Lithia Motors (LAD) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 revenue of $9.3 billion, up 1% year-over-year, with strong used vehicle and aftersales growth, but net income declined 51.7% to $102.0 million due to higher SG&A and investment losses.

• Adjusted diluted EPS was $7.34, down 7% year-over-year; diluted EPS was $4.28, down 46%.

• Operational resilience supported by a diversified omnichannel business model and technology investments.

• Completed three acquisitions, expanding the network to 465 locations across the US, UK, and Canada.

• Aggressive share repurchases continued, with $259 million spent in Q1 2026, retiring 4% of outstanding shares.

Financial highlights

• Gross profit was $1.42 billion, up 0.8% year-over-year, with aftersales gross profit up 9.0% and used vehicle gross profit down 0.5%.

• Adjusted EBITDA was $374.6 million, down 9% year-over-year; adjusted net income was $173.3 million, down 18%.

• Adjusted SG&A as a percentage of gross profit rose to 71.5% from 68.2% year-over-year.

• Cash flow from operations was negative $108.4 million, mainly due to inventory and floor plan changes; available liquidity at quarter-end was $1.4 billion.

• Driveway Finance Corporation achieved record $840 million in loan originations, with income up to $21.3 million and a $5 billion portfolio.

Outlook and guidance

• Focus on cost discipline, productivity, and leveraging technology to drive SG&A improvement toward the mid-50% range long-term.

• Management targets 25–35% of free cash flow for acquisitions, 25% for capital expenditures and innovation, and 40–50% for shareholder returns.

• Continued growth expected in aftersales and used vehicles, with stable vehicle margins and operating leverage as volumes increase.

• DFC penetration target is 20%+, with upside potential as used vehicle financing grows.

• Mid-term targets include $2 EPS per $1B revenue, $75–100B revenue, and operating margin above 5%.