Lithia Motors (NYSE:LAD) shares rose nearly 5% in pre-market trading on Wednesday after the automotive retailer reported second-quarter earnings that comfortably exceeded Wall Street expectations, supported by record performance from its financing business.
The company posted adjusted earnings of $10.03 per share, beating analysts’ consensus estimate of $8.81. Quarterly revenue reached $9.8 billion, up 2% from $9.6 billion a year earlier and ahead of market expectations of $9.64 billion.
Financing Business Delivers Record Results
Lithia’s Financing Operations generated record quarterly income of $37 million, an increase of 82% compared with the same period last year.
Loan originations climbed to $884 million during the quarter, with financing penetration reaching 17.5%.
The company also reported stronger profitability across its used vehicle business. Used retail gross profit per unit (GPU) increased by $339, or 20%, from the previous quarter, while same-store aftersales gross profit rose 3.1%. Aftersales gross margin expanded by 120 basis points to 59.2%.
Share Buybacks and Dividend Increased
Lithia continued returning capital to shareholders during the quarter by repurchasing $242 million of its own shares, equivalent to approximately 3.7% of its outstanding share count.
The company also announced a 23% increase in its quarterly dividend, raising the payout to $0.70 per share.
Commenting on the results, President and Chief Executive Officer Bryan DeBoer said: “Our team delivered differentiated growth across the platform, with record quarterly revenues, stable new vehicle margins, improved used vehicle profitability, and meaningful sequential SG&A improvement. Financing Operations delivered 80% income growth, with expanding margins and increasing penetration.”
Operational Performance Continues to Improve
Adjusted selling, general and administrative (SG&A) expenses as a percentage of gross profit improved by 290 basis points from the previous quarter to 68.6%.
New vehicle gross profit per unit declined 11.8% to $2,728, while used vehicle retail GPU increased 5.4% to $2,014. Finance and insurance gross profit per unit remained broadly unchanged at $1,808.
For the first six months of 2026, adjusted diluted earnings per share increased to $17.32 from $17.12 in the same period of 2025, while revenue rose 2% year over year to $19.1 billion.
Expansion Strategy Continues
During the quarter, Lithia acquired five dealerships expected to generate approximately $340 million in annualised revenue, while divesting three locations representing around $120 million in annualised revenue.
The company finished the quarter with approximately $1.3 billion in cash, marketable securities and available capacity under its revolving credit facilities, providing substantial financial flexibility for future growth.