Lithia’s second quarter results were met with a negative market reaction as revenue fell short of Wall Street expectations despite year-over-year growth. Management cited key drivers such as expanding high-margin financing and aftersales operations, ongoing cost controls, and a focus on omnichannel digital engagement. CEO Bryan DeBoer highlighted that over 60% of net profit now comes from aftersales, underscoring the company’s shift toward more stable and diversified earnings. He acknowledged operational pressures, particularly around SG&A, but emphasized progress in store-level execution and the integration of adjacencies. "Our integrated ecosystem is delivering tangible results, and we are confident in our ability to lead the industry in consistency, profitability and long-term value creation," DeBoer stated.
Is now the time to buy LAD? Find out in our full research report (it’s free).
Lithia (LAD) Q2 CY2025 Highlights:
- Revenue: $9.58 billion vs analyst estimates of $9.78 billion (3.8% year-on-year growth, 2% miss)
- Adjusted EPS: $10.24 vs analyst estimates of $9.81 (4.4% beat)
- Adjusted EBITDA: $500.2 million vs analyst estimates of $453.3 million (5.2% margin, 10.3% beat)
- Operating Margin: 4.4%, in line with the same quarter last year
- Locations: 449.5 at quarter end, up from 410.7 in the same quarter last year
- Same-Store Sales rose 4.1% year on year (-6.4% in the same quarter last year)
- Market Capitalization: $7.71 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Lithia’s Q2 Earnings Call
- Ryan Sigdahl (Craig-Hallum): Asked about operational improvements and SG&A implications in the U.S. versus U.K. CFO Tina Miller emphasized ongoing productivity gains and a long-term target for SG&A, while CEO DeBoer highlighted progress despite market scrutiny.
- Michael Ward (Citi): Inquired about the sustainability of DFC earnings and U.S. SG&A trends. Charles Lietz, SVP at Driveway Finance, confirmed DFC’s trajectory and profitability, while Miller noted continued SG&A opportunity.
- Rajat Gupta (JPMorgan): Questioned the timeline for store performance recoupling with peers. CEO DeBoer cited recent improvements in used car revenue and ongoing shift toward higher-growth regions, noting long-term strategic advantages.
- Daniela Haigian (Morgan Stanley): Asked about used car mix and M&A environment. DeBoer explained direct consumer sourcing and value car growth, and reiterated a disciplined acquisition approach focused on high-return markets.
- Mark Jordan (Goldman Sachs): Sought clarity on aftersales growth drivers and tariff impact. DeBoer attributed most growth to lapping last year’s outage and strong customer pay, stating that tariffs had minimal immediate effect.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will track (1) the pace and effectiveness of Pinewood.AI’s rollout in North America and its impact on operational efficiency, (2) sustained growth and profitability in aftersales and DFC as penetration rates rise, and (3) the ability to further reduce SG&A through automation and vendor optimization. M&A execution, regional market share gains, and resilience to external pressures like tariffs will also be key to monitoring Lithia’s progress.
Lithia currently trades at $300.81, down from $307.08 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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