Key Highlights

● Second-quarter revenue rose 2.2 per cent year over year to $9,791.3 million.

● Diluted earnings per share rose 16.9 per cent to $11.54, aided by an investment gain.

● Adjusted net income fell 6 per cent to $227.6 million even as per-share earnings rose.

● The board raised the quarterly dividend 23 per cent to $0.70 per share.

Lithia Motors, Inc. (NYSE:LAD). The company reported on 29 July 2026 that second-quarter revenue was $9,791.3 million, up 2.2 per cent. Net income was $261.6 million, up 1.3 per cent, and diluted earnings per share were $11.54, up 16.9 per cent from $9.87. Adjusted diluted earnings per share were $10.03, up 9 per cent, after excluding items that included a $0.96 per share investment gain on Pinewood Technologies. Adjusted net income fell 6 per cent to $227.6 million, which shows that share buybacks narrowed the per-share comparison. For the first half, revenue was $19,062.7 million, up 1.6 per cent, while net income of $363.7 million was down 22.5 per cent and diluted earnings per share of $15.68 were down 11.9 per cent; adjusted diluted earnings per share were $17.32, up 1 per cent.

Vehicles, Service and Finance

New vehicle revenue rose 2.7 per cent to $4,829.2 million on 104,089 units, but gross margin fell 80 basis points to 5.9 per cent and gross profit per unit fell 11.8 per cent to $2,728. Used vehicle revenue rose 1.4 per cent to $3,528.3 million; retail units fell 2.7 per cent, yet gross profit per retail unit rose 5.4 per cent to $2,014. Parts and service revenue rose 3.9 per cent to $1,067.4 million at a 59.3 per cent gross margin, and same-store parts and service gross profit was $599.7 million, up 3.1 per cent. Finance and insurance revenue fell 2.0 per cent to $366.4 million, and gross profit per unit was $1,808, down 0.6 per cent. The company's own financing operations earned a record $36.5 million, up 81.6 per cent, on record originations of $884 million at a 17.5 per cent penetration rate. Interest and fee income was $116.4 million and total interest margin $62.9 million, on average managed receivables of $5,271.4 million.

Capital Allocation and Leverage

The company repurchased about 854,000 shares for roughly $242 million in the quarter, reducing the share count by 3.7 per cent, and the board added $500 million to the authorisation, leaving about $620 million. It raised the quarterly dividend 23 per cent to $0.70 per share, with a record date of 7 August and payment on 21 August 2026. It acquired five stores with about $340 million of annualised revenue and divested three representing $120 million. Net debt was $5,143.6 million, and net debt to trailing adjusted EBITDA was 3.17 times, against 2.53 times a year earlier. Liquidity was about $1.3 billion, with unrestricted cash of $110.3 million. New vehicle inventory stood at 59 days' supply, against 63 a year earlier.

New Vehicle Margins Are Under Real Pressure

Lithia Motors' adjusted net income actually fell even as adjusted earnings per share rose, a gap explained by aggressive share buybacks that reduced the count by 3.7 per cent in the quarter, and new vehicle gross profit per unit dropped nearly 12 per cent as margins compressed. Net debt rose 21.8 per cent from a year earlier to a leverage ratio of 3.17 times, so the 21 October third-quarter report will be an early test of whether record finance-arm originations and parts and service growth can offset softening new-vehicle economics.