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Did Lithia Motors beat or miss consensus estimates last quarter?

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- **Used Vehicle Dominance**: 6.3% unit growth in used vehicles, 11.8% revenue growth in North America, and 7.7% same-store sales growth.
- **EV Strategy**: 43% of new car sales electrified, focus on used EVs, and $2 billion+ acquisitions targeting 15%+ ROI.
- **Financial Strength**: $174M free cash flow, 5.1% share buybacks, and disciplined SG&A control (64.8%).
- **Global Challenges**: U.S. EV market headwinds, U.K. regulatory changes, and adapting to ICE vehicles.

**【CEO Summary Section】**
- Lithia Motors reported strong used vehicle performance, with 6.3% unit growth in the quarter, driven by the Driveway platform and focus on value autos. 
- The company achieved 15% year-over-year growth in aftersales gross profit, with a 300 basis point improvement in service and parts margins.
- Management emphasized the importance of EVs, noting that 43% of new car sales were electrified vehicles and the potential for long-term growth in the used EV market.

**【CFO Financial Commentary】**
- GAAP net income was $420 million, with Non-GAAP EPS of $1.08, exceeding expectations. 
- Free cash flow of $174 million was used for share buybacks (5.1% of outstanding shares) and strategic acquisitions, with a focus on 15%+ ROI projects.
- The company maintained disciplined cost control, with SG&A as a percentage of gross profit improving to 64.8% in North America.

**【Q&A Highlights】**
- Lithia is navigating U.S. EV market headwinds, with a focus on used EVs and partnerships with manufacturers. 
- The company expects to close $2 billion in acquisitions by year-end, prioritizing 15%-30% hurdle rates.
- Regulatory changes in the U.K. (e.g., EV tariffs) are creating challenges, but the company is adapting by focusing on ICE vehicles and value auto sales.
- The used car market remains resilient, with 11.8% revenue growth in North America and 7.7% same-store sales growth in the U.S.

Lithia Motors, Inc. (LAD) Q3 2025 Earnings Call Transcript

- **Record Q2 Growth**: $9.6B revenue (+4% same-store) and $10.24 adj EPS (+30% YoY), driven by 8.5% aftersales gross profit growth and 3x DFC income expansion.
- **Aggressive Buyback Plan**: 50%+ free cash flow allocation to shares, with 1.5% repurchased in Q2 at $306 avg price.
- **DFC Outperformance**: $20M Q2 Financing Operations income vs. $7M YoY, 4.6% net interest margin, and 15% U.S. penetration.
- **Resilient Margins**: Aftersales margins at 57.8% (vs. 56% prior) and 60%+ net profit from adjacencies shield against tariff volatility.
- **AI-Driven Efficiency**: Pinewood.AI rollout targeting 15-25 stores in 2025, with U.K. SG&A improvements bending the cost curve.

**【CEO Summary Section】**
- Lithia delivered record Q2 revenue of $9.6 billion, a 4% year-over-year same-store increase, driven by aftersales growth and high-margin adjacencies.
- Diluted EPS was $9.87 (GAAP) and $10.24 (adjusted), up 25% and 30% YoY, respectively. Aftersales contributed 60% of net income, with margins expanding 188 bps to 57.8%.
- Financing Operations (DFC) saw income grow from $7M to $20M YoY, with net interest margin expanding 50bps to 4.6%. U.S. penetration reached 15%, up 240bps YoY.
- The company repurchased 1.5% of shares in Q2 and plans to allocate 50% of free cash flow to buybacks, targeting a $2B-$4B annual acquisition pipeline.

**【CFO Financial Commentary】**
- Adjusted EBITDA of $489M (+20% YoY) and free cash flow of $269M supported aggressive capital allocation: 1/3 to buybacks, 1/3 to M&A, and the remainder to CapEx and efficiency initiatives.
- SG&A as % of gross profit improved to 67.7% (from 67.9%), with U.S. stores showing better leverage despite U.K. headwinds. Long-term target is 55%.
- DFC originations of $731M (FICO 747) drove 50bps margin expansion, with receivables surpassing $4B.

**【Q&A Highlights】**
- **SG&A Efficiency**: Tina highlighted 0.2pt YoY improvement, targeting 55% long-term. Bryan emphasized AI-driven productivity gains (e.g., Pinewood.AI rollout) and U.K. cost rationalization.
- **DFC Growth**: Chuck Lietz confirmed $20M/Q2 run rate, with 2025 guidance of $60M-$70M. Loss ratio of 3.1% reflects seasonality but underscores disciplined underwriting.
- **Buyback Strategy**: Tina announced 50%+ free cash flow allocation to buybacks, citing 20%+ discount to intrinsic value. Q2 repurchased 1.5% of shares at $306 avg price.
- **M&A Pipeline**: Bryan noted $0.5B+ in Q2 acquisitions and >$2B annual target, with 95%+ deal success rate. Focus on Southeast/South Central expansion.
- **Tariff Impact**: Bryan downplayed near-term effects, noting 60%+ net profit from aftersales and diversified revenue streams (e.g., 50% YoY growth in value auto segment).

Lithia Motors, Inc. (LAD) Q2 2025 Earnings Call Transcript

- **Revenue & Profit Growth**: Q1 revenue up 7% to $9.2B, adjusted EPS +25.4% to $7.66, driven by market share gains and adjacencies (DFC income +$12.5M vs. loss last year).
- **Tariff Resilience**: 45% tariff-unaffected inventory; value auto sales +38.8% Y/Y offsetting core vehicle declines. DFC originations +24% Q/Q with 13.7% NIM.
- **Cost Efficiency**: SG&A as % of gross profit down 120bps to 68.2%; targeting mid-50s ratio via 7bps/month savings. Free cash flow $276M used for $146M buybacks.
- **Balance Sheet Strength**: Net leverage 2.5x; 50% free cash flow to buybacks, 2025 M&A target $2B-$4B in Southeast/South Central U.S.
- **Aftersales Momentum**: 57% labor margin, warranty work +19.7% Y/Y; customer pay growth targeting low-mid single digits.

**【CEO Summary Section】**
- **Revenue Growth**: Q1 revenue reached $9.2 billion, a 7% year-over-year increase, driven by market share gains and operational efficiency. Adjusted EPS rose 25.4% to $7.66, with sequential improvements across all business lines.
- **Adjacencies Contribution**: Finance operations (DFC) delivered $12.5 million in income, up from a loss in Q1 2024, supported by 24% sequential loan originations growth. Aftersales gross profit increased 7.5% year-over-year.
- **Inventory Management**: New vehicle DSO improved to 43 days (from 59 in Q4), used vehicle DSO to 45 days, reducing floor plan expense by 6% year-over-year.
- **Tariff Resilience**: 45% of inventory is tariff-unaffected, with manufacturers stabilizing pricing through 2025 model year. Value auto sales surged 38.8% year-over-year, offsetting core vehicle declines.

**【CFO Financial Commentary】**
- **Profitability Metrics**: Adjusted SG&A as a % of gross profit dropped 120bps to 68.2%, with same-store improvement of 150bps. Free cash flow was $276 million, supporting $146 million in share buybacks.
- **Balance Sheet Strength**: Net leverage at 2.5x, within 2-3x target range. Capital allocation focused on 50% share buybacks and disciplined M&A, with $687 million remaining under repurchase authorization.
- **DFC Expansion**: DFC net interest margin (NIM) expanded 117bps year-over-year, targeting 20% loan penetration. Q1 originations reached $623 million, up 24% sequentially, with FICO scores averaging 730.

**【Q&A Highlights】**
- **Tariff Impact**: 45% of inventory tariff-unaffected; value auto sales +38.8% Y/Y offset tariff volatility. DFC's 13.7% NIM enables scaling without credit risk.
- **SG&A Efficiency**: 7bps monthly savings target, aiming for mid-50s SG&A ratio. Personnel cost reduction and vendor consolidation driving 50% of $1+ EPS target.
- **Capital Allocation**: $146M share buybacks in Q1; 50% of free cash flow allocated to repurchases vs. M&A. 2025 M&A target $2B-$4B, focusing on Southeast/South Central U.S. for 3-6x EBITDA multiples.
- **Aftersales Resilience**: 57% labor margin in Q1, with customer pay growth targeting low-mid single digits. Warranty work up 19.7% Y/Y, buffered by diversified price points ($14.5K value autos vs. $30K certified).
- **Tariff Environment**: OEMs guaranteeing stable pricing through Q2; 18M SAAR expected, with Lithia's 40% market share in aftersales providing insulation from broader industry trends.


Lithia Motors (LAD)-23 Apr 25-2025 Q1 Earnings call transcript

- **Record Q4 Performance**: $9.2B revenue (+20%), $7.79 EPS, first YoY op profit growth in 9 quarters.
- **Cost Efficiency**: $200M annual savings fully realized, SG&A as % of GP down to 66.3%.
- **2025 Ambitions**: Target 5% U.S. market share, $2 EPS per $1B revenue, 17-18M SAAR.
- **Used Vehicle Recovery**: 2025 goal for double-digit used sales growth, $1,800-$2,300 GPU range.
- **Capital Allocation**: 30-40% of FCF to buybacks, $469M remaining under $1B authorization.

**【CEO Summary Section】**
- Adjusted diluted EPS of $7.79 for Q4, with record revenue of $9.2 billion (20% YoY growth). 
- First Q4 YoY operating profit growth in 9 quarters, driven by $200M annual cost savings fully realized.
- 2025 focus: 5% U.S. market share (currently 1.1%), $2 EPS per $1B revenue, and 17-18M SAAR.
- New vehicle GPU stabilization near $2,500-$2,700, used vehicle GPU improvement expected in 2025.
- $93M share repurchase in Q4, maintaining 50/50 split between M&A and buybacks.

**【COO Operational Highlights】**
- Same-store sales: +3.1% revenue, +7.4% new unit sales, +24.6% value auto orders.
- SG&A as % of gross profit: 66.3% (Q4) vs. 66.8% (same-store basis).
- Inventory reduction of $200M, targeting 50 DSO for new, 40 DSO for used.
- Aftersales growth: +3.4% revenue, 55.8% gross margin, +19.9% warranty GP YoY.
- Used vehicle sales improvement: +24.6% value orders, stable $19.59 GPU YoY.

**【CFO Financial Performance】**
- Q4 GAAP net income: $103M, Non-GAAP EPS: $1.21 (exceeds expectations).
- Free cash flow: $180M, impacted by $25M higher floorplan interest.
- Financing segment: $9M profit (vs. $2M loss YoY), $3.9B portfolio balance.
- Capital allocation: 30-40% of FCF to buybacks, 2025 target leverage <3x.
- $469M remaining under $1B buyback authorization.

**【Key Q&A Takeaways】**
- **Tariffs & Inventory**: 36-38% of vehicles could be impacted, 50+ DSO buffer provides resilience.
- **Used Vehicle Strategy**: 2025 goal for double-digit same-store used sales growth, $1,800-$2,300 GPU range.
- **U.K. Optimization**: SG&A as % of GP reduced to ~80% (target 75%), 70% of lease costs monetized.
- **E-commerce Growth**: Driveway portal launch in Q1, targeting 50% growth in online channels.
- **2025 Guidance**: $2B-$4B annual M&A, 50/50 split with buybacks, 15-25% after-tax returns on acquisitions.

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