Lithia's Q3 Revenue Climbs, EPS Jumps Amidst Stock Buybacks

Ticker: LAD · Form: 10-Q · Filed: 2025-10-24T00:00:00.000Z

Sentiment: mixed

Topics: Automotive Retail, Earnings Report, Share Repurchase, Finance Receivables, Revenue Growth, EPS Growth, Acquisitions

Related Tickers: LAD, AN, PAG

TL;DR

**LAD's revenue is up, EPS is strong, and they're buying back stock aggressively, signaling a bullish outlook despite some credit quality concerns.**

AI Summary

Lithia Motors, Inc. (LAD) reported a mixed financial performance for the three and nine months ended September 30, 2025. Total revenues increased by 4.9% to $9,675.8 million for the three months ended September 30, 2025, compared to $9,221.0 million in the prior year period. For the nine months, total revenues rose 5.3% to $28,437.1 million from $27,014.7 million. Despite revenue growth, net income attributable to Lithia Motors, Inc. slightly decreased by 1.8% to $217.1 million for the three-month period, down from $207.3 million, but increased by 16.9% to $682.7 million for the nine-month period, up from $584.0 million. Basic earnings per share (EPS) for the three months increased to $8.63 from $7.75, and for the nine months, it rose to $26.47 from $21.50. Key business changes include a significant increase in finance receivables, net, to $4,544.9 million from $3,868.2 million, and a substantial repurchase of common stock totaling $678.4 million year-to-date. Risks include a foreign currency translation adjustment loss of $30.2 million for the quarter, and an increase in the allowance for doubtful accounts to $6.7 million from $2.3 million. The strategic outlook appears focused on growth through acquisitions, as evidenced by $417.6 million cash paid for acquisitions year-to-date, and managing finance operations.

Why It Matters

Lithia's performance indicates a robust automotive retail market, particularly in new and used vehicle sales, which is positive for investors in the sector. The significant increase in finance receivables and the allowance for doubtful accounts suggests potential shifts in consumer credit quality or aggressive financing strategies, which could impact future profitability and risk for investors. The substantial common stock repurchases, totaling $678.4 million year-to-date, signal management's confidence and a commitment to shareholder returns, potentially boosting EPS. This aggressive capital allocation, alongside continued acquisition activity, positions Lithia to potentially gain market share against competitors like AutoNation and Penske Automotive Group, but also introduces integration risks.

Risk Assessment

Risk Level: medium — The allowance for doubtful accounts on accounts receivable increased significantly from $2.3 million at December 31, 2024, to $6.7 million at September 30, 2025, indicating potential deterioration in credit quality. Additionally, the foreign currency translation adjustment resulted in a $30.2 million loss for the three months ended September 30, 2025, highlighting exposure to currency fluctuations.

Analyst Insight

Investors should consider LAD's strong EPS growth and significant share repurchases as positive indicators for shareholder value. However, they should monitor the rising allowance for doubtful accounts and foreign currency exposure, which could impact future earnings. A deeper dive into the quality of finance receivables is warranted.

Financial Highlights

revenue
$9.68B
total Assets
$24.52B
total Debt
$11.56B
net Income
$217.1M
eps
$8.63
cash Position
$417.1M
revenue Growth
+4.9%

Key Numbers

Key Players & Entities

FAQ

What were Lithia Motors' total revenues for the three months ended September 30, 2025?

Lithia Motors reported total revenues of $9,675.8 million for the three months ended September 30, 2025, an increase from $9,221.0 million in the same period of 2024.

How did Lithia Motors' net income attributable to common stockholders change year-over-year for the nine months ended September 30, 2025?

Net income attributable to Lithia Motors, Inc. common stockholders increased to $682.7 million for the nine months ended September 30, 2025, up from $584.0 million in the prior year, representing a 16.9% increase.

What was Lithia Motors' basic earnings per share for the third quarter of 2025?

Lithia Motors' basic earnings per share attributable to common stockholders was $8.63 for the three months ended September 30, 2025, compared to $7.75 for the same period in 2024.

What was the total value of common stock repurchased by Lithia Motors during the nine months ended September 30, 2025?

Lithia Motors repurchased common stock totaling $678.4 million during the nine months ended September 30, 2025, significantly higher than the $273.2 million repurchased in the same period of 2024.

Did Lithia Motors experience any significant foreign currency translation adjustments in Q3 2025?

Yes, Lithia Motors reported a foreign currency translation adjustment loss of $30.2 million for the three months ended September 30, 2025, compared to a gain of $71.6 million in the prior year period.

How much cash did Lithia Motors pay for acquisitions during the nine months ended September 30, 2025?

Lithia Motors paid $417.6 million in cash for acquisitions, net of cash acquired, during the nine months ended September 30, 2025.

What was the change in Lithia Motors' allowance for doubtful accounts from December 31, 2024, to September 30, 2025?

The allowance for doubtful accounts for Lithia Motors increased from $2.3 million at December 31, 2024, to $6.7 million at September 30, 2025.

What was the total amount of finance receivables, net, for Lithia Motors as of September 30, 2025?

As of September 30, 2025, Lithia Motors reported finance receivables, net, of $4,544.9 million, an increase from $3,868.2 million at December 31, 2024.

What was the impact of the error correction on Lithia Motors' net income for the three months ended September 30, 2024?

The correction of an immaterial error related to interest and fee income recognition resulted in a $1.8 million decrease in net income attributable to Lithia Motors, Inc. for the three months ended September 30, 2024, restating it to $207.3 million.

How much cash did Lithia Motors have at the end of the period on September 30, 2025?

Lithia Motors reported cash, restricted cash, and cash equivalents of $468.6 million at the end of the period on September 30, 2025, compared to $398.6 million at September 30, 2024.

Risk Factors

Industry Context

The automotive retail industry is characterized by high capital intensity, cyclical demand tied to economic conditions, and increasing reliance on financing and service revenues. Competition is fierce, with consolidation trends driven by scale advantages in purchasing, marketing, and operational efficiencies. The shift towards electric vehicles and evolving consumer preferences for digital sales channels are also key trends impacting dealerships.

Regulatory Implications

As a publicly traded company, Lithia Motors is subject to SEC regulations and accounting standards (GAAP). Changes in accounting for revenue recognition, lease accounting, or credit losses can impact financial reporting. Additionally, regulations related to consumer financing, data privacy, and environmental standards for vehicle sales and service operations may pose compliance challenges.

What Investors Should Do

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Key Dates

Glossary

EPS
Earnings per share, a measure of a company's profit allocated to each outstanding share of common stock. (Key metric for investor profitability assessment, showing an increase to $8.63 for Q3 2025.)
Finance receivables, net
Loans and finance leases provided by the company, net of any allowances for potential losses. (Significant growth to $4,544.9 million indicates expansion in financing operations but also increased credit risk.)
Allowance for doubtful accounts
An estimate of the amount of accounts receivable that may not be collected. (The increase to $6.7 million from $2.3 million signals potential rising credit concerns.)
Floor plan notes payable
Short-term debt used by dealerships to finance the purchase of new vehicle inventory. (Total floor plan debt stands at $4,868.9 million, a slight decrease from the prior year-end.)
Goodwill
An intangible asset that arises when one company acquires another for a price greater than the fair market value of its net assets. (Goodwill increased to $2,440.1 million, reflecting recent acquisitions.)
Franchise value
The value attributed to the brand name and customer relationships associated with a dealership franchise. (Represents a significant intangible asset, increasing to $2,771.8 million.)
YTD
Year-to-date, referring to the period from the beginning of the fiscal year up to the current reporting date. (Used to report cumulative figures for stock repurchases and acquisitions.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Lithia Motors (LAD) demonstrated robust revenue growth, with Q3 revenues up 4.9% to $9.68 billion and YTD revenues up 5.3% to $28.44 billion. While net income for the quarter saw a slight decrease, YTD net income increased by a significant 16.9%. A notable shift is the substantial increase in common stock repurchases to $678.4 million YTD, alongside a considerable expansion in finance receivables. New risks highlighted include a substantial increase in the allowance for doubtful accounts, indicating potential credit concerns, and a foreign currency translation loss.

Filing Stats: 4,365 words · 17 min read · ~15 pages · Grade level 6.2 · Accepted 2025-10-24 16:10:21

Filing Documents

Financial Statements

Financial Statements 2 Consolidated Balance Sheets (Unaudited) - September 30, 2025, and December 31, 2024 2 Consolidated Statements of Operations (Unaudited) - Three and Nine Months Ended September 30, 2025 and 2024 3 Consolidated Statements of Comprehensive Income (Unaudited) – Three and Nine Months Ended September 30, 2025 and 2024 4 Consolidated Statements of Equity and Redeemable Non-controlling Interest (Unaudited) - Three and Nine Months Ended September 30, 2025 and 2024 5 Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2025 and 2024 6 Condensed Notes to Consolidated Financial Statements (Unaudited) 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results

Management's Discussion and Analysis of Financial Condition and Results of Operations 22 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 41 Item 4.

Controls and Procedures

Controls and Procedures 42 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 42 Item 1A.

Risk Factors

Risk Factors 42 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42 Item 5. Other Information 43 Item 6. Exhibits 43 SIGNATURE 44 GLOSSARY 1 Table of Contents GLOSSARY OF DEFINITIONS The following are abbreviations and definitions of terms used within this report: Terms Definitions AFS Available-for-sale ASC Accounting Standards Codification ASU Accounting standards update Board Board of directors BPS Basis points CAD Canadian Dollar ($) CPO Certified pre-owned DFC Driveway Finance Corporation EBITDA Earnings before interest, taxes, depreciation, and amortization EPS Earnings per share FASB Financial Accounting Standards Board GAAP Generally accepted accounting principles GBP Great Britain Pound () JPM JPMorgan Chase Bank, N.A. LAD Lithia and Driveway Mizuho Mizuho Bank, Ltd. NCI Non-controlling interest NM Not meaningful NYSE New York Stock Exchange PINE.L Pinewood Technologies Group PLC PPA Purchase price allocation RSU Restricted stock units SEC Securities and Exchange Commission SG&A Selling, general, and administrative SOFR Secured Overnight Financing Rate SONIA Sterling Overnight Index Average U.K. United Kingdom U.S. United States of America USB US Bank National Association YTD Year-to-date CONSOLIDATED FINANCIAL STATEMENTS 2 Table of Contents CONSOLIDATED BALANCE SHEETS (In millions; Unaudited) September 30, 2025 December 31, 2024 Assets Current assets: Cash, restricted cash, and cash equivalents $ 417.1 $ 402.2 Accounts receivable, net of allowance for doubtful accounts of $ 6.7 and $ 2.3 1,212.8 1,237.0 Inventories, net 5,941.7 5,911.7 Other current assets 354.3 223.0 Total current assets 7,925.9 7,773.9 Property and equipment, net of accumulated depreciation of $ 957.9 and $ 825.5 4,784.0 4,629.9 Operating lease right-of-use

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8 Table of Contents CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. INTERIM FINANCIAL STATEMENTS Basis of Presentation These Consolidated Financial Statements contain unaudited information as of September 30, 2025 , and for the three and nine months ended September 30, 2025 and 2024 . The unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America for annual financial statements are not included herein. In management's opinion, these unaudited financial statements reflect all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the information when read in conjunction with our 2024 audited Consolidated Financial Statements and the related notes thereto. The financial information as of December 31, 2024 , is derived from our Annual Report on Form 10-K filed with the SEC on February 24, 2025 . The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. Reclassifications Certain reclassifications of amounts previously reported have been made to the accompanying Consolidated

Financial Statements to maintain consistency and comparability between periods presented. Within our financing

Financial Statements to maintain consistency and comparability between periods presented. Within our financing operations income, we disaggregated our lease income out of our previously reported interest, fee, and lease income to be its own separately presented line item, as well as revised the related lease depreciation and amortization to now be reported as lease costs, reclassifying amounts previously reported net within lease income. Correction of an Error In the three months ended March 31, 2025, we identified an immaterial error related to interest and fee income recognition in our previously issued financial statements for the year ended December 31, 2024. In accordance with FASB ASC 250, Accounting Changes and Error Corrections, we corrected this error by retrospectively restating the affected prior periods in this Form 10-Q. The following tables summarize the impact of the correction on our Consolidated Balance Sheet and Consolidated Statement of Operations. December 31, 2024 (In millions) As Previously Reported Adjustment As Restated Consolidated Balance Sheet Other current assets $ 221.3 $ 1.7 $ 223.0 Total current assets 7,772.2 1.7 7,773.9 Finance receivables, net 3,875.2 ( 7.0 ) 3,868.2 Total assets 23,127.9 ( 5.3 ) 23,122.6 Retained earnings 5,758.8 ( 5.3 ) 5,753.5 Total stockholders' equity - Lithia Motors, Inc. 6,655.5 ( 5.3 ) 6,650.2 Total equity 6,679.4 ( 5.3 ) 6,674.1 Total liabilities, non-controlling interest, and equity 23,127.9 ( 5.3 ) 23,122.6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9 Table of Contents For the Three Months Ended September 30, 2024 (in millions, except per share amounts) As Previously Reported Adjustment As Restated Consolidated Statement of Operations Financing operations income (loss) $ 0.9 $ ( 2.3 ) $ ( 1.4 ) Operating profit 424.2 ( 2.3 ) 421.9 Income before income taxes 288.2 ( 2.3 ) 285.9 Income tax provision ( 65.3 ) 0.5 ( 64.8 ) Net income 222.9 ( 1.8 ) 221.1 Net income attributable to Lithia Motors, Inc. 209.1 ( 1.8 ) 207.3 Basic earnings per share attributable to Lithia Motors, Inc. $ 7.82 $ ( 0.07 ) $ 7.75 Diluted earnings per share attributable to Lithia Motors, Inc. $ 7.80 $ ( 0.07 ) $ 7.73 For the Nine Months Ended September 30, 2024 (in millions, except per share amounts) As Previously Reported Adjustment As Restated Consolidated Statement of Operations Financing operations income $ 6.4 $ ( 2.3 ) $ 4.1 Operating profit 1,159.3 ( 2.3 ) 1,157.0 Income before income taxes 791.4 ( 2.3 ) 789.1 Income tax provision ( 187.0 ) 0.5 ( 186.5 ) Net income 604.4 ( 1.8 ) 602.6 Net income attributable to Lithia Motors, Inc. 585.8 ( 1.8 ) 584.0 Basic earnings per share attributable to Lithia Motors, Inc. $ 21.57 $ ( 0.07 ) $ 21.50 Diluted earnings per share attributable to Lithia Motors, Inc. $ 21.54 $ ( 0.07 ) $ 21.47 NOTE 2. ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: (In millions) September 30, 2025 December 31, 2024 Contracts in transit $ 437.2 $ 497.4 Trade receivables 166.2 166.5 Vehicle receivables 258.7 243.7 Manufacturer receivables 338.0 306.3 Other receivables, current 19.4 25.4 1,219.5 1,239.3 Less: Allowance for doubtful accounts ( 6.7 ) ( 2.3 ) Total accounts receivable, net $ 1,212.8 $ 1,237.0 The long-term portion of other receivables wa

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10 Table of Contents NOTE 4. FINANCE RECEIVABLES Interest income on finance receivables is recognized based on the contractual terms of each receivable and is accrued until repayment, reaching non-accrual status, charge-off, or repossession. Direct costs associated with originations are capitalized and expensed as an offset to interest income when recognized on the receivables. The balances of finance receivables are made up of loans and finance leases secured by the related vehicles. More than 99 % of the portfolio is aged less than 60 days past due with less than 1 % on non-accrual status. Finance Receivables, net (In millions) September 30, 2025 December 31, 2024 Asset-backed term funding $ 2,757.3 $ 2,604.9 Warehouse facilities 1,514.8 1,052.0 Other managed receivables 389.5 314.2 Total finance receivables 4,661.6 3,971.1 Accrued interest and fees 23.1 20.5 Less: Allowance for credit losses ( 139.8 ) ( 123.4 ) Finance receivables, net $ 4,544.9 $ 3,868.2 Finance Receivables by FICO Score As of September 30, 2025 Year of Origination ($ in millions) 2025 2024 2023 2022 2021 Prior to 2021 Total <599 $ 35.9 $ 39.2 $ 26.2 $ 14.1 $ 5.8 $ 0.6 $ 121.8 600-699 490.1 410.0 284.2 200.5 54.7 4.3 1,443.8 700-774 612.7 423.3 287.2 194.3 24.6 1.7 1,543.8 775+ 614.8 379.4 224.8 118.4 5.7 0.5 1,343.6 Total auto loan receivables $ 1,753.5 $ 1,251.9 $ 822.4 $ 527.3 $ 90.8 $ 7.1 4,453.0 Other finance receivables 1 208.6 Total finance receivables $ 4,661.6 As of December 31, 2024 Year of Origination ($ in millions) 2024 2023 2022 2021 2020 Total <599 $ 53.0 $ 39.7 $ 22.4 $ 9.9 $ 1.4 $ 126.4 600-699 534.1 406.2 298.8 90.2 8.3 1,337.6 700-774 560.2 402.5 284.9 39.5 3.2 1,290.3 775+ 528.1 324.9 176.6 9.1 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11 Table of Contents Rollforward of Allowance for Credit Losses on Finance Receivables Our allowance for credit losses on finance receivables represents the net credit losses expected over the remaining contractual life of our managed receivables. The allowance for credit losses on finance receivables consisted of the following changes during the period: Nine Months Ended September 30, (In millions) 2025 2024 Allowance at beginning of period $ 123.4 $ 106.4 Charge-offs ( 120.1 ) ( 106.8 ) Recoveries 64.5 44.2 Sold loans — ( 0.3 ) Provision expense 72.5 77.0 Currency translation ( 0.5 ) — Allowance at end of period $ 139.8 $ 120.5 Charge-off Activity by Year of Origination Nine Months Ended September 30, (In millions) 2025 2024 2025 $ 6.0 $ — 2024 37.1 5.3 2023 38.3 45.4 2022 26.7 39.5 2021 7.6 13.6 2020 and prior 0.4 1.2 Other finance receivables 1 4.0 1.8 Total charge-offs $ 120.1 $ 106.8 1 Includes legacy portfolio, loans that are originated with no FICO score available, and finance lease receivables. NOTE 5. GOODWILL AND FRANCHISE VALUE The changes in the carrying amounts of goodwill are as follows: (In millions) Vehicle Operations Financing Operations Consolidated Balance as of December 31, 2023 $ 1,913.0 $ 17.6 $ 1,930.6 Adjustments to purchase price allocations 2 47.7 — 47.7 Additions through acquisitions 1 167.0 — 167.0 Reductions through disposals ( 22.1 ) — ( 22.1 ) Currency translation ( 6.3 ) ( 1.4 ) ( 7.7 ) Balance as of December 31, 2024 2,099.3 16.2 2,115.5 Additions through acquisitions 3 347.9 — 347.9 Reductions through disposals ( 39.2 ) — ( 39.2 ) Currency translation 15.4 0.5 15.9 Balance as of September 30, 2025 $ 2,423.4 $ 16.7 $ 2,440.1 1 Our purchase price allocations ( PPA ) for the 2023 acqu

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12 Table of Contents The changes in the carrying amounts of franchise value are as f

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