~16% and unit growth +22% Strengthening
Aftersales growth & marginsAftersales GP +7.5% same-store Aftersales GP +11.9% same-store; margin 57.8% Aftersales GP +9.1% same-store; margin 58.4% (+280 bps YoY) Positive margin expansion
SG&A efficiencyAdjusted SG&A to revenue 10.5% (Q1) Adjusted SG&A/gross ~67.7% North America adjusted SG&A/gross 64.8% sequential; UK cost actions underway Improving in NA; UK self-help
EVs and lease penetrationEV strategy evolving; sustainable vehicles contribution noted Notable EV disclosures limited in PREVs 43% of new mix; ~40% lease penetration; OEM incentives offset tax credit expiration; significant Tesla conquest Mixed margin pressure, higher throughput
DFC scaling & creditNIM 4.6%; originations $623M NIM 4.6%; originations $731M; finance ops income $20M Finance ops income $19M; NIM 4.6%; penetration milestone 15%; stable credit/losses Consistent execution
UK brand/mix & regulationUK ~20% of revenue; margin mix noted UK revenue 18.3%; margin pressure UK labor tax/min wage impact ~$20M; pivot to Chinese ICE brands; add 5 stores next 60 days Managing headwinds

Management Commentary

  • Strategic mix and execution: “High-quality earnings mix with more profits coming from recurring streams… accelerated growth in used and after-sales segments.” — Bryan DeBoer .
  • Capital allocation stance: “With our stock trading at a meaningful discount, we prioritized repurchases… buying back 5.1% of outstanding shares… while maintaining flexibility.” — Tina Miller .
  • M&A discipline: “Hurdle rates unchanged: 15–30% of revenue or 3–6x normalized EBITDA with ≥15% after-tax return… reiterate ~$2B acquired revenue in 2025.” — Bryan DeBoer .
  • DFC milestone: “Penetration rate milestone of 15% achieved earlier than expected… strong net interest margins and stable credit trends.” — Bryan DeBoer and Chuck Lietz .

Q&A Highlights

  • EV dynamics: OEM incentives and elevated lease penetration (~40%) helped clear EV inventory despite tax credit changes; profitability lighter on BEVs, but repeat buyer and Tesla conquest trends favorable .
  • UK operations: Labor cost increases (~$20M) mitigated via productivity and headcount actions; expanding Chinese brands (ICE/plug-ins) to respond to market demand; incremental store adds underway .
  • Used value segment: Value-auto sourcing at 74% from consumers; scarcity and reconditioning economics drive ~16% margins and 130% cash-on-cash returns; focus to scale across buckets (core, CPO, value) .
  • M&A pipeline vs buybacks: ~$2B 2025 acquisition revenue target reiterated; return thresholds maintained; buybacks accelerated given valuation disconnect .

Estimates Context

  • Q3 2025 beat summary: Revenue $9.68B vs $9.49B consensus; adjusted EPS $9.50 vs $8.61 consensus. Both outcomes exceeded expectations, driven by used and aftersales strength and SG&A leverage. Consensus values marked with * retrieved from S&P Global .*
  • Potential estimate revisions: Upward bias likely for aftersales margin, DFC contribution, and used revenue trajectory; front-end GPU assumptions may remain conservative given normalization commentary .

Consensus vs Actual (Context: Q1–Q3 2025)

PeriodRevenue Consensus ($B)Revenue Actual ($B)EPS Consensus ($)Adjusted EPS Actual ($)
Q1 20259.28*9.18 7.87*7.66
Q2 20259.56*9.58 9.81*10.24
Q3 20259.49*9.68 8.61*9.50

Consensus values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Strong operational execution: Same-store revenue and aftersales margins expanded; recurring earnings mix (aftersales/DFC) supports more durable EPS and cash flows .
  • Capital returns catalyze EPS: 5.1% share count reduction in Q3, 8% YTD, enhances per-share metrics; $0.55 dividend sustained; authorization capacity remains large (~$889M) .
  • Used vehicle strategy is central: Value-auto economics, consumer self-sourcing, and omnichannel reach (Driveway/GreenCars/MyDriveway) are driving superior growth vs peers; watch continued margin and throughput gains .
  • SG&A leverage and tech stack: Pinewood AI simplification and vendor consolidation underwrite SG&A efficiency, particularly in North America; UK actions continue to mitigate cost headwinds .
  • M&A balanced with buybacks: ~$2B 2025 acquisition revenue target reiterated; management remains disciplined on returns and agile in allocation to maximize per-share compounding .
  • EV lease penetration supports throughput: Margin pressure on BEVs acknowledged, but higher repeat buyer rates and OEM incentives can sustain volume; watch next-gen Japanese/Korean models for affordability tailwinds .
  • Monitoring items: Front-end GPU normalization, UK labor/regulatory costs, interest expense trajectory, and DFC credit trends (currently stable) .

Additional Q3 Items and Balance Sheet/Cash Flow Notes

  • Dividend and timing: $0.55 per share; payable Nov 21, 2025; record Nov 7, 2025 .
  • Liquidity: ~$1.9B total liquidity (cash, marketable securities, revolver availability) at quarter end .
  • Net debt to adjusted EBITDA: 2.63x TTM as of Sep 30, 2025 (Adjusted EBITDA TTM $1.70B) .
  • Cash flows YTD: Operating cash flow $233M; adjusted operating cash flow $914.7M (including finance receivables and floor plan adjustments) .

Other Relevant Q3 Press Releases

  • Pinewood Technologies Group (Pinewood.AI) announced CFO presentation at AI & Technology Conference, highlighting revenue and EBITDA growth, buyout of LAD’s NA JV stake, and a 5-year contract to roll out Pinewood AI across North America (expected ~$60M annual revenue by 2028) .

Consensus values marked with * retrieved from S&P Global.