Lithia Motors, Inc.

Lithia reported second-quarter revenue of $9.8 billion and adjusted diluted EPS of $10.03, up 9% from last year. Same-store revenues declined 1.6% and total gross profit declined 2.7%; total vehicle GPU was $4,119, up nearly $200 sequentially. New vehicle revenue declined 1.5% on 2.2% lower units, with new vehicle GPU at $2,718, essentially flat sequentially. Used vehicle GPU improved to $2,019, up $339 sequentially, while used vehicle gross profit increased 1.2%; aftersales gross profit rose 3.1% and margins expanded to 59.2%. Adjusted SG&A as a percentage of gross profit was 68.6%, improving 290 basis points from the first quarter. DFC delivered $37 million of financing operations income, record originations of $884 million, and net interest margin of 4.8%; adjusted EBITDA was $445 million and adjusted cash flow from operations was $228 million, up 76% year over year. For capital returns, the company bought back $242 million of stock, retired about 4% of outstanding shares, and raised the dividend 23% to $0.70 per share. Management did not give formal next-quarter or full-year financial guidance, but said the difficult comparison is now behind them, DFC margins should keep building, and the company remains on track toward a long-term target of $2 of EPS for every $1 billion of revenue.

Bryan DeBoer said the quarter showed the power of Lithia’s diversified ecosystem, with every major business line contributing. He emphasized stable new-vehicle margins, much stronger used-vehicle profitability, better SG&A leverage, and record DFC results as evidence the company is moving into the second half with momentum. He was notably optimistic on Pinewood.AI, AI-enabled cost reduction, and the path to a sub-60% SG&A structure, while framing the overall strategy as balancing buybacks, acquisitions, and internal investment for the highest returns.

Tina Miller highlighted that the quarter’s year-over-year comparisons were still pressured by margin normalization and tough prior-year demand pull-forward, but said the model performed as designed. She pointed to adjusted SG&A as a percentage of gross profit at 68.6%, same-store SG&A dollars down, and personnel costs improving by 30 basis points as a percentage of gross profit. On cash, she cited adjusted EBITDA of $445 million, adjusted cash flow from operations of $228 million, and first-half adjusted operating cash flow of $609 million after adjusting for a Q1 floor-plan benefit. She also noted repurchases at an average price of $284 and said the company returned more than $560 million to shareholders through buybacks and dividends in the first half.

Analysts focused on whether SG&A improvement was durable, how much Pinewood.AI is driving U.K. savings, whether DFC’s $35 million to $40 million earnings level is a new run-rate, and how used-vehicle GPU and volume should evolve in the back half. Management said roughly half of the U.K. SG&A improvement is tied to Pinewood, that DFC was helped by scale and credit performance but still faces normal seasonality in the second half, and that the provision benefit was small and immaterial. On used cars, Bryan DeBoer said the company is deliberately balancing volume and margin, with more pricing discipline through AI and people, and that the business is still selling some value-auto inventory below market. He also said U.S. Pinewood rollout should be smooth, not disruptive, because the company has already managed major DMS transitions before.