Companies: 10,813     total market cap: $144.043 T
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Lithia Motors
LAD
#2696
Rank
$6.48 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$284.18
Share price
-2.31%
Change (1 day)
-4.43%
Change (1 year)
๐Ÿ›๏ธ Retail๐Ÿš— Car retail
Categories
  1. Lithia Motors
  2. Quarterly Reports (10-Q)
  3. Submitted on 2026-04-29

Lithia Motors - 10-Q quarterly report FY


Text size:
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-14733
Lithia_Driveway_Combo_FINAL.jpg
Lithia Motors, Inc.
(Exact name of registrant as specified in its charter)
Oregon
 
93-0572810
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
150 N. Bartlett Street
Medford,
Oregon
97501
(Address of principal executive offices)
(Zip Code)
(541) 776-6401
Registrant’s telephone number, including area code
 
Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock without par value
LAD
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
☒
 ☐
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 29, 2026, there were 22,805,820 shares of the registrant’s common stock outstanding.
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LITHIA MOTORS, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
 
Item Number
Item
Page
GLOSSARY
PART I
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II
OTHER INFORMATION
Item 1.
Legal Proceedings
Item 1A.
Item 2.
Item 5.
Other Information
Item 6.
SIGNATURE
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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
BNS
The Bank of Nova Scotia
BPS
Basis points
CAD
Canadian Dollar ($)
CORRA
Canadian Overnight Repo Rate Average
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 (£)
LAD
Lithia and Driveway
LMMH
Lithia Marubeni Mobility Holdings
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
U.K.
United Kingdom
U.S.
United States of America
USB
US Bank National Association
YTD
Year-to-date
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CONSOLIDATED FINANCIAL STATEMENTS
2
Table of Contents
CONSOLIDATED BALANCE SHEETS
(In millions; Unaudited)
March 31,
2026
December 31,
2025
Assets
 
 
Current assets:
 
 
Cash, restricted cash, and cash equivalents
$421.3
$341.8
Accounts receivable, net of allowance for doubtful accounts of $7.3 and $6.9
1,261.4
1,134.1
Inventories, net
6,193.2
6,119.6
Other current assets
275.9
262.5
Total current assets
8,151.8
7,858.0
Property and equipment, net of accumulated depreciation of $1,052.4 and $1,004.9
4,994.5
4,936.0
Operating lease right-of-use assets
708.1
717.2
Finance receivables, net of allowance for credit losses of $149.1 and $143.7
5,012.9
4,755.1
Goodwill
2,471.8
2,476.7
Franchise value
2,770.2
2,777.4
Other non-current assets
1,640.4
1,586.8
Total assets
$25,749.7
$25,107.2
Liabilities and equity
 
 
Current liabilities:
 
 
Floor plan notes payable
$1,910.4
$1,992.6
Floor plan notes payable: non-trade
4,374.1
3,016.3
Current maturities of long-term debt
110.4
64.2
Current maturities of non-recourse notes payable
68.2
69.7
Trade payables
489.3
339.5
Accrued liabilities
1,247.3
1,214.4
Total current liabilities
8,199.7
6,696.7
Long-term debt, less current maturities
6,448.8
7,274.9
Non-recourse notes payable, less current maturities
2,565.8
2,404.2
Deferred revenue
466.6
452.7
Deferred income taxes
531.3
516.3
Non-current operating lease liabilities
651.8
662.1
Other long-term liabilities
476.2
471.9
Total liabilities
19,340.2
18,478.8
Equity:
 
 
Preferred stock - no par value; authorized 15.0 shares; none outstanding
—
—
Common stock - no par value; authorized 125.0 shares; issued and outstanding 22.8 and 23.5
—
—
Additional paid-in capital
—
18.1
Accumulated other comprehensive income
42.1
67.3
Retained earnings
6,342.1
6,517.8
Total stockholders’ equity - Lithia Motors, Inc.
6,384.2
6,603.2
Non-controlling interest
25.3
25.2
Total equity
6,409.5
6,628.4
Total liabilities and equity
$25,749.7
$25,107.2
 See accompanying condensed notes to consolidated financial statements.
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CONSOLIDATED FINANCIAL STATEMENTS
3
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended March 31,
(In millions, except per share amounts; Unaudited)
2026
2025
Revenues
 
 
New vehicle
$4,379.4
$4,580.4
Used vehicle
3,489.4
3,250.5
Finance and insurance
359.7
364.3
Aftersales
1,042.9
983.1
Total revenues
9,271.4
9,178.3
Cost of sales
 
 
New vehicle retail
4,119.8
4,287.0
Used vehicle retail
3,301.7
3,061.8
Aftersales
428.2
419.1
Total cost of sales
7,849.7
7,767.9
Gross profit
1,421.7
1,410.4
Finance operations income
21.3
12.5
Selling, general and administrative
1,037.4
952.7
Depreciation and amortization
69.8
63.9
Operating income
335.8
406.3
Floor plan interest expense
(55.9)
(57.1)
Other interest expense, net
(70.3)
(65.5)
Other (expense) income, net
(67.6)
0.8
Income before income taxes
142.0
284.5
Income tax provision
(40.0)
(73.3)
Net income
102.0
211.2
Net income attributable to non-controlling interest
(1.6)
(1.7)
Net income attributable to Lithia Motors, Inc.
$100.4
$209.5
Basic earnings per share attributable to Lithia Motors, Inc. common stockholders
$4.29
$7.96
Shares used in basic per share calculations
23.4
26.3
Diluted earnings per share attributable to Lithia Motors, Inc. common stockholders
$4.28
$7.94
Shares used in diluted per share calculations
23.4
26.4
Cash dividends paid per share
$0.55
$0.53
See accompanying condensed notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Three Months Ended March 31,
(In millions; Unaudited)
2026
2025
Net income
$102.0
$211.2
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment
(23.3)
35.9
Unrealized (loss) gain on debt securities, net of tax benefit (provision) of $0.1 and $(0.1)
(0.3)
0.4
(Loss) gain on cash flow hedges, net of tax benefit (provision) of $0.5 and $(0.3)
(1.6)
0.8
Total other comprehensive (loss) income, net of tax
(25.2)
37.1
Comprehensive income
76.8
248.3
Comprehensive income attributable to non-controlling interest
(1.6)
(1.7)
Comprehensive income attributable to Lithia Motors, Inc.
$75.2
$246.6
See accompanying condensed notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF EQUITY
Three Months Ended March 31,
(In millions; Unaudited)
2026
2025
Total equity, beginning balances
$6,628.4
$6,674.1
Common stock, beginning balances
—
793.1
Stock-based compensation
30.2
26.4
Issuance of stock in connection with employee stock purchase plans
5.8
5.6
Repurchase of common stock, including excise tax
(36.0)
(145.7)
Common stock, ending balances
—
679.4
Additional paid-in capital, beginning balances
18.1
107.2
Stock-based compensation
(18.1)
(11.4)
Additional paid-in capital, ending balances
—
95.8
Accumulated other comprehensive income (loss), beginning balances
67.3
(3.6)
Foreign currency translation adjustment
(23.3)
35.9
Unrealized (loss) gain on debt securities, net of tax benefit (provision) of $0.1 and $(0.1)
(0.3)
0.4
(Loss) gain on cash flow hedges, net of tax benefit (provision) of $0.5 and $(0.3)
(1.6)
0.8
Accumulated other comprehensive income, ending balances
42.1
33.5
Retained earnings, beginning balances
6,517.8
5,753.5
Net income attributable to Lithia Motors, Inc.
100.4
209.5
Dividends paid
(12.8)
(13.9)
Repurchase of common stock, including excise tax
(263.3)
—
Retained earnings, ending balances
6,342.1
5,949.1
Non-controlling interest, beginning balances
25.2
23.9
Distribution of non-controlling interest
(1.5)
(1.2)
Net income attributable to non-controlling interest
1.6
1.7
Non-controlling interest, ending balances
25.3
24.4
Total equity, ending balances
$6,409.5
$6,782.2
See accompanying condensed notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended March 31,
(In millions; Unaudited)
2026
2025
Cash flows from operating activities:
 
 
Net income
$102.0
$211.2
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
 
Depreciation and amortization
86.3
77.7
Stock-based compensation
12.1
15.0
Net loss on disposal of other assets
3.3
1.3
Net gain on disposal of stores
—
(9.4)
Unrealized investment loss, net
70.0
6.0
Deferred income taxes
16.2
33.8
Amortization of operating lease right-of-use assets
24.3
22.5
(Increase) decrease (net of acquisitions and dispositions):
Accounts receivable, net
(135.8)
(153.5)
Inventories
(97.2)
186.4
Finance receivables
(261.2)
(179.1)
Other assets
(51.2)
(36.2)
Increase (decrease) (net of acquisitions and dispositions):
Floor plan notes payable
(65.5)
23.3
Trade payables
152.8
21.7
Accrued liabilities
28.3
103.7
Other long-term liabilities and deferred revenue
7.2
(2.3)
Net cash (used in) provided by operating activities
(108.4)
322.1
Cash flows from investing activities:
 
Capital expenditures
(97.1)
(68.7)
Proceeds from sales of assets
11.3
5.4
Net cash used for other investments
(9.4)
(12.5)
Cash paid for acquisitions, net of cash acquired
(145.3)
(84.5)
Proceeds from sales of stores
—
43.2
Net cash used in investing activities
(240.5)
(117.1)
Cash flows from financing activities:
 
Borrowings (repayments) on floor plan notes payable, net: non-trade
1,378.3
(44.0)
Borrowings on lines of credit
3,436.5
3,698.5
Repayments on lines of credit
(4,216.2)
(3,846.9)
Principal payments on long-term debt and finance lease liabilities, scheduled
(12.6)
(10.0)
Principal payments on long-term debt and finance lease liabilities, other
(6.5)
(1.3)
Principal payments on non-recourse notes payable
(372.1)
(309.6)
Proceeds from issuance of non-recourse notes payable
532.1
564.0
Payment of debt issuance costs
(2.0)
(2.5)
Proceeds from issuance of common stock
5.8
5.6
Repurchase of common stock
(297.0)
(143.4)
Dividends paid
(12.8)
(13.9)
Payment of contingent consideration related to acquisitions
—
(9.4)
Other financing activity
(1.5)
(60.1)
Net cash provided by (used in) financing activities
432.0
(173.0)
Effect of exchange rate changes on cash, restricted cash, and cash equivalents
(1.7)
0.3
Increase in cash, restricted cash, and cash equivalents
81.4
32.3
Cash, restricted cash, and cash equivalents at beginning of year
391.3
445.8
Cash, restricted cash, and cash equivalents at end of period
$472.7
$478.1
See accompanying condensed notes to consolidated financial statements.
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Three Months Ended March 31,
(In millions)
2026
2025
Reconciliation of cash, restricted cash, and cash equivalents to the consolidated balance sheets
Cash and cash equivalents
$160.8
$234.4
Restricted cash from collections on auto loans receivable and customer deposits
260.5
195.9
Cash, restricted cash, and cash equivalents
421.3
430.3
Restricted cash on deposit in reserve accounts, included in other non-current assets
51.4
47.8
Total cash, restricted cash, and cash equivalents reported in the Consolidated
Statements of Cash Flows
$472.7
$478.1
Supplemental cash flow information:
Cash paid during the period for interest
$185.4
$168.9
Cash paid during the period for income taxes, net
24.1
7.3
Debt paid in connection with store disposals
—
10.2
Non-cash activities:
Acquisition of finance leases in connection with acquisitions
23.3
—
Right-of-use assets obtained in exchange for lease liabilities
21.6
13.1
Unsettled repurchases of common stock and excise taxes
2.4
2.3
See accompanying condensed notes to consolidated financial statements.
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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1. INTERIM FINANCIAL STATEMENTS
 
Basis of Presentation
These Consolidated Financial Statements contain unaudited information as of March 31, 2026, and for the three
months ended March 31, 2026 and 2025. 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
2025 audited Consolidated Financial Statements and the related notes thereto. The financial information as of
December 31, 2025, is derived from our Annual Report on Form 10-K filed with the SEC on February 25, 2026. 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
Consolidated Statements of Operations, we combined used wholesale revenue with used retail revenue and now
present these revenues collectively as used vehicle revenue. In addition, we combined fleet revenue with new retail
revenue and now present these revenues collectively as new vehicle revenue.
These changes were made to better reflect how management evaluates our revenue performance and to improve
comparability with industry practice. The reclassifications had no impact on total revenue, gross profit, operating
income, net income, or cash flows for any period presented.
NOTE 2. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following:
(In millions)
March 31, 2026
December 31, 2025
Contracts in transit
$496.4
$468.6
Trade receivables
163.9
148.6
Vehicle receivables
244.7
177.6
Manufacturer receivables
347.3
327.9
Other receivables, current
16.4
18.3
 
1,268.7
1,141.0
Less: Allowance for doubtful accounts
(7.3)
(6.9)
Total accounts receivable, net
$1,261.4
$1,134.1
The long-term portion of other receivables was included as a component of Other non-current assets in the
Consolidated Balance Sheets.
NOTE 3. INVENTORIES AND FLOOR PLAN NOTES PAYABLE
The components of inventories, net, consisted of the following:
(In millions)
March 31, 2026
December 31, 2025
New vehicles
$3,593.0
$3,586.1
Used vehicles
2,337.6
2,266.7
Parts and accessories
262.6
266.8
Total inventories
$6,193.2
$6,119.6
Vehicle inventory costs are generally reduced by manufacturer holdbacks and incentives, while the related floor plan
notes payable are reflective of the gross cost of the vehicle.
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(In millions)
March 31, 2026
December 31, 2025
Floor plan notes payable
$1,910.4
$1,992.6
Floor plan notes payable: non-trade
4,374.1
3,016.3
Total floor plan debt
$6,284.5
$5,008.9
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)
March 31, 2026
December 31, 2025
Asset-backed term funding
$3,104.7
$2,954.6
Warehouse facilities
1,611.0
1,514.8
Other managed receivables
419.6
403.4
Total finance receivables
5,135.3
4,872.8
Accrued interest and fees
26.7
26.0
Less: Allowance for credit losses
(149.1)
(143.7)
Finance receivables, net
$5,012.9
$4,755.1
Finance Receivables by FICO Score
As of March 31, 2026
Year of Origination
($ in millions)
2026
2025
2024
2023
2022
Prior to 2022
Total
<599
$11.4
$38.1
$29.9
$19.6
$10.4
$4.0
$113.4
600-699
201.4
583.8
329.9
219.9
147.2
38.9
1,521.1
700-774
253.5
721.0
341.3
224.0
144.9
17.7
1,702.4
775+
290.9
723.0
299.9
170.3
86.9
4.2
1,575.2
Total auto loan receivables
$757.2
$2,065.9
$1,001.0
$633.8
$389.4
$64.8
4,912.1
Other finance receivables 1
223.2
Total finance receivables
$5,135.3
As of December 31, 2025
Year of Origination
($ in millions)
2025
2024
2023
2022
2021
Prior to 2021
Total
<599
$42.0
$34.4
$22.7
$12.0
$4.7
$0.5
$116.3
600-699
629.9
369.1
250.9
173.0
45.2
3.3
1,471.4
700-774
784.1
382.1
254.7
168.4
20.4
1.3
1,611.0
775+
810.5
338.5
197.3
102.0
4.8
0.4
1,453.5
Total auto loan receivables
$2,266.5
$1,124.1
$725.6
$455.4
$75.1
$5.5
4,652.2
Other finance receivables 1
220.6
Total finance receivables
$4,872.8
1Includes legacy portfolio, loans that are originated with no FICO score available, lease receivables, and deferred origination
fees.
In accordance with FASB ASC Topic 326, the allowance for credit losses on finance receivables is estimated based
on our historical write-off experience, current conditions and forecasts, as well as the value of any underlying assets
securing these receivables. Consideration is given to recent delinquency trends and recovery rates. Account
balances are charged against the allowance upon reaching 120 days past due status.
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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:
Three Months Ended March 31,
2026 vs. 2025
(In millions)
2026
2025
$ Change
% Change
Allowance for credit losses at beginning of period
$143.7
$123.4
$20.3
16.5%
Charge-offs
(41.8)
(43.1)
1.3
(3.0)
Recoveries
20.8
21.7
(0.9)
(4.1)
Net charge-offs
(21.0)
(21.4)
0.4
(1.9)%
Change in provision due to portfolio size
5.4
4.1
1.3
31.7
Change in provision due to net charge-offs
21.0
21.4
(0.4)
(1.9)
Allowance for credit losses at end of period
$149.1
$127.5
$21.6
16.9%
Charge-off Activity by Year of Origination
Three Months Ended March 31,
(In millions)
2026
2025
2026
$0.1
$—
2025
10.9
—
2024
12.3
11.5
2023
8.8
15.9
2022
6.2
10.7
2021 and prior
1.3
3.2
Other finance receivables 1
2.2
1.8
Total charge-offs
$41.8
$43.1
1Includes 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, 2024
$2,099.3
$16.2
$2,115.5
Additions through acquisitions 1
383.1
—
383.1
Reductions through disposals
(39.2)
—
(39.2)
Currency translation
16.5
0.8
17.3
Balance as of December 31, 2025
2,459.7
17.0
2,476.7
Currency translation
(4.6)
(0.3)
(4.9)
Balance as of March 31, 2026
$2,455.1
$16.7
$2,471.8
1Our purchase price allocations (PPA) for the 2024 acquisitions were finalized in 2025. As a result, we added $348.2 million
of goodwill. Preliminary PPA for a portion of our 2025 acquisitions resulted in adding $34.9 million of goodwill. Our PPA for
the remaining 2025 acquisitions are preliminary and goodwill is not yet allocated to our segments. These amounts are
included in other non-current assets until we finalize our purchase accounting. See Note 12 – Acquisitions.
The changes in the carrying amounts of franchise value are as follows:
(In millions)
Franchise Value
Balance as of December 31, 2024
$2,550.3
Additions through acquisitions 1
231.1
Reductions through divestitures
(20.9)
Reductions from impairments 2
(5.8)
Currency translation
22.7
Balance as of December 31, 2025
2,777.4
Currency translation
(7.2)
Balance as of March 31, 2026
$2,770.2
1Our PPA for the 2024 acquisitions were finalized in 2025. As a result, we added $218.0 million of franchise value.
Preliminary PPA for a portion of our 2025 acquisitions resulted in adding $13.1 million of franchise value. These amounts
are included in other non-current assets until we finalize our purchase accounting. See Note 12 – Acquisitions.
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2In our annual impairment testing in 2025, we determined the franchise value of one underperforming store was not
recoverable, resulting in an impairment of $5.8 million being recorded in the Consolidated Statements of Operations as
Asset impairments. Balance as of March 31, 2026 and December 31, 2025 is net of accumulated impairments of this
amount only.
NOTE 6. INVESTMENTS
Marketable Securities
As of March 31, 2026 and December 31, 2025, marketable equity securities recorded within other current assets in
the Consolidated Balance Sheets were $2.4 million and $2.4 million, respectively. There were no net unrealized
gains or losses recognized during the three months ended March 31, 2026 and 2025 on marketable equity
securities held at the reporting date.
Marketable debt securities accounted for as available-for-sale (AFS), and recorded within Other current assets in
the Consolidated Balance Sheets, were as follows:
As of March 31, 2026
Fair Value of Securities with Contractual
Maturities
(In millions)
Amortized
Cost
Total Net
Gains1
Total Net
Losses1
Fair Value
Within 1
Year
After 1 Year
through 5
Years
After 5
Years
U.S. Treasury
$20.8
$0.1
$—
$20.9
$3.7
$14.5
$2.7
Municipal securities
10.5
0.1
—
10.6
0.2
9.0
1.4
Corporate debt
22.0
0.1
—
22.1
4.1
14.5
3.5
Total
$53.3
$0.3
$—
$53.6
$8.0
$38.0
$7.6
As of December 31, 2025
Fair Value of Securities with Contractual
Maturities
(In millions)
Amortized
Cost
Total Net
Gains1
Total Net
Losses1
Fair Value
Within 1
Year
After 1 Year
through 5
Years
After 5
Years
U.S. Treasury
$21.4
$0.2
$—
$21.6
$3.7
$14.5
$3.4
Municipal securities
10.4
0.2
—
10.6
0.1
9.0
1.5
Corporate debt
21.5
0.3
—
21.8
4.0
14.3
3.5
Total
$53.3
$0.7
$—
$54.0
$7.8
$37.8
$8.4
1Represents total unrealized gains for securities with net gains (losses) in accumulated other comprehensive income.
Proceeds from the maturity of AFS debt securities were $0.7 million and $0.6 million for the three months ended
March 31, 2026 and 2025. There were no gross realized gains or losses on the maturity of AFS debt securities for
the three months ended March 31, 2026 and 2025.
Equity Method Investments
Our common stock voting interests in Pinewood Technologies, PLC (PINE.L), a U.K.-based automotive dealership
management system provider, increased from 25.50% to 31.95% in July 2025. The investment is accounted for as
an equity method investment. The investment is measured at fair value based on quoted market prices, and all fair
market value changes in the investment are recorded as unrealized gains or losses as a component of Other
(expense) income, net in the Consolidated Statements of Operations. The fair value of our investment was $101.3
million and $177.2 million as of March 31, 2026 and December 31, 2025, respectively. See Note 11 – Fair Value
Measurements.
Our investment in Wheels, Inc., an automotive fleet management provider, through Lithia Marubeni Mobility
Holdings (LMMH) consists of 26.5% of the common stock voting interests accounted for as an equity method
investment. The investment is measured at cost plus or minus our share of equity method investee income or loss
as a component of Other non-current assets in the Consolidated Balance Sheets. The book value of our investment
was $213.7 million and $222.0 million as of March 31, 2026 and December 31, 2025, respectively. We received a
dividend of $9.8 million during the three months ended March 31, 2026. Using the cumulative earnings approach,
this dividend is classified within Operating Activities in the Consolidated Statements of Cash Flows, as it is less than
our cumulative equity in the investee's earnings.
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NOTE 7. COMMITMENTS AND CONTINGENCIES
Contract Liabilities
We retain the obligation for various contracts sold to our customers and assumed in acquisitions. These amounts
are recorded as a contract liability. At the time of sale, we defer the full sale price and recognize the revenue based
on the rate at which we expect to incur further costs.
The amount of revenue recognized related to aftersales contract liabilities is calculated, net of cancellations, using
an input method, which most closely depicts performance of the contracts. Our contract liability balances associated
with aftersales were $516.1 million and $501.5 million as of March 31, 2026, and December 31, 2025, respectively;
we recognized $34.8 million of revenue in the three months ended March 31, 2026, related to our opening contract
liability balances associated with aftersales.
The amount of revenue recognized related to operating lease vehicle contract liabilities is recognized evenly over
the life of the related lease contracts. Our contract liability balances associated with operating lease vehicles were
$140.2 million and $136.4 million as of March 31, 2026, and December 31, 2025, respectively; we recognized $17.7
million of revenue in the three months ended March 31, 2026, related to our opening contract liability balances
associated with operating lease vehicles.
Our contract liability balances are included in Accrued liabilities and Deferred revenue.
Litigation
We are party to numerous legal proceedings arising in the normal course of our business. Although we do not
anticipate that the resolution of legal proceedings arising in the normal course of business will have a material
adverse effect on our business, results of operations, financial condition, or cash flows, we cannot predict this with
certainty.
NOTE 8. DEBT
Credit Facilities
US Bank Syndicated Credit Facility
On February 27, 2026, we amended our existing syndicated credit facility with US Bank as agent (USB credit
facility), now comprised of 18 financial institutions, including six manufacturer-affiliated finance companies, maturing
February 27, 2031. The amendment extended the maturity date, converted the existing used vehicle floorplan and
service loaner floorplan facilities to VIN-specific facilities, eliminated the credit spread adjustment of 0.10%, and
reduced the margin on used vehicle floor plan financing from 1.40% to 1.20%.
This USB credit facility provides for a total financing commitment of $6.5 billion, which may be further expanded,
subject to lender approval and the satisfaction of other conditions, up to a total of $7.0 billion. The allocation of the
financing commitment is for up to $2.7 billion in new vehicle inventory floorplan financing, up to $1.3 billion in used
vehicle inventory floorplan financing, up to $150 million in service loaner vehicle floorplan financing, and up to
$2.4 billion in revolving financing for general corporate purposes, including acquisitions and working capital. We
have the option to reallocate the commitments under this USB credit facility, provided that the aggregate revolving
loan commitment may not be more than 50% of the amount of the aggregate commitment. All borrowings from, and
repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as part of Net cash
provided by (used in) financing activities.
Our obligations under our USB credit facility are secured by a substantial amount of our assets, including our
inventory (including new and used vehicles, parts and accessories), equipment, accounts receivable (and other
rights to payment), real property, and our equity interests in certain of our subsidiaries.
The interest rate on the USB credit facility varies based on the type of debt, with the rate of one-day SOFR plus a
margin of 1.10% for new vehicle floor plan financing, 1.20% for used vehicle floor plan financing, 1.20% for service
loaner floor plan financing, and a variable interest rate on the revolving financing ranging from 1.00% to 2.00%
depending on our leverage ratio. The annual interest rates associated with our commitments are as follows:
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Commitment
Annual Interest Rate at March 31, 2026
New vehicle floor plan
4.78%
Used vehicle floor plan
4.88%
Service loaner floor plan
4.88%
Revolving line of credit
4.93%
Bank of Nova Scotia Syndicated Credit Facility
On February 27, 2026, we amended our syndicated credit agreement with The Bank of Nova Scotia as agent (BNS
credit facility), which is comprised of six financing institutions, including two manufacturer-affiliated finance
companies. The amendment extended the maturity date, converted the existing used vehicle floorplan facility to a
VIN-specific facility, and reduced the margin on used vehicle floor plan financing from 1.25% to 1.10%.
The BNS credit facility provides for a total financing commitment of approximately $1.1 billion CAD, including a
working capital revolving credit facility of up to $125 million CAD, a wholesale flooring facility for new vehicles up to
$375 million CAD, used vehicle flooring facility of up to $100 million CAD, wholesale leasing facility of up to $500
million CAD, and daily rental vehicle facility up to $25 million CAD.
The interest rate on the BNS credit facility varies based on the type of debt, with the daily compound rate of the
Canadian Overnight Repo Rate Average (CORRA) plus a margin of 1.25%-2.25%. The annual interest rates
associated with our commitments are as follows:
Commitment
Annual Interest Rate at March 31, 2026
Wholesale flooring facility
3.57%
Used vehicle flooring facility
3.37%
Daily rental facility
3.77%
Wholesale leasing facility
3.87%
Working capital revolving facility
3.82%
All BNS facilities other than the wholesale and used flooring facilities, which are demand facilities, mature on
March 18, 2029. The credit agreement includes various financial and other covenants typical of such agreements.
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Non-Recourse Notes Payable
In 2026, we issued $532.1 million in non-recourse notes payable related to asset-backed term funding transactions.
Below is a summary of outstanding non-recourse notes payable issued:
($ in millions)
Balance as of
March 31, 2026
Initial Principal
Amount
Issuance Date
Interest Rate
Range
Final Distribution
Date
LAD Auto Receivables Trust 2022-1
Class C
20.4
23.0
08/17/22
6.85% to 6.85%
Various dates through
Apr 2030
LAD Auto Receivables Trust 2023-1
Class C-D
46.8
68.0
02/14/23
6.18% to 7.30%
Various dates through
Jun 2030
LAD Auto Receivables Trust 2023-2
Class B-D
84.5
102.3
05/24/23
5.45% to 6.30%
Various dates through
Feb 2031
LAD Auto Receivables Trust 2023-3
Class A-D
90.7
124.4
08/23/23
5.95% to 6.92%
Various dates through
Dec 2030
LAD Auto Receivables Trust 2023-4
Class A-D
109.9
121.1
11/15/23
6.24% to 7.37%
Various dates through
Apr 2031
LAD Auto Receivables Trust 2024-1
Class A-D
103.4
179.4
02/14/24
5.17% to 6.15%
Various dates through
Jun 2031
LAD Auto Receivables Trust 2024-2
Class A-D
163.5
232.2
06/20/24
5.46% to 6.37%
Various dates through
Oct 2031
LAD Auto Receivables Trust 2024-3
Class A-D
301.2
306.3
11/15/24
4.52% to 5.18%
Various dates through
Feb 2032
LAD Auto Receivables Trust 2025-1
Class A-D
327.4
461.4
02/12/25
4.60% to 5.52%
Various dates through
May 2032
LAD Auto Receivables Trust 2025-2
Class A-D
398.5
443.3
08/13/25
4.25% to 5.01%
Various dates through
Dec 2032
LAD Auto Receivables Trust 2025-3
Class A-C
491.9
583.2
11/13/25
4.03% to 4.60%
Various dates through
Mar 2033
LAD Auto Receivables Trust 2026-1
Class A-C
495.8
532.1
02/18/26
3.75% to 4.42%
Various dates through
Aug 2033
Total non-recourse notes payable
$2,634.0
$3,176.7
NOTE 9. RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
Company-Sponsored Defined Benefit Pension Plan
We maintain two company-sponsored defined benefit plans applicable to a portion of salaried past and present
team members, which are closed to future accrual.
Net Periodic (Benefit) Cost
Interest cost represents the increase in the projected benefit obligation, which is a discounted amount, due to the
passage of time. The expected return on plan assets reflects the computed amount of current-year earnings from
the investment of plan assets using an estimated long-term rate of return.
Three Months Ended March 31,
(In millions)
2026
2025
Interest cost
$8.5
$8.0
Expected return on plan assets
(9.1)
(10.3)
Amortization of net loss
0.1
—
Net periodic benefit
$(0.5)
$(2.3)
During the three months ended March 31, 2026, funding of pension plans was $2.0 million. For the remainder of
2026, we estimate approximately $6.2 million of cash contributions.
NOTE 10. EQUITY
Repurchases of Common Stock
Repurchases of our common stock occurred under a repurchase authorization granted by our Board and related to
shares withheld as part of the vesting of RSUs.
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Our Board has approved repurchase authorizations totaling up to $3.2 billion of our common stock. Share
repurchases under our authorization were as follows:
 
Repurchases Occurring in 2026
Cumulative Repurchases as of
March 31, 2026
 
Shares
Average Price1
Shares
Average Price
Share Repurchase Authorization
941,979
$274.62
12,238,943
$227.73
1Price excludes excise taxes imposed under the Inflation Reduction Act of $2.4 million for the three months ended March 31,
2026.
As of March 31, 2026, we had $362.9 million available for repurchases pursuant to our share repurchase
authorizations from our Board in 2025 and prior years.
In addition, during 2026, we repurchased 115,228 shares at an average price of $332.30 per share, for a total of
$38.3 million, related to tax withholding associated with the vesting of RSUs. The repurchase of shares related to
tax withholding associated with stock awards does not reduce the number of shares available for repurchase as
approved by our Board.
NOTE 11. FAIR VALUE MEASUREMENTS
Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad
categories:
•Level 1 - quoted prices in active markets for identical securities;
•Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates,
prepayment spreads, credit risk; and
•Level 3 - significant unobservable inputs, including our own assumptions in determining fair value.
We determined the carrying value of cash, restricted cash, cash equivalents, accounts receivable, trade payables,
accrued liabilities, finance receivables, and short-term borrowings approximate their fair values because of the
nature of their terms and current market rates of these instruments. We believe the carrying value of our variable
rate debt approximates fair value.
We have money market securities, which include restricted cash from collections on finance receivables, recorded
as a component of Cash, restricted cash, and cash equivalents in our Consolidated Balance Sheets, as well as
restricted cash on deposit in reserve accounts, recorded as a component of Other non-current assets in our
Consolidated Balance Sheets. These money market securities consist of highly liquid investments with original
maturities of three months or less and are classified as Level 1.
We have investments consisting of equity securities, available for sale debt securities, and equity method
investments with a fair value election. We calculated the estimated fair value of the equity securities, equity method
investments, and U.S. Treasury debt securities using quoted market prices (Level 1). The fair value of corporate and
municipal debt securities are measured using observable Level 2 market expectations at each measurement date.
See Note 6 – Investments.
We have fixed rate debt primarily consisting of amounts outstanding under our senior notes, non-recourse notes
payable, and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices
for the identical liability (Level 1). The fair value of non-recourse notes payable are measured using observable
Level 2 market expectations at each measurement date. The calculated estimated fair values of the fixed rate real
estate mortgages and finance lease liabilities use a discounted cash flow methodology with estimated current
interest rates based on a similar risk profile and duration (Level 2). The fixed cash flows are discounted and
summed to compute the fair value of the debt.
We have derivative instruments consisting of an offsetting set of interest rate caps. The fair value of derivative
assets and liabilities are measured using observable Level 2 market expectations at each measurement date and is
recorded as other current assets, current liabilities and other long-term liabilities in the Consolidated Balance
Sheets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Nonfinancial assets such as goodwill, franchise value, or other long-lived assets are measured and recorded at fair
value during a business combination or when there is an indicator of impairment. We evaluate our goodwill and
franchise value using a qualitative assessment process. If the qualitative factors determine that it is more likely than
not that the carrying value exceeds the fair value, we would further evaluate for potential impairment using a
quantitative assessment. The quantitative assessment estimates fair values using unobservable (Level 3) inputs by
discounting expected future cash flows of the store for franchise value, or reporting unit for goodwill. The forecasted
cash flows contain inherent uncertainties, including significant estimates and assumptions related to growth rates,
margins, working capital requirements, and cost of capital, for which we utilize certain market participant-based
assumptions we believe to be reasonable. We estimate the value of other long-lived assets that are recorded at fair
value on a non-recurring basis on a market valuation approach. We use prices and other relevant information
generated primarily by recent market transactions involving similar or comparable assets, as well as our historical
experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation
approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we
determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence.
When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and
brokers, to corroborate our estimates of fair value. Real estate appraisers’ and brokers’ valuations are typically
developed using one or more valuation techniques including market, income and replacement cost approaches.
Because these valuations contain unobservable inputs, we classified the measurement of fair value of long-lived
assets as Level 3.
There were no changes to our valuation techniques during the three-month period ended March 31, 2026.
Below are our assets and liabilities that are measured at fair value:
As of March 31, 2026
As of December 31, 2025
(In millions)
Carrying
Value
Level 1
Level 2
Level 3
Carrying
Value
Level 1
Level 2
Level 3
Recorded at fair value
Marketable securities
Restricted cash - collections
$123.9
$123.9
$—
$—
$131.3
$131.3
$—
$—
Restricted cash - reserve
34.3
34.3
—
—
34.3
34.3
—
—
Total money market funds
$158.2
$158.2
$—
$—
$165.6
$165.6
$—
$—
Equity securities
$2.4
$2.4
$—
$—
$2.4
$2.4
$—
$—
U.S. Treasury
$20.9
$20.9
$—
$—
$21.6
$21.6
$—
$—
Municipal debt
10.6
—
10.6
—
10.6
—
10.6
—
Corporate debt
22.1
—
22.1
—
21.8
—
21.8
—
Total debt securities
$53.6
$20.9
$32.7
$—
$54.0
$21.6
$32.4
$—
Equity Method Investment
PINE.L
$101.3
$101.3
$—
$—
$177.2
$177.2
$—
$—
Derivatives
Derivative assets
$0.3
$—
$0.3
$—
$0.7
$—
$0.7
$—
Derivative liabilities
0.3
—
0.3
—
0.7
—
0.7
—
Recorded at historical value
Fixed rate debt 1
4.625% Senior notes due 2027
$400.0
$393.0
$—
$—
$400.0
$398.0
$—
$—
3.875% Senior notes due 2029
800.0
752.0
—
—
800.0
770.0
—
—
5.500% Senior notes due 2030
600.0
584.3
—
—
600.0
602.3
—
—
4.375% Senior notes due 2031
550.0
509.4
—
—
550.0
526.6
—
—
Non-recourse notes payable
2,634.0
—
2,641.5
—
2,473.9
—
2,489.0
—
Real estate mortgages and other debt
738.9
—
747.6
—
730.0
—
703.8
—
1Excluding unamortized debt issuance costs
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NOTE 12. ACQUISITIONS
In the first three months of 2026, we completed the following acquisitions:
•In February 2026, Mercedes-Benz of Medford in Oregon.
•In March 2026, Toyota of Gallatin in Tennessee.
•In March 2026, Read Motor Group in the United Kingdom.
The acquisitions were accounted for as business combinations under the acquisition method of accounting. The
results of operations of the acquired stores are included in our Consolidated Financial Statements from the date of
acquisition.
Revenue and operating income contributed by the 2026 acquisitions subsequent to the date of acquisition were as
follows (in millions):
Three Months Ended March 31,
2026
Revenue
$18.1
Operating income
0.8
The following tables summarize the consideration paid for the 2026 acquisitions and the PPA for identified assets
acquired and liabilities assumed as of the acquisition date:
(In millions)
Consideration
Cash paid, net of cash acquired
$145.3
Total consideration transferred
$145.3
(In millions)
Assets Acquired
and Liabilities
Assumed
Inventories, net
$21.5
Property and equipment
42.4
Other assets
107.1
Debt and finance lease obligations assumed
(23.3)
Other liabilities and deferred revenue
(2.4)
Total net assets acquired and liabilities assumed
$145.3
The PPA for the 2026 acquisitions is preliminary, as we have not obtained and evaluated all of the detailed
information necessary to finalize the opening balance sheet amounts in all respects. We recorded the PPA based
upon information that is currently available and recorded unallocated items as a component of Other non-current
assets in the Consolidated Balance Sheets.
We expect all of the goodwill related to U.S. acquisitions in 2026 to be deductible for U.S. federal income tax
purposes.
In the three-month period ended March 31, 2026, we recorded $0.3 million in acquisition-related expenses as a
component of SG&A expense. Comparatively, we recorded $0.2 million of acquisition-related expenses in the same
period of 2025.
 
The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three-
month periods ended March 31, 2026 and 2025 had occurred on January 1, 2025:
Three Months Ended March 31,
(In millions, except per share amounts)
2026
2025
Revenue
$9,320.7
$9,253.9
Net income attributable to Lithia Motors, Inc.
102.6
212.3
Basic EPS attributable to Lithia Motors, Inc. common stockholders
4.38
8.06
Diluted EPS attributable to Lithia Motors, Inc. common stockholders
4.38
8.05
 
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We calculated these amounts by applying our accounting policies and estimates. The results of the acquired stores
have been adjusted to reflect the following: depreciation on a straight-line basis over the expected lives for property
and equipment, accounting for inventory on a specific identification method, and recognition of interest expense for
real estate financing related to stores where we purchased the facility. No nonrecurring proforma adjustments
directly attributable to the acquisitions are included in the reported proforma revenues and earnings.
NOTE 13. EARNINGS PER SHARE
We calculate basic EPS by dividing net income attributable to Lithia Motors, Inc. by the weighted average number of
common shares outstanding for the period, including vested RSU awards. We calculate diluted EPS by dividing net
income attributable to Lithia Motors, Inc. by the weighted average number of shares outstanding, adjusted for the
dilutive effect of unvested RSU awards and employee stock purchases.
The following is a reconciliation of net income attributable to Lithia Motors, Inc. and weighted average shares used
for our basic EPS and diluted EPS:
Three Months Ended March 31,
(In millions, except per share amounts)
2026
2025
Net income attributable to Lithia Motors, Inc.
$100.4
$209.5
Weighted average common shares outstanding – basic
23.4
26.3
Effect of employee stock purchases and restricted stock units on weighted average common shares
outstanding
—
0.1
Weighted average common shares outstanding – diluted
23.4
26.4
Basic EPS attributable to Lithia Motors, Inc. common stockholders
$4.29
$7.96
Diluted EPS attributable to Lithia Motors, Inc. common stockholders
$4.28
$7.94
We evaluated the effect of antidilutive securities on common stock for the three-month periods ended March 31,
2026 and 2025 and determined the effect to be immaterial.
NOTE 14. SEGMENTS
We operate in two reportable segments: Vehicle Operations and Financing Operations. Our Vehicle Operations
consists of all aspects of our auto merchandising and aftersales operations, excluding financing provided by our
Financing Operations. Our Financing Operations segment provides financing to customers buying and leasing retail
vehicles from our Vehicle Operations, as well as leasing vehicles from our fleet management services provider.
All other remaining unallocated corporate overhead expenses and internal charges are reported under Corporate
and Other. We do not utilize asset information by segment for purposes of assessing performance or allocating
resources and, as a result, we do not present such information.
The reportable segments identified above represent our business activities for which discrete financial information is
available and for which operating results are regularly provided and reviewed by our CODM to allocate resources
and assess performance. Our CODM is our Chief Executive Officer. The CODM assesses segment performance
using segment income, which is measured as net segment profit before taxes on a U.S. GAAP basis.
We do not regularly provide total asset information by segment to our CODM or utilize the information for purposes
of assessing performance or allocating resources and, as a result, we do not present such information. Certain
financing operations asset information including total managed receivables are used by the financing operations
segment manager to manage operations and are included in various reports regularly provided to our CODM. See
Note 4 – Finance Receivables.
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Certain financial information on a segment basis is as follows:
 
Three Months Ended
March 31,
(In millions)
2026
2025
Vehicle operations
Total revenue
$9,271.4
$9,178.3
Total gross profit
1,421.7
1,410.4
Floor plan interest expense
(55.9)
(57.1)
Personnel expense
(541.1)
(514.1)
Rent and facility expense
(202.2)
(182.4)
Advertising expense
(79.7)
(69.9)
Other vehicle operations expenses1
(310.1)
(278.2)
Vehicle operations income
232.7
308.7
Financing Operations
Interest and fee income
110.5
94.4
Interest expense
(51.6)
(48.1)
Total interest margin
58.9
46.3
Lease income
23.9
20.5
Lease costs
(20.2)
(16.8)
Lease income, net
3.7
3.7
Provision expense
(26.4)
(25.5)
Other financing operations expenses2
(14.9)
(12.0)
Financing operations income
21.3
12.5
Total segment income for reportable segments
254.0
321.2
Corporate and other3
95.7
91.9
Depreciation and amortization
(69.8)
(63.9)
Other interest expense
(70.3)
(65.5)
Other (expense) income, net
(67.6)
0.8
Income before income taxes
$142.0
$284.5
(1)Other vehicle operations expenses includes management fees, data processing fees, outside services fees, insurance
expense, office and other supplies expense, banking expense, and certain overhead expenses.
(2)Other financing operations expenses includes personnel expense, data processing fees, outside services fees, expenses
attributable to underwriting, funding, and loan servicing, and certain overhead expenses.
(3)Corporate and other includes management fee income.
The following table presents revenue by geographic area:
Three Months Ended
March 31,
(In millions)
2026
2025
Revenue from external customers:
United States
$7,007.9
$7,071.7
United Kingdom
1,987.2
1,850.1
Canada
276.4
256.5
Total revenue from external customers
$9,271.4
$9,178.3
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NOTE 15. RECENT ACCOUNTING PRONOUNCEMENTS
In November 2024, the FASB issued ASU 2024-03 related to the disaggregation of certain income statement
expenses. The amendments in this update require public entities to disclose incremental information related to
purchases of inventory, team member compensation, and depreciation, which will provide investors the ability to
better understand entity expenses and make their own judgments about entity performance. The amendments in
this update are effective for fiscal years beginning after December 15, 2026. We plan to adopt this pronouncement
and make the necessary updates to our disclosures for the year ending December 31, 2027, and, aside from these
disclosure changes, we do not expect the amendments to have a material effect on our financial statements.
In December 2025, the FASB issued ASU 2025-11 that included amendments to improve the organization of
required interim disclosures and clarified the scope of their applicability. The amendments in this update are
effective for fiscal years beginning after December 15, 2027. We plan to adopt this pronouncement and make the
necessary updates to our disclosures for the year ending December 31, 2028, and, aside from these disclosure
changes, we do not expect the amendments to have a material effect on our financial statements.
In December 2025, the FASB issued ASU 2025-12 intended to make financial reporting more straightforward by
addressing 33 specific issues within the FASB ASC. The amendments in this update are effective for fiscal years
beginning after December 15, 2026. We plan to adopt this pronouncement and make the necessary updates to our
disclosures for the year ending December 31, 2027, and, aside from these disclosure changes, we do not expect
the amendments to have a material effect on our financial statements.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
Forward-Looking Statements and Risk Factors
Certain statements under the sections entitled “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and “Risk Factors” and elsewhere in this Form 10-Q constitute forward-looking statements
within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Generally,
you can identify forward-looking statements by terms such as “project,” “outlook,” “target,” “may,” “will,” “would,”
“should,” “seek,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “likely,”
“ensure,” “goal,” “strategy,” “future,” “maintain,” and “continue” or the negative of these terms or other comparable
terms. Examples of forward-looking statements in this Form 10-Q include, among others, statements we make
regarding:
•The profitability of our strategy and growth
•Future market conditions, including anticipated vehicle and other sales, gross profit and inventory supply
•Our business strategy and plans, including our achieving our long-term financial targets
•The growth, expansion, make-up and success of our network, including our finding accretive acquisitions that
meet our target valuations and acquiring additional stores
•Annualized revenues from acquired stores or achieving target returns
•The growth and performance of our Driveway e-commerce home solution and DFC, their synergies and other
impacts on our business and our ability to meet Driveway and DFC-related targets
•The impact of sustainable vehicles and other market and regulatory changes on our business, including
evolving vehicle distribution models
•Our capital allocations and uses and levels of capital expenditures in the future
•Expected operating results, such as improved store performance, continued improvement of SG&A as a
percentage of gross profit and any projections
•Our anticipated financial condition and liquidity, including from our cash and the future availability of our credit
facilities, unfinanced real estate and other financing sources
•Our continuing to purchase shares under our share repurchase program
•Our compliance with financial and restrictive covenants in our credit facilities and other debt agreements
•Our programs and initiatives for team member recruitment, training, and retention
•Our strategies and targets for customer retention, growth, market position, operations, financial results and risk
management
 
The forward-looking statements contained in this Form 10-Q involve known and unknown risks, uncertainties, and
situations that may cause our actual results to materially differ from the results expressed or implied by these
statements. Certain important factors that could cause actual results to differ from our expectations are discussed in
the Risk Factors section of our 2025 Annual Report on Form 10-K, as supplemented and amended from time to time
in Quarterly Reports on Form 10-Q and our other filings with the SEC.
 
By their nature, forward-looking statements involve risks and uncertainties because they relate to events that
depend on circumstances that may or may not occur in the future. You should not place undue reliance on these
forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. We
assume no obligation to update or revise any forward-looking statement.
Overview
Lithia and Driveway (NYSE: LAD) is the largest global automotive retailer providing an array of products and
services throughout the vehicle ownership lifecycle. Simple, convenient and transparent experiences are offered
through our comprehensive network of physical locations, e-commerce platforms, captive finance solutions, fleet
management offerings, and other synergistic adjacencies. We have delivered consistent profitable growth in a
massive and unconsolidated industry. Our highly diversified and competitively differentiated design provides us the
flexibility and scale to pursue our vision to modernize personal transportation solutions wherever, whenever and
however consumers desire. As of March 31, 2026, we operated 465 locations representing 57 brands in the United
States, the United Kingdom, and Canada.
We offer a wide array of products and services fulfilling the entire vehicle ownership lifecycle including new and
used vehicles, financing and insurance products, and aftersales automotive repair and maintenance services. We
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strive for diversification in our products, services, brands, and geographic locations to reduce dependence on any
one manufacturer, reduce susceptibility to changing consumer preferences, manage market risk and maintain
profitability. Our diversification, along with our operating structure, provides a resilient and nimble business model.
We seek to provide customers with a seamless, blended online and physical retail experience, broad selection, and
access to specialized expertise and knowledge. Our comprehensive network provides convenient touch points for
customers and provides services throughout the vehicle life cycle. We seek to increase market share and optimize
profitability by focusing on the consumer experience and applying proprietary performance measurement systems
fueled by data science. Our Driveway and GreenCars brands and online customer portal complement our in-store
experiences in the United States and provide convenient, simple, and transparent platforms that serve as our e-
commerce home solutions and allow us to deliver differentiated, proprietary digital experiences. Enhancing our
business, our captive auto financing division allows us to provide financing solutions for customers and diversify our
business model with adjacent products.
Our long-term strategy to create value for our customers, team members and shareholders includes the following
elements:
Driving operational excellence, innovation and diversification
LAD builds magnetic customer loyalty across our 465 stores, our Driveway and GreenCars e-commerce platforms,
and our entire omnichannel ecosystem by focusing on convenient and transparent experiences supported by
proprietary data science. Our entrepreneurial model that emphasizes personal accountability for our team powers
efficient operations and allows dynamic responsiveness to each of our local markets. Our best-in-class performance
management reporting provides the foundation to enable high-performing teams to drive our platform’s full potential.
Investments across our ecosystem built a framework that is responsive to evolving consumer preferences, providing
a foundation that supports our current business and our ongoing expansion. These investments, particularly in our
digital strategies, connect our experienced, knowledgeable team members with our expansive inventory and
physical network of stores to ensure we are agile and adaptable. Additionally, we systematically explore and invest
in transformative adjacencies that are synergistic and complementary to our existing business, such as our captive
auto finance and fleet management offerings.
These investments support the foundational elements of our strategy. We seek to create durable customer loyalty in
our stores and our digital platforms, such as our My Driveway customer portal. These experiences and offerings,
backed by our extensive physical network, broad geographic reach, and customized digital offerings, empower our
people to provide transparent, flexible, and simple retail experiences.
Our performance-based culture is geared toward an incentive-based compensation structure for a majority of our
personnel. We develop pay plans that measure factors such as customer satisfaction, profitability, and individual
performance metrics. These plans reward team members for creating customer loyalty, achieving store potential,
developing high-performing talent, meeting and exceeding manufacturer requirements, and living our core values.
We centralize many administrative functions to drive efficiencies and streamline store-level operations. These
efficiencies allow our local managers to focus on serving customers to increase revenues and gross profit. Our
operations are supported by regional and corporate management, as well as dedicated training and personnel
development programs which allow us to share best practices across our network and develop talent.
Growth through acquisition and network optimization
Our acquisition growth strategy has diversified our business and been financially and culturally successful. Our
disciplined approach focuses on acquiring new vehicle franchises, which operate in markets ranging from mid-sized
regional markets to metropolitan markets. Acquisition of these businesses increases our proximity to consumers
throughout North America and the United Kingdom. While we target annual after tax return of more than 15% for our
acquisitions, we have averaged over a 25% return by the third year of ownership due to a disciplined approach
focusing on accretive, cash flow positive targets at reasonable valuations. In addition to being financially accretive,
acquisitions aim to drive network growth that improves our ability to serve customers through vast selection, greater
density, easy access, and the ability to leverage national branding and advertising.
As we focus on expanding our physical network of stores, one of the criteria we evaluate is a valuation multiple
between 3x to 6x of investment in intangibles to estimated annualized adjusted EBITDA, with various factors
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including location, ability to expand our network and talent considered in determining value. We also target an
investment in intangibles as a percentage of annualized revenues in the range of 15% to 30%.
We regularly optimize and balance our network through strategic divestitures to ensure continued high performance.
We believe our disciplined approach provides us with attractive acquisition opportunities and expanded coast-to-
coast coverage.
Thoughtful capital allocation
We manage our liquidity and available cash to support our long-term plan focused on growth through acquisitions
and investments in our existing business, technology and adjacencies that expand and diversify our business
model. In the current market of elevated acquisition pricing, we have adjusted our free cash flow deployment
strategy. Under current conditions, including recent trends in our stock price, we may consider repurchases as a
more attractive use of funds than acquisitions. Our current free cash flow deployment strategy includes a target
allocation of 25% to 35% investment in acquisitions, 25% investment in capital expenditures, innovation, and
diversification and 40% to 50% in shareholder return in the form of dividends and share repurchases based on
current valuation trends in acquisitions relative to stock price performance. During the first three months of 2026, we
utilized $97.1 million for capital expenditures investing in our existing business and $145.3 million expanding our
network through acquisitions. We also provided shareholder return in the form of $12.8 million in dividends and
$297.0 million in share repurchases. As of March 31, 2026, we had available liquidity of approximately $1.4 billion,
which was comprised of $160.8 million in unrestricted cash, $55.9 million in marketable securities, and $1.2 billion
availability on our credit facilities.
Financial Performance
26
27
29
We experienced growth of revenue in 2026 compared to 2025, primarily driven by increases in used vehicle and
aftersales volume related to acquisitions. Total gross profit grew in 2026 compared to 2025, primarily driven by
acquisition growth and supported by same store increases in aftersales. New vehicle gross profit decreased
compared to 2025 due to continued normalization of margins. Net income declined in 2026 compared to 2025,
primarily as a result of our increase in SG&A as a percentage of gross profit and equity method investment losses.
589
590
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Vehicle Operations
Key performance metrics for revenue and gross profit were as follows:
Three Months Ended March 31,
($ in millions, except per unit values)
2026
2025
Change
Revenues
New vehicle
$4,379.4
$4,580.4
(4.4) %
Used vehicle
3,489.4
3,250.5
7.3
Finance and insurance
359.7
364.3
(1.3)
Aftersales
1,042.9
983.1
6.1
Total revenues
$9,271.4
$9,178.3
1.0
Gross profit
New vehicle
$259.6
$293.5
(11.6) %
Used vehicle
187.7
188.7
(0.5)
Finance and insurance
359.7
364.3
(1.3)
Aftersales
614.7
563.9
9.0
Total gross profit
$1,421.7
$1,410.4
0.8
Gross profit margins
New vehicle
5.9%
6.4%
(50) bps
Used vehicle
5.4
5.8
(40)
Finance and insurance
100.0
100.0
—
Aftersales
58.9
57.4
150
Total gross profit margin
15.3
15.4
(10)
Units sold
New vehicle
94,787
99,503
(4.7) %
Used vehicle retail
110,151
107,326
2.6
Average selling price per unit (excluding agency)
New vehicle
$46,878
$47,209
(0.7) %
Used vehicle retail
28,464
27,198
4.7
Average gross profit per unit
New vehicle
$2,739
$2,950
(7.2)%
Used vehicle retail
1,688
1,769
(4.6)
Finance and insurance
1,807
1,804
0.2
Total vehicle 1
3,938
4,093
(3.8)
1Includes the sales and gross profit related to new, used, and finance and insurance and unit sales for new and used retail.
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Same Store Operating Data
We believe that same store comparisons are an important indicator of our financial performance. Same store
measures demonstrate our ability to grow revenues in our existing locations. As a result, same store measures have
been integrated into the discussion below.
 
Same store measures reflect results for stores that were operating in each comparison period and only include the
months when operations occurred in both periods. For example, a store acquired in February 2025 would be
included in same store operating data beginning in March 2026, after its first complete comparable month of
operation. The first quarter operating results for the same store comparisons would include results for that store in
only the month of March for both comparable periods.
Three Months Ended March 31,
($ in millions, except per unit values)
2026
2025
Change
Revenues
New vehicle
$4,156.8
$4,474.3
(7.1) %
Used vehicle
3,302.0
3,157.4
4.6
Finance and insurance
345.2
358.7
(3.8)
Aftersales
992.1
955.8
3.8
Total revenues
$8,796.1
$8,946.2
(1.7)
Gross profit
New vehicle
$246.8
$287.8
(14.2) %
Used vehicle
178.8
187.3
(4.5)
Finance and insurance
345.2
358.7
(3.8)
Aftersales
582.6
551.1
5.7
Total gross profit
$1,353.4
$1,384.9
(2.3)
Gross profit margins
New vehicle
5.9%
6.4%
(50) bps
Used vehicle
5.4
5.9
(50)
Finance and insurance
100.0
100.0
—
Aftersales
58.7
57.7
100
Total gross profit margin
15.4
15.5
(10)
Units sold
New vehicles
90,671
97,617
(7.1) %
Used vehicle retail
105,541
104,961
0.6
Average selling price per unit (excluding agency)
New vehicles
$46,545
$47,018
(1.0) %
Used vehicle retail
28,142
27,019
4.2
Average gross profit per unit
New vehicles
$2,722
$2,949
(7.7)%
Used vehicle retail
1,680
1,795
(6.4)
Finance and insurance
1,813
1,812
0.1
Total vehicle 1
3,928
4,116
(4.6)
1Includes the sales and gross profit related to new, used, and finance and insurance and unit sales for new and used retail.
New Vehicles
We believe that our new vehicle sales create incremental profit opportunities through certain manufacturer incentive
programs, arranging of third-party financing, vehicle service and insurance contracts, future resale of used vehicles
acquired through trade-in, and aftersales. Our leaders in each market continue to adapt to changing conditions,
respond to customer needs and manage inventory availability and selection.
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YTD 2026 vs. YTD 2025
New vehicle revenue for the three months ended March 31, 2026 decreased 4.4% compared to the same period of
2025, primarily due to same store performance, offset by acquisition activity. Same store new vehicle revenue
decreased 7.1% due to a decrease in unit volume of 7.1% and a decrease in average selling prices of 1.0%.
Same store new vehicle gross profit per unit decreased 7.7%, driven by a decrease in new vehicle gross profit
margins of 50 bps. Total same store new vehicle gross profit per unit, which includes the finance and insurance
revenue generated from the sales of new vehicles, decreased $139 to $4,866.
Used Retail Vehicles
Used vehicle retail sales are a strategic focus for organic growth. We offer three categories of used vehicles:
manufacturer certified pre-owned (CPO) vehicles; core vehicles, or late-model vehicles with lower mileage; and
value autos, or vehicles with over 80,000 miles. We continue to focus on procuring vehicles across the full spectrum
of the addressable used vehicle market to provide customers with a wide selection meeting all levels of affordability,
driving increased used vehicle unit volumes. Our used vehicle operations provide an opportunity to generate sales
to customers unable or unwilling to purchase a new vehicle, sell brands other than the store’s new vehicle
franchise(s) and increase sales from finance and insurance and aftersales.
YTD 2026 vs. YTD 2025
Used vehicle retail revenue for the three months ended March 31, 2026 increased 7.3% compared to the same
period of 2025 driven by same store performance and supported by acquisition activity. On a same store basis,
used vehicle retail sales increased 4.6% due to an increase in average selling prices of 4.2% and an increase in unit
volume of 0.6%. Total same store used vehicle retail gross profit per unit, which includes the finance and insurance
revenue generated from the sales of used retail vehicles, decreased $134 to $3,279.
Finance and Insurance
We believe that arranging vehicle financing is an important part of our ability to sell vehicles, and we attempt to
arrange financing for every vehicle we sell. We also offer related products such as extended warranties, insurance
contracts and vehicle and theft protection which promotes continued engagement with the consumer throughout the
ownership lifecycle.
YTD 2026 vs. YTD 2025
Total finance and insurance income decreased 1.3% in the three months ended March 31, 2026 compared to the
same period of 2025, driven by same store performance, offset by acquisition activity. Same store finance and
insurance revenues decreased 3.7%. On a same store basis, our finance and insurance revenue per retail unit
increased $1 to $1,813.
Aftersales
We provide automotive repair and maintenance services for customers for the new vehicle brands sold by our
stores, as well as service and repairs for most other makes and models. These aftersales services are an integral
part of our customer retention and the largest contributor to our overall profitability. Earnings from aftersales
continue to prove to be more resilient during economic downturns, when owners tend to repair their existing
vehicles rather than buy new vehicles. We believe the increased number of units in operation will continue to benefit
our aftersales revenue in the coming years as more late-model vehicles age, necessitating repairs and
maintenance.
YTD 2026 vs. YTD 2025
Our aftersales revenue increased 6.1% in the three months ended March 31, 2026 compared to the same period of
2025, driven by same store performance and supported by acquisition activity. Same store aftersales revenue
increased 3.8%, driven by an increase in customer pay revenues of 4.8% and an increase in warranty revenues of
4.0% compared to the prior year.
Same store aftersales gross profit increased 5.7%. This increase was primarily due to increased volume of
customer pay transactions. Overall same store aftersales gross margins increased 100 bps, primarily as a result of
increased customer pay margins of 120 bps and increased warranty gross margins of 50 bps.
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Financing Operations
In the United States, Financing Operations is a captive lender, originating loans only from our stores and Driveway.
In Canada, Financing Operations originates loans and leases from both our Canadian stores and third-party
dealerships. In the United Kingdom, Financing Operations is related to our fleet funding and management division.
These product offerings add diversity to the business model and provide an opportunity to capture additional profits,
cash flows, and sales while managing our reliance on third-party finance sources.
Financing Operations income reflects the interest and fee income generated by the portfolio of auto loan and
finance lease receivables, plus the lease income generated by our net investment in operating leases, less the
interest expense associated with the debt utilized to fund the lending, including internal capital, a provision for
estimated loan and lease losses, depreciation on vehicles leased via operating leases, and directly-related
expenses.
Selected Financing Operations Financial Information
Three Months Ended March 31,
($ in millions)
2026
% 1
2025
% 1
Interest and fee income
$110.5
9.0
$94.4
9.4
Interest expense
(51.6)
(4.2)
(48.1)
(4.8)
Total interest margin
58.9
4.8
46.3
4.6
Lease income
23.9
20.5
Lease costs
(20.2)
(16.8)
Lease income, net
3.7
3.7
Provision expense
(26.4)
(2.1)
(25.5)
(2.5)
Other financing operations expenses
(14.9)
(1.2)
(12.0)
(1.2)
Finance operations income
$21.3
$12.5
Total average managed finance receivables
$5,004.0
$4,062.1
1Annualized percentage of total average managed finance receivables.
DFC Portfolio Information1
Three Months Ended March 31,
($ in millions)
2026
2025
Loan origination information
Net loans originated
$839.8
$622.9
Vehicle units financed
26,768
20,844
Total penetration rate 2
18.0%
13.7%
Weighted average contract rate
7.9%
9.1%
Weighted average credit score 3
750
744
Weighted average FE LTV 4
95.1%
94.6%
Weighted average term (in months)
72
73
Loan performance information
Allowance for loan losses as a percentage of ending managed receivables
3.0%
3.1%
Net credit losses on managed receivables
$19.1
$20.2
Annualized net credit losses as a percentage of total average managed receivables
1.6%
2.1%
Past due accounts as a percentage of ending managed receivables 5
3.2%
3.8%
Average recovery rate 6
47.8%
46.0%
1Excludes Canadian and U.K. portfolios
2Units financed as a percentage of total U.S. new and used vehicle retail units sold.
3The credit scores represent FICO scores and reflect only receivables with obligors that have a FICO score at the time of
application. For receivables with co-borrowers, the FICO score is the primary borrower’s. FICO scores are not a significant
factor in our proprietary credit model, which relies on information from credit bureaus and other application information.
4Front-end loan-to-value represents the ratio of the amount financed to the total collateral value, which is measured as the
vehicle selling price plus applicable taxes, title and fees.
5Past due means loans at least 3 months old that are 30 or more days delinquent.
6The average recovery rate represents the average percentage of the outstanding principal balance we receive when a
vehicle is repossessed and liquidated, generally at wholesale auctions.
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YTD 2026 vs. YTD 2025
Financing operations recorded higher income in the three months ended March 31, 2026 compared to the same
period of 2025, primarily due to increased interest income resulting from the growth of the portfolio and a decreased
cost of funds, resulting in an expansion of total interest margin to 4.8%.
The weighted average contract rate on loans originated in the three months ended March 31, 2026 decreased to
7.9%, compared with 9.1% in the same period of 2025 as we decreased rates to maintain competitiveness following
Federal Reserve rate cuts. The decrease in provision expense as a percentage of receivables compared to the prior
year reflected lower net charge-offs, attributable to the increased credit quality of the portfolio and improved
servicing, as well as a decrease in the percentage of ending managed receivables constituted by the allowance for
loan losses. Other financing operations expenses as a percentage of average managed receivables was flat with
the same period of 2025 despite significant portfolio growth, reflecting improved operational performance and
economies of scale.
Operating Expenses
Selling, General and Administrative Expense
SG&A includes salaries and related personnel expenses, advertising (net of manufacturer cooperative advertising
credits), rent, facility costs, and other general corporate expenses.
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
Increase
% Increase
($ in millions)
2026
2025
Personnel
$627.9
$607.4
$20.5
3.4%
Rent and facility costs
108.3
99.1
9.2
9.3
Advertising
71.3
61.3
10.0
16.3
Other
229.9
184.9
45.0
24.3
Total SG&A
$1,037.4
$952.7
$84.7
8.9%
 
 
Three Months Ended March 31,
Increase
As a % of gross profit
2026
2025
Personnel
44.2%
43.1%
110bps
Rent and facility costs
7.6
7.0
60
Advertising
5.0
4.3
70
Other
16.2
13.1
310
Total SG&A
73.0%
67.5%
550bps
SG&A as a percentage of gross profit was 73.0% for the three months ended March 31, 2026 compared to 67.5%
for the same period of 2025, driven by increases in all expense categories outpacing the increase in gross profit.
Total SG&A expense increased 8.9%, driven by increases in personnel and other costs as a result of our acquisition
activity.
On a same store basis and excluding non-core charges, SG&A as a percentage of gross profit was 71.8%
compared to 67.4% for the same period of 2025. The increase was related to SG&A growth outpacing gross profit
growth in the period.
SG&A expense adjusted for non-core charges was as follows:
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
Increase
% Increase
($ in millions)
2026
2025
Personnel
$627.9
$607.4
$20.5
3.4%
Rent and facility costs
108.3
99.1
9.2
9.3%
Advertising
71.3
61.3
10.0
16.3%
Adjusted other
209.3
193.7
15.6
8.1%
Adjusted total SG&A
$1,016.8
$961.5
$55.3
5.8%
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Three Months Ended March 31,
Increase
As a % of gross profit
2026
2025
Personnel
44.2%
43.1%
110bps
Rent and facility costs
7.6
7.0
60
Advertising
5.0
4.3
70
Adjusted other
14.7
13.8
90
Adjusted total SG&A
71.5%
68.2%
330bps
Adjusted SG&A for the three months ended March 31, 2026 excludes $20.3 million in one-time contract buyouts and
$0.3 million in acquisition-related expenses.
Adjusted SG&A for the three months ended March 31, 2025 excludes $0.2 million in acquisition-related expenses,
$0.4 million in storm insurance charges, and a $9.4 million net gain on store disposals.
Adjusted SG&A is a non-GAAP measure. See Non-GAAP Reconciliations for more details.
Floor Plan Interest Expense
Below are the details for carrying costs for vehicle inventory:
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
 
%
($ in millions)
2026
2025
Change
Change
Floor plan interest expense
$55.9
$57.1
$(1.2)
(2.1)%
Floor plan interest expense decreased $1.2 million in the three months ended March 31, 2026 compared to the
same period of 2025 due to a decrease in interest rates, offset by an increase in floored inventory levels.
Depreciation and Amortization
Depreciation and amortization is comprised of depreciation expense related to buildings, significant remodels or
improvements, furniture, tools, equipment, signage, and amortization of certain intangible assets, including
customer lists.
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
Increase
% Increase
($ in millions)
2026
2025
Depreciation and amortization
$69.8
$63.9
$5.9
9.2%
Acquisition activity contributed to the increase in depreciation and amortization in 2026 compared to 2025. We
acquired $147.0 million of depreciable property as part of our acquisition activity over the trailing twelve months
ended March 31, 2026. For the three months ended March 31, 2026, we invested $97.1 million in capital
expenditures. These investments increased the amount of depreciation expense in the three months ended
March 31, 2026. See the discussion under Liquidity and Capital Resources for additional information.
Operating Income
Operating income as a percentage of revenue, or operating margin, was as follows:
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
 
2026
2025
Operating margin
3.6%
4.4%
Operating margin adjusted for non-core charges 1
3.8%
4.3%
1See Non-GAAP Reconciliations for more details.
Operating margin decreased 80 bps in the three months ended March 31, 2026 compared to the same period in
2025, primarily due to increased SG&A of 8.9%, partially offset by increased gross profit of 0.8% and improved
profitability of our Financing Operations.
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Non-Operating Expenses
Other Interest Expense
Other interest expense includes interest on senior notes, debt incurred related to acquisitions, real estate
mortgages, used and service loaner vehicle inventory financing commitments, and revolving lines of credit.
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
Increase
(Decrease)
% Increase
(Decrease)
($ in millions)
2026
2025
Senior notes interest
$27.6
$19.0
$8.6
45.3%
Mortgage interest
15.7
14.3
1.4
9.8
Other interest
28.6
34.1
(5.5)
(16.1)
Capitalized interest
(1.6)
(1.9)
(0.3)
NM
Total other interest expense
$70.3
$65.5
$4.8
7.3%
Other interest expense for the three months ended March 31, 2026 increased $4.8 million related to increased
borrowings on our warehouse facilities compared to the same period of 2025, and our September 2025 issuance of
senior notes due 2030.
Other (Expense) Income, net
YTD 2026 vs. YTD 2025
 
Three Months Ended March 31,
Decrease
% Decrease
($ in millions)
2026
2025
Equity method investments
$(70.1)
$(6.2)
(63.9)
(1,030.6)
Foreign currency remeasurements
(1.5)
(0.2)
(1.3)
(650.0)
Net pension benefits
0.5
2.3
(1.8)
(78.3)
Miscellaneous
3.5
4.9
(1.4)
(28.6)
Other (expense) income, net
$(67.6)
$0.8
$(68.4)
NM
Other (expense) income, net in the three months ended March 31, 2026 decreased $68.4 million compared to the
same period of 2025, primarily as a result of fair market value changes in our investment in Pinewood Technologies
Group PLC.
Income Tax Provision
Our effective income tax rate was as follows:
 
Three Months Ended March 31,
 
2026
2025
Effective income tax rate
28.1%
25.8%
Effective income tax rate excluding non-core items 1
26.5%
26.1%
1See Non-GAAP Reconciliations for more details.
 
Our effective income tax rate for the three months ended March 31, 2026 compared to last year was negatively
affected by the geographic mix of earnings during the period and a decrease in general business credits. Excluding
non-core charges and acquired general business credits, we estimate our annual effective income tax rate to be
27.1%.
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Non-GAAP Reconciliations
Non-GAAP measures do not have definitions under GAAP and may be defined differently by and not comparable to
similarly titled measures used by other companies. We caution you not to place undue reliance on such non-GAAP
measures and to consider them together with the most directly comparable GAAP measures. We believe each of
the non-GAAP financial measures below improves the transparency of our disclosures, provides a meaningful
presentation of our results from the core business operations because they exclude items not related to our ongoing
core business operations and other non-cash items, and improves the period-to-period comparability of our results
from the core business operations. We use these measures in conjunction with GAAP financial measures to assess
our business, including our compliance with covenants in our credit facility and in communications with our Board
concerning financial performance. These measures should not be considered an alternative to GAAP measures.
The following tables reconcile certain reported non-GAAP measures, which we refer to as “adjusted,” to the most
comparable GAAP measure from our Consolidated Statements of Operations.
 
Three Months Ended March 31, 2026
($ in millions, except per share amounts)
As reported
Investment
loss
Acquisition
expenses
Contract
buyouts
Tax
attribute
Adjusted
Selling, general and administrative
$1,037.4
$—
$(0.3)
$(20.3)
$—
$1,016.8
Operating income (loss)
335.8
—
0.3
20.3
—
356.4
Other income (expense), net
(67.6)
73.3
—
—
—
5.7
Income (loss) before income taxes
$142.0
$73.3
$0.3
$20.3
$—
$235.9
Income tax (provision) benefit
(40.0)
(18.6)
(0.1)
(5.1)
1.2
(62.6)
Net income (loss)
102.0
54.7
0.2
15.2
1.2
173.3
Net income attributable to NCI
(1.6)
—
—
—
—
(1.6)
Net income (loss) attributable to Lithia Motors,
Inc.
$100.4
$54.7
$0.2
$15.2
$1.2
$171.7
Diluted earnings (loss) per share attributable to Lithia
Motors, Inc.
$4.28
$2.34
$0.01
$0.65
$0.06
$7.34
Diluted share count
23.4
 
Three Months Ended March 31, 2025
($ in millions, except per share
amounts)
As reported
Net gain on
disposal of
stores
Investment
loss
Insurance
reserves
Acquisition
expenses
Tax
attribute
Adjusted
Selling, general and administrative
$952.7
$9.4
$—
$(0.4)
$(0.2)
$—
$961.5
Operating income (loss)
406.3
(9.4)
—
0.4
0.2
—
397.5
Other income, net
0.8
—
9.7
—
—
—
10.5
Income (loss) before income taxes
$284.5
$(9.4)
$9.7
$0.4
$0.2
$—
$285.4
Income tax (provision) benefit
(73.3)
2.4
(2.5)
(0.1)
—
(1.0)
(74.5)
Net income (loss)
211.2
(7.0)
7.2
0.3
0.2
(1.0)
210.9
Net income attributable to NCI
(1.7)
—
—
—
—
—
(1.7)
Net income (loss) attributable to
Lithia Motors, Inc.
$209.5
$(7.0)
$7.2
$0.3
$0.2
$(1.0)
$209.2
Diluted earnings (loss) per share
attributable to Lithia Motors, Inc.
$7.94
$(0.25)
$0.27
$0.01
$—
$(0.04)
$7.93
Diluted share count
26.4
(1) Investment losses (gains) retrospectively included in adjusted non-GAAP financial measures presented
Liquidity and Capital Resources
We manage our liquidity and capital resources in the context of our overall business strategy, continually forecasting
and managing our cash, working capital balances and capital structure in a way that we believe will meet the short-
term and long-term obligations of our business while maintaining liquidity and financial flexibility. Our current free
cash flow deployment strategy includes a target allocation of 25% to 35% investment in acquisitions, 25%
investment in capital expenditures, innovation, and diversification and 40% to 50% in shareholder return in the form
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MANAGEMENT’S DISCUSSION AND ANALYSIS
32
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of dividends and share repurchases based on current valuation trends in acquisitions relative to stock price
performance.
We believe we have sufficient sources of funding to meet our business requirements for the next 12 months and in
the longer term. Cash flows from operations and borrowings under our credit facilities are our main sources for
liquidity. In addition to the above sources of liquidity, potential sources to fund our business strategy include
financing of real estate and proceeds from debt or equity offerings. We evaluate all of these options and may select
one or more of them depending on overall capital needs and the availability and cost of capital, although no
assurances can be provided that these capital sources will be available in sufficient amounts or with terms
acceptable to us.
 
Available Sources
Below is a summary of our immediately available funds:
($ in millions)
March 31, 2026
December 31, 2025
Change
% Change
Cash and cash equivalents
$160.8
$109.2
$51.6
47.3%
Marketable securities
55.9
56.4
(0.5)
(0.9)
Available credit on credit facilities
1,168.4
1,359.2
(190.8)
(14.0)
Total current available funds
$1,385.1
$1,524.8
$(139.7)
(9.2)%
Information about our cash flows, by category, is presented in our Consolidated Statements of Cash Flows. The
following table summarizes our cash flows:
 
Three Months Ended March 31,
Change
(In millions)
2026
2025
in Cash Flow
Net cash (used in) provided by operating activities
$(108.4)
$322.1
$(430.5)
Net cash used in investing activities
(240.5)
(117.1)
(123.4)
Net cash provided by (used in) financing activities
432.0
(173.0)
605.0
Operating Activities
Cash provided by operating activities for the three months ended March 31, 2026 decreased $430.5 million
compared to the same period of 2025, primarily related to changes in inventories, net income, and floor plan notes
payable, partially offset by changes in trade payables, unrealized investment loss, and trade receivables compared
to the same period of 2025.
 
Borrowings from and repayments to our syndicated credit facilities related to our vehicle inventory floor plan
financing are presented as financing activities. To better understand the impact of changes in inventory, other
assets, and the associated financing, we also consider our adjusted net cash provided by operating activities to
include borrowings or repayments associated with our vehicle floor plan commitment and exclude the impact of our
finance receivables activity. Adjusted net cash provided by operating activities, a non-GAAP measure, is presented
below:
 
Three Months Ended March 31,
Change
(In millions)
2026
2025
in Cash Flow
Net cash (used in) provided by operating activities – as reported
$(108.4)
$322.1
$(430.5)
Adjust: Net borrowings (repayments) on floor plan notes payable, non-trade(1)
1,378.3
(44.0)
1,422.3
Less: Borrowings on floor plan notes payable, non-trade associated with acquired
vehicle inventory
(11.3)
(9.9)
(1.4)
Adjust: Finance receivables activity
261.2
179.1
82.1
Net cash provided by operating activities – adjusted
$1,519.8
$447.3
$1,072.5
(1) Includes the impact of converting inventory‑secured revolvers to floorplan facilities during the quarter, increasing net floorplan
borrowings and adjusted operating cash flows $1,138.3 million.
Investing Activities
Net cash used in investing activities totaled $240.5 million and $117.1 million, respectively, for the three months
ended March 31, 2026 and 2025.
 
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Table of Contents
Below are highlights of significant activity related to our cash flows from investing activities:
 
Three Months Ended March 31,
Change
(In millions)
2026
2025
in Cash Flow
Capital expenditures
$(97.1)
$(68.7)
$(28.4)
Cash paid for acquisitions, net of cash acquired
(145.3)
(84.5)
(60.8)
Net cash for other investments
(9.4)
(12.5)
3.1
Proceeds from sales of stores
—
43.2
(43.2)
Capital Expenditures
Below is a summary of our capital expenditure activities ($ in millions):
316
Many manufacturers provide assistance in the form of additional incentives or assistance if facilities meet specified
standards and requirements. We expect that certain facility upgrades and remodels will generate additional
manufacturer incentive payments. Also, tax laws allowing accelerated deductions for capital expenditures reduce
the overall investment needed and encourage accelerated project timelines.
We expect to use a portion of our future capital expenditures to upgrade facilities that we recently acquired. Our
initial evaluation of the investment return metrics applied to each acquisition contemplates this additional capital
investment, which is usually associated with manufacturer standards and requirements.
Capital expenditures for the three months ended March 31, 2026, compared to the same period of 2025 were lower
for existing facility purchases, maintenance, new operations purchases and improvements, and information
technology, and higher in existing operations improvements.
If we undertake a significant capital commitment in the future, we expect to pay for the commitment out of existing
cash balances, construction financing and borrowings on one of our credit facilities. Upon completion of the
projects, we believe we would have the ability to secure long-term financing and general borrowings from third party
lenders for 70% to 90% of the amounts expended, although no assurances can be provided that these financings
will be available to us in sufficient amounts or on terms acceptable to us.
Acquisitions
We focus on acquiring stores at attractive purchase prices that meet our return thresholds and strategic objectives.
We look for acquisitions that diversify our brand and geographic mix as we continue to evaluate our portfolio to
minimize exposure to any one manufacturer and achieve financial returns.
 
We are able to subsequently floor new vehicle inventory acquired as part of an acquisition; however, the cash
generated by this transaction is recorded as borrowings on floor plan notes payable, non-trade.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
34
Table of Contents
Adjusted net cash paid for acquisitions, a non-GAAP measure, as well as certain other acquisition-related
information is presented below:
 
Three Months Ended March 31,
($ in millions)
2026
2025
Number of locations acquired
6
2
Number of stores opened
4
—
Cash paid for acquisitions, net of cash acquired
$(145.3)
$(84.5)
Add: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory
11.3
9.9
Cash paid for acquisitions, net of cash acquired – adjusted
$(134.0)
$(74.6)
 
We evaluate potential capital investments primarily based on targeted rates of return on assets and return on our
net equity investment.
Financing Activities
Adjusted net cash provided by financing activities, a non-GAAP measure, which is adjusted for borrowings and
repayments on floor plan facilities: non-trade and borrowings and repayments associated with our Financing
Operations segment was as follows:
 
Three Months Ended March 31,
Change
(In millions)
2026
2025
in Cash Flow
Cash provided by (used in) financing activities, as reported
$432.0
$(173.0)
$605.0
Less: Net borrowings (repayments) on floor plan notes payable: non-trade
(1,378.3)
44.0
(1,422.3)
Less: Net borrowings on non-recourse notes payable
(160.0)
(254.4)
94.4
Cash used in financing activities, as adjusted
$(1,106.3)
$(383.4)
$(722.9)
Below are highlights of significant activity related to our cash flows from financing activities, excluding borrowings
and repayments on floor plan notes payable: non-trade, which are discussed above:
 
Three Months Ended March 31,
Change
(In millions)
2026
2025
in Cash Flow
Net borrowings on lines of credit
$(779.7)
$(148.4)
$(631.3)
Principal payments on non-recourse notes payable
(372.1)
(309.6)
(62.5)
Proceeds from the issuance of non-recourse notes payable
532.1
564.0
(31.9)
Repurchase of common stock
(297.0)
(143.4)
(153.6)
Equity Transactions
Our Board has approved share repurchase authorizations totaling up to $3.2 billion of our common stock. We
repurchased a total of 1,057,207 shares of our common stock at an average price of $280.91 in the first three
months of 2026, consisting of 115,228 related to tax withholding on vesting RSUs, and 941,979 related to our
repurchase authorizations. As of March 31, 2026, we had $362.9 million remaining available for repurchases and
the authorizations do not have expiration dates.
In the first three months of 2026, we declared and paid dividends on our common stock as follows:
Dividend paid:
Dividend
amount
per share
Total amount of
dividend
(in millions)
March 2026
$0.55
$12.8
 
We evaluate performance and make a recommendation to the Board on dividend payments on a quarterly basis.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
35
Table of Contents
Summary of Outstanding Balances on Credit Facilities and Long-Term Debt
Below is a summary of our outstanding balances on credit facilities and long-term debt:
As of March 31, 2026
(In millions)
Outstanding
Remaining Available
 
Floor plan note payable: non-trade
$4,374.1
$—
(1)
Floor plan notes payable
1,910.4
—
 
Daily rental vehicle inventory financing commitments
3.6
0.2
(2)
Revolving lines of credit
1,738.8
1,150.8
(2), (3)
Warehouse facilities
1,337.0
17.4
Non-recourse notes payable
2,634.0
—
4.625% Senior notes due 2027
400.0
—
5.500% Senior notes due 2030
600.0
—
4.375% Senior notes due 2031
550.0
—
3.875% Senior notes due 2029
800.0
—
Real estate mortgages, finance lease obligations, and other debt
1,156.2
—
 
Unamortized debt issuance costs
(26.3)
—
(4)
Total debt
15,477.8
$1,168.4
Less: Inventory related debt
(6,288.1)
Less: Financing operations related debt
(3,971.0)
Less: Unrestricted cash and cash equivalents
(160.8)
Less: Marketable securities
(55.9)
Less: Availability on used and service loaner financing facilities
(0.2)
Net debt(5)
$5,001.8
(1)As of March 31, 2026, we had a $2.7 billion new vehicle floor plan commitment as part of our US Bank syndicated credit
facility, and a $375 million CAD wholesale floorplan commitment as part of our Bank of Nova Scotia syndicated credit facility.
(2)The amount available on this credit facility is limited based on borrowing base calculations and fluctuates monthly.
(3)Available credit is based on the borrowing base amount effective as of February 28, 2026. This amount is reduced by $6.3
million for outstanding letters of credit.
(4)Debt issuance costs are presented on the balance sheet as a reduction from the carrying amount of the related debt liability.
(5)Non-GAAP financial measure.
Financial Covenants
Our credit facilities, non-recourse notes payable, and senior notes contain customary representations and
warranties, conditions and covenants for transactions of these types.
Recent Accounting Pronouncements
See Note 15 – Recent Accounting Pronouncements for discussion.
 
Critical Accounting Policies and Use of Estimates
There have been no material changes in the critical accounting policies and use of estimates described in our 2025
Annual Report on Form 10-K filed with the SEC on February 25, 2026.
Seasonality and Quarterly Fluctuations
Our North American operations generally experience lower volumes in the first quarter of each year due to
consumer purchasing patterns and inclement weather in certain of our markets. As a result, financial performance is
expected to be lower during the first quarter than during the second, third and fourth quarters of each fiscal year.
Our U.K. operations generally experience higher volumes in the first and third quarters of each year, due primarily to
new vehicle registration practices in the United Kingdom. We believe that interest rates, levels of consumer debt,
consumer confidence and manufacturer sales incentives, as well as general economic conditions, also contribute to
fluctuations in sales and operating results.
 
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or
future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
 
Lithia Logo-Footer.jpg
36
Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
There have been no material changes in our reported market risks or risk management policies since the filing of
our 2025 Annual Report on Form 10-K, which was filed with the SEC on February 25, 2026.
Item 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
We evaluated, with the participation and under the supervision of our Chief Executive Officer and our Chief
Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by
this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial
Officer concluded that our disclosure controls and procedures are effective to ensure that information we are
required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and
communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure and that such information is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms.
 
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during our most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings
We are party to numerous legal proceedings arising in the normal course of our business. Although we do not
anticipate that the resolution of legal proceedings arising in the normal course of business will have a material
adverse effect on our business, results of operations, financial condition, or cash flows, we cannot predict this with
certainty.
Item 1A. Risk Factors
The information in this Form 10-Q should be read in conjunction with the risk factors and information disclosed in
our 2025 Annual Report on Form 10-K, which was filed with the SEC on February 25, 2026. We have described in
our 2025 Annual Report on Form 10-K, under Risk Factors in Item 1A, the primary risks related to our business and
securities.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
We repurchased the following shares of our common stock during the first quarter of 2026:
For the full calendar month of
Total number of shares
purchased2
Average
price paid
per share
Total number of shares
purchased as part of
publicly announced plans1
Maximum dollar value of
shares that may yet be
purchased under publicly
announced plan
January
182,950
$329.77
67,795
$599,493
February
340,800
291.00
340,800
500,322
March
533,457
257.71
533,384
362,865
Total
1,057,207
280.91
941,979
1On March 4, 2025, our Board approved an additional $350 million repurchase authorization of our common stock and on
August 26, 2025, our Board approved an additional $750 million repurchase authorization of our common stock. These
authorizations were in addition to the amount previously authorized by the Board for repurchase. There are no expiration
dates for the share repurchase authorizations.
2Of the shares repurchased in the first quarter of 2026, 115,228 shares were related to tax withholding upon the vesting of
RSUs.
Lithia Logo-Footer.jpg
37
Table of Contents
Item 5. Other Information
Rule 10b5-1 Trading Plans of Directors and Section 16 Officers
During the fiscal quarter ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1 under the
Exchange Act) adopted, modified or terminated any Rule 10b5-1 plan or any non-Rule 10b5-1 trading arrangement.
Item 6. Exhibits
The following exhibits are filed herewith and this list is intended to constitute the exhibit index.
Incorporated by Reference
Filed or
Furnished
Herewith
Exhibit
Number
Exhibit Description
Form
File
Number
Exhibit
Filing
Date
Restated Articles of Incorporation of Lithia Motors, Inc.
10-Q
001-14733
3.1
07/28/21
Bylaws of Lithia Motors, Inc.
8-K
001-14733
3.1
02/20/26
Seventh Amendment to Fourth Amended and Restated Loan Agreement,
dated February 27,2026, among Lithia Motors, Inc., the subsidiaries of
Lithia Motors, Inc. listed on the signature pages of the agreement or that
thereafter become borrowers thereunder, the lenders party thereto from
time to time, and U.S. Bank National Association.
8-K
001-14733
10.1
03/04/26
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934.
X
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934.
X
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
X
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
X
101
Inline XBRL Document Set for the consolidated financial statements and
accompanying notes to consolidated financial statements
X
104
Cover page formatted as Inline XBRL and contained in Exhibit 101.
X
Lithia Logo-Footer.jpg
38
Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
Date: April 29, 2026
LITHIA MOTORS, INC.
Registrant
By:
/s/ Tina Miller
Tina Miller
Chief Financial Officer, Senior Vice President, and
Principal Accounting Officer

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