Lithia Motors (LAD) investor relations material

Executive summary

• Achieved record Q2 revenue of $9.8 billion, up 2.2% year-over-year, with diluted EPS rising 17% to $11.54 and adjusted diluted EPS up 9% to $10.03, driven by strong used vehicle and aftersales performance, and record financing results.

• Used vehicle profitability and aftersales gross profit both improved, while new vehicle margins remained stable; omnichannel and digital investments supported organic growth.

• Driveway Finance Corporation delivered record originations of $884 million, income of $37 million, and managed receivables above $5 billion, with penetration at 17.5%.

• Strategic capital allocation included $242 million in share repurchases (3.7% of shares retired), a 23% dividend increase, and expanded repurchase authorization by $500 million.

• Liquidity remained strong with $1.3 billion available, including $110.3 million in cash and $1.1 billion in credit facility availability.

Financial highlights

• Q2 2026 revenue was $9.8 billion (up 2.2% YoY), adjusted diluted EPS $10.03 (up 9% YoY), and adjusted EBITDA $445 million (down 2% YoY).

• Q2 net income was $261.6 million (up 1.3% YoY); adjusted net income was $227.6 million (down 6% YoY); gross profit for Q2 was $1.50 billion (up 0.8% YoY).

• Used vehicle GPU rose $339 sequentially to $2,019; aftersales gross profit grew 3.1% on 1% revenue growth, with margin expanding 120 bps YoY to 59.2%.

• SG&A as a percentage of gross profit was 68.6% (down 290 bps sequentially); net profit margin for Q2 was 2.3%.

• Net debt as of June 30, 2026, was $5.14 billion; net debt to adjusted EBITDA increased to 3.17x.

Outlook and guidance

• Management expects continued SG&A leverage, stable new vehicle margins, further DFC penetration, and ongoing capital returns.

• Used vehicle volumes expected to be flat to up mid-single digits in H2, with Driveway growing at a high teens rate.

• Free cash flow deployment: 25–35% to acquisitions, 25% to capex/innovation, 40–50% to dividends and repurchases.

• Focus remains on balancing share repurchases, acquisitions, organic investment, and maintaining balance sheet strength.

• Pinewood.AI rollout and technology investments expected to further improve efficiency and margins.