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LAD Q2 Earnings Beat on Used Margins and Financing Growth
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Key Takeaways
Lithia Motors beat Q2 earnings and revenue estimates on stronger used margins and aftersales growth.
LAD posted record Financing Operations income as DFC originations reached $884 million.
LAD raised its dividend 23%, repurchased shares and added five stores through acquisitions.
Lithia Motors (LAD - Free Report) 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 and EPS Surprise
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.
Lithia’s Used Profitability Improves Despite Lower Volume
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%.
LAD’s Aftersales Business Supports the Profit Mix
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%.
Lithia’s Cost Control Lifts Operating Income
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.
LAD’s Financing Operations Reach Record Income
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.
Lithia’s Balance Sheet Reflects Finance Growth
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.
LAD Keeps Capital Returns and Acquisitions Active
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.
General Motors Company (GM - Free Report) 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 - Free Report) 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 - Free Report) 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.
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LAD Q2 Earnings Beat on Used Margins and Financing Growth
Key Takeaways
Lithia Motors (LAD - Free Report) 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 and EPS Surprise
Lithia Motors, Inc. price-consensus-eps-surprise-chart | Lithia Motors, Inc. Quote
LAD’s Revenue Growth Spans Core Business Lines
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.
Lithia’s Used Profitability Improves Despite Lower Volume
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%.
LAD’s Aftersales Business Supports the Profit Mix
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%.
Lithia’s Cost Control Lifts Operating Income
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.
LAD’s Financing Operations Reach Record Income
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.
Lithia’s Balance Sheet Reflects Finance Growth
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.
LAD Keeps Capital Returns and Acquisitions Active
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.
Key Releases From Auto Space
General Motors Company (GM - Free Report) 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 - Free Report) 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 - Free Report) 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.